UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, DC. 20549

                                  FORM 10-K

 (mark one)
   [ X ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED OCTOBER 31, 2002

                                      OR

   [   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934

       FOR THE TRANSITION PERIOD FROM ______________ TO ______________.

                        COMMISSION FILE NUMBER 0-22636

                     DIAL THRU INTERNATIONAL CORPORATION
            (Exact name of registrant as specified in its charter)


            DELAWARE                                75-2461665
 ------------------------------        ------------------------------------
 State or other jurisdiction of        (I.R.S. Employer Identification No.)
 Incorporation or organization


           17383 SUNSET BOULEVARD, SUITE 350 LOS ANGELES, CA 90272
           -------------------------------------------------------
           (Address of principal executive offices)     (Zip Code)

      Registrant's telephone number, including area code (310) 566-1700

         SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                     NONE

         SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                        COMMON STOCK, $0.001 PAR VALUE
                        ------------------------------
                               (title of class)

 Indicate by check  mark whether  the registrant  (1) has  filed all  reports
 required to be filed by Section 13  or 15(d) of the Securities Exchange  Act
 of 1934 during the preceding 12 months (or for such shorter period that  the
 registrant was required to file such  reports), and (2) has been subject  to
 such filing requirements the past 90 days. Yes /X/ No /  /

 Indicate by check mark if disclosure  of delinquent filers pursuant to  Item
 405 of Regulation S-K is not contained herein, and will not be contained, to
 the best  of  registrant's knowledge,  in  definitive proxy  or  information
 statements incorporated by reference  in Part III of  this Form 10-K or  any
 amendment to this Form 10-K. [ ]

 Indicate by check mark  whether the registrant is  an accelerated filer  (as
 defined in Rule 12b-2 of the act). Yes / / No /X/

 State the aggregate market value of the voting and non-voting common  equity
 held by  non-affiliates computed  by reference  to the  price at  which  the
 common equity was last  sold, or the  average bid and  asked price for  such
 common equity, as of the last business day of the registrant's most recently
 completed fiscal quarter.

 The aggregate market value of shares of common stock held by  non-affiliates
 of  Dial  Thru  International  Corporation  as  of  January  23,  2003   was
 approximately $2,031,589, based on the average  bid and ask price of  common
 stock as quoted on the OTC Bulletin Board of $0.19.


 (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

 Indicated the number of shares  outstanding  of  each  of  the  registrant's
 classes  of common stock,  as of the latest practicable date.  As of January
 23, 2003, 15,103,751 shares of common stock were outstanding.


                     DOCUMENTS INCORPORATED BY REFERENCE.
 None.

<PAGE>

                          FORWARD-LOOKING STATEMENTS

 This Annual Report  on Form 10-K  (this "Report") includes  "forward-looking
 statements" within the meaning of Section 27A of the Securities Act of 1933,
 as amended  (the  "Securities  Act"), and  Section  21E  of  the  Securities
 Exchange Act  of  1934, as  amended  (the "Exchange  Act").  Forward-looking
 statements are statements other than historical information or statements of
 current condition. Some forward-looking statements may be identified by  the
 use  of  such  terms  as  "expects",  "will",  "anticipates",   "estimates",
 "believes", "plans"  and words  of  similar meaning.  These  forward-looking
 statements relate to  business plans,  programs, trends,  results of  future
 operations, satisfaction  of future  cash  requirements, funding  of  future
 growth, acquisition  plans and  other matters.  In light  of the  risks  and
 uncertainties inherent  in  all such  projected  matters, the  inclusion  of
 forward-looking statements in  this Form 10-K  should not be  regarded as  a
 representation by us or any other  person that our objectives or plans  will
 be achieved or that  our operating expectations  will be realized.  Revenues
 and results  of  operations  are difficult  to  forecast  and  could  differ
 materially from  those  projected in  forward-looking  statements  contained
 herein, including without limitation statements regarding our belief of  the
 sufficiency  of  capital  resources  and  our  ability  to  compete  in  the
 telecommunications  industry.  Actual  results   could  differ  from   those
 projected in any forward-looking statements for, among others, the following
 reasons: (a) increased competition from  existing and new competitors  using
 voice over Internet protocol ("VoIP") to provide telecommunications services
 over the Internet,  (b) the relatively  low barriers to  entry for  start-up
 companies  using  VoIP  to  provide  telecommunications  services  over  the
 Internet, (c)  the  price-sensitive  nature  of  consumer  demand,  (d)  the
 relative lack of  customer loyalty to  any particular  provider of  services
 over the  Internet,  (e) our  dependence  upon favorable  pricing  from  our
 suppliers to  compete  in  the telecommunications  industry,  (f)  increased
 consolidation in the telecommunications industry, which may result in larger
 competitors being able to compete more  effectively, (g) failure to  attract
 or retain key employees, (h) continuing changes in governmental  regulations
 affecting the telecommunications industry and the Internet and (i)  changing
 consumer demand,  technological  developments and  industry  standards  that
 characterize the industry. We do not undertake to update any forward-looking
 statements contained herein. For a discussion  of these factors and  others,
 please see "Risk Factors"  in Item 1 of  this Report. Readers are  cautioned
 not to place undue reliance on  the forward-looking statements made in  this
 Report or in any document or statement referring to this Report.


                                    PART I


 Item 1.  Business

 Our Company

 Throughout this Annual Report, the term "we", "Dial Thru" and the  "Company"
 refer to  Dial  Thru  International  Corporation  and  its  subsidiaries,  a
 Delaware corporation formerly known as  ARDIS Telecom & Technologies,  Inc.,
 successor by merger to Canmax Inc. The Company was incorporated on July  10,
 1986 under the Company Act of  the Province of British Columbia, Canada.  On
 August 7,  1992, we  renounced our  original province  of incorporation  and
 elected to continue our domicile under the laws of the State of Wyoming, and
 on November 30, 1994 our  name was changed to  "Canmax Inc." On February  1,
 1999, we reincorporated under  the laws of the  State of Delaware under  the
 name "ARDIS Telecom & Technologies, Inc."  On November 2, 1999, we  acquired
 (the "DTI Acquisition") substantially all of the business and assets of Dial
 Thru International Corporation,  a California corporation,  and, on  January
 19, 2000, we  changed our name  from ARDIS Telecom  & Technologies, Inc.  to
 "Dial Thru International Corporation." Our common stock currently trades  on
 the OTC Bulletin Board under the symbol "DTIX."

 From our inception  until 1998 we  provided retail  automation software  and
 related services to the retail  petroleum and convenience store  industries.
 In 1998  we decided  that the  rapidly expanding  telecommunications  market
 presented an  opportunity to  utilize some  of  the technology  and  support
 capabilities  that   we   had   developed,   and   we   entered   into   the
 telecommunications industry  via  the  pre-paid  long  distance  market.  In
 December 1998,  we sold  our retail  automation  software business  and  now
 operate only in the telecommunications marketplace.

 Our principal executive offices are located at 17383 Sunset Boulevard, Suite
 350, Pacific Palisades, California 90272, and our telephone number is  (310)
 566-1700.

 Recent Developments

 On November  19, 2002  we  entered into  an  agreement with  Global  Capital
 Funding Group, L.P. that provided us with a two year loan of $1.25  million.
 A portion of  the proceeds  from this  financing were  used to  pay off  the
 remaining balance  of  Dial Thru's  April  2001 convertible  debenture  with
 Global Capital, while the remaining $807,000  has been and will be used  for
 the Company's ongoing working capital needs.

 On January  27, 2003,  we  amended our  6%  convertible debenture  with  GCA
 Strategic Investment Fund  Limited to change  the debenture's maturity  date
 from January 28, 2003 to February 24,  2004.  In addition, we cancelled  the
 existing warrants to purchase 50,000 shares  of common stock at an  exercise
 price of $0.41  and issued  warrants to  purchase 150,000  shares of  common
 stock at an exercise price of $0.24 which expire on January 28, 2008.

 On January 27, 2003, we amended our 10% convertible notes with three of  our
 executives to change  the notes'  maturity dates  from October  24, 2003  to
 February 24, 2004.

 Development of Our Telecommunications Business

 In January  1998, we  acquired US  Communication Services,  Inc. ("USC"),  a
 provider of  prepaid phone  cards, public  Internet  access kiosks  and  pay
 telephones. While the USC acquisition did  not proceed as intended,  leading
 to our rescission of the transaction in May 1998, we decided to develop  our
 in-house  capabilities  to  expand  our  telecommunications  operations  and
 continued to focus  on the  rapidly growing  prepaid phone  card market.  In
 August 1998, we entered into an agreement with PT-1 Communications, Inc.  to
 acquire long distance telecommunications and debit  services for use in  the
 marketing and  distribution  of  domestic and  international  prepaid  phone
 cards. We conducted our domestic prepaid  phone card business through  RDST,
 Inc., a wholly owned subsidiary, by purchasing services from PT-1 until mid-
 1999. In the second quarter of fiscal 1999, we purchased  telecommunications
 switching equipment and an enhanced services platform. Following a period of
 development, implementation  and  testing,  we  commenced  operations  as  a
 facilities-based carrier  in the  fourth quarter  of our  1999 fiscal  year.
 Calls made  with  our prepaid  phone  cards  were then  routed  through  our
 switching facilities, giving  us better control  over costs  and quality  of
 service.

 In November 1999, we completed the DTI Acquisition and continued  operations
 of its  facilities-based  telecommunications carrier  business  through  its
 subsidiary, Dial  Thru.com.  During the first  quarter  of fiscal  2000,  we
 appointed John Jenkins (founder of the acquired business) to the position of
 President and Chief Operating Officer of  our Company. In the third  quarter
 of fiscal 2000, we relocated our  Texas operations, including our  switching
 facilities, to a location in downtown Los Angeles. During the fourth quarter
 of fiscal 2001, Mr. Jenkins was appointed  by our Board of Directors to  the
 position of  Chairman of  the  Board and  also  became our  Chief  Executive
 Officer.  At that time we announced the creation  of our "Bookend  Strategy"
 and the roll out of our facilities-based Internet Protocol network,  whereby
 we sell VoIP to allow us to compete in the international  telecommunications
 market.

 Mr. Jenkins continued  the merger of  operations of the  two businesses  and
 increased our emphasis  on the international  wholesale and retail  business
 segment while reducing  our focus  on the  prepaid domestic  market.  We now
 operate as  a facilities-based  global IP  communications company  providing
 connectivity to international markets experiencing significant demand for IP
 enabled services. We provide  a variety of international  telecommunications
 services, including  the transmission  of voice  and  data traffic  and  the
 provision of Web-based and other communications services, which are targeted
 to small and medium sized enterprises ("SMEs"), wholesale carriers providing
 international and domestic long distance  traffic and consumers. We  utilize
 VoIP packetized  voice  technology  (and other  compression  techniques)  to
 improve both costs and efficiencies of telecommunication transmissions,  and
 are developing a private  VoIP telephony network.  We utilize digital  fiber
 optic cable, oceanic cable transmission facilities, international satellites
 and the Internet to transport our communications.

 During the fourth quarter of fiscal 2001, we acquired the assets and certain
 of the liabilities of Rapid Link, Incorporated, ("Rapid Link") a provider of
 integrated data  and voice  communications services  to both  wholesale  and
 retail customers around the world. Rapid Link's global VoIP network  reaches
 thousands  of  retail  customers,  primarily   in  Europe  and  Asia.   This
 acquisition has significantly enhanced  our product lines, particularly  our
 Dial  Thru  and  Re-origination  services,  Global  Roaming  products,   and
 wholesale termination. Furthermore, the acquisition  has allowed us to  roll
 out services to additional international markets and more rapidly expand our
 VoIP strategy due to the engineering  and operational expertise acquired  in
 the transaction.   For  2002, 82%  of our  total revenue  resulted from  the
 retail customers and VoIP infrastructure that  we acquired from Rapid  Link,
 contributing significantly to our overall revenue growth of 255% over 2001.

 Our Business Strategy

 Our primary business concentrates on the marketing of IP telephony services,
 including voice, fax, data  and other Web-based  services. The term  Bookend
 Strategy describes our primary focus, which is to provide  telecommunication
 services originating in  foreign countries and  in the corresponding  ethnic
 segment domestically  in the  United States  via the  Internet to  transport
 various forms of communications. These  services are provided primarily  via
 the public Internet, utilizing VoIP and other digitized voice  technologies.
 VoIP is voice communication that has been converted into digital packets and
 is then addressed, prioritized, and transmitted  over any form of  broadband
 network utilizing the  technology that  makes the  Internet possible.  These
 technologies allow us to transmit voice  communications with the same  high-
 density compression as  networks initially designed  for data  transmission,
 and at the same time utilize  a common network for providing customers  with
 data and other Web-based services.

 By utilizing VoIP over the public  Internet, we avoid the high network  cost
 associated with private line connections to each international  destination,
 which would require us to lease a dedicated line for a set period of time at
 a set rental rate and to "fill" idle network capacity with traffic in  order
 to offset the high fixed costs of such a private line. The primary focus  of
 our business is to sell a  bundled solution of communication services,  such
 as international dial thru,  re-origination, fax over  the Internet to  SMEs
 worldwide. We also sell telecommunications services for both the foreign and
 domestic  termination  of  international  long  distance  traffic  into  the
 wholesale market. Our primary objective in selling into the wholesale market
 is to take  advantage of below  market international rates  that arise  from
 time to  time while  we are  developing revenue  from our  retail  marketing
 operations.  We expanded the offering of  our wholesale services in the 2002
 fiscal year  and believe  that additional  market opportunities  for  select
 wholesale routes will be available to us in our current fiscal year. In some
 markets, where the price advantages and capacity limitations do not  provide
 for significant retail opportunities, we sell only wholesale terminations.

 A key part of the Bookend Strategy is the establishment of direct routes for
 telecommunications traffic  to  and from  a  target country.  Once  we  have
 determined that a particular country meets our requirements for availability
 of retail revenue opportunities, we then  must determine the best manner  to
 establish  dedicated   connectivity.  This   is  usually   accomplished   by
 establishing a  licensing  agreement  within the  country,  whereby  we  are
 licensed to sell these communication products.  We then make these  products
 available to SMEs in the target country through public Internet  connections
 and apply the appropriate technology to  provide for the compression of  the
 telecommunications  traffic  over  these   routing  options.  The   emerging
 technology that is best  suited for the majority  of these installations  is
 VoIP.

 We primarily focus on markets where competition is not keen, thereby  giving
 us opportunities for greater profit  margins. These markets include  regions
 where the deregulation of telecommunications services has not been completed
 and smaller markets that have not attracted large multi-national  providers.
 South Africa, Asia, and parts of South America offer the greatest  abundance
 of these target markets.

 Cooperating with  overseas carriers  and the  incumbent, usually  government
 owned, telephone companies, gives us better  opportunities to engage in  the
 co-branding of jointly  marketed products,  including IP-based  enhancements
 that they have developed,  rather than simply basing  a strategy on  pricing
 arbitrage. As  a result,  we are  regularly invited  to participate  in  new
 markets.

 The explosive growth of the Internet has accelerated the rapid merger of the
 worlds of  voice-based and  data-based communications.  By first  digitizing
 voice signals, then utilizing the same packetizing technology that makes the
 Internet possible, VoIP  provides for a  cost effective manner  in which  to
 perform the signal compression needed to maximize the return from the use of
 the public Internet. In this way,  not only has efficiency of the  dedicated
 circuits been improved, but use of the public Internet provides a much  more
 cost effective  means  of  transmission and  rapid  deployment  compared  to
 traditional private leased lines and circuits.

 We currently operate our domestic telecommunications switching facilities in
 Los Angeles, California, Atlanta, Georgia, and Frankfurt, Germany, providing
 for long distance services worldwide. Development of the private IP  network
 and the use of VoIP  technology have improved both  the cost and quality  of
 telecommunications services,  as well  as  facilitating our  expansion  into
 other Internet related opportunities.

 Our Products and Services

 Dial Thru and Re-origination Services

 We provide a variety of international Dial Thru and Re-origination services.
 These services,  while  accounting for  a  majority of  our  revenues,  will
 continue to decrease as a percentage of our total revenues as we continue to
 develop and market new services. Generally, the Dial Thru and Re-origination
 services are provided  to customers that  establish deposits or  prepayments
 with us to be used for  long-distance calling. The Dial Thru service  allows
 customers the convenience of making local and/or international calls in  the
 same manner as traditional long distance dialing. In those markets in  which
 we cannot currently provide Dial Thru  service, we offer our  Re-origination
 service, which allows a caller outside of the United States to place a  long
 distance telephone call that appears to  have originated from our switch  in
 Los Angeles to the customer's location,  and then connects the call  through
 our network  to anywhere  in the  world.  By completing  the calls  in  this
 manner, we  are able  to provide  very competitive  rates to  the  customer.
 Wherever possible, we route calls over our private network. By using VoIP to
 compress voice and  data transmissions across  the public  Internet, we  are
 able to  offer these  services at  costs that  are substantially  less  than
 traditional communications services.

 International Wholesale Termination

 Primarily as a result  of our acquisition of  Rapid Link, we began  offering
 international  call  completion  on  a  wholesale  basis  to   international
 telecommunications companies.   Our service enables  our customers to  offer
 their own customers  phone to  phone global voice  and fax  services.   This
 service provides our customers with high quality and low cost long  distance
 without our customers having  to deploy their own  VoIP infrastructure.   We
 can also provide additional termination opportunities to customers that have
 developed their  own  VoIP  networks  with  nearly  instant  access  to  our
 termination points  by  connecting  to these  customers  via  the  Internet.
 Therefore, we  have  the  capability  to  offer  our  services  to  carriers
 connecting to our  network through  traditional dedicated  switch to  switch
 connections, and through the public  Internet whereby our customers  connect
 to our network using their own VoIP equipment.

 FaxThru

 We offer  FaxThru  and "store  and  forward"  fax services,  which  allow  a
 customer to  send a  fax to  another party  utilizing the  Internet  without
 incurring long distance or similar charges. From the customer's perspective,
 these products  function exactly  like traditional  fax services,  but  with
 significant savings in long distance charges.

 Global Roaming

 Our Global Roaming service provides customers a single account number to use
 to initiate phone-to-phone calls from  locations throughout the world  using
 specific toll-free access numbers. This service enables customers to receive
 the cost benefits associated with our telecommunications network  throughout
 the world. This product will begin to account for a more significant  amount
 of our revenue  due to the  acquisition of Rapid  Link, which provides  this
 product to its retail customers around the world.

 1+ Services and Dial Around Products

 We are  licensed to  provide long  distance service  in most  of the  United
 States and now  have begun  selling our 1+  long distance  service and  dial
 around products  to our  SME customer  base. We  are also  targeting  ethnic
 segments of the United States which correspond to foreign countries in which
 we  have  facilities.  This  allows  us   to  add  a  complete  package   of
 communication services to the SME customer, furthering our Bookend Strategy.

 Prepaid Phone Cards

 During fiscal year 2000, prepaid  calling cards accounted for  approximately
 32% of our revenue.  Since that time, we significantly reduced our  emphasis
 on this segment of our business in favor of other products and services that
 offer the opportunity for higher profit margins.  Currently, we do not offer
 this product to our customers and calling cards did not generate any revenue
 in either our 2001 or our 2002 fiscal years. It is not anticipated that this
 product will account for a significant amount of revenue going forward.

 Suppliers

 Our   principal   suppliers   consist   of   domestic   and    international
 telecommunications carriers. Relationships currently exist with a number  of
 reliable  carriers.   Due  to   the  highly   competitive  nature   of   the
 telecommunications business, we believe that the  loss of any carrier  would
 not have a long-term material impact on our business.

 Customers

 We focus our retail  sales and marketing  efforts toward SMEs,  particularly
 those located in foreign  markets where telecommunications deregulation  has
 not taken place or is in the process of taking place, residential  customers
 in those same  markets and  in the  United States,  and wholesale  customers
 located both domestically and internationally. We rely heavily on the use of
 commissioned agents  to generate  retail sales  in the  foreign markets.  By
 doing so, we believe that we establish a wide base of customers with  little
 vulnerability based on lack of customer loyalty. Our wholesale customers are
 primarily large public  telecommunications customers in  the United  States,
 and medium to large foreign Postal, Telephone and Telegraph companies, which
 are those entities responsible for providing telecommunications services  in
 foreign markets and are usually government  owned or controlled. We  believe
 the loss  of  any  individual  customer  would  not  materially  impact  our
 business.

 Competition

 The telecommunications  services  industry is  highly  competitive,  rapidly
 evolving and  subject  to  constant technological  change.  Other  providers
 currently offer  one  or  more  of  each of  the  services  offered  by  us.
 Telecommunication service companies  compete for consumers  based on  price,
 with the dominant  providers conducting extensive  advertising campaigns  to
 capture  market  share.  As  a  service   provider  in  the  long   distance
 telecommunications  industry,  we  compete  with  such dominant providers as
 AT&T Corp., MCI  WorldCom  Inc.,  and Sprint Corporation,  all of which  are
 substantially larger than us  and have the  resources, history and  customer
 bases to dominate virtually every segment of the telecommunications market.

 A substantial majority of the telecommunications traffic around the world is
 carried by dominant carriers in each market. These carriers, such as British
 Telecom and Deutsche Telekom, have started to deploy packet-switch  networks
 for voice and  fax traffic.  In addition,  other industry  leaders, such  as
 AT&T, MCI  WorldCom,  Sprint  and Qwest  Communications  International  have
 recently announced their intention to offer Internet telephony services both
 in the United States and internationally. These and other competitors may be
 able to bundle services  and products that are  not offered by us,  together
 with Internet telephony services, to gain a competitive advantage over us in
 the marketing and distribution of products and services

 We also compete with other smaller,  emerging carriers including IDT  Corp.,
 ITXC Corporation, deltathree.com, Primus Telecommunications Group, Inc., and
 Net2Phone Inc. We believe  that additional competitors  may be attracted  to
 the  market,   including   internet-based  service   providers   and   other
 telecommunications companies. We also believe that existing competitors  are
 likely to continue to expand their service offerings to appeal to  retailers
 and consumers.

 The market for international voice and fax call completion services is  also
 highly competitive.  We compete  both in  the market  for enhanced  Internet
 communication services and the market for carrier transmission services.  We
 believe that  the  primary competitive  factors  in the  Internet  and  VoIP
 communications business  are  quality  of service,  price,  convenience  and
 bandwidth.  We  believe   that  the  ability   to  offer  enhanced   service
 capabilities, including new services, will become an increasingly  important
 competitive factor in the near future.

 Future competition  could come  from  a variety  of  companies both  in  the
 Internet and telecommunications industries. We  also compete in the  growing
 markets of  providing  Re-origination services,  Dial Thru  services,  dial-
 around, 10-10-XXX  calling and  other calling  services. In  addition,  some
 Internet service providers have begun enhancing  their real-time interactive
 communications and,  although  these  companies have  initially  focused  on
 instant messaging, we  expect them to  provide PC-to-phone  services in  the
 future.

 Internet Telephone Service Providers

 During the  past  several  years, a  number  of  companies  have  introduced
 services that make Internet  telephony or voice  services over the  Internet
 available to businesses and consumers. Concert Global Clearinghouse, iBasis,
 ITXC, and  the wholesale  divisions of  Net2Phone and  deltathree.com  route
 traffic to  destinations  worldwide  and compete  directly  with  us.  Other
 Internet telephony service providers focus on a retail customer base and may
 in the future compete with us. These companies may offer the kinds of  voice
 services we intend to offer in the future. In addition, companies  currently
 in related  markets have  begun  to provide  VoIP  services or  adapt  their
 products to enable  voice over the  Internet services.  These companies  may
 potentially  migrate   into  the   Internet  telephony   market  as   direct
 competitors.

 Regulation of Internet Telephony and the Internet

 The use of the Internet to provide telephone service is a relatively  recent
 market development. Currently, the Federal Communications Commission ("FCC")
 is considering whether to impose  surcharges or additional regulations  upon
 certain providers of Internet telephony. On  April 10, 1998, the FCC  issued
 its report  to  Congress  concerning the  implementation  of  the  universal
 service  provisions  of the Telecommunications Act of 1996.  In the  report,
 the  FCC  indicated  that  it would  examine the question of whether certain
 forms of  phone-to-phone Internet  telephony  are  information  services  or
 telecommunications services.  If  the FCC  were  to determine  that  certain
 services are subject to FCC  regulation as telecommunications services,  the
 FCC may require providers of Internet  telephony services to make  universal
 service contributions,  pay  access charges  or  be subject  to  traditional
 common carrier regulation. It is also  possible that PC-to-phone and  phone-
 to-phone services may be regulated by the FCC differently. In addition,  the
 FCC sets  the access  charges on  traditional telephony  traffic and  if  it
 reduces  these  access  charges,  the  cost  of  traditional  long  distance
 telephone calls will probably be lowered, thereby decreasing any competitive
 pricing advantage that we have. In May  of 2000, the FCC approved an  access
 charge reduction plan known  as CALLS which has  resulted in a reduction  of
 the access charges paid by traditional  long distance carriers to the  major
 local phone companies.

 Changes   in   the  legal  and  regulatory   environment   relating  to  the
 Internet connectivity  market,  including regulatory  changes  which  affect
 telecommunications costs or that may increase the likelihood of  competition
 from the  regional  Bell  operating companies  or  other  telecommunications
 companies, could increase our costs of providing services. For example,  the
 FCC determined in 1999 that subscriber  calls to Internet service  providers
 should be classified  for jurisdictional  purposes as  interstate calls.  On
 appeal, the U.S. Court  of Appeals remanded the  case to the FCC,  directing
 the FCC to reconsider this determination. If the FCC reaffirms its  original
 determination, the determination could affect a telephone carrier's cost for
 provision of  service  to these  providers  by eliminating  the  payment  of
 reciprocal compensation to carriers terminating calls to these providers.

