TELCO CUBA, INC..

In accordance with “reverse merger” accounting treatment, our historical financial statements as of period ends, and for periods ended, prior to the Merger will be replaced with the historical financial statements of Amgentech prior to the Merger in all future filings with the SEC, beginning with this Quarterly Report. Prior to the Merger, we were a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended). As a result of the Merger, we ceased to be a shell company. All reference to common stock shares and per share amounts have been retroactively restated to effect the reverse acquisition as if the transaction had taken place as of the beginning of the earliest period presented.

The accompanying condensed consolidated financial statements as of August 31, 2015 and for the three and nine months ended August 31, 2015 and 2014 are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and are presented in accordance with the requirements of Rule S-X of the Securities and Exchange Commission (the "SEC") and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Our operating results for the three and nine months ended August 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending November 30, 2015.

ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of  nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

There were no new convertible debentures issued in the fiscal year ended November 30, 2014; however, certain debentures previously issued were assigned to third parties and the terms thereof were then renegotiated to modify the conversion rate from 50% to 45%, during the period ended August 31, 2015 and pursuant to the said reassignment, accrued interest worth of $16,965 was re-classed into convertible debentures and interest worth $14,963 were waived which were recorded as gain on extinguishment of debt.  

During the nine months ended August 31, 2015, the Company issued two notes total of $140,000 in new convertible debentures. Due to the variable conversion price associated with the above convertible debentures, the Company has determined that the conversion feature is considered a derivative liability. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. The initial fair value of the embedded debt derivative at the date of issuance was $1,033,168 allocated as a debt discount and derivatives liability. The debt discount is being amortized over the term of the convertible promissory notes. The Company recognized a charge of $23,333 for the three and nine months ended August 31, 2015 for amortization of this debt discount and as of August 31, 2015, the unamortized debt discount amounted to $116,667.