UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

  (Mark One)

     |X|  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
          ACT OF 1934
          For the quarterly period ended March 31, 2000

     |_|  TRANSITION  REPORT  UNDER  SECTION 13 OR 15(d) OF THE EXCHANGE ACT
          For the transition period from __________ to ___________

                         Commission file number: 0-29581

                        TELEFFICIENCY HOLDING CORPORATION
        (Exact name of small business issuer as specified in its charter)

          Delaware                                               98-0188197
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                             Identification No.)

        5155 Spectrum Way, Bldg. 30, Mississauga, Ontario Canada L4W 5A1
                    (Address of principal executive offices)

                                 (416) 324-3030
                           (Issuer's telephone number)

                                       n/a
              (Former name, former address and former fiscal year,
                          if changed since last report)

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court.
Yes [__]  No [__]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date:

<TABLE>
<CAPTION>
                                                                         Outstanding as of
Class                                                                         May 15, 2000
-----                                                                         ------------
<S>                                                                             <C>
Class A Voting and Participating Common Stock, par value $.0001                 10,979,949
Class B Convertible Voting and Nonparticipating Common Stock, par value $.0001   3,980,051
</TABLE>

Transitional Small Business Disclosure Format (Check One): Yes[__] No [X]



<PAGE>

                        TELEFFICIENCY HOLDING CORPORATION

                                   FORM 10-QSB


                                      INDEX


                                                                            Page
                                                                            ----
PART I   FINANCIAL INFORMATION.................................................3

Item 1.  Financial Statements:.................................................3
         Consolidated Balance Sheets...........................................3
         Consolidated Statements of Operations.................................4
         Consolidated Statements of Cash Flows.................................5
         Notes to Consolidated Financial Statements............................6

Item 2.  Management's Discussion and Analysis or Plan of Operation............11


PART II  OTHER INFORMATION....................................................14

Item 1.  Legal Proceedings....................................................14
Item 2.  Changes in Securities................................................14
Item 3.  Defaults Upon Senior Securities......................................15
Item 4.  Submission of Matters to a Vote of Security Holders..................15
Item 5.  Other Information....................................................15
Item 6.  Exhibits and Reports on Form 8-K.....................................15

SIGNATURE PAGE ...............................................................16

FINANCIAL DATA SCHEDULE.......................................................17

                                       2

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                        TELEFFICIENCY HOLDING CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2000 AND DECEMBER 31, 1999
                                    UNAUDITED

                                                         2000           1999
                                                     -----------    -----------

ASSETS
Current assets:
 Accounts receivable, net                            $   533,922    $   596,990
 Inventory                                               464,438        446,920
 Prepaid expenses                                        102,285         27,354
                                                     -----------    -----------
      Total current assets                             1,100,645      1,071,264

Property and equipment - net                              91,785         59,525
Advances to related companies                            199,878        200,338
Deferred finance costs, net                              663,104        279,125
Intangibles, net                                          93,394         97,011
                                                     -----------    -----------

      TOTAL ASSETS                                   $ 2,148,806    $ 1,707,263
                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
 Bank indebtedness                                   $   605,732    $   694,212
 Accounts payable and accrued liabilities                893,555      1,049,789
 Deferred revenue                                        150,625        162,745
 Customers' deposits                                     253,799        398,788
 Loan payable                                               --          100,000
 Obligation under capital leases - current portion        12,000         19,569
                                                     -----------    -----------
      Total current liabilities                        1,915,711      2,425,103

Debentures payable, net of discount of $ 501,246       1,298,754        605,375
Obligation under capital leases, net of
 current portion                                          17,533         14,932
                                                     -----------    -----------

      Total liabilities                                3,231,998      3,045,410
                                                     -----------    -----------

Stockholders' deficit:
 Capital stock                                             1,512          1,496
 Additional paid in capital                            4,333,698      3,445,736
 Cumulative translation adjustment                       (71,058)        99,605
 Accumulated deficit                                  (5,347,344)    (4,884,984)
                                                     -----------    -----------

      Total stockholders' deficit                     (1,083,192)    (1,338,147)
                                                     -----------    -----------

      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT    $ 2,148,806    $ 1,707,263
                                                     ===========    ===========


          See accompanying notes to consolidated financial statements.