 The FCC has pending a proceeding to encourage the development of  cost-based
 compensation mechanisms for  the termination  of calls  to Internet  service
 providers. Meanwhile, state agencies will determine whether carriers receive
 reciprocal compensation  for these  calls.  If new  compensation  mechanisms
 increase the  costs to  carriers of  termination calls  to Internet  service
 providers or  if  States  eliminate reciprocal  compensation  payments,  the
 affected carriers could increase  the price of  service to Internet  service
 providers to compensate, which  could raise the cost  of Internet access  to
 consumers.

 In addition,  although the  FCC to  date has  determined that  providers  of
 Internet services should not be required  to pay interstate access  charges,
 this decision may be reconsidered in  the future. This decision could  occur
 if the  FCC  determines that  the  services provided  are  basic  interstate
 telecommunications services  and no  longer subject  to the  exemption  from
 access charges that are currently enjoyed by providers of enhanced services.
 Access charges are  assessed by local  telephone companies to  long-distance
 companies for  the use  of  the local  telephone  network to  originate  and
 terminate long-distance calls, generally on a per minute basis. The FCC  has
 stated publicly that it would be inclined to hold the provision of phone-to-
 phone Internet protocol telephony to  be a basic telecommunications  service
 and therefore subject to access  charges and universal service  contribution
 requirements. In a Notice  of Inquiry released September  29, 1999, the  FCC
 again asked for  comments on the  regulatory status  of Internet  telephony.
 Specifically, the  FCC  asked  for  comments  to  address  whether  Internet
 telephony service generally, and  phone-to-phone service in particular,  may
 be regulated as  a basic telecommunications  service. If  the FCC  concludes
 that  any  or  all  Internet  telephony  should  be  regulated  as  a  basic
 communications service, it eventually could require that Internet  telephony
 providers must contribute to universal service funds and pay access  charges
 to local telephone companies. The imposition of access charges or  universal
 service contributions  would substantially  increase  our costs  of  serving
 dial-up customers. Following the election of George W. Bush as President  of
 the United States, William Kennard resigned from the chairmanship of the FCC
 and President Bush appointed Michael Powell  as the new chairman. The  FCC's
 polices may change as a result of this change in FCC leadership.

 State public utility  commissions may  retain jurisdiction  to regulate  the
 provision of  intrastate Internet  telephony services.  At least  one  state
 public utility commission (the Nebraska Commission) has made a determination
 that  it  will  regulate  intrastate  Internet  telephony  services.   State
 regulation of  intrastate  Internet telephony  services  may result  in  the
 requirement that Internet telephony providers pay intrastate access  charges
 to local phone companies and pay into state universal service funds.

 Local  phone  companies  seeking  to  require  that  providers  of  Internet
 telephony services pay access charges to them have the option of filing suit
 as well as initiating regulatory proceedings. In January 2001, a state trial
 court in Colorado  ruled that one  provider of  Internet telephony  services
 must pay intrastate access charges to the local phone company. The  Colorado
 litigation result  may encourage  local phone  companies to  file more  such
 suits. Courts in such suits may  award substantial damages for past  periods
 of time in which the Internet telephony provider did not pay access  charges
 as well as  require that  access charges  be paid  prospectively. State  and
 federal regulators are in some cases authorized to award damages as well  as
 prospective relief.

 To our knowledge, there  are currently no domestic  and few foreign laws  or
 regulations that prohibit voice communications  over the Internet. A  number
 of countries that currently prohibit competition  in the provision of  voice
 telephony have also  prohibited Internet telephony.  Other countries  permit
 but regulate Internet telephony. If Congress,  the FCC, or State  regulatory
 agencies of foreign governments begin  to regulate Internet telephony,  such
 regulation may materially adversely affect our business, financial condition
 or results of operations.

 In addition, access to our services may also be limited in foreign countries
 where laws and  regulations otherwise  do not  prohibit voice  communication
 over the Internet. We have negotiated agreements to provide our services  in
 various countries. No assurances  can be given that  we will continue to  be
 successful in these negotiations.

 Congress has recently adopted legislation that regulates certain aspects  of
 the Internet,  including on-line  content, user  privacy and  taxation.  For
 example, the Internet Tax  Freedom Act prohibits  certain taxes on  Internet
 uses through November  1, 2003. We  cannot predict  whether substantial  new
 taxes will be imposed on our services provided after that date. In addition,
 Congress and other  federal entities are  considering other legislative  and
 regulatory proposals that would further regulate the Internet. Congress  has
 enacted digital signature  legislation and various  states have adopted  and
 are  considering  Internet-related  legislation.  Increased  United   States
 regulation of  the  Internet may  slow  its growth,  particularly  if  other
 governments follow suit, which may increase the cost of doing business  over
 the  Internet  and  materially  adversely  affect  our  business,  financial
 condition, results of operations and future prospects.

 The  European  Union's  European  Commission  (EC)  in  early  January  2001
 recommended that member countries refrain from regulating Internet telephony
 service. However,  the  EC  qualified  its  recommendation  by  noting  that
 regulation is appropriate when an Internet telephony company provides levels
 of quality  and reliability  equal to  those provided  by traditional  phone
 companies, makes a separate voice-only  service offering, and meets  several
 other conditions.

 The European  Union has  also enacted  several  directives relating  to  the
 Internet. The European Union has, for  example, adopted a directive on  data
 protection that imposes restrictions on the processing of personal data that
 are more restrictive than current United States privacy standards. Under the
 directive, personal  data may  not be  collected, processed  or  transferred
 outside the European Union unless certain  specified conditions are met.  In
 addition, persons whose personal data is processed within the European Union
 are guaranteed a number of rights, including the right to access and  obtain
 information about their data, the right  to have inaccurate data  rectified,
 the right to  object to the  processing of their  data for direct  marketing
 purposes and in certain other circumstances, rights of legal recourse in the
 event of unlawful processing. The directive  will affect all companies  that
 process personal  data  in,  or receive  personal  data  processed  in,  the
 European  Union,  and  may  affect   companies  that  collect  or   transmit
 information over the Internet from individuals in the European Union  Member
 States. In particular, companies with  establishments in the European  Union
 may not be  permitted to  transfer personal data  to countries  that do  not
 maintain adequate levels  of data protection.  Our transmission of  personal
 data is limited and we do  not anticipated it becoming a significant  source
 of revenue.

 In addition,  the  European  Union has  adopted  a  separate,  complementary
 directive that pertains to  privacy and the processing  of personal data  in
 the  telecommunications   sector.   This   directive   establishes   certain
 requirements with  respect  to,  among  other  things,  the  processing  and
 retention of subscriber traffic and billing data, subscriber rights  to non-
 itemized  bills,  and  the  presentation  and  restriction  of  calling  and
 connected line identification. In addition,  a number of European  countries
 outside the European Union have adopted, or are in the process of  adopting,
 rules similar to those set forth in the European Union directives.

 Although we do not engage in the collection of data for purposes other  than
 routing calls and billing for our  services, the data protection  directives
 are quite  broad and  the European  Union Privacy  standards are  stringent.
 Accordingly, the  potential effect  of these  data protection  rules on  the
 development of our business is uncertain.

 Sales and Marketing

 We market long  distance telecommunications products  and services from  our
 offices in Los  Angeles, California  and Atlanta,  Georgia. We  also have  a
 wholly owned  subsidiary  in  Mannheim, Germany,  a  regional  sales  office
 located in Johannesburg,  South Africa, and an office in Caracas, Venezuela.
 Our revenues are primarily derived from  direct sales to business  accounts,
 sales  through   commissioned   agents   and  wholesale   sales   to   other
 telecommunications providers. We  plan to expand  our sales  effort to  both
 domestic and international business  accounts, as well  as add products  and
 services targeted toward residential customers in both markets.

 We have  substantial  revenues in  foreign  markets.  For the  years  ending
 October 31, 2002, 2001 and 2000, $8.6  million or 35%, $5.4 million or  78%,
 and $5.8 million or  68% of our total  revenue for each year,  respectively,
 originated from Western Europe, Africa and South East Asia.

 Intellectual Property

 We don't  hold  any significant  patents  or trademarks.  Our  products  and
 services are available to other telecommunication companies.

 Employees

 As of January 23,  2003, we had approximately  67 full-time and 3  part-time
 employees, approximately 15  of which perform  administrative and  financial
 functions, approximately 27  of which  perform customer  support duties  and
 approximately 28 of which  have experience in telecommunications  operations
 and/or sales. Approximately 39 current employees are located in Los Angeles,
 California, and Atlanta, Georgia, and approximately 28 employees operate  in
 offices worldwide. No  employees are represented  by a labor  union, and  we
 consider our employee relations to be good.

 Risk Factors

 Our cash flow may not be sufficient to satisfy our cost of operations

 For the years ended October 31, 2002, 2001 and 2000, we recorded net  losses
 of approximately $4.7 million, $2.7 million and $11.2 million, respectively,
 on revenues of approximately $24.9 million,  $7.0 million and $8.6  million,
 respectively.  As  a  result,  we  currently have a  working capital deficit
 of  over  $6 million.  In  addition,  we  have a significant amount of trade
 payables, of which approximately 33% is past  due,  excluding  disputes  for
 overcharges with  our  underlying carriers of approximately $500,000.  To be
 able to service our debt obligations over the course of the 2003 fiscal year
 we must  generate significant cash flow and obtain additional financing.  If
 we  are unable  to  do  so  or otherwise  to obtain funds necessary  to make
 required payments  on our trade debt and other  indebtedness, we may not  be
 able to continue our operations.

 Our operating history makes  it difficult to  accurately assess our  general
 prospects in the  VoIP portion of  the telecommunications  industry and  the
 effectiveness of  our  business  strategy.  In  addition,  we  have  limited
 meaningful historical financial data upon which to forecast our future sales
 and operating  expenses. Our  future performance  will  also be  subject  to
 prevailing economic conditions and to financial, business and other factors.
 Accordingly, we cannot assure  you that we  will successfully implement  our
 business strategy or that our actual future cash flows from operations  will
 be sufficient to satisfy our debt obligations and working capital needs.

 To implement our  business strategy, we  will also need  to seek  additional
 financing.  There  is  no  assurance  that  adequate  levels  of  additional
 financing will be available at all or on acceptable terms. In addition,  any
 additional financing  will  likely result  in  significant dilution  to  our
 existing stockholders. If we  are unable to  obtain additional financing  on
 terms that are acceptable to us, we could be forced to dispose of assets  to
 make  up  for  any  shortfall  in  the  payments  due  on  our  debt   under
 circumstances that might not be favorable to realizing the highest price for
 those assets. A  portion of  our assets  consist of  intangible assets,  the
 value of which will depend upon a variety of factors, including the  success
 of our business. As a result,  if we do need to sell  any of our assets,  we
 cannot assure  you that  our assets  could be  sold quickly  enough, or  for
 amounts sufficient, to meet our obligations.

 We face competition from numerous, mostly well-capitalized sources

 The market for  our products  and services  is highly  competitive. We  face
 competition from  multiple sources,  many of  which have  greater  financial
 resources and a substantial  presence in our markets  and offer products  or
 services similar  to  our  services.  Therefore,  we  may  not  be  able  to
 successfully compete in  our markets,  which could  result in  a failure  to
 implement our business strategy, adversely affecting our ability to  attract
 and retain new customers. In addition, competition within the industries  in
 which we operate  is characterized by,  among other factors,  price and  the
 ability to  offer enhanced  services.  Significant price  competition  would
 reduce the margins realized by us in our telecommunications operations. Many
 of our competitors have greater financial  resources to devote to  research,
 development and marketing, and may be able to respond more quickly to new or
 merging technologies and changes in customer requirements. If we are  unable
 to provide value-added Internet products and services then we will be unable
 to compete in certain  segments of the market,  which could have an  adverse
 impact on our business.

 The regulatory environment in our industry is very uncertain

 The legal and regulatory environment pertaining to the Internet is uncertain
 and changing rapidly as the use  of the Internet increases. For example,  in
 the United States, the  FCC is considering whether  to impose surcharges  or
 additional regulations upon certain providers of Internet telephony.

 In addition, the regulatory treatment of  Internet telephony outside of  the
 United States varies from country to country. There can be no assurance that
 there will not  be legally imposed  interruptions in  Internet telephony  in
 these and  other foreign  countries. Interruptions  or restrictions  on  the
 provision of Internet  telephony in foreign  countries may adversely  affect
 our ability to continue to offer services in those countries, resulting in a
 loss of customers and revenues.

 New regulations could increase the cost of doing business over the  Internet
 or restrict or prohibit the delivery  of our products or services using  the
 Internet. In addition to new regulations being adopted, existing laws may be
 applied to the Internet . Newly existing laws may cover issues that  include
 sales and  other  taxes, access  charges,  user privacy,  pricing  controls,
 characteristics and quality of  products and services, consumer  protection,
 contributions to the  Universal Service Fund,  an FCC-administered fund  for
 the support of local telephone service in rural and high-cost areas,  cross-
 border commerce,  copyright, trademark  and patent  infringement, and  other
 claims based on the nature and content of Internet materials.

 Changes in the technology relating to Internet telephony could threaten  our
 operations

 The industries in  which we  compete are  characterized, in  part, by  rapid
 growth, evolving industry standards,  significant technological changes  and
 frequent product enhancements. These  characteristics could render  existing
 systems and strategies obsolete  and require us to  continue to develop  and
 implement new products  and services, anticipate  changing consumer  demands
 and respond to  emerging industry  standards and  technological changes.  No
 assurance can be given that we  will be able to  keep pace with the  rapidly
 changing  consumer  demands,  technological  trends  and  evolving  industry
 standards.

 We need to develop and maintain strategic relationships around the world  to
 be successful

 Our international business,  in part, is  dependent upon relationships  with
 distributors, governments  or providers  of telecommunications  services  in
 foreign markets.  The failure  to develop  or maintain  these  relationships
 could have an adverse impact on our business.

 We rely on two key senior executives

 Our success is dependent on our  senior management team of John Jenkins  and
 Allen Sciarillo and our future success will depend, in large part, upon  our
 ability to retain these two individuals.

 The expansion of our VoIP product offerings is essential to our survival

 We  intend  to  expand   our  VoIP  network  and   the  range  of   enhanced
 telecommunications services that we provide. Our expansion prospects must be
 considered in  light  of the  risks,  expenses and  difficulties  frequently
 encountered by companies in new and rapidly evolving markets.

 Our OTC  Bulletin Board  listing negatively  affects  the liquidity  of  our
 common stock

 Our common stock currently trades on  the OTC Bulletin Board. Therefore,  no
 assurances can be given that a liquid trading market will exist at the  time
 any investor desires to dispose  of any shares of  the our common stock.  In
 addition, our common stock is subject  to the so-called "penny stock"  rules
 that impose  additional sales  practice requirements  on broker-dealers  who
 sell such  securities  to  persons  other  than  established  customers  and
 accredited investors (generally defined as an  investor with a net worth  in
 excess of  $1  million or  annual  income exceeding  $200,000,  or  $300,000
 together with a spouse). For transactions covered by the penny stock  rules,
 a broker-dealer must make a suitability determination for the purchaser  and
 must have received the purchaser's written consent to the transaction  prior
 to sale.  Consequently, both  the ability  of a  broker-dealer to  sell  our
 common stock and the ability  of holders of our  common stock to sell  their
 securities in the secondary market may be adversely affected. The Securities
 and Exchange Commission has adopted regulations that define a "penny  stock"
 to be an  equity security that  has a market  price of less  than $5.00  per
 share, subject to certain exceptions. For any transaction involving a  penny
 stock,  unless  exempt,  the  rules  require  the  delivery,  prior  to  the
 transaction, of a disclosure  schedule relating to  the penny stock  market.
 The broker-dealer must disclose the commissions payable to both the  broker-
 dealer  and  the  registered  representative,  current  quotations  for  the
 securities and, if the broker-dealer is  to sell the securities as a  market
 maker, the broker-dealer  must disclose  this fact  and the  broker-dealer's
 presumed control over the market. Finally,  monthly statements must be  sent
 disclosing recent price information for the penny stock held in the  account
 and information on the limited market in penny stocks.


 Item 2. Properties

 Our principal executive office is located in Los Angeles, California,  where
 we lease 6,796 square feet in two locations.  Our operations and information
 systems are located in Atlanta, Georgia, where we lease 17,034 square  feet,
 New York,  New York,  where we  lease 104  square feet  under a  co-location
 agreement, and Los Angeles.  Our German operations  are located in  Mannheim
 and Frankfurt, Germany, where we lease 8,395 square feet. We also have sales
 and administrative  offices in  Caracas, Venezuela  and Johannesburg,  South
 Africa.

 In addition, our subsidiary in Germany, acquired from Rapid Link in  October
 2001, is  a facilities  based provider  of telecommunications  services  and
 utilizes significant property and equipment to  operate its business. As  of
 October 31, 2002, $475,000, or 15%  of our total property and equipment  was
 located at  our  Germany subsidiary.  We  believe that  our  facilities  are
 sufficient for the operation of our business for the foreseeable future.


 Item 3. Legal Proceedings

 On June 12, 2001, Cygnus Telecommunications Technology, LLC, filed a  patent
 infringement suit (case no.  01-6052) in the  United States District  Court,
 Central District of  California, with  respect to  our "international  call-
 back" technology.  This technology  drives our  Re-Origination services  and
 allows our foreign based customers to initiate international telephone calls
 by first calling a switch in the United States, which then initiates a "call
 back" to the customer sight providing  the customer with an open phone  line
 to place a  call anywhere in  the world. The  injunctive relief that  Cygnus
 sought  in  this  suit  has  been  denied,  but  Cygnus  continues  to  seek
 compensatory and punitive damages as well as attorneys' fees and costs.

 In August  2002, Cygnus  filed  a motion  for  a preliminary  injunction  to
 prevent us from providing "call back" services.  We filed a cross motion for
 summary judgment of non-infringement.  Both motions were denied.  We  intend
 to refile the motion for summary  judgment for non-infringement.  We  intend
 to continue defending this  case vigorously, though  our ultimate legal  and
 financial  liability  with  respect  to  such  legal  proceeding  cannot  be
 estimated with any certainty at this time.

 On June 3, 2002, RSL Com USA, Inc.  ("RSL") filed a breach of contract  suit
 (case no. BC275210) in the Superior Court of the State of California, County
 of Los  Angeles,  alleging that  the  Company owes  RSL  past due  sums  for
 services rendered in connection with  a written Carrier Services  Agreement.
 We have answered  denying RSL's  claims and, in  November 2002,  we filed  a
 cross-complaint against  RSL.   We  do not  believe  that RSL's  claims  are
 legitimate and intend to defend this  case vigorously. At the same time,  we
 are not presently in a position to estimate our ultimate legal and financial
 liability with respect to this matter.


 Item 4. Submission of Matters to a Vote of Security Holders

 No matters were submitted  to a vote of  security holders during the  fourth
 quarter of the fiscal year covered by this Report.


                                   PART II


 Item 5.  Market  for  Registrant's Common  Equity  and  Related  Stockholder
 Matters

 Market For Our Common Stock

 We have only one class  of shares, common stock,  $.001 par value, which  is
 traded on the OTC Bulletin Board. Each share ranks equally as to  dividends,
 voting rights,  participation  in assets  on  winding-up and  in  all  other
 respects. No  shares  have  been  or  will be  issued  subject  to  call  or
 assessment. There are  no preemptive  rights, provisions  for redemption  or
 purpose for either cancellation  or surrender or  provisions for sinking  or
 purchase funds.

 Our Common Stock  is currently traded  on the OTC  Bulletin Board under  the
 symbol "DTIX." Our principal executive offices  are located at 17383  Sunset
 Boulevard, Suite  350, Los  Angeles, California,  90272, and  its  telephone
 number is (310) 566-1700.

 The following table sets forth for the fiscal periods indicated the high and
 low  closing  sales  price  per share of our Common Stock as reported on the
 OTC Bulletin  Board.  The  market quotations presented reflect  inter-dealer
 prices, without  retail  mark-up,  mark-down  or  commissions  and  may  not
 necessarily reflect actual transactions.

                                                       COMMON STOCK
                                                      CLOSING PRICES
                                                      --------------
                                                      HIGH      LOW
                                                      -----    -----
 FISCAL 2001
      First Quarter  . . . . . . . . . . . . . .     $ 2.34   $ 0.50
      Second Quarter . . . . . . . . . . . . . .     $ 2.63   $ 0.71
      Third Quarter  . . . . . . . . . . . . . .     $ 1.20   $ 0.62
      Fourth Quarter . . . . . . . . . . . . . .     $ 1.09   $ 0.41

 FISCAL 2002
      First Quarter  . . . . . . . . . . . . . .     $ 0.70   $ 0.29
      Second Quarter . . . . . . . . . . . . . .     $ 0.50   $ 0.21
      Third Quarter  . . . . . . . . . . . . . .     $ 0.29   $ 0.09
      Fourth Quarter . . . . . . . . . . . . . .     $ 0.13   $ 0.09


 The closing price for our  Common Stock on January  23, 2003 as reported  on
 the OTC Bulletin Board was $0.19.

 Dividends

 We have never declared or paid any cash dividends on our Common Stock and do
 not presently  intend to  pay cash  dividends  on our  Common Stock  in  the
 foreseeable future. We intend to retain future earnings for reinvestment  in
 our business.

 Holders of Record

 There were 453 stockholders of record as of January 23, 2003.

 Recent Sales of Unregistered Securities

 In January 2002, we issued an amended 10% convertible note to Mr. Jenkins to
 reflect the advance of an additional $102,433, which  matures on October 24,
 2003.  The note was originally convertible  at six-month intervals only, but
 was  subsequently  amended  in November 2002 to provide for conversion  into
 shares of our common stock at the option of Mr. Jenkins at any time prior to
 maturity.  The  conversion  price is equal  to the closing bid price  of our
 common stock  on the last trading day immediately preceding  the conversion.
 In connection with the issuance of the amended note we also issued a warrant
 to  Mr. Jenkins  to  purchase  102,433  shares  of  our common stock  at  an
 exercise price of $0.75 per share, which expires on January 28, 2007.

 In July 2002, we issued a second amended 10% convertible note to Mr. Jenkins
 to  reflect  the  advance  of an  additional  $300,000,  which   matures  on
 October  24,  2003.   The  note  was  originally  convertible  at  six-month
 intervals only, but was subsequently amended in November 2002 to provide for
 conversion  into  shares of our common stock at the option of Mr. Jenkins at
 any time prior to maturity.  The  conversion  price is equal  to the closing
 bid price of our common stock  on the last trading day immediately preceding
 the conversion.  In connection with the issuance of the amended note we also
 issued a  warrant to  Mr. Jenkins  to purchase 300,000 shares of  our common
 stock  at an exercise price  of  $0.75  per  share, which expires on July 8,
 2007.

 Our  issuance  of  the  amended  note  and  the  warrants  was  exempt  from
 registration  under  the  Securities   Act  pursuant  to  Regulation D   and
 Section 4(2) thereof.

<PAGE>
<TABLE>

 Item 6.  Selected Financial Data


                                                       FISCAL YEARS ENDED OCTOBER 31
                                           -----------------------------------------------------
                                            2002        2001       2000        1999       1998
                                           -------     -------    -------     -------    -------
 <S>                                      <C>         <C>        <C>         <C>        <C>
 CONSOLIDATED STATEMENT OF OPERATIONS
  DATA (1)
 Revenues                                 $ 24,871    $  7,002   $  8,591    $  3,117   $  2,189
 Cost of revenues                           16,590       3,625      9,971       2,982      2,155
 Operating expenses                         11,667       5,365      9,142       4,028      1,399
 Other income (expense)                     (1,298)        647       (655)         79       (101)
 Gain on sale of software business               -           -          -       5,309          -
 Loss on disposal of USC & equipment             -           -          -           -     (1,155)
 Income (loss) from continuing operations   (4,684)     (2,684)   (11,187)     (3,815)    (2,621)
 Income (loss) from discontinued
   operations                                    -           -          -         218       (103)
 Extraordinary item - forgiveness of debt        -           -          -           -          -
 Net income (loss)                          (4,684)     (2,684)   (11,187)      1,713     (2,724)

 Income (loss) from continuing
   operations per share                   $  (0.34)   $  (0.25)  $  (1.31)   $  (0.56)   $ (0.37)
 Net income (loss) per share              $  (0.34)   $  (0.25)  $  (1.31)   $   0.25    $ (0.38)

 CONSOLIDATED BALANCE SHEET DATE (1):
 Total assets
     Continuing operations                $  9,787    $ 12,644   $  6,102    $  4,467    $ 1,411
     Discontinued operations                     -           -          -           -      3,880
 Working capital (deficiency)
     Continuing operations                  (6,879)     (6,524)    (4,829)      1,251     (1,460)
     Discontinued operations                     -           -          -           -        622
 Noncurrent obligations
     Continuing operations,
       net of discount                       2,878       2,070        119         562          -
     Discontinued operations                     -           -          -           -        147
 Shareholders' (deficit) equity             (1,975)      2,079        508       2,865      1,064

 --------------------
 (1)  All numbers,  other  than per  share  numbers, are  in  thousands.  The
 results of  operations  of   our  predecessor software  business  have  been
 presented in the financial statements as discontinued operations. Results of
 operations in prior years have been restated to reclassify this business  as
 discontinued operations.

</TABLE>
<PAGE>

 Item 7.    Management's Discussion and Analysis  of Financial Condition  and
 Results of Operations  for the Fiscal Years Ended October 31, 2002, 2001 and
 2000

 This Annual Report on Form 10-K contains "forward-looking statements" within
 the meaning of Section 27A of the Securities Act of 1933 and Section 21E  of
 the Securities Exchange Act of 1934. These statements relate to expectations
 concerning matters that are not historical facts. Words such as  "projects",
 "believes", "anticipates", "estimates",  "plans", "expects", "intends",  and
 similar words  and  expressions  are intended  to  identify  forward-looking
 statements.  Although  the  Company   believes  that  such   forward-looking
 statements are reasonable, we cannot assure you that such expectations  will
 prove to  be correct.  Factors that  could cause  actual results  to  differ
 materially from such  expectations are disclosed  herein including,  without
 limitation, in the "Risk Factors" beginning on page 9.  All  forward-looking
 statements attributable  to the  Company are  expressly qualified  in  their
 entirety by such language and we  do not undertake any obligation to  update
 any forward-looking statements. You are also  urged to carefully review  and
 consider the various disclosures we have made which describe certain factors
 which affect our business throughout  this Report. The following  discussion
 and analysis of  financial condition and  results of  operations covers  the
 years ended  October 31,  2002,  2001,  and  2000  and  should  be  read  in
 conjunction with our Financial Statements  and the Notes thereto  commencing
 at page F-1 hereof.

 General

 On November 2, 1999, we consummated  the DTI Acquisition and, in the  second
 quarter of fiscal 2000,  we shifted focus toward  our global VoIP  strategy.
 This change in focus has lead to  a significant shift from our prepaid  long
 distance operations toward higher margin international wholesale and  retail
 telecommunication opportunities.  This  strategy  allows us  to  form  local
 partnerships with foreign PTT's and to provide IP enabled services based  on
 the in-country regulatory environment affecting telecommunications and  data
 providers. In the third quarter of fiscal 2000, we further concentrated  our
 efforts toward our  global VoIP  telecommunications strategy  by moving  our
 operations to Los Angeles, California.  This refocusing and consolidation of
 operations has resulted in not only greater savings, but also higher profits
 and more sustainable revenues. This consolidation and reduction in staff has
 allowed us to significantly reduce our overhead, and although our operations
 have not yet  produced positive cash  flow, we believe  that continued  cost
 reductions and moderate revenue  growth would allow  us to achieve  positive
 results in the near future.

 On October 12, 2001, we completed the acquisition from Rapid Link of certain
 assets and executory  contracts of  Rapid Link, USA,  Inc. and  100% of  the
 common stock  of  Rapid Link  Telecommunications,  GmbH, a  German  company.
 Rapid Link provides  integrated data  and voice  communications services  to
 both wholesale and  retail customers around  the world. Rapid  Link built  a
 large residential  retail customer  base in  Europe  and Asia,  using  Rapid
 Link's  network  to  make  international   calls  anywhere  in  the   world.
 Furthermore, Rapid Link  developed a VoIP  network using  Clarent and  Cisco
 technology which we have used to  take advantage of wholesale  opportunities
 where rapid deployment  and  time  to market are  critical.   A  significant
 majority of our revenue in our 2002  fiscal year was derived from our  Rapid
 Link acquisition.

 On November  19, 2002  we  entered into  an  agreement with  Global  Capital
 Funding Group, L.P. that provided us with a two year loan of $1.25  million.
 A portion of  the proceeds  from this  financing were  used to  pay off  the
 remaining balance  of  Dial Thru's  April  2001 convertible  debenture  with
 Global Capital while the  remaining $807,000 has been  and will be used  for
 the Company's ongoing working capital needs.

 Critical Accounting Policies

 The consolidated financial  statements include accounts  of our Company  and
 all  of  our  majority-owned  subsidiaries.  The  preparation  of  financial
 statements in conformity  with accounting principles  generally accepted  in
 the United States requires us to  make estimates and assumptions in  certain
 circumstances that affect amounts reported in the accompanying  consolidated
 financial statements and  related footnotes.   In preparing these  financial
 statements, we have made our best estimates and judgments of certain amounts
 included  in  the   financial  statements,  giving   due  consideration   to
 materiality.  We do not believe there is a great likelihood that  materially
 different amounts  would  be reported  related  to the  accounting  policies
 described below.  However, application of these accounting policies involves
 the exercise of judgment and use  of assumptions as to future  uncertainties
 and, as a result, actual results could differ from these estimates.

 Revenue Recognition

 Our revenues are generated at the time a customer uses our network to make a
 phone call.   We sell our  services to SMEs  and end-users  who utilize  our
 network for  international re-origination  and  dial thru services,  and  to
 other providers of long  distance usage who utilize  our network to  deliver
 domestic and international  termination of minutes  to their own  customers.
 At times we receive  payment from our customers  in advance of their  usage,
 which we record as deferred revenue, recognizing revenue as calls are  made.
 The Securities and Exchange Commission's Staff Accounting Bulletin No.  101,
 "Revenue Recognition",  provides guidance  on the  application of  generally
 accepted accounting principles to selected  revenue recognition issues.   We
 have concluded that  our revenue recognition  policy is  appropriate and  in
 accordance with generally accepted accounting principles and SAB No. 101.

 Allowance for Uncollectible Accounts Receivable

 Accounts receivable are reduced by an allowance for amounts that may  become
 uncollectible in the future.  All of our receivables are due from commercial
 enterprises  and  residential  users  in  both  domestic  and  international
 markets.   The  estimated  allowance  for  uncollectible  amounts  is  based
 primarily on our evaluation of the financial condition of the customer,  and
 our estimation of the customer's willingness to pay amounts due.  We  review
 our credit  policies  on  a regular  basis  and  analyze the  risk  of  each
 prospective customer individually in order to minimize our risk.

 Goodwill, Intangible and Other Long-Lived Assets

 Property, plant  and  equipment,  certain intangible  and  other  long-lived
 assets are amortized over their useful lives.  Useful lives are based on our
 estimate of the period that the  assets will generate revenue.  Goodwill  is
 assessed for impairment at  least annually and  other intangible assets  are
 reviewed for impairment whenever events or changes in circumstances indicate
 that the carrying amount of an asset may not be recoverable.

 Financing,  Warrants   and  Amortization   of   Warrants  and   Fair   Value
 Determination

 We have traditionally financed our operations  through the issuance of  debt
 instruments that are convertible into our common stock, at conversion  rates
 at or  below the  fair market  value of  our  common stock  at the  time  of
 conversion,  and  typically  include  the issuance  of  warrants.   We  have
 recorded these  financing transactions  in accordance  with Emerging  Issues
 Task Force No. 00-27.  Accordingly,  we recognize the beneficial  conversion
 feature imbedded  in  the financings  and  the  fair value  of  the  related
 warrants on the  balance sheet  as deferred  financing fees.   The  deferred
 financing fee is amortized over the life of the respective debt instrument.

 Carrier Disputes

 We review our  vendor bills  on a  monthly basis  and periodically  disputes
 amounts invoiced by  its carriers.   Prior to the  second quarter of  fiscal
 2001, we recorded as trade accounts  payable the entire amounts owed to  our
 vendors, including amounts in dispute.   Any disputes resolved and  credited
 to us were recorded as other income at the  time the credit was issued.   We
 subsequently changed  our  policy  to  record  cost  of  revenues  excluding
 disputed amounts.  We review our  outstanding disputes on a quarterly  basis
 as part of the overall review of  our accrued carrier costs, and adjust  our
 liability based on management's estimate of amounts owed.

 Revenues

 Our primary  source  of  revenue  is  the sale  of  voice  and  fax  traffic
 internationally over  our  VoIP  network,  which  is  measured  in  minutes,
 primarily to SMEs, residential  users, and wholesale  customers.  We  charge
 our customers a fee per minute of usage that is dependent on the destination
 of the call and is recognized in the period in which the call is completed.

 Expenses

 Our costs  of revenues  are termination  fees, purchased  minutes and  fixed
 costs for specific international and domestic Internet circuits and  private
 lines used to  transport our  minutes. Termination  fees are  paid to  local
 service providers and other international and domestic carriers to terminate
 calls received from our network. This  traffic is measured in minutes, at  a
 negotiated contract cost per minute.

 General and administrative expenses include salaries, payroll taxes, benefit
 expenses and  related  costs  for  general  corporate  functions,  including
 executive management,  finance  and administration,  legal  and  regulatory,
 information technology  and human  resources. Sales  and marketing  expenses
 include salaries, payroll taxes,  benefits and commissions  that we pay  for
 sales  personnel   and  advertising   and  marketing   programs,   including
 expenses relating to our  outside public relations  firms. Interest  expense
 and financing  costs  relate  primarily  to  the  amortization  of  deferred
 financing fees on our various debt instruments.

<PAGE>
<TABLE>

 Quarterly Results of Operations

 The following table sets forth selected unaudited quarterly information  for
 our last eight fiscal quarters:

                                                         Quarter Ended
                                     January 31     April 30       July 31     October 31       Year
                                          $             $             $             $             $
                                      ---------     ---------     ---------     ---------     ----------
 <S>                                 <C>           <C>           <C>           <C>           <C>
 2002
  Revenue                             6,586,754     6,086,154     6,138,790     6,059,234     24,870,932
  Loss from operations               (1,002,479)     (922,941)     (727,007)     (734,107)    (3,386,534)
  Net loss                           (1,285,893)   (1,239,814)   (1,082,615)   (1,075,858)    (4,684,180)
  Basic and diluted loss
    per share from operations             (0.10)        (0.09)        (0.08)        (0.07)         (0.34)

 2001
  Revenue                               890,620       903,639     1,654,079     3,553,524      7,001,862
  Loss from operations                 (991,223)     (682,600)     (497,762)   (1,159,563)    (3,331,148)
  Net Income (loss)                     382,191    (1,193,171)     (594,871)   (1,278,455)    (2,684,306)
  Basic and diluted income (loss)
    per share from operations              0.03         (0.11)        (0.05)        (0.12)         (0.25)

</TABLE>

 Results of Operations - 2002 Versus 2001

 Due to the Rapid Link acquisition in October 2001, our Results of Operations
 for  fiscal  year  2002  includes  a  full year of related operations, while
 fiscal year 2001 includes one month of related operations.


 Revenues

 For our fiscal year ended October 31, 2002, we had revenues of  $24,870,000,
 an increase of $17,870,000, or 255%, over the same period in 2001.  Revenues
 for the fiscal  year ended October  31, 2002  include $21,540,000  resulting
 from the customers  and infrastructure acquired  from Rapid Link.  Recurring
 revenues not related to Rapid Link were  reduced in our 2002 fiscal year  by
 $1,005,000, primarily due to the loss of business from two large  resellers.
 In absolute dollars, our retail and wholesale revenues increased by 236% and
 282%, respectively, for the fiscal year  ended October 31, 2002 compared  to
 the  prior  fiscal  year.   In  addition  to  the  growth  obtained  by  the
 acquisition  of  Rapid  Link,  we  have  successfully  added  new  wholesale
 customers and new international points of termination.  Furthermore, we have
 added to our wholesale sales force to focus on developing greater  wholesale
 opportunities.  We also plan on using our advertising credits to promote our
 retail products through  focused advertising targeted  at ethnic markets  in
 the United States.

 Expenses

 For the fiscal year  ended October 31,  2002, we had  total direct costs  of
 revenues of $16,590,000, an increase of $11,620,000, or 234%, over the  same
 period in 2001.  Costs of revenues have increased in absolute dollars due to
 the growth in  minutes and customers  as well as  the increased revenue  and
 traffic acquired from  Rapid Link.   As a percentage  of revenues, costs  of
 revenues were 67%  of revenues for  the fiscal year  ended October 31,  2002
 compared to 71%  of revenues  for the fiscal  year ended  October 31,  2001.
 Included in  our cost of revenues for fiscal year 2002 are credits  received
 from two vendors totaling $729,000  relating to disputes for minutes  billed
 in  error for periods prior to fiscal 2002.  Without these credits, costs of
 revenues  as  a percentage of revenues for the fiscal year ended October 31,
 2002 would have been 70%.  Our costs of revenues as a percentage of revenues
 have  improved  slightly as  the  retail  revenue acquired  from Rapid  Link
 realizes  higher  margins  than  our  existing  retail traffic.  This margin
 improvement  has  been  reduced in part  by growth in our wholesale traffic.
 Costs  of revenues as  a percentage of revenues will fluctuate depending  on
 the traffic mix  between our wholesale and retail products.

 General and administrative expenses were  $7,511,000 and $3,464,000 for  the
 fiscal years ended October 31, 2002  and 2001, respectively.  This  absolute
 dollar increase of $4,047,000, or 117%, is primarily due to the addition  of
 the Rapid  Link  operations.   As  a  percentage of  revenues,  general  and
 administrative expenses were 30%  and 49% of revenues  for the fiscal  years
 ended October 31,  2002 and  2001, respectively.   Included  in general  and
 administrative expenses is bad debt expense of $994,000 and $140,000 for the
 fiscal years October 31, 2002 and  2001, respectively.  For the 2002  fiscal
 year, bad debt  expense includes $525,000  attributable to non-payment  from
 two wholesale customers, including $310,000 from  our German operation.   We
 have implemented strict credit policies and  systems to closely monitor  our
 wholesale traffic daily  to reduce  the risk  of this  type of  bad debt  in
 future periods.   We  also review  our general  and administrative  expenses
 regularly, and  continue to  manage the  costs  accordingly to  support  the
 current business as well as anticipated near term growth.

 Sales and marketing  expenses were  $1,399,000, or  6% of  revenues for  the
 fiscal year ended October 31, 2002 compared to $824,000, or 12% of revenues,
 for the same period last year.   This absolute dollar increase of  $575,000,
 or 70%,  is  due to  the  acquisition of  the  Rapid Link  operations.  This
 reduction of our sales and marketing expenses as a percentage of revenues is
 primarily due to the increase in wholesale customer revenues as a percentage
 of our total revenues.  A majority of our  retail revenues are generated  by
 outside agents, or  through newspaper and  periodical advertising, which  is
 managed by a small  in-house sales and marketing  group.  Alternatively,  we
 can  generate  significant  revenues   from  our  wholesale  business   with
 relatively few sales  personnel, as  wholesale customers  are usually  large
 international telecommunications  companies  that provide  both  retail  and
 wholesale opportunities to millions of customers worldwide.

 Depreciation and amortization expenses increased to $2,437,000 from $818,000
 for the fiscal years  ended October 31, 2002  and 2001, respectively.   This
 increase primarily  relates  to the  depreciation  and amortization  of  the
 assets of  the  business  acquired  from  Rapid  Link.  A  majority  of  our
 depreciation and amortization expenses relate  to the equipment utilized  in
 our VoIP  network.  In accordance with Statement of Accounting Standards No.
 142, effective November 1, 2001,  we  no  longer  amortize goodwill.  Had we
 amortized  goodwill  for fiscal year 2002, we would have recognized $220,000
 in additional amortization expense.

 For the fiscal year ended October  31, 2002, interest expense and  financing
 costs of  $1,275,000 were  due primarily  to  the amortization  of  deferred
 financing fees on  our convertible debentures  and our  related party  notes
 payable.  For the  fiscal year ended October  31, 2001 $709,000 of  interest
 expense and financing  fees were primarily  attributable to amortization  of
 deferred financing fees  associated with  our convertible  notes which  were
 converted to equity in March 2001, and the fair value of additional warrants
 issued to the holders of the  notes which were fully  vested at the time  of
 issuance.

 Settlements with two major carriers over  charges in prior periods  amounted
 to a total  credit to  the statements of  operations of  $1,789,000 for  the
 fiscal year ended October 31, 2001.  Of this amount, $780,000 was the result
 of a settlement with  Star Telecommunications.   Also included was  $447,000
 representing common stock received from Star in connection with our  dispute
 settlement. This amount was subsequently written  off due to the Chapter  11
 bankruptcy filing by Star.

 As a result of the foregoing, we incurred a net loss of $4,684,000, or $0.34
 per share, for the fiscal year ended  October 31, 2002, compared with a  net
 loss of $2,684,000 or $0.25 per share, for the fiscal year ended October 31,
 2001.


 Results of Operations - 2001 Versus 2000

 Revenues

 For the fiscal year ended October 31, 2001, we had revenues from  continuing
 operations of $7,002,000, a decrease of $1,589,000 or 19% over fiscal  2000.
 Revenues in 2001 included  $1,572,000 resulting from  the purchase of  Rapid
 Link.  Our international long distance business as described above generated
 revenues of $5,429,000 for the fiscal  year ended October 31, 2001  compared
 to $5,836,000 for  the fiscal year  ended October 31,  2000.  The  remaining
 revenue for 2000 of  $2,755,000 was derived from  the prepaid long  distance
 business that we have discontinued. Resources devoted to the discontinuation
 of the prepaid  business, as well  as a shift  in our  strategic focus  have
 prevented us from  fully developing and  marketing our redirected  business,
 resulting in a slight decline in  revenues from international long  distance
 services.  We  now devote all  of our resources  to providing  international
 communication services in niche markets to SME's either through direct sales
 efforts, outside sales agents or resellers in each market.

 Expenses

 For the fiscal year  ended October 31,  2001, we had  total direct costs  of
 revenues relating to  revenues from continuing  operations of $4,967,000,  a
 decrease of $5,004,000, or 50%, from $9,971,000 in fiscal 2000.  Included in
 the cost is $1,194,000 attributable to Rapid Link operations.  In  addition,
 during the fiscal year ended October  31, 2001 we received credits from  our
 vendors totaling $1,340,000,  including a $780,000  carrier usage credit  as
 part of  our settlement  of litigation  with Star  Telecommunications.  This
 amount was included  as a  reduction of costs  of revenues.   Excluding  the
 impact of Rapid  Link and the  credits from our  vendors, costs of  revenues
 were $3,773,000 or 69%  of revenues, for the  fiscal year ended October  31,
 2001, compared to $9,971,000, or 116% of revenues, for the fiscal year ended
 October 31, 2000.   A substantial portion of  this negative margin for  2000
 related to our sale of prepaid phone cards for use between the United States
 and Mexico.  Changes in competitive pricing structures combined with changes
 in predicted  average call  durations resulted  in carrier  costs  exceeding
 revenues.  By  focusing our business  away from low  margin prepaid  calling
 cards to delivering  higher margin international  communication services  to
 SME's in niche markets utilizing our  VoIP network, we have realized  higher
 margins on sales across our product lines.

 General and administrative expenses were  $3,464,000 and $5,202,000 for  the
 fiscal years  ended October  31, 2001  and October  31, 2000,  respectively.
 This decrease of $1,738,000, or 33% includes $539,000 attributable to  Rapid
 Link operations.  Excluding the expenses associated with Rapid Link, general
 and administrative expenses  decreased by 44%  from the prior  period.   The
 change in our  business away from  prepaid calling cards,  which requires  a
 larger infrastructure to support and control a large volume of transactions,
 as well as our decision to  consolidate our US operations into one  location
 has resulted in an  overall drop in general  and administrative expenses  in
 absolute dollars.  It is anticipated that general and administrative expense
 will grow in absolute dollars and as  a percentage of revenues in the  short
 term due to the  acquisition of Rapid  Link, as a  majority of the  acquired
 infrastructure supports a large retail customer base.

 Sales and  marketing expenses  were $824,000,  or 12%  of revenues  for  the
 fiscal year  ended  October  31,  2001, compared  to  $863,000,  or  10%  of
 revenues, for  the  same period  in  fiscal 2000.   Included  in  sales  and
 marketing  expenses  for  2001  is   $16,000  attributable  to  Rapid   Link
 operations.  The increase in sales and marketing as a percentage of revenues
 is the result of our investment  in startup operations in Latin America.  In
 addition, Rapid  Link  uses  newspapers and  periodicals  to  advertise  its
 services, which we will continue and increase in order to grow the  acquired
 customer base.

 Depreciation and amortization expenses attributable to continuing operations
 increased $253,000 or 45%, from $565,000  for the fiscal year ended  October
 31, 2000 to $818,000 for the  fiscal year ended October  31, 2001.  Of  this
 increase, $195,000  relates  to the  depreciation  and amortization  of  the
 assets of the business acquired from Rapid Link.  The remaining increase  of
 $58,000  is  attributable  to  the  increase  in  depreciation  expense  for
 telephone switching equipment, which was purchased  in late fiscal 1999,  as
 well as the amortization of goodwill related to the DTI Acquisition.

 The fiscal 2000 and 2001 interest  expense is primarily attributable to  our
 $1.0 million convertible notes, which  had original deferred financing  fees
 totaling $609,000, and were  being amortized over a  three year period.  The
 notes were converted to equity in March 2001, and the remaining  unamortized
 deferred financing fees of $315,000 were charged to expense.   In connection
 with the conversion of the notes into equity, we issued 150,000 warrants  to
 the note holders on March 13, 2001, and recorded $144,000 as the fair  value
 of the  warrants.   This amount  was recorded  as interest  expense for  the
 fiscal year ended  October 31, 2001.   In addition,  during fiscal 2001,  we
 incurred $150,000 in financing fees  relating to our convertible  debenture,
 which was issued  in April,  2001.   These financing  fees include  $144,000
 relating to  a beneficial  conversion feature  provided  by our  April  2001
 convertible  debenture  agreement,  which   provides  for  a  below   market
 conversion of 30% applied to  the fair market value  of our common stock  at
 each conversion of the convertible debenture.

 As a result of the  foregoing, we incurred a  net loss $2,684,000, or  $0.25
 per share, for the fiscal year ended  October 31, 2001, compared with a  net
 loss of $11,187,000, or $1.31 per  share, for the fiscal year ended  October
 31, 2000.


 Liquidity and Sources of Capital

 The growth model for our  business is scaleable, but  the rate of growth  is
 dependent on the  availability of  future financing  for capital  resources.
 Our funding  of  additional  infrastructure  development  will  be  provided
 through the  operations of  our Telecommunications  Business and  externally
 through debt and/or equity  offerings.  We plan  to obtain vendor  financing
 for any equipment needs associated with  expansion.   We believe that,  with
 sufficient capital, we can  significantly accelerate our  growth plan.   Our
 failure to obtain additional financing could delay the implementation of our
 business plan and have a material adverse effect on its business,  financial
 condition and operating results.

 At October  31, 2002,  we had  cash and  cash equivalents  of  approximately
 $489,000, an increase of $394,000 from the balance at October 31, 2001.   As
 of October  31, 2002,  we had  a working  capital deficit  of  approximately
 $6,879,000,  compared  to  a   working  capital  deficit  of   approximately
 $6,524,000 at October 31, 2001.  As of October 31, 2002, our current  assets
 of  approximately   $2,006,000   included   net   accounts   receivable   of
 approximately $1,370,000, which has decreased over the balance of $1,833,000
 at October 31, 2001  primarily due to  a writeoff of  $215,000 for a  single
 wholesale  customer  in  the  first  quarter of  fiscal  2002.   As  revenue
 increases, we  do not  anticipate a  commensurate increase  in our  accounts
 receivable as a majority of our customers pay in advance for service, or  on
 a weekly basis.

 Net cash used  in operating activities  was $1,202,000 for  the fiscal  year
 ended October  31, 2002,  compared to  $950,000 for  the fiscal  year  ended
 October 31, 2001.  The net cash used in operating activities for the  fiscal
 year ended October 31, 2002  was primarily due to  a net loss of  $4,684,000
 adjusted for: bad  debt expense of  $994,000; non-cash  interest expense  of
 $924,000; depreciation and  amortization of $2,437,000;  and net changes  in
 operating assets and liabilities of ($1,199,000).  For the fiscal year ended
 October 31, 2001, the net cash used in operating activities was comprised of
 a net  loss of  $2,684,000 adjusted  for: depreciation  and amortization  of
 $818,000; stock  and  warrants issued  for  services of  $259,000;  non-cash
 interest expense of $598,000; non-cash vendor credit of ($780,000); and  net
 changes in operating assets and liabilities of $713,000.

 During the  fiscal  year  ended  October 31,  2002,  net  cash  provided  by
 investing activities was $1,008,000, compared to net cash used in  investing
 activities of $1,556,000 for  the fiscal year ended  October 31, 2001.   The
 net cash provided  by investing activities  for the year  ended October  31,
 2002 is primarily attributable to a refund of a license fee previously  paid
 on behalf of our German subsidiary of $1,425,000.  The investing  activities
 for the year ended October 31, 2001 included approximately $1.5 million used
 for the purchase of  Rapid Link. Investing  activities also include  capital
 expenditures of $417,000 and $61,000 for the fiscal years ended October  31,
 2002 and 2001, respectively.

 Net cash provided by financing activities for the fiscal year ended  October
 31, 2002, totaled $588,000, compared to $2,528,000 for fiscal 2001.  For the
 fiscal year  ended October  31, 2002,  significant  components of  net  cash
 provided by financing  activities include $550,000  in net  proceeds from  a
 convertible debenture, $300,000 in proceeds from a shareholder note payable,
 offset by $184,000 in payments on  capital leases, and  $93,000 of financing
 fees.   For  the  fiscal  year  ended  October  31,  2001,  the  significant
 components of net cash provided  by financing activities include  $1,000,000
 in net  proceeds  from  the issuance  of  our  convertible  debentures,  and
 proceeds of $1,599,000 from notes issued to three of our executives,  offset
 primarily by $106,000 in payments on capital leases.