                                       3

<PAGE>

                        TELEFFICIENCY HOLDING CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                    UNAUDITED


                                                     2000               1999
                                                 -----------        -----------
Sales                                            $ 1,303,864        $ 2,122,139
Cost of sales                                        754,808          1,324,836
                                                 -----------        -----------

Gross profit                                         549,056            797,303
                                                 -----------        -----------

Expenses:
 Wages and salaries                                  423,870            366,867
 Subcontract costs                                   105,304            245,888
 Management salaries                                  63,547             40,317
 Automobile                                           51,479             59,298
 Sales commissions                                    14,420             53,740
 Professional fees                                    59,012              9,345
 Office and general                                   83,464             52,503
 Employee benefits                                    44,985             35,055
 Advertising and promotion                            22,701             65,684
 Telephone                                            18,016             21,749
 Premises lease cost                                  26,599             28,938
 Bank charges and interest                            80,532             15,892
 Insurance                                             9,210              9,000
 Depreciation and amortization                         8,277              6,220
                                                 -----------        -----------

                                                   1,011,416          1,010,496
                                                 -----------        -----------

NET LOSS                                         $  (462,360)       $  (213,193)
                                                 ===========        ===========

NET LOSS PER SHARE                               $     (0.03)       $     (0.01)
                                                 ===========        ===========


          See accompanying notes to consolidated financial statements.

                                       4

<PAGE>

                        TELEFFICIENCY HOLDING CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                    UNAUDITED


<TABLE>
<CAPTION>
                                                            2000           1999
                                                        -----------    -----------

<S>                                                     <C>            <C>
Cash flows from operating activities:
 Net loss                                               $  (462,360)   $  (213,193)
 Adjustments for items not affecting cash:
  Depreciation and amortization                              76,427          6,220
Changes in assets and liabilities:
  Accounts receivable                                        63,068        260,389
  Inventory                                                 (17,518)       (27,970)
  Prepaid expenses                                               69         (4,234)
  Deferred finance costs                                    (40,000)
  Accounts payable and accrued
   liabilities                                             (156,235)      (179,796)
  Customers' deposits                                       174,789        152,576
  Deferred revenue                                         (331,898)      (183,544)
                                                        -----------    -----------
         Net cash used by
          operating activities                             (693,658)      (189,552)
                                                        -----------    -----------

Cash flows from investing activities:
 Purchase of capital assets                                 (36,920)        (2,436)
                                                        -----------    -----------
         Net cash used by investing activities              (36,920)        (2,436)
                                                        -----------    -----------

Cash flows from financing activities:
 Issuance of capital stock and warrants                      19,228
 Advances from related companies                                460         25,390
 Obligations under capital leases                            (4,968)        (1,105)
 Bank indebtedness                                          (88,480)       123,296
 Repayment of demand loan                                  (100,000)
 Proceeds from issue of debentures                        1,075,000
                                                        -----------    -----------
         Net cash provided by financing
          activities                                        901,240        147,581
                                                        -----------    -----------

Effect of exchange rate changes on cash                    (170,662)        44,407
                                                        -----------    -----------

Increase in cash                                                 --             --

Cash - beginning                                                 --             --
                                                        -----------    -----------

CASH - ENDING                                           $        --    $        --
                                                        ===========    ===========

Supplemental Cash Flow Information:
 Cash paid for interest                                 $    43,771    $    15,892
                                                        ===========    ===========

 Cash paid for income taxes                             $        --    $        --
                                                        ===========    ===========

                                                        ===========    ===========
  Deferred finance costs paid with warrants and stock   $   390,625    $        --
                                                        ===========    ===========
</TABLE>


              See accompanying notes to consolidated financial statements.

                                       5

<PAGE>

                        TELEFFICIENCY HOLDING CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
                                    UNAUDITED

NOTE 1   The financial  information included herein is unaudited;  however, such
         information  reflects  all  adjustments,  consisting  solely  of normal
         recurring   adjustments  which  are,  in  the  opinion  of  management,
         necessary for a fair  presentation  of the periods  indicated.  Certain
         information  and footnote  disclosures  normally  included in financial
         statements  prepared in conformity with generally  accepted  accounting
         principles  have been  condensed  or omitted  pursuant to the rules and
         regulations of the Securities and Exchange Commission.  These condensed
         financial   statements   should  be  read  in   conjunction   with  the
         consolidated  financial  statements and related notes  contained in the
         Company's Annual Report for the twelve months ended December 31, 1999.

NOTE 2 - NATURE OF BUSINESS

         The  Company  operates  in one  industry  segment and is engaged in the
         sales, installation and service of telephone systems throughout Canada.
         Substantially all of the Company's net assets are within Canada.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

         Basis of accounting

         The financial statements are prepared in accordance with US GAAP.

         The  consolidated  financial  statements  include  the  accounts of the
         Company  and  its  subsidiaries   after  eliminating  all  intercompany
         accounts and transactions.

         Translation of foreign currencies

         The Company  uses the local  currency as the  functional  currency  and
         translates all assets and liabilities at year-end  exchange rates,  all
         income and expense  accounts at average  rates and records  adjustments
         resulting from the translation in a separate component of equity.

         Inventory

         Inventory is valued at the lower of cost and net realizable value. Cost
         is  determined  on a  first-in  first-out  basis.  At  March  31,  2000
         inventory is comprised entirely of component parts.

         Property and equipment

         Property and equipment are recorded at cost. Depreciation is calculated
         using the declining  balance method over the useful life of the assets.
         Furniture and fixtures and other equipment are  depreciated  over seven
         years.  Computer  equipment under capital lease is depreciated over the
         life of the lease, 2 to 5 years, and included in depreciation expense.