 We have an accumulated deficit of approximately $40.6 million as of  October
 31, 2002,  as  well as  a  working  capital deficit  of  approximately  $6.9
 million.   Funding  of  our working  capital  deficit,  current  and  future
 operating losses, and expansion will require continuing capital  investment.
 Our strategy is  to fund these  cash requirements  through operations,  debt
 facilities and additional equity financing.  As of the date of this report:

   1) We  obtained  additional financing  of  $1,250,000  in  November  2002.
      Since the beginning of April 2001, we have raised $4.7 million in  debt
      financing.
   2) We have negotiated payment terms of approximately $400,000 of our  past
      due trade payables with one of our largest vendors, and we have  agreed
      to remit equal  monthly installments in  excess of  our normal  monthly
      usage billing.   We  have also  settled  a dispute  with a  vendor  and
      thereby reduced our accounts  payable by approximately $700,000,  which
      is reflected in the October 31, 2002 balance sheet.
   3) During fiscal year 2002,  our  German  subsidiary  received  a  net  $1
      million refund for a license fee previously paid, which was used to pay
      down past due liabilities.

 Although we have been able to  arrange debt facilities and equity  financing
 to date, there can be no assurance that sufficient debt or equity  financing
 will continue to be available in the future or that it will be available  on
 terms acceptable  to  us.    Failure  to  obtain  sufficient  capital  could
 materially affect our operations and expansion  strategies.  As a result  of
 the aforementioned factors and related uncertainties, there is  considerable
 doubt about our ability to continue as a going concern.

 Our current capital expenditure requirements are not significant,  primarily
 due to the equipment acquired from Rapid Link.  Our capital expenditures for
 the fiscal  year  ended  October  31,  2002 were  $507,000  and  we  do  not
 anticipate significant spending for fiscal 2003.

 On April 11, 2001, we executed a 6% convertible debenture  (the "Debenture")
 with  Global  Capital  Funding  Group  L.P,   which  provided  financing  of
 $1,000,000.  The  Debenture's  maturity date was April 11, 2003.  Subsequent
 to fiscal year 2002, this debenture was paid in full through the issuance of
 a subsequent loan from Global Capital Funding Group, L.P.

 In October 2001, we executed 10% convertible notes (the "Notes") with  three
 of our executives, which provided financing of $1,945,958.  With an original
 maturity  date  of  October 24, 2003,  these  Notes  were amended subsequent
 to  fiscal  year  2002 and now mature on February 24, 2004.  These Notes are
 secured by selected Company assets and are convertible into our common stock
 at the option of the holder  at any  time prior to maturity.  The conversion
 price  is  equal  to the closing  bid price of  our common stock on the last
 trading  day immediately preceding the  conversion.  We  also  issued to the
 holders of the Notes warrants to acquire an aggregate of 1,945,958 shares of
 common stock at an exercise price of $0.78 per share,  which warrants expire
 on  October 24, 2006.  For the year ended October  31, 2002,  an  additional
 $402,433  was  added to  the  Notes and  an  additional  402,433 warrants to
 acquire our common stock were issued in connection  with the financing.

 On January 28,  2002, we executed  a 6% convertible  debenture (the  "Second
 Debenture") with  GCA  Strategic  Investment Fund  Limited,  which  provided
 financing of $550,000.  With  an original maturity date of January 28, 2003,
 the  Second Debenture was  amended  subsequent  to  fiscal year 2002 and now
 matures on February 24, 2004.  The conversion price is equal  to  the lesser
 of  (i) 100%  of the volume weighted average  of sales price as reported  by
 the Bloomberg L.P.  of  the common stock on the last trading day immediately
 preceding the Closing  Date ("Fixed Conversion Price")  and (ii)  85% of the
 average  of  the  three  (3) lowest volume weighted average  sales prices as
 reported by Bloomberg  L.P. during the twenty  (20) Trading Days immediately
 preceding but not  including the date of  the related  Notice of  Conversion
 ("the  "Formula  Conversion  Price").  In an event  of  default  the  amount
 declared due and payable on the Debenture shall be at the Formula Conversion
 Price.


 Item 7a. Quantitative and Qualitative Disclosures About Market Risk

 We provide services primarily to customers located outside of the U.S. Thus,
 our financial results could be impacted  by foreign currency exchange  rates
 and market conditions abroad. As most of  our services are paid for in  U.S.
 dollars, a strong dollar could make the cost of our services more  expensive
 than the services of  non-U.S. based providers in  foreign markets. We  have
 not used derivative instruments to hedge  our foreign exchange risks  though
 we may choose to do so in the future.


 Item 8. Financial Statements and Supplementary Data

 The information required by Item 8 of this Report is presented at pages  F-1
 to F-5.


 Item 9.  Changes in  and Disagreements  with Accountants  on Accounting  and
 Financial Disclosure

 A change in our accountants was  previously reported in a current report  on
 Form 8-K filed on November 7, 2001, August 2, 2002 and August 23, 2002.


                                   PART III


 Item 10. Directors and Executive Officer of the Registrant


 The following table sets forth  certain  information regarding our executive
 officers and directors.


               Name             Age       Position with the Company
          ---------------       ---       --------------------------------
          John Jenkins          41        Chairman, Chief Executive
                                          Officer, President and Director
          Allen Sciarillo       38        Executive Vice President, Chief
                                          Financial Officer, Secretary and
                                          Director
          Lawrence Vierra       57        Executive Vice President and
                                          Director
          Robert M. Fidler      63        Director
          Nick DeMare           47        Director
          David Hess            41        Director


 JOHN JENKINS has  served as our  Chairman of the  Board and Chief  Executive
 Officer since October 2001, and has  served as our President and a  director
 since December 1999.  Mr. Jenkins has  also served as the President of  Dial
 Thru.com, Inc., one of our subsidiaries, since November 1999.  In May  1997,
 Mr.  Jenkins  founded  Dial  Thru  International  Corporation  (subsequently
 dissolved in November 2000), and served as its President and Chief Executive
 Officer until  joining us  in November  1999.   Prior to  1997, Mr.  Jenkins
 served as  the  President  and  Chief  Financial  Officer  for  Golden  Line
 Technology, a  French telecommunications  company.   Prior to  entering  the
 telecommunications  industry,  Mr.  Jenkins   owned  and  operated   several
 software, technology and real estate companies.   Mr. Jenkins holds  degrees
 in physics and business/economics.

 ALLEN SCIARILLO  has  been  our  Chief  Financial  Officer,  Executive  Vice
 President and Secretary since July 2001 and was elected as a director in May
 2002.  From  January to March  2001, Mr. Sciarillo  was the Chief  Financial
 Officer  of  Star  Telecommunications,   Inc.,  a  global   facilities-based
 telecommunications carrier.   Prior to that  time, Mr.  Sciarillo served  as
 Chief Financial  Officer of  InterPacket Networks,  a provider  of  Internet
 connectivity to Internet service providers  worldwide, from July 1999  until
 its acquisition  by  American Tower  Corporation  in  December  2000.   From
 October 1997  to  June 1999,  he  served  as  Chief Financial Officer of RSL
 Com  USA,  a  division  of  RSL   Com   Ltd.,   a  global   facilities-based
 telecommunications carrier.  Prior  to joining RSL,  Mr. Sciarillo was  Vice
 President and Controller of Hospitality  Worldwide Services, Inc. from  July
 1996 to October 1997.  Mr. Sciarillo  began his career at Deloitte &  Touche
 and is a Certified Public Accountant.

 LAWRENCE VIERRA has served  as our Executive Vice  President and a  director
 since January  2000.   From 1995  through  1999, Mr.  Vierra served  as  the
 Executive  Vice  President   of  RSL   Com  USA,   Inc.,  an   international
 telecommunications  company,  where   he  was   primarily  responsible   for
 international sales.  Mr. Vierra has  also served on the board of  directors
 and executive committees of various telecommunications companies and he  has
 extensive knowledge and experience in the international sales and  marketing
 of telecommunications products and  services.  Mr.  Vierra holds degrees  in
 marketing and business administration.

 ROBERT M. FIDLER  has served as  one of our  directors since November  1994.
 Mr. Fidler joined Atlantic Richfield Company (ARCO) in 1960, was a member of
 ARCO's executive management team from 1976 to 1994 and was ARCO's manager of
 New Marketing Programs from 1985 until his retirement in 1994.

 NICK DEMARE has served as  one of our directors  since January 1991.   Since
 May 1991, Mr. DeMare has been  the President and Chief Executive Officer  of
 Chase Management  Ltd.,  a  private  company  providing  a  broad  range  of
 administrative, management  and financial  services  to private  and  public
 companies with  varied interests  in  mineral exploration  and  development,
 precious and  base  metals production,  oil  and gas,  venture  capital  and
 computer software.   Mr. DeMare  has served and  continues to  serve on  the
 boards of a  number of  Canadian public companies,  three of  which are  SEC
 reporting  companies;  Hilton  Petroleum,  Ltd.,  Trimark  Energy  Ltd.  and
 California Exploration Ltd.  Mr. DeMare is a Chartered Accountant (Canada).

 DAVID HESS  was  elected  to our  board  of  directors  in May  2002.   From
 November 2001 until December  2002, Mr. Hess served  as the Chief  Executive
 Officer and President,  North America of  Telia International Carrier,  Inc.
 Prior to joining Telia, Mr. Hess was part of a turnaround team hired by  the
 Board of  Directors of  Rapid Link  Incorporated.   He served  as the  Chief
 Executive Officer and as a director  of Rapid Link Incorporated from  August
 2000 until September 2001.  On March 13, 2001, Rapid Link Incorporated filed
 for Chapter 11 bankruptcy protection.   Before joining Rapid Link, Mr.  Hess
 served as  Chief  Executive  Officer of  Long  Distance  International  from
 January 1999 until its  acquisition by World Access  in February 2000.   Mr.
 Hess also served as  President and Chief Operating  Officer of TotalTel  USA
 from May 1995 until January 1999.  Mr. Hess received a BA in  Communications
 with a Minor in Marketing from Bowling Green State University.

 Meetings of the Board of Directors

 Our Board  of  Directors held  one  meeting  during the  fiscal  year  ended
 October 31, 2002.  The  Board of Directors has  two standing committees:  an
 Audit  Committee  and  a  Compensation  Committee.   There  is  no  standing
 nominating committee.   Each of the  directors attended the  meeting of  the
 Board of Directors and all meetings of any committee on which such  director
 served.

 Compliance with Section 16(a) of the Securities Exchange Act of 1934

 Section 16(a) of the Exchange Act requires our directors, executive officers
 and persons who own more than 10% of our  common stock to file with the  SEC
 initial reports of  ownership and  reports of  changes in  ownership of  our
 common  stock  and  other  equity  securities  of  our  Company.   Officers,
 directors and  greater than  10% stockholders  are required  by  regulations
 promulgated by  the SEC  to furnish  us  with copies  of all  Section  16(a)
 reports they file.  Based solely on the review of such reports furnished  to
 us and  written representations  that no  other  reports were  required,  we
 believe that during the  fiscal year ended October  31, 2002, our  executive
 officers, directors and  all persons  who own more  than 10%  of our  common
 stock complied with all Section 16(a) requirements.


 Item 11. Executive Compensation

      The following table summarizes the  compensation we paid, for  services
 rendered to our Company during the fiscal years ended October 31, 2002, 2001
 and 2000, to our  chief executive officer and  all other executive  officers
 whose total annual salary and bonus exceeded $100,000 during fiscal 2002.

<TABLE>

                                 Summary Compensation Table
                                                                Long Term
                                   Annual Compensation         Compensation
                                   -------------------           Awards
                                                               Securities
                                                               Underlying
 Name and principal             Salary   Bonus  Other annual  Options/SARs    All other
     position           Year     ($)      ($)   compensation       (#)     Compensation ($)
 ------------------------------------------------------------------------------------------
 <S>                    <C>    <C>        <C>       <C>         <C>            <C>
 John Jenkins           2002   181,042    -0-       -0-             -0-           -0-
 Chairman, CEO          2001   108,833    -0-       -0-         700,000           -0-
 and President          2000   175,950    -0-       -0-             -0-        1,599 (1)

 Allen Sciarillo        2002   141,667    -0-       -0-             -0-           -0-
 Executive Vice         2001       -0-    -0-       -0-         500,000           -0-
 President and Chief    2000       -0-    -0-       -0-             -0-            0-
 Financial Officer


  (1) Includes compensation associated with supplemental long-term disability
      insurance and matching 401(k) plan contributions we paid.


  Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
                                    Values

      The following table sets forth information  with respect to the  number
 of options held at fiscal year  end and the aggregate value of  in-the-money
 options held at fiscal year end by each of the Named Executive Officers.


                  Shares                  Number of securities           Value of unexercised in-
                acquired on   Value    underlying unexercised options  the-money options at fiscal
                 exercise    realized    at fiscal year end (#)             year end ($) (2)
     Name          (#)       ($)(1)    Exercisable      Unexercisable  Exercisable    Unexercisable
 -------------- -----------  --------  -----------      -------------  -----------    -------------
 <S>               <C>         <C>       <C>              <C>              <C>             <C>
 John Jenkins      -0-         -0-       233,333          466,667          -0-             -0-
 Allen Sciarillo   -0-         -0-       166,667          333,333          -0-             -0-


 (1)   The value realized upon  the exercise of stock options represents  the
 difference between  the exercise  price of  the stock  option and  the  fair
 market value of the shares, multiplied by the number of options exercised on
 the date of exercise.

 (2)   The value  of "in-the-money"  options represents  the positive  spread
 between the exercise price of  the option and the  fair market value of  the
 underlying shares based on  the closing stock price  of our common stock  on
 October 31, 2002, which was $0.12 per share.  "In-the-money" options include
 only those options where the fair market  value of the stock is higher  than
 the exercise price of the option on  the date specified.  The actual  value,
 if any, an executive realizes on the exercise of options will depend on  the
 fair market value of our common stock at the time of exercise.

</TABLE>


 Compensation of Directors

 Each of our  directors who  is not one  of our  officers receives  a fee  of
 $1,500 for each Board meeting attended.   Directors are not compensated  for
 attending committee meetings.  Our directors also participate in our  Equity
 Incentive Plan and are annually awarded  non-qualified stock options for  an
 aggregate of 5,000 shares of our  common stock for services rendered to  our
 company as a director.

 Committees of the Board of Directors

 During our 2002 fiscal  year, our Audit Committee  consisted of Nick  DeMare
 and Robert Fidler.  The Audit  Committee makes recommendations to our  Board
 of Directors  or management  concerning the  engagement of  our  independent
 public accountants and  matters relating  to our  financial statements,  our
 accounting principles and our system of  internal accounting controls.   The
 Audit Committee also  reports its  recommendations to  our Board  as to  the
 approval of our financial statements.  The Audit Committee held one  meeting
 during the fiscal year ended October 31, 2002, during which all members were
 in attendance.

 During our 2002 fiscal  year, our Compensation  Committee consisted of  Nick
 DeMare and Robert  Fidler.  The  Compensation Committee  is responsible  for
 considering and  making recommendations  to  our Board  regarding  executive
 compensation and is also responsible for administration of our stock  option
 and executive incentive compensation plans.  The Compensation Committee held
 no meetings during the fiscal year ended October 31, 2002.

           COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

 The Compensation Committee is  responsible for implementing, overseeing  and
 administering  the  Company's   overall  compensation   policy.  The   basic
 objectives of that policy  are to (a) provide  compensation levels that  are
 fair and competitive with peer companies, (b) align pay with performance and
 (c)  where  appropriate,  provide   incentives  which  link  executive   and
 stockholder interests and long-term corporate objectives through the use  of
 equity-based incentives.  Overall, the  compensation program is designed  to
 attract, retain and motivate high quality  and experienced employees at  all
 levels.  The principal elements of  executive officer compensation are  base
 pay, bonus and  stock options, together  with health  benefits. The  various
 aspects of  the compensation  program, as  applied  to the  Company's  Named
 Executive Officers, are outlined below.

 Executive  officer  compensation  is,  in  large  part,  determined  by  the
 individual officer's ability to achieve  his or her performance  objectives.
 Each  of  the  Company's  Named  Executive  Officers   participates  in  the
 development of an annual business strategy from which individual  objectives
 are established and performance goals are measured periodically.  Initially,
 the objectives  are  proposed  by the  particular  officer  involved.  Those
 objectives are then  determined by the  Chief Executive Officer  or, in  the
 case of Mr. Jenkins's objectives, by the Board of Directors.

 Base Pay

 Initially, base pay  was established at  levels that were  considered to  be
 sufficient to  attract experienced  personnel but  which would  not  exhaust
 available resources. As the Company grows, the compensation focus  continues
 to emphasize other areas of compensation. Executive officers understand that
 their principal  opportunities  for  substantial  compensation  lay  not  in
 enhanced base  salary,  but rather  through  appreciation in  the  value  of
 previously granted stock options.   Thus, base pay  has not represented  the
 most critical element of executive officer compensation.

 Mr. Jenkins, the  Company's President  and Chief  Operating Officer  through
 September 2001, was promoted to  the position of CEO  in October 2001.   Mr.
 Jenkins' base pay  for fiscal  2001 and 2002  was established  at an  amount
 considered  below market  in  comparison  to executive  compensation  levels
 for companies  of  similar size  and maturity.  The  Compensation  Committee
 established, and  Mr. Jenkins  accepted, below  market compensation  at  the
 beginning of  fiscal 2001,  based on  a variety  of factors,  including  the
 performance of the Company, the ability of the Company to obtain funding  to
 support its operational  cash flow requirements,  and a desire  to save  the
 Company the  expense of  compensation at  market levels.   The  Compensation
 Committee set Mr. Jenkins' salary at $100,000 per annum for fiscal 2001, and
 $150,000 for 2002, compared to $175,950 for fiscal 2000.

 Bonus

 The Compensation Committee has determined that a cash incentive plan will be
 implemented when the Company is able to achieve positive operating results.

 Stock Options

 The Compensation  Committee  believes  that a  stock  option  plan  provides
 capital accumulation opportunities to participants in a manner that  fosters
 the alignment of the  participants' interests and  risks with the  interests
 and risks  of  public  stockholders.   The  Compensation  Committee  further
 believes that stock options can function to assure the continuing  retention
 and loyalty  of employees.  Options  that have  been  granted to  the  Named
 Executive Officers typically carry three-year  vesting schedules.  If  these
 officers leave the Company's employ before  their options are fully  vested,
 they will lose a portion of  the benefits that they might otherwise  receive
 if they remain in the Company's employ for the entire vesting period.  Stock
 option grants  have been  based upon  amounts  deemed necessary  to  attract
 qualified employees and  amounts deemed necessary  to retain such  employees
 and to equitably reward high  performance employees for their  contributions
 to our  development. For  most of  the Company's  executive officers,  stock
 options generally constitute the most  substantial portion of the  Company's
 compensation program.

 The Compensation Committee believes that an appropriate compensation program
 can help  in fostering  competitive operations  if  the program  reflects  a
 suitable balance between providing appropriate awards to key employees while
 at the same time effectively controlling compensation costs, principally  by
 establishing  cash  compensation  at  competitive  levels  and   emphasizing
 supplemental compensation that  correlates the  performance of  individuals,
 the Company and its Common Stock.

 This report has  been furnished by  the Compensation  Committee of  the
 Board of Directors.

                                    Nick DeMare, Chairman
                                    Robert M. Fidler

<PAGE>

                           AUDIT COMMITTEE MATTERS

 Independence of Audit Committee Members

 Our common stock is quoted on the OTC Bulletin Board and is governed by  the
 standards applicable thereto.   All members  of the Audit  Committee of  the
 Board of  Directors  have  been determined  to  be  "independent  directors"
 pursuant to the  definition contained  in Rule 4200(a)(15)  of the  National
 Association of Securities Dealers' Marketplace rules.

                            AUDIT COMMITTEE REPORT

 In connection with the preparation and  filing of our Annual Report on  Form
 10-K for the year ended October 31, 2002:

  (1) the  Audit  Committee  reviewed  and  discussed the audited financial
      statements with our management;

  (2) the  Audit  Committee  discussed  with our  independent auditors  the
      matters  required  to be discussed by Statement of Auditing Standards
      No. 61;

  (3) based  on the  review and discussions  referred  to  above, the Audit
      Committee  recommended  to  the  Board  that  the  audited  financial
      statements be  included  in  the  2002 Annual Report on Form 10-K for
      filing with the SEC.

                          By: The Audit Committee of the Board of Directors

                          Nick DeMare, Chairman
                          Robert Fidler

<PAGE>

       COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG DIAL THRU
  INTERNATIONAL CORPORATION, THE NASDAQ STOCK MARKET (U.S.) COMPOSITE INDEX
                         AND THE NASDAQ STOCK MARKET


                      [ PERFORMANCE GRAPH APPEARS HERE ]

 CUMULATIVE
 TOTAL RETURN      12/31/97  12/31/98  12/31/99  12/31/00  12/31/01  12/31/02
                   --------  --------  --------  --------  --------  --------
  Dial Thru
    Int'l  Corp      $100      $ 19      $ 52      $ 91      $ 41      $  7
  NASDAQ Stock
    Market (U.S.)    $100      $137      $259      $322      $134      $103
  NASDAQ Telecom
    Index            $100      $135      $252      $212      $ 72      $ 36


<PAGE>


 Item 12. Security Ownership of Certain Beneficial Owners and Management

 The following table sets forth certain  information as of January 23,  2003,
 concerning those persons  known to us,  based on  information obtained  from
 such persons, our records  and schedules required to  be filed with the  SEC
 and delivered to us, with respect to the beneficial ownership of our  common
 stock by (i) each stockholder known  by us to own beneficially five  percent
 or more  of  such  outstanding  common  stock,  (ii)  each  of  our  current
 directors, (iii) each Named Executive Officer and (iv) all of our  executive
 officers and directors  as a group.   Except as  otherwise indicated  below,
 each of the  entities or  persons named  in the  table has  sole voting  and
 investment power with respect to all shares of our common stock beneficially
 owned.   Effect  has  been  given to  shares  reserved  for  issuance  under
 outstanding stock options and warrants where indicated.


                                                   Number of      Percent of
        Name and address of Beneficial Owner       Shares (1)     Class (2)
        ------------------------------------       -----------    ----------
        Dodge Jones Foundation
        400 Pine Street, Suite 900                 1,000,000         5.55%
        Abilene, Texas 79601

        Joseph E. Canon
        Dodge Jones Foundation                     1,000,000 (3)     5.55%
        P.O. Box 176
        Abilene, Texas 79601

        John Jenkins
        17383 Sunset Boulevard, Suite 350          3,447,066 (4)    19.12%
        Los Angeles, California  90272

        Scotty Cook
        2602 McKinney Avenue, Suite 220              911,899 (5)     5.06%
        Dallas, Texas 75204

        Lawrence Vierra
        2353 Dolphin Court                            80,833 (6)      *
        Henderson, NV  89014

        Nick DeMare
        Chase Management                              20,280 (7)      *
        1090 West Georgia Street, Suite 1305
        Vancouver, BC V6E 3V7

        Robert M. Fidler
        987 Laguna Road                               39,000 (8)      *
        Pasadena, California 91105

        David Hess
        17383 Sunset Boulevard, Suite 350                  0          *
        Los Angeles, California 90272

        Allen Sciarillo
        17383 Sunset Boulevard, Suite 350            237,500 (9)     1.32%
        Los Angeles, CA 90272

        Global Capital Funding Group L.P.
        106 Colony Park Drive                      1,323,838 (10)    7.34%
        Cumming, GA  30040

        All Executive Officers and Directors
        as a group (6 persons)                     3,824,679        21.21%


        *  Reflects less than one percent.

       (1) Beneficial ownership is determined in accordance with the rules of
           the SEC.  In computing the number of shares beneficially owned  by
           a person and the  percentage ownership of  that person, shares  of
           our common  stock subject  to options  or  warrants held  by  that
           person that are exercisable within 60 days of January 23, 2003 are
           deemed  outstanding.    Such  shares,  however,  are  not   deemed
           outstanding for purposes of computing  the ownership of any  other
           person.
       (2) Based upon 18,029,150  shares of  common stock  outstanding as  of
           January 23, 2003.
       (3) Includes 1,000,000 shares held by Dodge Jones Foundation, of which
           Mr. Canon serves as  the Executive Director.   As such, Mr.  Canon
           exercises voting power over all such shares.
       (4) Includes 1,697,066 shares  of common stock  which may be  acquired
           through the exercise of options and warrants which are exercisable
           within 60 days of January 23, 2003.
       (5) Includes 399,899 shares of common stock owned by Founders Partners
           VI LLC, of which  Founders Equity Group  is the managing  partner.
           Founders Equity Group  is controlled  by Mr.  Cook, who  exercises
           voting power over all such shares.   Also includes 300,000  shares
           of common  stock which  may be  acquired through  the exercise  of
           warrants which are exercisable within 60 days of January 23, 2003.
       (6) Includes 70,833  shares  of common  stock  which may  be  acquired
           through the exercise of warrants  which are exercisable within  60
           days of January 23, 2003.
       (7) Includes 10,000  shares  of common  stock  which may  be  acquired
           through the exercise  of options which  are exercisable within  60
           days of January 23, 2003.
       (8) Includes 10,000  shares  of common  stock  which may  be  acquired
           through the exercise  of options which  are exercisable within  60
           days of January 23, 2003.
       (9) Includes 237,500  shares of  common stock  which may  be  acquired
           through the exercise of option and warrants which are  exercisable
           within 60 days of January 23, 2003.
      (10) Includes 600,000  shares of  common stock  which may  be  acquired
           through the exercise of warrants  which are exercisable within  60
           days of January 23, 2002.



 Equity Compensation Plan Information

       The following table provides information about shares of our common
 stock that may be issued under our equity compensation plans, as of October
 31, 2002:

                                                               Number of
                         Number of       Weighted-average      securities
                      securities to be    exercise price       remaining
                        issued upon       of outstanding     available for
                        exercise of          options,       future issuance
                        outstanding          warrants         under equity
                     options, warrants         and            compensation
 Plan Category           and rights           rights             plans
 -------------       -----------------   ----------------   ---------------
 Equity                5,510,391 (1)          $1.26            1,352,567
 compensation
 plans approved by
 security holders

 Equity                     -0-                n/a                -0-
 compensation
 plans not
 approved by
 security holders

 Total                  5,510,391            $1.26             1,352,567

 (1)  Amount includes outstanding options granted pursuant to the 2002 Dial
      Thru International Corporation Equity Incentive Plan  and the Amended
      and  Restated  1990  Dial Thru International Corporation Stock Option
      Plan.


 Item 13. Certain Relationships and Related Transactions

 In October 2001, we executed 10% convertible notes (the "Notes") with  three
 of our executive officers, each of whom  was also one of our directors,  who
 provided financing  to our  Company in  the  aggregate principal  amount  of
 $1,945,958.  The Notes were issued as  follows: (i) a note in the  principal
 amount of $1,745,958 to  John Jenkins, our Chief  Executive Officer; (ii)  a
 note in the principal amount of  $100,000 to Allen Sciarillo, our  Executive
 Vice President  and  Chief Financial  Officer;   and  (iii)  a note  in  the
 principal amount of $100,000 to Larry Vierra, our Executive Vice  President.
 With  an  original maturity  date  of  October 24, 2003,  these  Notes  were
 amended  subsequent  to fiscal year 2002  and  now  mature  on  February 24,
 2004.  Each  note  is  secured  by  certain  of  our  assets.  Each Note was
 originally convertible  at  six-month intervals only, but  was  subsequently
 amended  in November 2002  to  provide  for  conversion  into shares  of our
 common stock  at the option of  the holder at  any time prior  to  maturity.
 The conversion price is equal to the closing  bid price of our common  stock
 on  the  last trading  day  immediately  preceding  the conversion.  We also
 issued to the holders of the  Notes  warrants  to  acquire  an  aggregate of
 1,945,958  shares  of  common stock at an exercise price of $0.75 per share,
 which warrants expire on October 24, 2003.

 In January and July 2002,  the Notes issued to  Mr. Jenkins were amended  to
 include additional advances in the  aggregate principal amount of  $402,433.
 We also issued to Mr. Jenkins two warrants to acquire an additional  102,433
 and 300,000 shares of  common stock, respectively, at  an exercise price  of
 $0.75, which  warrants  expire  on  January  28,  2007  and  July  8,  2007,
 respectively.


 Item 14.    Controls and Procedures

 Within the 90 days prior to the filing  date of this Report, we carried  out
 an  evaluation,  under the  supervision and  with the  participation  of our
 Chief  Executive  Officer   and  our   Chief  Financial   Officer,  of   the
 effectiveness of the  design and operation  of our  disclosure controls  and
 procedures. Based on this  evaluation, our Chief  Executive Officer  and our
 Chief  Financial  Officer  concluded   that  our  disclosure  controls   and
 procedures are  effective to  ensure that  information  we are  required  to
 disclose in  reports  that we  file  or submit  under  the Exchange  Act  is
 recorded, processed,  summarized,  and  reported  within  the  time  periods
 specified in SEC rules and forms.

 There have been  no significant changes  in our internal  controls or  other
 factors that could significantly affect our internal controls subsequent  to
 the date of their evaluation, including  any corrective actions with  regard
 to significant deficiencies and material weaknesses.


                                   PART IV


 Item 15. Exhibits, Financial Statements Schedules, and Reports on Form 8-K

 (A)

 (1) AND (2) LIST OF FINANCIAL STATEMENTS

 The response to this item is submitted as a separate section of this Report.
 See the index on Page F-1.

 (3) EXHIBITS

 The following is a  list of all exhibits  filed with this Report,  including
 those incorporated by reference.


   EXHIBIT

   NO. DESCRIPTION OF EXHIBIT

   2.1  Agreement and Plan of Merger  dated  as  of  January 30, 1998,  among
   Canmax Inc.,  CNMX MergerSub, Inc.  and  US  Communications Services, Inc.
   (filed as Exhibit 2.1 to Form 8-K dated January 30, 1998 (the "USC  8-K"),
   and incorporated herein by reference)

   2.2  Rescission Agreement dated June 15, 1998 among Canmax  Inc., USC  and
   former principals of USC (filed as Exhibit 10.1 to Form 8-K dated  January
   15,  1998  (the   "USC  Rescission  8-K"),  and  incorporated  herein   by
   reference)

   2.3  Asset Purchase Agreement by and among  Affiliated Computed  Services,
   Inc.,  Canmax and  Canmax Retail  Systems, Inc.  dated September  3,  1998
   (filed as Exhibit  10.1 to the Company's Form  8-K dated December 7,  1998
   and incorporated herein by reference)

   2.4  Asset Purchase Agreement dated November  2, 1999  among ARDIS Telecom
   &  Technologies,  Inc.,  Dial Thru International Corporation, a   Delaware
   corporation,   Dial Thru    International   Corporation,   a    California
   corporation,  and John  Jenkins (filed  as Exhibit  2.1 to  the  Company's
   Current Report on Form 8-K dated November 2, 1999 and incorporated  herein
   by reference)

   2.5  Stock  and  Asset Purchase Agreement, dated as of September 18, 2001,
   by and  among  Rapid Link USA,  Inc.,  Rapid  Link  Inc.,  and  Dial  Thru
   International Corporation. (filed as Exhibit 2.1 to the Company's Form  8-
   K dated October 29, 2001 and incorporated herein by reference)

   2.6  First Amendment  to Stock and Asset Purchase Agreement,  dated as  of
   September 21, 2001,  by and among Rapid Link  USA, Inc., Rapid Link  Inc.,
   and Dial  Thru International  Corporation. (filed  as Exhibit  2.2 to  the
   Company's  Form 8-K  dated October  29, 2001  and incorporated  herein  by
   reference)

   2.7  Second Amendment to Stock and Asset Purchase Agreement,  dated as  of
   October 12, 2001, by and among Rapid Link USA, Inc., Rapid Link Inc.,  and
   Dial  Thru  International  Corporation.  (filed  as  Exhibit  2.3  to  the
   Company's  Form 8-K  dated October  29, 2001  and incorporated  herein  by
   reference)

   2.8  Third Amendment to Stock and Asset  Purchase Agreement,  dated as  of
   October 30, 2001, by and among Rapid Link USA, Inc., Rapid Link Inc.,  and
   Dial  Thru  International  Corporation.  (filed  as  Exhibit  2.4  to  the
   Company's Form  8-K dated  December 28,  2001 and  incorporated herein  by
   reference)

   2.9  Fourth Amendment to Stock and Asset Purchase Agreement,  dated as  of
   November 30,  2001, by and among  Rapid Link USA,  Inc., Rapid Link  Inc.,
   and Dial  Thru International  Corporation. (filed  as Exhibit  2.5 to  the
   Company's Form  8-K dated  December 28,  2001 and  incorporated herein  by
   reference)

   3.1  Certificate of Incorporation, as amended (filed as Exhibit 3.1 to the
   Company's Annual  Report on Form  10-K for the  fiscal year ended  October
   31, 1999 (the "1999 Form 10-K") and incorporated herein by reference)

   3.2  Amended and Restated Bylaws  of Dial Thru  International  Corporation
   (filed as  Exhibit 3.2 to the  1999 Form 10-K  and incorporated herein  by
   reference)

   4.1  Registration Rights Agreement  between Canmax  and  the  Dodge  Jones
   Foundation (filed  as Exhibit 4.02  to Canmax's Quarterly  Report on  Form
   10-Q  for the  period ended  April  30, 1997  and incorporated  herein  by
   reference)

   4.2  Registration  Rights  Agreement  between  Canmax and Founders  Equity
   Group,  Inc.  (filed as Exhibit 4.02 to Canmax's  Quarterly Report on Form
   10-Q  for  the  period  ended  April 30, 1997  and  incorporated herein by
   reference)

   4.3  Amended and Restated Stock  Option  Plan of  Dial Thru  International
   Corporation (filed as Exhibit 4.3  to the 1999 Form 10-K and  incorporated
   herein by reference)

   4.4  Securities Purchase Agreement dated April 11, 2001 (filed as  Exhibit
   4.1  to the  Registrant's Quarterly  Report on  Form 10-Q  for the  period
   ended April 30, 2001 and incorporated herein by reference)

   4.5  Registration Rights Agreement dated April  6, 2001  between Dial Thru
   International Corporation  and Global Capital  Funding Group, L.P.  (filed
   as  Exhibit 4.2  to the  Company's  Form S-3,  File #333-71406,  filed  on
   October 11, 2001 and incorporated herein by reference)

   4.6  6% Convertible Debenture of Dial Thru International  Corporation  and
   Global Capital Funding Group, L.P. (filed as Exhibit 4.3 to the  Company's
   Form  S-3, File  333-71406, filed  on October  11, 2001  and  incorporated
   herein by reference)

   4.7  Form of Common Stock Purchase Warrant  dated  April 11, 2001  between
   Global Capital Funding Group, L.P. and Dial Thru International Corporation
   (filed  as Exhibit 4.4  to the Company's  Form S-3, File 333- 71406, filed
   October 11, 2001 and incorporated herein by reference)

   4.8  Form  of Common Stock Purchase Warrant  dated  April 6, 2001  between
   D.P. Securities, Inc. and  Dial Thru International Corporation  (filed  as
   Exhibit 4.5 to  the Company's Form S-3,  File 333-71406, filed on  October
   11, 2001 and incorporated herein by reference)

   4.9  Securities Purchase Agreement  issued  January 28, 2002  between Dial
   Thru International Corporation  and GCA Strategic Investment Fund  Limited
   (filed as Exhibit 4.1 to the Company's Form S-3, File 333-82622, filed  on
   February 12, 2002 and incorporated herein by reference)

   4.10  Registration Rights Agreement  dated  January 28, 2002  between Dial
   Thru International Corporation and GCA Strategic Investment  Fund  Limited
   (filed as Exhibit 4.2 to the Company's Form S-3, File 333-82622, filed  on
   February 12, 2002 and incorporated herein by reference)

   4.11  6% Convertible Debenture  of Dial Thru International Corporation and
   GCA  Strategic Investment  Fund  Limited  (filed  as  Exhibit  4.3  to the
   Company's  Form  S-3,  File  333-82622,  filed  on  February 12,  2002 and
   incorporated herein by reference)

   4.12  Common Stock Purchase Warrant dated  January  28, 2002  between  GCA
   Strategic Investment Fund Limited and Dial Thru International  Corporation
   (filed as Exhibit 4.4 to the Company's Form S-3, File 333-82622, filed  on
   February 12, 2002 and incorporated herein by reference)

   10.1  Employment Agreement,  dated  June 30, 1997  between  Canmax  Retail
   Systems, Inc.  and Roger Bryant  (filed as Exhibit 10.3  to the  Company's
   Registration Statement on Form  S-3, File No. 333-33523 (the "Form  S-3"),
   and incorporated herein by reference)

   10.2  Commercial Lease Agreement  between Jackson--Shaw/Jetstar Drive Tri-
   star Limited Partnership  and the Company (filed as Exhibit 10.20  to  the
   Company's  Annual  Report  on  Form  10-K  dated  October  31,  1998,  and
   incorporated herein by reference)

   10.3  Employment Agreement, dated November 2, 1999 between ARDIS Telecom &
   Technologies, Inc.  and John  Jenkins (filed as  Exhibit 4.3  to the  2000
   Form 10-K and incorporated herein by reference)

   21.1*   Subsidiaries of the Registrant

   23.1*   Information regarding consent of Arthur Andersen LLP

   23.2*   Consent of King Griffin & Adamson P.C.

   99.1*   Certificate of  Chief  Executive  Officer pursuant  to  18  U.S.C.
           Section 1350.

   99.2*   Certificate of  Chief  Financial  Officer pursuant  to  18  U.S.C.
           Section 1350.

   * Filed herewith.


 (B) REPORTS ON FORM 8-K

 During the quarter  ended October 31,  2002, our Company  filed two  Current
 Reports on Form 8-K.

 1. A report filed on August 2, 2002 described the Registrant's receipt of  a
 letter from the  Securities and  Exchange Commission  ("SEC") notifying  the
 Registrant that Arthur Andersen had notified that SEC that Andersen would be
 unable to perform future audit services for the Company.

 2. A report filed  on August 23,  2002, and amended  on September 12,  2002,
 described the Registrant's appointment of King Griffin & Adamson P.C. as the
 Company's new independent accountant.

<PAGE>

                                  SIGNATURES

 Pursuant to  the requirements  of  Section 13  or  15(d) of  the  Securities
 Exchange Act  of 1934,  the registrant  has duly  caused this  Report to  be
 signed in its behalf by the undersigned thereunto duly authorized.


                     DIAL THRU INTERNATIONAL CORPORATION

 Date: January 29, 2003



                       By: /s/ John Jenkins
                           John Jenkins
                           CHAIRMAN, CHIEF EXECUTIVE OFFICER
                           and PRESIDENT

 Pursuant to the  requirements of  the Securities  Exchange Act  of 1934,  as
 amended, this  report has  been signed  below by  the following  persons  on
 behalf of the Registrant in the capacities and on the dates indicated.



        NAME                        TITLE                         DATE
        ----                        -----                         ----

    /s/ JOHN JENKINS         Chairman, Chief Executive       January 29, 2003
    John Jenkins             Officer and President and
                             Director

    /s/ ALLEN SCIARILLO      Chief Financial Officer         January 29, 2003
    Allen Sciarillo          and secretary (principal
                             financial and principal
                             accounting officer)

    /s/ LAWRENCE VIERRA      Executive Vice President        January 29, 2003
    Lawrence Vierra          and Director

    /s/ ROBERT M. FIDLER     Director                        January 29, 2003
    Robert M. Fidler

    /s/ NICK DeMARE          Director                        January 29, 2003
    Nick DeMare

    /s/ DAVID HESS           Director                        January 29, 2003
    David Hess

<PAGE>

                                Certification

 I, John Jenkins, certify that:

      1.   I have  reviewed this  annual report  on  Form 10-K of  Dial  Thru
 International Corporation;

      2.   Based on my  knowledge, this annual  report does  not contain  any
 untrue statement  of  a material  fact  or omit  to  state a  material  fact
 necessary to make the statements made,  in light of the circumstances  under
 which such statements were made, not  misleading with respect to the  period
 covered by this annual report;

      3.   Based  on  my  knowledge,  the  financial  statements,  and  other
 financial information included in this annual report, fairly present in  all
 material respects the  financial condition, results  of operations and  cash
 flows of the registrant as of, and for, the periods presented in this annual
 report.

      4.   The registrant's other certifying  officers and I are  responsible
 for establishing  and maintaining  disclosure  controls and  procedures  (as
 defined in  Exchange Act  Rules 13a-14 and  15d-14) for  the registrant  and
 have:

           a)   designed such disclosure  controls and  procedures to  ensure
 that  material  information  relating  to  the  registrant,  including   its
 consolidated subsidiaries,  is  made known  to  us by  others  within  those
 entities, particularly  during the  period in  which this  annual report  is
 being prepared;

           b)   evaluated the  effectiveness of  the registrant's  disclosure
 controls and procedures as of a date within 90 days prior to the filing date
 of this annual report (the "Evaluation Date"); and

           c)   presented in  this annual  report our  conclusions about  the
 effectiveness of  the  disclosure  controls  and  procedures  based  on  our
 evaluation as of the Evaluation Date;

      5.   The registrant's other certifying  officers and I have  disclosed,
 based on our most  recent evaluation, to the  registrant's auditors and  the
 audit committee of  registrant's board of  directors (or persons  performing
 the equivalent function):

           a)   all significant deficiencies  in the design  or operation  of
 internal controls which could adversely  affect the registrant's ability  to
 record, process, summarize and report financial data and have identified for
 the registrant's auditors any material weaknesses in internal controls; and

           b)   any fraud, whether or not material, that involves  management
 or other employees who have a significant role in the registrant's  internal
 controls; and

      6.   The registrant's other certifying officers and I have indicated in
 this annual  report  whether  there were  significant  changes  in  internal
 controls or  in  other  factors that  could  significantly  affect  internal
 controls subsequent to the date of our most recent evaluation, including any
 corrective actions  with regard  to  significant deficiencies  and  material
 weaknesses.

 Date:  January 29, 2003

 /s/ John Jenkins
 John Jenkins,
 Chief Executive Officer and Chairman

<PAGE>


                                Certification

 I, Allen Sciarillo, certify that:

      1.   I have  reviewed this  annual report  on  Form 10-K of  Dial  Thru
 International Corporation;

      2.   Based on my  knowledge, this annual  report does  not contain  any
 untrue statement  of  a material  fact  or omit  to  state a  material  fact
 necessary to make the statements made,  in light of the circumstances  under
 which such statements were made, not  misleading with respect to the  period
 covered by this annual report;

      3.   Based  on  my  knowledge,  the  financial  statements,  and  other
 financial information included in this annual report, fairly present in  all
 material respects the  financial condition, results  of operations and  cash
 flows of the registrant as of, and for, the periods presented in this annual
 report.

      4.   The registrant's other certifying  officers and I are  responsible
 for establishing  and maintaining  disclosure  controls and  procedures  (as
 defined in  Exchange Act  Rules 13a-14 and  15d-14) for  the registrant  and
 have:

           a)   designed such disclosure  controls and  procedures to  ensure
 that  material  information  relating  to  the  registrant,  including   its
 consolidated subsidiaries,  is  made known  to  us by  others  within  those
 entities, particularly  during the  period in  which this  annual report  is
 being prepared;

           b)   evaluated the  effectiveness of  the registrant's  disclosure
 controls and procedures as of a date within 90 days prior to the filing date
 of this annual report (the "Evaluation Date"); and

           c)   presented in  this annual  report our  conclusions about  the
 effectiveness of  the  disclosure  controls  and  procedures  based  on  our
 evaluation as of the Evaluation Date;

      5.   The registrant's other certifying  officers and I have  disclosed,
 based on our most  recent evaluation, to the  registrant's auditors and  the
 audit committee of  registrant's board of  directors (or persons  performing
 the equivalent function):

           a)   all significant deficiencies  in the design  or operation  of
 internal controls which could adversely  affect the registrant's ability  to
 record, process, summarize and report financial data and have identified for
 the registrant's auditors any material weaknesses in internal controls; and

           b)   any fraud, whether or not material, that involves  management
 or other employees who have a significant role in the registrant's  internal
 controls; and

      6.   The registrant's other certifying officers and I have indicated in
 this annual  report  whether  there were  significant  changes  in  internal
 controls or  in  other  factors that  could  significantly  affect  internal
 controls subsequent to the date of our most recent evaluation, including any
 corrective actions  with regard  to  significant deficiencies  and  material
 weaknesses.

 Date:  January 29, 2003

 /s/ Allen Sciarillo
 Allen Sciarillo,
 Chief Financial Officer and Executive Vice President


<PAGE>


             DIAL THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES

                        INDEX TO FINANCIAL STATEMENTS


       1. Consolidated Financial Statements

          Reports of Independent Public Accountants

          Consolidated Balance Sheets at October 31, 2002 and 2001

          Consolidated Statements of Operations for the fiscal years
            ended October 31, 2002, 2001 and 2000

          Consolidated Statements of Shareholders' (Deficit) Equity
            for the fiscal years ended October 31, 2002, 2001 and 2000

          Consolidated Statements of Cash Flows for the fiscal years
            ended October 31, 2002, 2001 and 2000

          Notes to Consolidated Financial Statements

       2. Financial Statement Schedule

          Report of Independent Public Accountants as to Schedule

          Schedule II - Valuation and Qualifying Accounts


          All other schedules are omitted because they are not applicable or
     because the required information is shown in the consolidated financial
     statements or notes thereto.

<PAGE>

              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
              --------------------------------------------------


 To the Board of Directors and Shareholders of
 Dial Thru International Corporation

 We have audited the  accompanying  consolidated balance sheet  of  Dial Thru
 International Corporation  and  subsidiaries as of October 31, 2002, and the
 related  consolidated statements of operations,  shareholders'  deficit  and
 cash flows  for  the  year  then ended.  These financial statements are  the
 responsibility of  the  Company's  management.   Our  responsibility  is  to
 express an opinion on these financial statements based on our audit.

 We conducted  our  audit  in accordance  with  generally  accepted  auditing
 standards.  Those standards  require that we plan  and perform the audit  to
 obtain reasonable assurance about whether the financial statements are  free
 of material misstatement.   An audit  includes examining, on  a test  basis,
 evidence supporting the amounts and disclosures in the financial statements.
 An  audit  also  includes  assessing  the  accounting  principles  used  and
 significant estimates made by management, as well as evaluating the  overall
 financial statement  presentation.   We believe  that our  audit provides  a
 reasonable basis for our opinion.

 In our opinion, the financial statements  referred to above present  fairly,
 in all material respects, the consolidated  financial position of Dial  Thru
 International Corporation and subsidiaries as of  October 31, 2002, and  the
 consolidated results of their operations and  their cash flows for the  year
 then ended, in conformity with  accounting principles generally accepted  in
 the United States.

 As described in  Note 1 to  the October 31, 2002  financial statements,  the
 accompanying consolidated financial statements  have been prepared  assuming
 that the Company will continue as a going concern.  The Company has suffered
 recurring losses and has  used significant cash  flows in operations  during
 each of the last three fiscal years.  Additionally, at October 31, 2002, the
 Company's current liabilities  exceeded its current  assets by $9.7  million
 and  the  Company  has  a  stockholders  deficit.   These  conditions  raise
 substantial doubt  about  the  Company's ability  to  continue  as  a  going
 concern.  Unless  the Company obtains  additional financing  or makes  other
 arrangements to  settle  its payables,  it  will not  be  able to  meet  its
 obligations as they come due and it will be unable to execute its  long-term
 business plan.  Management's plans as  they relate to these issues are  also
 explained in Note 1.  The  consolidated financial statements do not  include
 any adjustments that might result from the outcome of this uncertainty.


                                          /s/ KING GRIFFIN & ADAMSON P.C.
                                          -------------------------------
                                          KING GRIFFIN & ADAMSON P.C.
 Dallas, Texas
 December 18, 2002

<PAGE>


                REPORT OF PREVIOUS INDEPENDENT PUBLIC ACCOUNTANTS
                -------------------------------------------------

 The  following  report  is a copy  of a report previously  issued  by Arthur
 Andersen LLP ("Andersen"),  which report has not been reissued  by Andersen.
 Other  than  with  respect to Andersen's  review  of our Quarterly Report on
 Form  10-Q  for  the  period  ended  January 31, 2002, none of the financial
 information for our fiscal year ended October 31, 2002  has been reviewed by
 Andersen.  Reclassifications were made to the financial information  for the
 time period indicated in Andersen's previously issued report to conform that
 report  to  the  financial  statement presentations made with respect to our
 fiscal year ended October 31, 2002.



 To Dial Thru International, Inc.:

 We have audited the accompanying balance  sheet of Dial Thru  International,
 Inc. (a Delaware corporation)  and subsidiaries as of  October 31, 2001  and
 the related statement of operations, shareholders' equity and cash flows for
 the year then ended.  These financial statements  are the responsibility  of
 the Company's management.  Our responsibility is  to express  an opinion  on
 these financial statements based on our audit.

 We conducted  our  audit in  accordance  with auditing  standards  generally
 accepted in the  United States.  Those standards  require that  we plan  and
 perform the audit to obtain reasonable assurance about whether the financial
 statements are free of material  misstatement. An audit includes  examining,
 on a test  basis, evidence  supporting the  amounts and  disclosures in  the
 financial statements.  An  audit  also  includes  assessing  the  accounting
 principles used  and significant  estimates made  by management  as well  as
 evaluating the overall financial statement presentation. We believe that our
 audit provides a reasonable basis for our opinion.

 In our opinion, the financial statements  referred to above present  fairly,
 in all material respects, the financial position of Dial Thru International,
 Inc. and  subsidiaries as  of October  31,  2001 and  the results  of  their
 operations and their cash flows for  the year then ended in conformity  with
 accounting principles generally accepted in the United States.

 The accompanying financial statements have  been prepared assuming that  the
 Company will continue  as a going  concern. As discussed  in Note  1 to  the
 consolidated financial statements, the Company has suffered recurring losses
 from operations and  is in a  working capital deficit  position that  raises
 substantial doubt  about  its  ability  to  continue  as  a  going  concern.
 Management's plans concerning these  matters are also  described in Note  1.
 The consolidated financial  statements do not  include any adjustments  that
 might result from the outcome of this uncertainty.

 /s/ Arthur Andersen LLP
 -----------------------
 Arthur Andersen LLP

 Atlanta, Georgia
 January 9, 2002

<PAGE>


              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
              --------------------------------------------------


 To the Board of Directors and Shareholders of
 Dial Thru International Corporation

 We  have audited  the  accompanying consolidated  statements  of operations,
 shareholders' equity and cash  flows of Dial Thru  International Corporation
 and  subsidiaries  for the  year  ended October 31,  2000.   These financial
 statements   are  the  responsibility  of  the  Company's  management.   Our
 responsibility is to express an opinion  on these financial statements based
 on our audit.

 We conducted  our  audit  in accordance  with  generally  accepted  auditing
 standards.  Those standards  require that we plan  and perform the audit  to
 obtain reasonable assurance about whether the financial statements are  free
 of material misstatement.   An audit  includes examining, on  a test  basis,
 evidence supporting the amounts and disclosures in the financial statements.
 An  audit  also  includes  assessing  the  accounting  principles  used  and
 significant estimates made by management, as well as evaluating the  overall
 financial statement  presentation.   We believe  that our  audit provides  a
 reasonable basis for our opinion.

 In our opinion, the financial statements  referred to above present  fairly,
 in all material respects,  the consolidated results  of operations and  cash
 flows of Dial Thru International Corporation  and subsidiaries for the  year
 ended October 31,  2000, in  conformity with  generally accepted  accounting
 principles.

 As described in  Note C to the previously issued October 31, 2000  financial
 statements,  the  accompanying consolidated financial statements  have  been
 prepared assuming that the Company will continue as  a  going  concern.  The
 Company  has  experienced  significant losses from continuing operations and
 has  generated  negative  cash flows  for each of the last two fiscal years.
 Additionally,  at  October  31,  2000,  the  Company's  current  liabilities
 exceeded   its  current  assets  by  $4,829,283.   These   conditions  raise
 substantial  doubt  about  the  Company's  ability  to continue  as  a going
 concern.   Unless  the Company obtains additional financing  or makes  other
 arrangements to  settle  its  payables,  it  will  not  be able to meet  its
 obligations as they come due and it will be unable to execute its  long-term
 business  plan.  Management's plans as they relate to these  issues are also
 explained in  Note  C.  The consolidated financial statements do not include
 any adjustments that might result from the outcome of this uncertainty.


                                          /s/ KING GRIFFIN & ADAMSON P.C.
                                          -------------------------------
                                          KING GRIFFIN & ADAMSON P.C.
 Dallas, Texas
 December 1, 2000

<PAGE>
<TABLE>

             DIAL THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS


                     ASSETS
                     ------                             October 31, October 31,
                                                           2002          2001
                                                        ----------   ----------
 <S>                                                   <C>          <C>
 CURRENT ASSETS
   Cash and cash equivalents                           $   488,868  $    94,985
   Trade accounts receivable, net of allowance
     for doubtful accounts of $548,467 at October
     31, 2002 and $228,729 at October 31, 2001           1,369,955    1,832,768
   Prepaid expenses and other current assets               147,209       43,612
                                                        ----------   ----------
       Total current assets                              2,006,032    1,971,365
                                                        ----------   ----------

 PROPERTY AND EQUIPMENT, net                             3,203,663    5,135,027
 PROPERTY AND EQUIPMENT HELD FOR SALE                            -      320,307
 ADVERTISING CREDITS, net                                2,376,678    2,376,678
 INTANGIBLE ASSETS, net                                    330,613      965,093
 GOODWILL, net                                           1,796,917    1,796,917
 OTHER ASSETS                                               73,525       78,762
                                                        ----------   ----------
 TOTAL ASSETS                                          $ 9,787,428  $12,644,149
                                                        ==========   ==========

    LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
    ----------------------------------------------

 CURRENT LIABILITIES
   Current portion of capital leases                       389,450      385,787
   Trade accounts payable                                4,422,493    4,973,338
   Accrued carrier costs                                   982,863      917,415
   Accrued liabilities                                   2,313,873    1,416,159
   Deferred revenue                                        331,786      346,294
   Deposits and other payables                             444,204      456,282
                                                        ----------   ----------
       Total current liabilities                         8,884,669    8,495,275
                                                        ----------   ----------

 CAPITAL LEASES, net of current portion                     72,365      286,102
 NOTES PAYABLE TO RELATED PARTIES, net of debt
    discount of $423,291 at October 31, 2002
    and $819,470 at October 31, 2001                     1,925,110    1,228,931
 CONVERTIBLE DEBENTURE, net of debt discount
    of $163,510 at October 31, 2002 and
    $445,155 at October 31, 2001                           880,365      554,845
 COMMITMENTS AND CONTINGENCIES (Notes 1 and 11)

 SHAREHOLDERS' (DEFICIT) EQUITY
   Preferred stock, $.001 par value, 10,000,000
     shares authorized, none issued and outstanding              -            -
   Common stock, $.001 par value; 44,169,100 shares
     authorized; 15,074,916 shares issued at October
     31, 2002 and 12,119,090 at October 31, 2001            15,075       12,119
   Additional paid-in capital                           38,894,064   38,174,588
   Accumulated deficit                                 (40,631,392) (35,947,213)
   Accumulated other comprehensive income                 (196,057)     (88,548)
   Treasury stock, 12,022 common shares at cost            (54,870)     (54,870)
   Subscription receivable - common stock                   (1,901)     (17,080)
                                                        ----------   ----------
       Total shareholders' (deficit) equity             (1,975,081)   2,078,996
                                                        ----------   ----------
 TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY  $ 9,787,428  $12,644,149
                                                        ==========   ==========

 The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>
<PAGE>
<TABLE>

             DIAL THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS


                                                            Year ended October 31,
                                                 -------------------------------------------
                                                     2002             2001           2000
                                                 -----------      -----------    -----------
 <S>                                            <C>              <C>            <C>
 REVENUES
 Re-origination and dial thru services          $ 24,870,932     $  7,001,862   $  5,836,392
 Prepaid phone cards and other                             -                -      2,755,057
                                                 -----------      -----------    -----------
 Total revenues                                   24,870,932        7,001,862      8,591,449


 COSTS AND EXPENSES
 Re-origination and dial thru services            16,590,152        4,967,214      5,750,839
 Prepaid phone cards and other                             -                -      4,220,570
 Sales and marketing                               1,398,639          824,388        862,582
 Non-cash sales and marketing expense                      -          258,616      1,937,184
 General and administrative                        7,511,063        3,464,468      5,201,608
 Impairment charge related to write down of
      advertising credits                                  -                -        575,542
 Impairment charge related to write down of
      assets held for resale                        (320,307)               -              -
 Depreciation and amortization                     2,437,305          818,324        565,188
                                                 -----------      -----------    -----------
 Total costs and expenses                         28,257,466       10,333,010     19,113,513
                                                 -----------      -----------    -----------

 Operating loss                                   (3,386,534)      (3,331,148)   (10,522,064)

 OTHER INCOME (EXPENSE)
 Interest expense and financing costs             (1,274,723)        (709,404)      (664,678)
 Other income related to settlement of disputes            -        1,789,373              -
 Foreign exchange                                    (31,976)               -              -
 Write off of investment in marketable securities          -         (446,820)             -
 Gain on sales of equipment                            9,053           13,693              -
                                                 -----------      -----------    -----------
 Total other income (expense)                     (1,297,646)         646,842       (664,678)
                                                 -----------      -----------    -----------
 NET LOSS                                       $ (4,684,180)    $ (2,684,306)  $(11,186,742)
                                                 ===========      ===========    ===========
 LOSS PER SHARE:
    Basic and diluted loss per share            $      (0.34)    $      (0.25)  $      (1.31)
                                                 ===========      ===========    ===========
 SHARES USED IN THE CALCULATION
    OF PER SHARE AMOUNTS:
      Basic and diluted common shares             13,935,782       10,900,115      8,544,105
                                                 ===========      ===========    ===========

 The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>
<PAGE>
<TABLE>

             DIAL THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY
                                                                                                      Other
                                                                                                   Accumulated Receivable -
                                     Common   Common Stock  Treasury    Additional    Accumulated Comprehensive Common
                                     Shares      Amount       Stock   Paid-in Capital   Deficit      Income      Stock      Total
                                   ----------  -----------   -------  --------------- -----------    ------     -------  ---------
<S>                               <C>         <C>           <C>        <C>           <C>           <C>        <C>      <C>
Balance at October 31, 1999         6,881,005 $      6,881  $      -   $ 24,940,093  $(22,076,165) $  (5,416) $      -  $ 2,865,393

Issuance of common stock
  in connection
  with acquisition of DTI           1,000,000        1,000         -        936,500             -          -         -      937,500
Shares issued for
  advertising credits                 914,285          914         -      3,027,655             -          -         -    3,028,569
Shares issued for cash                400,000          400         -      1,399,600             -          -         -    1,400,000
Shares issued upon exercise
  of options and warrants             699,800          700         -        601,880             -          -   (17,080)     585,500
Purchase of treasury stock                  -            -   (54,870)             -             -          -         -      (54,870)
Issuance of warrants in
  connection with convertible notes         -            -         -        995,246             -          -         -      995,246
Warrants issued as compensation             -            -         -      1,937,184             -          -         -    1,937,184
Net loss                                    -            -         -              -   (11,186,742)         -         -  (11,186,742)
                                   ----------  -----------   -------    -----------   -----------   --------   -------   ----------
Balance at October 31, 2000         9,895,090 $      9,895  $(54,870)  $ 33,838,158  $(33,262,907) $  (5,416) $(17,080) $   507,780
===================================================================================================================================

Shares issued upon exercise
  of options and warrants             134,000          134         -         34,223             -          -         -       34,357
Issuance of common stock in
 connection with consulting
 agreement                             90,000           90         -        101,160             -          -         -      101,250
Conversion of convertible notes       400,000          400         -        999,600             -          -         -    1,000,000
Shares issued to a shareholder      1,000,000        1,000         -      1,030,200             -          -         -    1,031,200
Issuance of warrants in connection
  with convertible debentures               -            -         -         79,931             -          -         -       79,931
Embedded beneficial conversion
  feature related to change in
  conversion factor                         -            -         -        828,111             -          -         -      828,111
Issuance of warrants in connection
  with convertible notes-related
  party                                     -            -         -        496,598             -          -         -      496,598
Issuance of common stock in
  connection with acquisition
  of rapid link                       600,000          600         -        467,400             -          -         -      468,000
Issuance of warrants in connection
  with convertible notes                    -            -         -        141,841             -          -         -      141,841
Issuance of warrants in connection
  with consulting agreement                 -            -         -        157,366             -          -         -      157,366
COMPREHENSIVE INCOME
  Net loss                                  -            -         -              -    (2,684,306)         -         -   (2,684,306)
  Foreign currency translation
    adjustment                              -            -         -              -             -    (83,132)        -      (83,132)
                                   ----------  -----------   -------    -----------   -----------   --------   -------   ----------
    Total Comprehensive Income              -            -         -              -    (2,684,306)   (83,132)        -   (2,767,438)
                                   ------------------------------------------------------------------------------------------------
Balance at October 31, 2001        12,119,090 $     12,119  $(54,870)  $ 38,174,587  $(35,947,213) $ (88,548) $(17,080) $ 2,078,996
===================================================================================================================================

Shares issued upon exercise
  of options and warrants             175,000          175         -        69,825              -          -         -       70,000
Retirement of shares as payment
  for options                        (100,000)        (100)        -       (69,900)             -          -         -      (70,000)
Issuance of common stock in
  connection with consulting
  agreement                            25,000           25         -        13,725              -          -         -       13,750
Conversion of convertible notes
  including accrued interest        2,855,826        2,856         -       528,969              -          -         -      531,825
Issuance of warrants in connection
  with convertible debentures               -            -         -        17,096              -          -         -       17,096
Embedded beneficial conversion
  feature related to issuance
  of note payable                           -            -         -       114,154              -          -         -      114,154
Issuance of warrants in connection
  with convertible notes-related
  party                                     -            -         -        45,608              -          -         -       45,608
Cash received for subscription
  receivable-common stock                   -            -         -             -              -          -    15,179       15,179
COMPREHENSIVE INCOME
  Net loss                                  -            -         -             -     (4,684,180)         -         -   (4,684,180)
  Foreign currency translation
    adjustment                              -            -         -             -              -   (107,509)        -     (107,509)
                                   ----------  -----------   -------    -----------   -----------   --------   -------   ----------
    Total Comprehensive Income              -            -         -             -     (4,684,180)  (107,509)        -   (4,791,689)
                                   ------------------------------------------------------------------------------------------------
 Balance at October 31, 2002       15,074,916 $     15,075  $(54,870)  $ 38,894,064  $(40,631,392) $(196,057) $ (1,901) $(1,975,081)
===================================================================================================================================


 The accompanying notes are an integral part of this consolidated financial statement.

</TABLE>
<PAGE>
<TABLE>

             DIAL THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                  Year ended October 31,
                                                          ---------------------------------------
                                                             2002          2001           2000
                                                          ----------    -----------    -----------
 <S>                                                    <C>            <C>            <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                              $ (4,684,180)  $ (2,684,306)  $(11,186,742)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    (Gain) loss from disposal of fixed assets                 (9,053)       (13,693)       121,360
    Impairment charge related to write down
      of assets held for resale                              320,307              -              -
    Stock and warrants issued for services                    13,750        258,616      1,937,184
    Bad debt expense                                         993,698        140,167        694,526
    Inventory write-off                                            -              -         58,526
    Non-cash interest expense                                924,340        597,731        679,258
    Non-cash vendor credit                                         -       (780,000)             -
    Impairment provision on advertising credits                    -              -        575,542
    Depreciation and amortization                          2,437,305        818,324        565,188
    (Increase) decrease in:
      Trade accounts receivable                             (530,885)    (1,031,471)      (173,826)
      Prepaid expenses and other current assets             (103,597)       103,094         30,301
      Inventory                                                    -              -         82,491
      Advertising credits                                          -         76,349              -
      Effects of changes in foreign exchange rates          (107,509)       (83,132)             -
      Other assets                                            28,204        136,483       (128,851)
    Increase (decrease) in:
      Trade accounts payable                              (1,106,135)       490,194      2,854,082
      Accrued carrier costs                                   65,448        666,728              -
      Accrued liabilities                                    582,484        217,158        (78,150)
      Deferred revenue                                       (14,508)        78,628       (187,914)
      Deposits and other payables                            (12,078)        59,000              -
                                                          ----------    -----------    -----------
  Net cash used in operating activities                   (1,202,409)      (950,130)    (4,157,025)
                                                          ----------    -----------    -----------
 CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                        (416,882)       (60,609)      (274,609)
  Refund of license fee                                    1,424,899              -              -
  Cash in DTI at acquisition date                                  -              -         69,137
  Payments received on note receivable                             -              -        255,000
  Cash paid for Rapid Link acquisition,
    net of cash acquired                                           -     (1,495,814)             -
                                                          ----------    -----------    -----------
  Net cash provided by (used in) investing activities      1,008,017     (1,556,423)        49,528
                                                          ----------    -----------    -----------
 CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from related party note payable                   300,000      1,599,486              -
  Proceeds from convertible debentures                       550,000      1,000,000      1,000,000
  Payments on capital leases                                (184,279)      (106,172)       (55,140)
  Deferred financing fees                                    (92,625)             -              -
  Proceeds from exercise of stock options                          -         34,357        585,500
  Payments on note payable                                         -              -       (724,000)
  Proceeds from common stock subscription                          -              -      1,400,000
  Purchase of treasury stock                                       -              -        (54,870)
  Repayment of advances to shareholder                             -              -        (54,000)
  Cash restricted as collateral for note
    and letters of credit                                          -              -      1,237,733
  Subscription receivable-common stock                        15,179              -              -
                                                          ----------    -----------    -----------
  Net cash provided by financing activities                  588,275      2,527,671      3,335,223
                                                          ----------    -----------    -----------
 NET INCREASE IN CASH AND CASH EQUIVALENTS                   393,883         21,118       (772,274)

 Cash and cash equivalents at beginning of year               94,985         73,867        846,141
                                                          ----------    -----------    -----------
 Cash and cash equivalents at end of year                $   488,868   $     94,985   $     73,867
                                                          ==========    ===========    ===========
 SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING
  AND FINANCING ACTIVITIES
  Conversion of convertible debenture and
    accrued interest to common stock                     $   531,825   $          -   $          -
  Fair value of warrants issued with debt                     62,704        736,458              -
  Debt issued with embedded beneficial
    conversion feature                                       114,154        667,598              -
  Exercise of stock options in exchange for
    retirement of 100,000 common shares                       70,000              -              -
  Acquisition of customer base for payable                   340,931              -              -
  Switch equipment obtained through issuance
    of capital lease                                               -              -        227,772
  Conversion of note payable shareholder
    to note payable related party                                  -        346,000              -
  Conversion of convertible note to common stock                   -      1,000,000              -
  Common stock issued for acquisition
    of Dial Thru International                                     -      1,031,200              -
  Common stock issued for acquisition of Rapid Link                -        468,000              -
  Cash paid for interest                                           -         11,174              -


 The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>
<PAGE>

             DIAL THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES

                       NOTES TO CONSOLIDATED STATEMENTS

 NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

 Organization
 ------------
 Dial  Thru  International  Corporation   and  subsidiaries  ("DTI"  or   the
 "Company"), (formerly  ARDIS  Telecom  &  Technologies,  Inc.,  "Ardis"  and
 formerly Canmax, Inc., "Canmax"),  was incorporated on  July 10, 1986  under
 the Company Act of  the Province of British  Columbia, Canada. On August  7,
 1992, the  Company  renounced its  original  province of  incorporation  and
 elected to continue its domicile under the laws of the State of Wyoming, and
 on November 30, 1994,  its name was  changed to Canmax  Inc. On February  1,
 1999, this predecessor company reincorporated under the laws of the State of
 Delaware and changed its name to ARDIS Telecom & Technologies, Inc.

 On November 2, 1999, the Company acquired substantially all of the  business
 and assets of Dial Thru International Corporation, a California corporation,
 along with the rights to the name "Dial Thru International Corporation."  On
 January 19,  2000,  the  Company  changed its  name  from  ARDIS  Telecom  &
 Technologies, Inc. to Dial Thru International Corporation ("DTI"). DTI is  a
 facilities-based,  global  Internet  Protocol  (IP)  communications  company
 providing connectivity  to  international markets  experiencing  significant
 demand for  IP enabled  services. DTI  provides a  variety of  international
 telecommunications services targeted to  small and medium sized  enterprises
 (SME's) that include  the transmission  of voice  and data  traffic and  the
 provision of Web-based and other communications services. DTI utilizes Voice
 over Internet  Protocol  ("VoIP")  packetized voice  technology  (and  other
 compression  techniques)   to  improve   both  cost   and  efficiencies   of
 telecommunication transmissions, and are developing a private VoIP  network.
 DTI utilizes  state-of-the-art  digital  fiber optic  cable,  oceanic  cable
 transmission  facilities,  international  satellites  and  the  Internet  to
 transport our communications.

 Nature of Business
 ------------------
 During 1998 and  1999, the Company's  operations included  mainly sales  and
 distribution  of  prepaid  domestic  and  international  calling  cards   to
 wholesale and retail  customers. In November  1999 with  the acquisition  of
 Dial Thru  International Corporation,  the Company  changed its  focus  from
 prepaid calling cards to becoming a full service, facility-based provider of
 communication  products   to  small   and  medium   size  businesses,   both
 domestically and internationally.  The Company currently provides a  variety
 of international and domestic communication services including international
 re-orignation and dial thru,  Internet voice  and  fax  services, e-Commerce
 solutions  and  other  value-added communication services,  using  its  VoIP
 Network to effectively deliver the products to the end user.

 To further enhance its product offerings and accelerate its growth plans, in
 October 2001, the Company acquired certain  assets and liabilities of  Rapid
 Link, Incorporated,  ("Rapid  Link")  a leading  provider  of  high  quality
 integrated data  and voice  communications services  to both  wholesale  and
 retail customers around the world. Rapid Link's global VoIP network  reaches
 thousands of retail customers, primarily in Europe and Asia. The acquisition
 has  enhanced  the  Company's  product  offerings  and  rapidly  expand  the
 Company's VoIP strategy  due to  the engineering  and operational  expertise
 acquired in the transaction.

 In addition to helping companies achieve savings on long-distance voice  and
 fax calls  by routing  calls  over the  Internet  or the  Company's  private
 network, the Company  also offers  new opportunities  for existing  Internet
 Service Providers ("ISPs") who want to  expand into voice services,  private
 corporate networks  seeking to  lower long-distance  costs, and  Web-enabled
 corporate call centers engaged in electronic commerce.

 Financial Condition
 -------------------
 The Company is subject to various risks in connection with the operation  of
 its  business  including,  among  other  things,  (i)  changes  in  external
 competitive market factors,  (ii) inability to  satisfy anticipated  working
 capital or other  cash requirements, (iii)  changes in  the availability  of
 transmission facilities, (iv) changes in the Company's business strategy  or
 an inability to  execute is  strategy due  to unanticipated  changes in  the
 market, (v) various competitive  factors that may  prevent the Company  from
 competing successfully in the  marketplace, and (vi)  the Company's lack  of
 liquidity and its ability  to raise additional capital.  The Company has  an
 accumulated deficit of approximately $40.6 million  as of October 31,  2002,
 as well as a working capital deficit of approximately $9.7 million.  Funding
 of the  Company's  working capital  deficit,  current and  future  operating
 losses, and  expansion  of  the  Company  will  require  continuing  capital
 investment.  Historically,  some  of  the  funding  of the  Company has been
 provided by a major shareholder.  The Company's  strategy is to  fund  these
 cash  requirements through debt facilities and additional equity  financing.
 As of the date of this report:

   1) the Company  obtained additional  financing of  $1,250,000 in  November
      2002.  Since the beginning of  April 2001, the Company has raised  $4.7
      million in debt financing.
   2) the Company has negotiated  payment terms of approximately $400,000  of
      its past due trade  payables with one of  its largest vendors, and  the
      Company has agreed to remit equal monthly installments in excess of its
      normal monthly usage billing.  The  Company has also settled a  dispute
      with a vendor and thereby reduced its accounts payable by approximately
      $700,000, which is reflected in the October 31, 2002 balance sheet.
   3) during fiscal year 2002, the Company's German subsidiary received a net
      $1 million refund for a license fee previously paid,  which was used to
      pay down past due liabilities.

 Although the Company  has been able  to arrange debt  facilities and  equity
 financing to date, there can be no assurance that sufficient debt or  equity
 financing will continue to  be available in  the future or  that it will  be
 available on terms acceptable to the  Company. Failure to obtain  sufficient
 capital could  materially  affect  the Company's  operations  and  expansion
 strategies.  As  a  result  of   the  aforementioned  factors  and   related
 uncertainties, there is  substantial doubt  about the  Company's ability  to
 continue as a going concern.


 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Principles of Consolidation
 ---------------------------
 The accompanying consolidated financial  statements include the accounts  of
 the  Company  and  its  wholly-owned  subsidiaries,  RDST,  Inc.,  a   Texas
 corporation, Dial Thru.com, Inc., a Delaware corporation, and DTI Com  Inc.,
 a California corporation, Dial Thru International Argentina S.A., Dial  Thru
 International Venezuela, C.A.,  Dial Thru  International Corporation,  South
 Africa, and Rapid Link GmbH, a Germany company. All significant intercompany
 accounts and transactions have been eliminated.

 Revenue Recognition
 -------------------
 The following describes the Company's revenue recognition policies:

 Revenues generated by international  re-origination, dial thru services  and
 international wholesale termination are based on minutes of customer  usage.
 The Company records payments received in  advance as deferred revenue  until
 such services are  provided. This policy  applies to  all international  re-
 origination  and dial thru services  revenues,  and is currently the primary
 source of the Company's revenue.

 Revenues generated by prepaid phone cards are recognized based on minutes of
 customer usage or  upon the expiration  of cards  containing unused  calling
 time. The Company records payments received in advance for prepaid  services
 as deferred revenue until such related services are provided.

 Cash and Cash Equivalents
 -------------------------
 The Company  considers  all  highly liquid  investments  purchased  with  an
 original maturity of three months or less to be cash equivalents.

 Property and Equipment
 ----------------------
 Property and  equipment are  stated at  cost. Depreciation  of property  and
 equipment is calculated  using the straight-line  method over the  estimated
 useful lives of the assets ranging from three to seven years. Equipment held
 under capital leases and leasehold improvements are amortized on a straight-
 line basis over the shorter of the  lease term or the estimated useful  life
 of the related  asset ranging  from three  to five  years. Expenditures  for
 repairs and maintenance are charged to  expense as incurred. Major  renewals
 and betterments are capitalized.

 Goodwill and Other Intangible Assets
 ------------------------------------
 Goodwill and other intangible assets, net of accumulated amortization, as of
 October 31, 2002 and 2001 consisted of the following:

                                            2002                  2001
                                        -----------           -----------
      Goodwill                         $  2,072,675          $  2,072,675
      Licenses and other                    494,669               980,537
                                        -----------           -----------
                                          2,567,344             3,053,212
      Less accumulated amortization        (439,814)             (291,202)
                                        -----------           -----------
                                       $  2,127,530          $  2,762,010
                                        ===========           ===========

 Excess  of  cost  over  fair  value  of  net  assets   of  company  acquired
 ("Goodwill") represents the excess of  purchase  price over the  fair market
 value of identifiable net assets at the date of acquisition. This amount was
 amortized on a straight-line basis over ten years through fiscal year  2001.
 In accordance with SFAS No. 142, goodwill is no longer amortized but instead
 will be assessed for impairment at least annually.  Accumulated amortization
 of excess of  cost over fair  value of net  assets of  company acquired  was
 $275,758  at October 31, 2002  and  2001.  Had  the  Company  not  amortized
 goodwill for the years  ended October 31, 2001 and 2000, net loss would have
 been $2,512,789 and $11,082,594, respectively, and loss per share would have
 been $0.23 and $1.30, respectively.

 The Company's German subsidiary, acquired from  Rapid Link in October  2001,
 obtained a  license  from the  German  authorities in  February  2000.  This
 license gives the Company the right  to provide and run a  telecommunication
 network in Germany.  The license was  recorded at its  fair market value  of
 $933,864 as of the acquisition date, October  1, 2001. The right to use  the
 license is unlimited, and the right  does not expire. In November 2001,  the
 Company received a refund for the full amount of the original license fee of
 $1.5 million. The  Company anticipates that  approximately $500,000 will  be
 returned to the German authorities as  a revised license fee and is  accrued
 at October 31, 2002.

 Valuation of Long-Lived Assets
 ------------------------------
 The Company reviews long-lived  assets and certain identifiable  intangibles
 for impairment whenever events or changes in circumstances indicate that the
 carrying amount of an asset may not be recoverable. If a condition or  event
 occurs which  is  considered to  impair  the recoverability  of  assets  the
 carrying amount of the asset is  compared to future net cash flows  expected
 to be generated by the asset. If such assets are considered to be  impaired,
 the impairment  to be  recognized is  measured by  the amount  by which  the
 carrying amount  of the  assets  exceeds the  estimated  fair value  of  the
 assets. Assets to be disposed of are  reported at the lower of the  carrying
 amount or estimated fair value less costs to sell.

 Loss Per Share
 --------------
 Loss per share is  computed using the weighted  average number of shares  of
 common  stock  outstanding during  each  year.  Diluted  loss per  share  is
 computed using  the  weighted  average number  of  shares  of  common  stock
 outstanding during each  year and common  equivalent  shares  consisting  of
 stock options and warrants, and  convertible debentures (using the  treasury
 stock method) to the extent they are dilutive.

 The shares  issuable  upon  the exercise  of  stock  options,  warrants  and
 convertible debentures are  excluded from the  calculation of  net loss  per
 share for each  year as their  effect on net  loss for  each year  presented
 would  be  antidilutive.   At  October  31,  2002,   there   are  15,748,927
 shares potentially  issuable  from  outstanding stock options, warrants  and
 convertible debentures.

 Income Taxes
 ------------
 The  Company  utilizes  the  asset  and  liability  approach  to   financial
 accounting and  reporting  for  income  taxes.  Deferred  income  taxes  and
 liabilities are  computed annually  for  differences between  the  financial
 statements and  tax basis  of assets  and liabilities  that will  result  in
 taxable or deductible amounts  in the future based  on enacted tax laws  and
 rates applicable to  the periods in  which the differences  are expected  to
 affect taxable income. Valuation allowances are necessary to reduce deferred
 tax assets to  the amount  expected to be  realized. Income  tax expense  or
 benefit is the tax payable  or refundable for the  period plus or minus  the
 change during the period in deferred tax assets and liabilities.

 Estimates and Assumptions
 -------------------------
 The preparation  of  financial  statements  in  conformity  with  accounting
 principles generally accepted  in the United  States requires management  to
 make estimates  and assumptions  that effect  the  amounts reported  in  the
 financial statements  and accompanying  notes. Actual  results could  differ
 from those estimates.

 Fair Market Value of Financial Instruments
 ------------------------------------------
 The carrying amount for current assets  and liabilities, and long-term  debt
 is not materially  different than  fair market  value because  of the  short
 maturity of the instruments and/or their respective interest rate amounts.

 Stock-Based Compensation
 ------------------------
 The Company accounts  for its  stock-based compensation  in accordance  with
 provisions of the Accounting Principles Board's  Opinion No. 25 ("APB  25"),
 "Accounting for Stock Issued to Employees."

 As such, compensation expense  is recorded on the  date of grant for  equity
 issued to employees only if the current market price of the underlying stock
 exceeds the  exercise  price.  In accordance  with  Statement  of  Financial
 Accounting Standards  No.  123  ("SFAS 123"),  "Accounting  for  Stock-Based
 Compensation", entities are allowed to continue  to apply the provisions  of
 APB 25 and provide pro forma net income (loss) and pro forma earnings (loss)
 per share disclosures for employee stock option grants as if the fair-value-
 based method defined in SFAS 123  had been applied. The Company has  elected
 to  continue  to apply  the provisions of  APB 25 and  provide the pro forma
 disclosure provisions of SFAS 123.

 Comprehensive Income
 --------------------
 SFAS No.  130, "Reporting  Comprehensive Income"  ("SFAS 130"),  sets  forth
 rules for the reporting and display of comprehensive income (net income plus
 all other changes in net assets  from non owner sources) and its  components
 in the financial statements.  At October 31, 2002,  2001 and 2000 the  major
 component of other comprehensive income consisted of an unrealized loss from
 currency translation,  which  is  stated as  a  component  of  shareholders'
 (deficit) equity.

 Foreign Currency Translation and Foreign Currency Transaction
 -------------------------------------------------------------
 The assets  and liabilities  of subsidiaries  domiciled outside  the  United
 States are translated  at rates of  exchange existing at  the balance  sheet
 date. Revenues  and expenses  are translated  at average  rates of  exchange
 prevailing during  the  year.  The  resulting  translation  adjustments  are
 recorded  as a separate component of shareholders' equity.  Foreign currency
 translations resulting  in gains and losses are recorded in the Statement of
 Operations.

 Reclassifications
 -----------------
 Certain reclassifications  were  made  to the  2001  and  2000  consolidated
 financial statements to conform to the current year presentation.


 NOTE 3 - ACQUISITIONS

 Rapid Link, Inc. Acquisition
 ----------------------------
 On October 12,  2001, DTI completed  the acquisition of  certain assets  and
 liabilities of Rapid  Link, USA,  Inc. ("Rapid Link  USA") and  100% of  the
 common stock of Rapid Link Telecommunications, GmbH, ("Rapid Link  Germany")
 a German Company, from  Rapid Link. The results  of the businesses  acquired
 from Rapid  Link have  been included  in operations  of the  Company in  the
 consolidated financial statements from the  date of acquisition. Rapid  Link
 is a  provider of  high quality  integrated  data and  voice  communications
 services to  both  wholesale and  retail  customers around  the  world.  The
 aggregate purchase  price  was  $2,116,481, including  $1,450,000  in  cash,
 common stock valued at $468,000, and  an additional $198,481 in  acquisition
 related costs. The value of the  600,000 common shares was determined  based
 on the closing  market price  of DTI's  common shares  on October  12, 2001.
 The  value  of the  common  stock  is  guaranteed by DTI to be no less  than
 $300,000 at the time of the effectiveness of the Registration of the shares.
 As  of  the  effectiveness  of  the  Registration Statement relating  to the
 shares, completed  on  March 28, 2002,  the  value  of the common stock  was
 $210,000.  The incremental amount will be paid in stock and will not  change
 the total purchase price paid for the Rapid Link acquisition.


 The fair value of assets and liabilities acquired consisted of:

       Cash                                           $    152,000
       Accounts Receivable                                 485,645
       Fixed Assets                                      4,187,647
       Intangible and others                             1,030,453
       Accrued liabilities                                (833,236)
       Accounts Payable and other                       (1,603,485)
       Deferred revenue                                   (612,758)
       Capital leases and other debt                      (690,266)
                                                       -----------
                                                      $  2,116,000
                                                       ===========

 The following unaudited pro-forma consolidated results of operations for the
 year ended October 31, 2001 assumes that the acquisition had occurred on
 November 1, 2000:
                                                        Unaudited
                                                        Year ended
                                                     October 31, 2001
                                                     ----------------
       Revenues                                       $ 32,933,450
                                                       ===========
       Net loss                                       $ (8,734,575)
                                                       ===========
       Net loss per common share (basic and diluted)  $      (0.76)
                                                       ===========
       Weighted average common shares outstanding
         (basic and diluted)                            11,500,115
                                                       ===========


 NOTE 4 - ADVERTISING CREDITS

 On September 8,  2000, the Company  issued 914,285 shares  (which are  fully
 vested and nonforfeitable)  of the Company's  common stock  in exchange  for
 $3.2 million face value of advertising  credits.  These credits were  issued
 by Millenium Media  Ltd. and  Affluent Media  Network, national  advertising
 agencies and media placement brokers.  The Company recorded the  advertising
 credits on the  date the shares  were issued, September  8, 2000, using  the
 Company's  quoted  common  stock  price of  $3.3125,  totaling   $3,028,569.
 During  the  fiscal year ended October  31, 2000,  the Company  recorded  an
 impairment charge of $575,542 to reduce the credits to their estimated  fair
 value, and sold a portion of the  credits for cash, reducing the balance  by
 an additional $76,349.  The estimated fair value was established at the  end
 of fiscal 2000 using a discount of 25%  off the face value, which was  based
 on management's estimate of the  dollar value of the  credits to be used  in
 settling various outstanding trade obligations. Such credits can be used  by
 the Company to place  electronic media and  periodical advertisements.   The
 primary use for  the media  credits is  to advertise  products and  services
 domestically.  As the Company's focus  to date has been on foreign  traffic,
 the Company has  not utilized  any of  the media  credits.   The Company  is
 currently developing domestic products  and services and management  intends
 to utilize the media  credits to advertise these  new services. There is  no
 contractual expiration  date  for  these trade  credits  and  there  are  no
 limitations relating to the use of these credits.


 NOTE 5 - SETTLEMENT OF LEGAL/CARRIER DISPUTES

 During the quarter  ended January 31,  2001, the Company  settled a  pending
 lawsuit  with  Star  Telecommunications,  Inc.   In   conjunction  with  the
 settlement the Company  received a  carrier usage  credit in  the amount  of
 $780,000 for previous services and future services comprised of one year  of
 no charge domestic  carrier services  for transporting  traffic between  Los
 Angeles, New  York and  Miami.   The $780,000  credit for  past services  is
 recorded  as  OTHER  INCOME  RELATED  TO  SETTLEMENT  OF  DISPUTES  in   the
 accompanying statement of operations  for the year  ended October 31,  2001.
 The  Company  also  received  1,100,000  shares  of  common  stock  of  Star
 Telecommunications  that  were  recorded  at  fair  value totaling $446,820,
 recorded  as  OTHER  INCOME  RELATED  TO  SETTLEMENT OF  DISPUTES which were
 subsequently written off as WRITE OFF OF INVESTMENT IN MARKETABLE SECURITIES
 during  the  year  ended  October  31,  2001.   On   March  13,  2001,  Star
 Telecommunications filed for Chapter 11 reorganization. The Company will not
 be  able   to   utilize   its   carrier   services   agreement   with   Star
 Telecommunications and placed no value on the future services.


 NOTE 6 - CONVERTIBLE DEBT

 Convertible Debenture with Global Capital Funding Group L.P.
 ------------------------------------------------------------
 On April 11,  2001, the  Company executed  a 6%  convertible debenture  (the
 "Debenture") with Global Capital Funding Group L.P, which provided financing
 of   $1,000,000.   The  Debenture  maturity  date is  April  11, 2003.   The
 Debenture  is  secured by  certain  property  and  equipment held for  sale.
 The conversion  price is  equal to  the lesser  of (i)  100% of  the  volume
 weighted average of  sales price as  reported by the  Bloomberg L.P. of  the
 common stock on the last trading day immediately preceding the Closing  Date
 and (ii) 80% of the average of the five lowest volume weighted average sales
 prices as  reported  by  Bloomberg  L.P.  during  the  twenty  Trading  Days
 immediately preceding but not  including the date of  the related Notice  of
 Conversion ("the  "Formula Conversion Price").   In an event of default  the
 amount declared due  and payable on  the Debenture shall  be at the  Formula
 Conversion Price.  During the fourth quarter of 2001, the Formula Conversion
 Price was  adjusted downward  to 70%  in accordance  with the  terms of  the
 Debenture as the Company's registration statement was not declared effective
 by the  Securities and  Exchange  Commission on  the  date required  by  the
 Debenture.  The  Company has  calculated the  beneficial conversion  feature
 embedded in the  Debenture in accordance  with EITF No.  00-27 and  recorded
 approximately $497,000  as  debt discount.   This  debt  discount  is  being
 amortized over the  two-year life  of the Debenture.   For  the years  ended
 October 31, 2002 and 2001, the  Company recorded approximately $276,000  and
 $106,000, respectively, as interest expense.  The Company also issued to the
 holder of the debenture warrants to  acquire an aggregate of 100,000  shares
 of common stock at  an exercise price  of $0.89 per  share, which expire  on
 April 11, 2006.  The Company recorded debt discount of approximately $80,000
 relating to  the issuance  of  the warrants.   This  amount  represents  the
 relative fair value of the warrants  in accordance with EITF No. 00-27,  and
 the Company is amortizing the  debt discount over the  two year life of  the
 Debenture.  For the years ended October  31, 2002 and 2001, the Company  has
 recorded  interest   expense   of   approximately   $39,000   and   $25,000,
 respectively, relating to the warrants.   During the year ended October  31,
 2002, Global  Capital Funding  Group L.P.  converted $506,125  of debt  into
 approximately 2,856,000 shares of the Company's stock.

 Convertible Debenture with GCA Strategic Investment Fund Limited
 ----------------------------------------------------------------
 On January 28, 2002,  the Company executed a  6% convertible debenture  (the
 "Second Debenture")  with  GCA  Strategic  Investment  Fund  Limited,  which
 provided financing  of $550,000.   The  Second  Debenture maturity  date  is
 January 28,  2003.   The  Second  Debenture is  secured  by certain property
 and equipment held for sale.  The conversion price  is equal  to  the lesser
 of  (i) 100%  of the volume weighted  average  of sales  price  as  reported
 by the  Bloomberg  L.P.  of  the  common  stock  on  the  last  trading  day
 immediately preceding the Closing  Date and (ii) 85%  of the average of  the
 three lowest volume weighted average sales  prices as reported by  Bloomberg
 L.P. during the twenty Trading Days immediately preceding but not  including
 the date of  the related  Notice of  Conversion ("the   "Formula  Conversion
 Price").  In an event of default the amount declared due and payable on  the
 Debenture shall be at the Formula Conversion Price.  In connection with  the
 Second Debenture,  the Company  paid $92,625  as financing  fees, which  are
 being amortized over  the one-year life  of the Second  Debenture using  the
 Interest Method.  For the year ended October 31, 2002, the Company  recorded
 interest expense of approximately $70,000 relating to these financing  fees.
 The Company has calculated the beneficial conversion feature embedded in the
 Second  Debenture  in   accordance  with   EITF  No.   00-27  and   recorded
 approximately  $114,000  as  debt discount.   This debt  discount  is  being
 amortized over the  one-year life  of the Second  Debenture.   For the  year
 ended October  31,  2002,  the Company  recorded  approximately  $86,000  as
 interest expense.  The  Company also issued to  the holder of the  debenture
 warrants to acquire  an aggregate  of 50,000 shares  of common  stock at  an
 exercise price of $0.40 per  share, which expire on  January 28, 2007.   The
 Company recorded  debt  discount of  approximately  $17,000 related  to  the
 issuance of the warrants.  This amount represents the relative fair value of
 the warrants  in  accordance  with  EITF  No.  00-27,  and  the  Company  is
 amortizing the debt discount over the one-year life of the Second Debenture.
 For the  year ended  October 31,  2002, the  Company has  recorded  interest
 expense of approximately $13,000 relating to the warrants.


 NOTE 7 - NOTES PAYABLE - RELATED PARTY

 In October 2001, the  Company executed 10%  convertible notes (the  "Notes")
 with  three  executives  of  the   Company,  which  provided  financing   of
 $1,945,958. The maturity date of each note  is October 24, 2003.  The  Notes
 are  secured  by all  Company assets.   Each Note  is convertible  into  the
 Company's  common  stock  at  the option  of  the  holder at  anytime.   The
 conversion price is equal to the  closing bid price of the Company's  common
 stock on the  last trading day  immediately preceding the  conversion.   The
 Company has calculated  the beneficial  conversion feature  embedded in  the
 Notes in  accordance with  EITF  No. 00-27  and  recorded debt  discount  of
 approximately $171,000 which will be amortized over two years.  The  Company
 also issued to the holders of the Notes warrants to acquire an aggregate  of
 1,945,958 shares of common  stock at an exercise  price of $0.78 per  share,
 which expire on October 24, 2006.  Additional debt discount of approximately
 $657,000 was recorded during the fourth quarter of fiscal 2001.  The Company
 determined the  additional debt  discount by  allocating the  relative  fair
 value to  the  Notes  and the  warrants.   The  Company  is  amortizing  the
 additional debt  discount over  the initial  maturity of  the Notes  of  two
 years.  For the two years ended October  31, 2002 and 2001, the Company  has
 recorded  approximately  $410,000  and  $9,000,  respectively,  of  interest
 expense.  In January 2002, an additional $102,433 was added to the Notes  in
 exchange for  an existing  note payable.   The  Company also  issued to  the
 holder of the  Notes warrants  to acquire  an additional  102,433 shares  of
 common stock at  an exercise  price of $0.75,  which expire  on January  28,
 2007.  Additional debt discount of approximately $24,000 was recorded during
 the first quarter  of fiscal 2002.   The Company  determined the  additional
 debt discount by  allocating the relative  fair value to  the Notes and  the
 warrants.  The Company is amortizing  the additional debt discount over  the
 remaining life of  the Notes.   For  the year  ended October  31, 2002,  the
 Company has recorded approximately $10,000  of interest expense relating  to
 the warrants.  In July 2002, an additional $300,000 was added to the  Notes,
 representing incremental monies loaned by a  shareholder.  The Company  also
 issued to the holder of the Notes warrants to acquire an additional  300,000
 shares of common stock at an exercise  price of $0.75, which expire on  July
 8, 2007.   Additional debt discount  of approximately  $22,000 was  recorded
 during the year ended October 31, 2002.


 NOTE 8 - PROPERTY AND EQUIPMENT

 Property and equipment consists of the following at October 31:

                                                      2002            2001
                                                  -----------     -----------
 Telephone switch equipment                      $  4,609,703    $  4,415,093
 Leasehold improvements                               334,661         262,085
 Furniture and fixtures                               274,918         229,554
 Computer and office equipment                        822,960         785,156
 Computer software                                  1,011,772         849,619
                                                  -----------     -----------
                                                    7,054,014       6,541,507
 Less: accumulated depreciation and amortization   (3,850,351)     (1,406,480
                                                  -----------     -----------
                                                 $  3,203,663    $  5,135,027
                                                  ===========     ===========

 At October 31, 2002 and 2001, the  gross amount of capital lease assets  and
 related accumulated  amortization  recorded  under capital  leases  were  as
 follows:

                                                  2002            2001
                                              -----------     -----------
 Telephone switch equipment                  $    833,981    $    792,502
 Office equipment                                  12,580          11,494
                                              -----------     -----------
                                                  846,561         803,996
 Less: accumulated amortization                  (344,230)       (110,619)
                                              -----------     -----------
                                             $    502,331    $    693,377
                                              ===========     ===========

 Amortization  of  assets  held  under   capital  leases  is  included   with
 depreciation  expense.   Depreciation  and   amortization   expense  totaled
 $2,437,305, $818,324 and $565,188 in 2002, 2001, and 2000, respectively.


 NOTE 9 - PROPERTY AND EQUIPMENT HELD FOR SALE

 Property  and  equipment  held  for  sale  represents internally constructed
 equipment for the prepaid telecommunications industry.  On October 31, 2000,
 the Company entered into an Asset Purchase Agreement to sell this technology
 for  $1  million,  however the sale was not consummated.  The  Company  will
 continue to search for a buyer  for the asset,  and is current utilizing the
 assets  as  collateral against its $1 million convertible debenture.  As the
 potential sale of this equipment is currently uncertain,  this equipment was
 written-off during the year ended October 31, 2002.


 NOTE 10 - STOCK OPTIONS AND WARRANTS

 Warrant Issuances to Employees

 Employee warrant activity for the three years ended October 31, 2002 was as
 follows:
                                                                   Weighted
                                        Number       Warrant       Average
                                          of          Price        Exercise
                                        Shares      Per Share       Price
                                      ---------    -----------     --------
 Warrants outstanding at
  October 31, 1999                    1,025,000   $0.46 - 0.80    $    0.54

 Warrants granted                       820,000    0.81 - 1.44         1.36
 Warrants exercised                   (125,000)           0.53         0.53
 Warrants canceled                    (810,000)    0.46 - 1.44         0.76
                                      ---------    -----------     --------
 Warrants outstanding at
  October 31, 2000                      910,000    0.53 - 1.44         1.09

 Warrants granted                     1,945,958           0.78         0.78
 Warrants exercised                           -              -            -
 Warrants canceled                     (100,000)          0.53         0.53
                                      ---------    -----------     --------
 Warrants outstanding at
  October 31, 2001                    2,755,958    0.53 - 1.44         0.89

 Warrants granted                       402,433           0.75         0.75
 Warrants exercised                           -              -            -
 Warrants canceled                     (145,000)          1.44         1.44
                                      ---------    -----------     --------
 Warrants outstanding at
  October 31, 2002                    3,013,391   $0.75 - 2.25    $    0.83
                                      =========    ===========     ========

 On December 1, 1999 the Company issued warrants to several employees of  the
 Company to acquire 100,000  shares of common stock  at an exercise price  of
 $0.81 per share. The warrants vest within one to two years from the date  of
 grant. On December 22, 1999 the Company issued warrants to several employees
 of the Company  to acquire  720,000 shares of  common stock  at an  exercise
 price of $1.44 per share. The warrants  vest over three years from the  date
 of grant. The exercise price was in excess of the trading price at the grant
 date, and accordingly no expense pursuant to APB No. 25 was recorded by  the
 Company for  these issuances.  The fair  value of  these warrants  has  been
 calculated pursuant to SFAS 123  "Accounting for Stock Based  Compensation".
 The fair value  of the warrants  using the Black-Scholes  pricing model  was
 $1,094,322 with  the following  assumptions: applicable  risk-free  interest
 rates based on the current treasury-bill interest rate at the grant date  of
 6.0%; dividend yields of 0%; volatility factors of the expected market price
 of the Company's common stock of 2.13; and an expected life of the  warrants
 ranging from 2 - 3 years.

 In October 2001,  the  Company  issued,  in  connection  with  a convertible
 note agreement,  warrants to acquire  an aggregate of  1,945,958  shares  of
 common  stock  at  an exercise price of  $0.78  per  share,  which expire on
 October 24, 2006.  Deferred financing fees  of approximately  $657,000  were
 recorded during the fourth quarter of  fiscal 2001. In accordance with  EITF
 00-27, the Company determined the deferred financing fee by calculating  the
 relative fair value of the warrants issued using the following  assumptions:
 applicable risk-  free  interest rate  based  on the  current  treasury-bill
 interest rate at  the grant date  of 5%; dividend  yields of 0%;  volatility
 factors of the expected market price of the Company's common stock of  1.36;
 and an expected life of the warrants of two years.

 In January  and  July 2002,  the  Company  issued, in  connection  with  the
 convertible note agreement noted above, warrants to acquire an aggregate  of
 402,433 shares of  common stock  at an exercise  price of  $0.75 per  share,
 respectively, which expire on October 24,  2006. Deferred financing fees  of
 approximately  $46,000  were recorded  in connection with the  warrants.  In
 accordance with EITF  00-27, the Company determined  the deferred  financing
 fee by calculating the relative fair value of the warrants issued using  the
 following assumptions:  applicable  risk-free  interest rate  based  on  the
 current treasury-bill interest rate at the grant date of 5%; dividend yields
 of 0%; volatility  factors of  the expected  market price  of the  Company's
 common stock of $1.36 and $1.57; and an expected life of the warrants of two
 years.

 The  warrants issued to  employees that  were exercisable at the years ended
 October  31,  2002,  2001  and  2000 were  1,701,000, 287,000,  and 350,000,
 respectively.


 Warrant Issuances to Non-Employees
 ----------------------------------
 Non-Employee warrant activity for the three years ended October 31, 2002 was
 as follows:
                                                                   Weighted
                                        Number       Warrant       Average
                                          of          Price        Exercise
                                        Shares      Per Share       Price
                                      ---------    -----------     --------
 Warrants outstanding at
  October 31, 1999                      195,000   $0.29 - 2.00    $    0.93

 Warrants granted                       660,000    0.46 - 3.50         1.53
 Warrants exercised                     (31,200)   0.46 - 0.81         0.61
 Warrants canceled                      (75,000)   0.53 - 0.88         0.76
                                      ---------    -----------     --------
 Warrants outstanding at
  October 31, 2000                      748,800    0.29 - 3.50         1.49

 Warrants granted                       575,000    0.89 - 3.00         2.80
 Warrants exercised                    (100,500)   0.01 - 0.53         0.21
 Warrants canceled                      (20,000)   0.45 - 3.00         0.45
                                      ---------    -----------     --------
 Warrants outstanding at
  October 31, 2001                    1,203,300    0.01 - 3.50         1.65

 Warrants granted                        50,000           0.40         0.40
 Warrants exercised                           -              -            -
 Warrants canceled                     (365,800)   0.53 - 0.88         0.74
                                      ---------    -----------     --------
 Warrants outstanding at
  October 31, 2002                      887,500   $0.01 - 3.50    $    1.95
                                      =========    ===========     ========


 On March 1, 2000 the Company issued warrants to several employees who  later
 became distributors  of  the Company's  prepaid  calling card  business,  to
 acquire 400,000 shares of common stock at an exercise price ranging  between
 $0.46  and  $0.88  per  share.  Fifty  percent  of  these  warrants   vested
 immediately, while the  remaining fifty percent  vest upon the  distributors
 achieving consolidated revenues of in excess of $10 million for a period  of
 three consecutive  calendar  months  on or  before  February  28,  2002.  In
 connection with the  change in  status and  related changes  in the  vesting
 schedule, during  the  fiscal  year ended  October  31,  2000,  the  Company
 recorded a  charge of  $1,937,184  for the  vested  portion of  the  400,000
 warrants. This charge  is included  in sales  and marketing  expense in  the
 accompanying  statements  of  operations.  As  of  October  31,  2001,   the
 distributors have failed  to generate any  revenue toward their  performance
 goals and are no longer selling the Company's products and services.

 During fiscal 2000,  several distributors  exercised 21,200  warrants at  an
 exercise price ranging between  $0.46 and $0.88 per  share. Also during  the
 year a consultant of the Company exercised 10,000 warrants with an  exercise
 price of $0.81.

 All warrants issued to non-employees during the year ended October 31,  2000
 were recorded at fair value using the Black-Scholes pricing model, with  the
 following assumptions:  applicable risk  free interest  rates based  on  the
 current treasury bill  interest rate  at the  grant date  of 6.0%;  dividend
 yields of  0%;  volatility factors  of  the  expected market  price  of  the
 Company's common stock of 213%; and an expected life of the warrants ranging
 from 1 -  3 years. The  total fair value  of these warrants  at the date  of
 issuance was approximately  $878,000, which is  being charged to  operations
 over the initial maturity of the related debt.

 During December 2000, the Company issued 300,000 warrants to Founders Equity
 Group, Inc. at  an exercise price  of $3.50, in  connection with  Investment
 Banking services. The warrants were fully vested at the time of issuance. At
 the time of issuance, the Company's common stock price was $1.3125. The fair
 value of  the  warrants was  calculated  at  $157,366. The  fair  value  was
 determined using the Black-Scholes  pricing model and  was expensed as  non-
 cash sales and marketing  expense for issuance of  warrants during the  year
 ended October 31, 2001, with the following assumptions: applicable risk free
 interest rates based on the current treasury bill interest rate at the grant
 date of 5.0%;  dividend yields  of 0%;  volatility factors  of the  expected
 market price of the Company's common stock  of 79%; and an expected life  of
 the warrants of four years.

 The warrants issued to  non-employees that were  exercisable at October  31,
 2002, 2001 and 2000 were 888,000, 1,103,000, and 70,000, respectively.


 Stock Options

 2002 Equity Incentive Plan

 The Company adopted the  2002 Equity Incentive  Plan ("Incentive Plan"),  at
 the Company's annual shareholder  meeting in May 2002.   The Incentive  Plan
 authorized the  Board of  Directors  to grant  up  to 2,000,000  options  to
 purchase common shares  of the  Company.  The  maximum number  of shares  of
 common stock  which  may  be  issuable  under  the  Incentive  Plan  to  any
 individual plan participant is 500,000 shares.   All  options granted  under
 the Incentive Plan have vesting periods up to a maximum of five years.   The
 exercise price of an  option granted under the  Incentive Plan shall not  be
 less than 85% of the fair value of the common stock on the date such  option
 is granted.

 Amended and restated 1990 Stock Option Plan

 The  1990  Stock  Option  Plan  ("1990  Stock  Option  Plan"),  as  amended,
 authorizes the  Board of  Directors  to grant  up  to 2,300,000  options  to
 purchase common shares  of the Company.  No options will  be granted to  any
 individual director or employee which will, when exercised, exceed 5% of the
 issued and outstanding shares of the Company. The term of any option granted
 under the 1990 Stock Option Plan is fixed  by the Board of Directors at  the
 time the options are granted, provided  that the exercise period may not  be
 longer than 10 years from the date  of grant. All options granted under  the
 1990 Stock Option  Plan have up  to 10-year terms  and have vesting  periods
 that range from 0 to 3 years from the grant date. The exercise price of  any
 options granted under the 1990 Stock Option Plan is the fair market value at
 the date of grant.


 The Company's stock option activity for the three years ended October 31,
 2002 was as follows:

                                                                   Weighted
                                       Number        Option        Average
                                         of           Price        Exercise
                                       Shares       Per Share       Price
                                      ---------    -----------     --------
 Options outstanding at
  October 31, 1999                    1,063,300   $0.30 - 2.50    $    0.70

 Options granted                         50,000    0.46 - 1.44         1.44
 Options exercised                     (543,600)   0.30 - 2.25         0.95
 Options canceled                      (105,600)   0.40 - 2.50         1.14
                                      ---------    -----------     --------
 Options outstanding at
  October 31, 2000                      464,100    0.30 - 2.25         0.67

 Options granted                      1,930,000    0.42 - 1.50         0.55
 Options exercised                      (33,500)   0.30 - 1.41         0.40
 Options canceled                      (178,100)   0.40 - 2.50         1.10
                                      ---------    -----------     --------
 Options outstanding at
  October 31, 2001                    2,182,500    0.30 - 2.25         0.53

 Options granted                        195,000    0.21 - 0.70         0.27
 Options exercised                     (175,000)          0.40         0.40
 Options canceled                      (593,000)   0.30 - 1.88         0.77
                                      ---------    -----------     --------
 Options outstanding at
  October 31, 2002                    1,609,500   $0.09 - 1.50    $    0.44
                                      =========    ===========     ========


<TABLE>

 The following table summarizes information about warrants and stock options
 outstanding at October 31, 2002:

                                                 Weighted
                                  Weighted       Average
     Range of       Options/      Average    Exercise Price Of  Options/       Prices of
     Exercise       Warrants     Remaining   Options/Warrants   Warrants   Options/Warrants
      Prices       Outstanding      Life       Outstanding     Exercisable    Exercisable
   ------------     ---------       ----           ----        ---------          ----
  <S>              <C>             <C>            <C>          <C>               <C>
      $0 - $0.9     4,335,891       3.85           0.60        1,947,738          0.59
   $1.00 - $1.9       424,500       0.19           1.44          381,500          1.44
   $2.00 - $2.9       300,000       4.68           2.21          300,000          2.21
   $3.00 - $3.9       450,000       2.46           3.33          450,000          3.33
                    ---------       ----           ----        ---------          ----
                    5,510,391       3.50           0.97        3,079,238          1.26
                    =========       ====           ====        =========          ====

</TABLE>


 Statements of Financial Accounting Standards No. 123

 The Company accounts  for its stock-based  compensation plans in  accordance
 with APB No. 25,  "Accounting for Stock Issued  to Employees." SFAS No.  123
 encourages but does  not require  the use of  a fair  value-based method  of
 accounting for stock-based compensation plans under which the fair value  of
 stock option  is determined  on the  date  of grant  and expensed  over  the
 vesting period  of the  stock  options. While  the  Company has  elected  to
 continue to apply the provisions of  APB No. 25 under which no  compensation
 cost has been  recognized by the  Company, SFAS No.  123 requires pro  forma
 disclosure of net loss and loss per share as if the fair value-based  method
 under SFAS No. 123 has been adopted. The value of all options for shares  of
 the Company's common stock to employees  of the Company has been  determined
 under the market value method  using Black-Scholes valuation principles  and
 the following assumptions:


                                          2002          2001         1999
 ---------------------------------------------------------------------------
 Risk-free interest rate                      4%            5%            6%
 Expected dividend yield                      0%            0%            0%
 Expected lives                          5 years       4 years     1-3 years
 Expected volatility                  99% - 157%   133% - 159%          213%


 The total value  of options  and warrants  granted to  employees during  the
 years ended  October  31, 2002,  2001  and  2000 was  computed  as  $40,011,
 $900,677 and  $1,119,895, respectively.  If the  Company had  accounted  for
 these plans in accordance with SFAS No. 123, the Company's net loss for  the
 year ended October 31, 2002, 2001 and 2000 would have increased as follows:

                                     2002            2001            2000
                                  ----------     -----------     -----------
    Net Income (loss):
      As reported                $(4,684,180)   $ (2,684,306)   $(11,186,742)
      Pro forma                  $(5,027,880)   $ (2,950,373)   $(11,425,397)
    Net loss per share
      As reported:
        Basic and diluted        $     (0.34)   $      (0.25)   $      (1.31)
      Pro forma
        Basic and diluted        $     (0.36)   $      (0.27)   $      (1.34)


 NOTE 11 - INCOME TAXES

 The  temporary  differences  that  give  rise  to the deferred tax assets or
 liabilities at October 31, 2002 and 2001 are as follows:

                                                 2002             2001
                                              ----------       ----------
 Deferred tax assets
   Net operating loss carryovers             $13,529,415      $10,789,919
   Accounts receivable                           172,173          100,075
   Advertising credits                           190,134          190,134
   Property and equipment                        132,799                -
   Accrued liabilities                            36,627          228,714
                                              ----------       ----------
     Total gross deferred tax assets          14,061,148       11,308,842

 Deferred tax liabilities
   Property and equipment                              -          (34,314)
                                              ----------       ----------
     Total gross deferred tax liabilities              -          (34,314)
                                              ----------       ----------
                                              14,061,148       11,274,528
         Valuation allowance                 (14,061,148)     (11,274,528)
                                              ----------       ----------
   Net deferred tax assets                   $         -      $         -
                                              ==========       ==========

 The  increase in the  valuation allowance for  the years  ended October  31,
 2002 and  2001  of  $2.8 million and  $1 million,  respectively, was related
 primarily to a change in U.S. operating loss carryforwards.

 At October  31, 2002, the Company has U.S. net operating loss  carryforwards
 for federal  income tax purposes of approximately $40 million, which  expire
 in  2006 through 2022. Utilization of U.S.  net operating losses is  subject
 to annual limitations provided for by the Internal Revenue Code. The  annual
 limitation may also result in the expiration of net operating losses  before
 utilization.

 Realization  of tax  benefits depends  on having  sufficient taxable  income
 within  the  carryback and  carryforward  periods. The  Company  continually
 reviews  the  adequacy  of the  valuation  allowance  and  recognizes  these
 benefits as reassessment indicates that it is more likely than not that  the
 benefits will be realized. Based on pretax losses incurred in recent  years,
 management  has established a  valuation allowance against  the entire  U.S.
 net deferred asset balance.


 NOTE 12 - COMMITMENTS AND CONTINGENCIES

 The Company is obligated under various capital leases for equipment used  in
 operating  the business with terms expiring  at various dates through  2005.
 The  Company leases its  branch office facilities  and its corporate  office
 under various noncancelable operating leases with terms expiring at  various
 dates through  2007, and has also entered into various operating leases  for
 equipment  used in  the  Company's business.  Rental expense  for  operating
 leases was  $555,598, $228,882 and $290,175 for the years ended October  31,
 2002, 2001 and 2000, respectively.

 Future minimum lease payments under noncancelable operating leases and
 capital leases as of October 31, 2002 are as follows:

                                                Capital         Operating
                                                Leases            Leases
                                              ----------       -----------
       Year ending October 31,
                        2003                 $   405,090      $    507,615
                        2004                      61,185           409,427
                        2005                      14,130           198,294
                        2006                           -           171,742
                        2007                           -            57,676
                                              ----------       -----------
       Total minimum lease payments              480,405      $  1,344,754
                                                               ===========
       Less amount representing interest         (18,590)
                                              ----------
       Present value of net minimum
            capital lease payment                461,815

       Less current installments of
         obligations under capital lease        (389,450)
                                              ----------
       Obligations under capital leases,
         excluding current installments      $    72,365
                                              ==========

 Legal Proceedings
 -----------------
 The Company is not currently a party to any material legal proceedings.  The
 Company, from time to time, may  be subject to legal proceedings and  claims
 in the ordinary course of business, including claims of alleged infringement
 of trademarks  and  other intellectual  property  of third  parties  by  the
 Company.  Such  claims,  even  if  not  meritorious,  could  result  in  the
 expenditure of significant financial and managerial resources.

 On June  12, 2001,  Cygnus  Telecommunications Technology,  LLC  ("Cygnus"),
 filed a patent  infringement suit (case  no. 01-6052) in  the United  States
 District  Court,  Central  District  of  California,  with  respect  to  the
 Company's "international call-back" technology.  This technology drives  the
 Company's Re-Origination Services and allows its foreign based customers  to
 initiate international  telephone calls  by first  calling a  switch in  the
 United States, which  then initiates  a "call  back" to  the customer  sight
 providing the customer with an open phone  line to place a call anywhere  in
 the world. The injunctive  relief that Cygnus sought  in this suit has  been
 denied, but Cygnus continues  to seek compensatory  and punitive damages  as
 well as attorneys' fees and costs.

 In August  2002, Cygnus  filed  a motion  for  a preliminary  injunction  to
 prevent the Company from providing "call back" services.  The Company  filed
 a cross motion for summary judgment of non-infringement.  Both motions  were
 denied.  The  Company plans to  refile the motion  for summary judgment  for
 non-infringement.  The Company's ultimate legal and financial liability with
 respect to such legal proceeding cannot  be estimated with any certainty  at
 this time.  The Company intends to continue defending this case vigorously.

 On June 3, 2002, RSL Com USA, Inc.  ("RSL") filed a breach of contract  suit
 (case no. BC275210) in the Superior Court of the State of California, County
 of Los  Angeles,  alleging that  the  Company owes  RSL  past due  sums  for
 services rendered in connection with  a written Carrier Services  Agreement.
 The Company has  answered denying RSL's  claims and, in  November 2002,  the
 Company filed a cross-complaint against RSL.   The Company does not  believe
 that RSL's claims are legitimate and intends to defend this case vigorously.
 At the same time, the Company is not presently in a position to estimate its
 ultimate legal and financial liability with respect to this matter.


 NOTE 13 - BENEFIT PLAN

 Effective January  1, 1994, the Company implemented a 401(k) Profit  Sharing
 Plan  for all  employees of  the Company.  The Plan  provides for  voluntary
 contributions by employees into the Plan subject to the limitations  imposed
 by the Internal Revenue Code Section 401(k). The Company may match  employee
 contributions to a discretionary percentage of the employee's  contribution.
 The Company's  matching funds are determined at the discretion of the  Board
 of Directors and are subject to a seven-year vesting schedule from the  date
 of  original employment. The Company made  matching contributions of $0,  $0
 and  $10,566  for  the  years  ended  October  31,  2002,  2001  and   2000,
 respectively.


 NOTE 14 - BUSINESS AND CREDIT CONCENTRATIONS

 During  the year  ended October  31, 2002,  the Company  provided  wholesale
 services to a customer who accounted for approximately 10% of revenues,  and
 during  the year  ended October  31, 2001,  the Company  provided  wholesale
 services to a customer who accounted for approximately 11% of revenues.

 Management  provides an allowance for  doubtful accounts which reflects  its
 estimate  of the Company's uncollectible receivables.  In the event of  non-
 performance, the  maximum exposure to the Company is the recorded amount  of
 the receivable at the balance sheet date. The Company's receivables
 are generally not secured.


 NOTE 15 - SEGMENT INFORMATION

 Prior to fiscal 2001 the Company was organized by line of business. The  two
 major line of business operating segments were prepaid phone cards and  dial
 thru services.

 The accounting  policies of the line of business operating segments are  the
 same as  those described in the summary of significant accounting  policies.
 Revenue  represents  revenue  from  external  customers.  Substantially  all
 revenues  are from customers  within the United  States. All  assets of  the
 Company are also located in the United States.

 During the  year ended October 31, 2000, the Company had two major lines  of
 business,  its Dial Thru  services and prepaid  phone card business.  During
 the  years ended October 31,  2002 and 2001, the  Company operated its  Dial
 Thru business exclusively.

 A summary of the segment financial information as of and for the year  ended
 October  31, 2000  reported to  the  chief operating  decision maker  is  as
 follows:


     During the Year Ended             Prepaid      Dial Thru
     October 31, 2000                Phone Cards    Services        Total
     -----------------------------   ----------    ----------     ----------
     Revenue                        $ 2,755,057   $ 5,836,392    $ 8,591,449
     Direct cost of revenues          4,220,570     5,750,839      9,971,409
     Net loss                        (7,824,754)   (2,819,629)   (10,644,383)
     Total assets                     1,506,644     4,595,505      6,102,149
     Depreciation and amortization      242,788       322,400        565,188
     Capital expenditures               243,513       258,868        502,381


 Information regarding the Company's domestic and foreign revenues is as
 follows:

                                         All other
                                          foreign
                Africa       Germany     countries    Domestic        Total
               ---------    ---------    ---------    ----------    ----------
 Fiscal 2000  $1,891,191   $  418,347   $3,526,854   $ 2,755,057   $ 8,591,449
 Fiscal 2001   2,953,817      455,643    2,020,721     1,571,681     7,001,862
 Fiscal 2002   1,392,384    6,037,612    1,184,239    16,256,697    24,870,932


 No individual foreign country, except  as  noted above represented more than
 10 percent of revenue. No  individual foreign country represented more  than
 10 percent of long lived assets for any period presented.


 NOTE 16 - QUARTER-BY-QUARTER COMPARISION

<TABLE>
 Summarized  unaudited  quarterly  financial data for the years ended October
 31, 2002, 2001 and 2000 are as follows:


 2002                                      First         Second        Third          Fourth
 Quarters:                               ----------    ----------    ----------     ----------
 <S>                                    <C>           <C>           <C>            <C>
   Revenues, net                        $ 6,586,754   $ 6,086,154   $ 6,138,790    $ 6,059,234
   Operating loss                        (1,002,479)     (922,941)     (727,007)      (734,107)
   Net loss                              (1,285,893)   (1,239,814)   (1,082,615)    (1,075,858)
   Net loss per share-basic                   (0.10)        (0.09)        (0.08)         (0.07)
   Net loss per share-diluted                 (0.10)        (0.09)        (0.08)         (0.07)

 2001
 Quarters:
   Revenues, net                            890,620       903,639     1,654,079      3,553,524
   Operating loss                          (991,223)     (682,600)     (497,762)    (1,159,563)
   Net (loss) income                        382,191    (1,193,171)     (594,871)    (1,278,455)
   Net (loss) income per share-basic           0.03         (0.11)        (0.05)         (0.12)
   Net (loss) income per share-diluted         0.03         (0.11)        (0.05)         (0.12)

 2000
 Quarters:
   Revenues, net                          3,806,767     2,823,704       952,667      1,008,311
   Operating loss                        (2,120,381)   (4,402,381)     (848,626)    (3,150,676)
   Net loss                              (2,083,370)   (4,659,540)     (965,071)    (3,478,761)
   Net loss per share-basic                   (0.26)        (0.55)        (0.11)         (0.39)
   Net loss per share-diluted                 (0.26)        (0.55)        (0.11)         (0.39)

</TABLE>


 NOTE 17 - CAPITAL STOCK

 During the year  ended October 31, 2002,  a holder of  one of the  Company's
 Debentures converted $506,125  of debt into  approximately 2,856,000  shares
 of the Company's stock. (See Note 6).

 In November 2001, the Company  issued 175,000 shares in connection with  the
 exercise of  options. The exercise  price was  paid with  100,000 shares  of
 common stock, which were subsequently retired.

 In November  2001, the  Company issued  25,000 shares  of common  stock  for
 investor relations services  and were  recorded at the  stock's fair  market
 value.

 In October 2001,  the Company issued 600,000  shares in connection with  the
 Company's purchase of certain assets and executory contracts of  Rapid Link,
 Inc, valued at $468,000 at the date of issuance. (See Note 3).

 In March  2001,  the Company  issued 1,000,000  shares  of common  stock  as
 additional consideration  for the  purchase of  Dial Thru  International  in
 accordance with terms of the Asset Purchase Agreement with the seller.

 In March 2001,  the Company's  $1 million convertible  note with  accredited
 investors was converted into 400,000  shares of common stock. In  connection
 with the conversion, the Company  issued additional 150,000 warrants to  the
 investors and recorded deferred financing fees of $96,230.

 In December 2000,  the Company issued 90,000  shares to Scotty Cook,  former
 Director of the Company, as  compensation for consulting services  performed
 for the Company.  The Company recorded $101,250  as consulting fees for  the
 year ending October 31, 2001.

 In September  2000,  the Company  issued  914,285 shares  of  the  Company's
 common  stock in  exchange  for  $3.2  million  face  value  of  advertising
 credits.  (See Note 4).

 In August 2000, the Company received $1 million from an  accredited investor
 in connection with a $2  million private equity placement of 571,428  shares
 of common stock, par  value $.001 per share.  The Company issued 285,714  of
 common shares in connection with  this private placement for the $1  million
 in cash  received.  In September  2000, the  Company received  $400,000  and
 issued  an additional  114,286  common  shares in  connection  with  the  $2
 million private equity placement.

 In  November 1999, the Company consummated the acquisition of  substantially
 all of the assets and  business of Dial Thru International Corporation  (the
 "Seller"), a California  corporation. The  Company issued to  the Seller  an
 aggregate of 1,000,000  shares of  common stock, recorded  a total  purchase
 price of $937,500  using the Company's  common stock price  at the time  the
 acquisition was  announced,  and agreed  to  issue an  additional  1,000,000
 shares of its  common stock upon the  acquired business achieving  specified
 revenue and earnings goals.

 During  the years  ended  October  31, 2002,  2001  and  2000,  options  and
 warrants to purchase 175,000, 134,000  and 699,800, respectively, shares  of
 common stock were exercised.


 NOTE 18 - SUBSEQUENT EVENTS

 In November  2002, the  Company  executed a  12%  note payable  with  Global
 Capital  Funding  Group,  L.P.   which  provided  additional  financing   of
 $1,250,000. The note's maturity date is November 2004.  In conjunction  with
 the issuance  of  the note,  the  outstanding  balance of  $443,000  on  the
 Debenture (see Note 6) was paid in full.

 In January  2002,  the Company  amended  the  maturity date  of  the  Second
 Debenture (see Note  6) from  January 28,  2003 to  February 24,  2004.   In
 addition, the Company  cancelled the  existing warrants  to purchase  50,000
 shares of common stock at an exercise price of $0.41 and issued warrants  to
 purchase 150,000 shares of common stock at an exercise price of $0.24  which
 expire on January 28, 2008.

 In January 2002, the Company amended the maturity date of the Notes (see
 Note 7) from October 24, 2003 to February 24, 2004.

<PAGE>

        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS AS TO SCHEDULE

 Board Of Directors and Stockholders
 Dial Thru International Corporation

 In  connection with our  audit of the  consolidated financial statements  of
 Dial  Thru International  Corporation and  Subsidiaries referred  to in  our
 report  dated December 18,  2002, we have  also audited Schedule  II for  the
 year ended October 31, 2002. In our opinion, this schedule  presents fairly,
 in all material respects, the information required to be set forth therein.



                                          /s/ KING GRIFFIN & ADAMSON P.C.
                                          -------------------------------
                                          King Griffin & Adamson P.C.
 Dallas, Texas
 December 18, 2002


<PAGE>

        REPORT OF PREVIOUS INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE

 The following  report is  a copy  of a  report previously  issued by  Arthur
 Andersen LLP ("Andersen"), which report has not been reissued by Andersen.

 We have audited,  in accordance with  auditing standards generally  accepted
 in the United  States, the financial statements  of DIAL THRU  INTERNATIONAL
 CORPORATION AND SUBSIDIARIES included in this Form 10-K and have  issued our
 report thereon dated January 9, 2002.  Our audits were made for the  purpose
 of forming an opinion  on the basic financial  statements taken as a  whole.
 The schedule  listed in the  index is  the responsibility  of the  Company's
 management and is  presented for purposes of  complying with the  Securities
 and Exchange  Commission's rules  and is  not part  of the  basic  financial
 statements.  This  schedule has  been subjected to the  auditing  procedures
 applied in  audit of the  basic financial  statements and,  in our  opinion,
 fairly states in  all material respects  the financial data  required to  be
 set forth therein in relation to  the basic financial statements taken as  a
 whole.


                               /s/ Arthur Andersen LLP
                               -----------------------
                               Atlanta, Georgia
                               January 9, 2002

<PAGE>

        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS AS TO SCHEDULE

 Board Of Directors and Stockholders
 Dial Thru International Corporation

     In connection  with our audit of  the consolidated financial  statements
 of Dial Thru International Corporation  and Subsidiaries referred to in  our
 report dated December  1, 2000,  we have  also audited Schedule  II for  the
 year ended October 31, 2000. In our opinion, this schedule  presents fairly,
 in all material respects, the information required to be set forth therein.



                                          /s/ KING GRIFFIN & ADAMSON P.C.
                                          -------------------------------
                                          King Griffin & Adamson P.C.
 Dallas, Texas
 December 1, 2000

<PAGE>

                      DIAL THRU INTERNATIONAL CORPORATION

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

              For the years ended October 31, 2002, 2001 and 2000


                            Balance at                            Balance at
                             the beg                               the end
                            of period   Additions  Deductions     of period
                            ----------  ---------- -----------    ----------
 2002
 ----
 Allowance for doubtful
    accounts                $  228,729  $1,085,043  $ 765,305 (1) $  548,467
                             =========   =========   ========      =========
 Impairment provision for
   advertising credits      $  563,932  $        -  $       -     $  563,932
                             =========   =========   ========      =========

 2001
 ----
 Allowance for doubtful
   accounts                 $1,025,766  $  140,167  $ 937,204 (1) $  228,729
                             =========   =========   ========      =========
 Impairment provision for
   advertising credits      $  575,542  $        -  $  11,610     $  563,932
                             =========   =========   ========      =========

 2000
 ----
 Allowance for doubtful
   accounts                 $  231,675  $  983,760  $ 189,669 (1) $1,025,766
                             =========   =========   ========      =========
 Impairment provision for
   advertising credits      $        -  $  575,542  $       -     $  575,542
                             =========   =========   ========      =========

 (1) Write offs.


<PAGE>

                                EXHIBIT INDEX

 NO. DESCRIPTION OF EXHIBIT

 21.1  Subsidiaries of the Registrant

 23.1  Information Regarding Consent of Arthur Andersen LLP

 23.2  Consent of King Griffin & Adamson P.C.

 99.1  Certificate of Chief Executive Officer pursuant to 18 U.S.C.
       Section 1350

 99.2  Certificate of Chief Financial Officer pursuant to 18 U.S.C.
       Section 1350