         Leasehold  improvements are amortized on the  straight-line  basis over
         the term of the  leased  premises,  three  years  and six  months.  The
         original lease expired on December 31, 1999 with the improvements fully
         amortized. However, the lease was renewed for an additional six months.

                                       6

<PAGE>

                        TELEFFICIENCY HOLDING CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999


NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Intangibles

         The excess of the cost of a prior  acquisition  of a  Canadian  company
         over the fair value of the assets acquired, and is being amortized over
         10 years using the straight-line basis.

         During  1999 the  Company  purchased  the  customer  lists of two small
         companies  engaged in the sales and  servicing of telephone  systems in
         Canada.  The consideration  for the purchases was cash of $74,232.  The
         cost of these  acquisitions  has been  included in  intangibles  on the
         accompanying  consolidated  balance sheets. The cost is being amortized
         over 10 years using the straight-line basis.

         Deferred financing

         Deferred finance costs represent costs incurred in conjunction with the
         issue of debentures.  Such costs will be amortized over the life of the
         debentures, three years, on a straight-line basis.

         Revenue recognition

         Revenue is recognized  upon  shipment of product or upon  completion of
         installation,  if  required.  Installation  is  generally  over a short
         period of one to several days. Accordingly, no material amounts of work
         in process exist at any point in time.  Service  contracts are sold for
         one  year  periods.  The  terms of the  contracts  require  payment  in
         advance.   Revenues   for  service   contracts   are   amortized  on  a
         straight-line  basis over the life of the  contract.  Product  warranty
         costs, including Company labor, where necessary,  are reimbursed by the
         manufacturer.  Accordingly,  no amount is provided for warranty  costs.
         The Company has not experienced  material amounts of sales returns,  as
         the majority of sales are under contracts  covered by product warranty,
         discussed above.

         Estimates

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities  and disclosure of contingent  assets and liabilities as of
         the  date of the  financial  statements  and the  reported  amounts  of
         revenues and expenses  during the  reporting  periods.  Actual  results
         could differ from those estimates and assumptions.

         Financial instruments

         The Company's  financial  instruments  consist of accounts  receivable,
         advances to related companies, bank indebtedness,  accounts payable and
         accrued  liabilities,  obligations  under capital leases and debentures
         payable.  Unless otherwise  noted, it is management's  opinion that the
         Company is not  exposed to  significant  interest,  currency  or credit
         risks arising from these financial instruments. The fair value of these
         financial   instruments   approximate  their  carrying  values,  unless
         otherwise noted.

                                       7

<PAGE>

                        TELEFFICIENCY HOLDING CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Income taxes

         The Company  accounts for income taxes in accordance  with Statement of
         Financial  Accounting  Standards  No. 109.  Deferred  income  taxes are
         provided on material temporary  differences  between book and tax bases
         of assets and liabilities when such differences  arise. As of March 31,
         2000, there are no material  differences between the book and tax bases
         of the  Company's  assets  and  liabilities.  Deferred  taxes  are also
         recognized  for  operating  losses  available to offset  future  income
         taxes. A valuation  allowance is provided if it is more likely than not
         that the Company will not realize the benefits of a deferred tax asset.

NOTE 4 - DEBENTURES PAYABLE

         In  December  1999,  the  Company  offered for sale up to 18 units each
         consisting of $100,000  principal amount of Series A 13% debentures due
         December 31, 2002 and a warrant to purchase up to 30,000  shares of the
         Company's Class A common stock at a price of $0.25 per share. Each unit
         was  offered  for  $100,000.  Interest  is payable  annually in arrears
         commencing  December 31, 2000. The debentures are redeemable,  prior to
         maturity,  at a price of 105% of the  principal  amount,  limiting  the
         Company's  exposure to interest  rate risk.  As of March 31, 2000,  the
         Company sold 18 units,  receiving $1,800,000.  At the time of sale, the
         stock price exceeded the warrant exercise price. Accordingly,  $522,750
         was  attributable to warrants based on the excess of the stock price at
         issuance date over the warrant  exercise  price.  The  debentures  were
         recorded at a discounted  value of  $1,277,250.  The  discount  will be
         amortized  over the life of the  debentures  using the interest  method
         with  effective  interest  rates of 20.9% to  35.6%.  Interest  expense
         attributable  to them for the three  months  ended  March  31,  2000 is
         $68,358.

NOTE 5 - CAPITAL STOCK, OPTIONS AND WARRANTS

         At March 31, 2000 and December 31, 1999 capital  stock is  comprised as
         follows:

<TABLE>
<CAPTION>

         Authorized          Issued                                        2000      1999
         ----------          ------                                       ------    ------
<S>      <C>                <C>                 <C>                       <C>        <C>
           5,000,000                            Preferenced shares,
                                                par value $.0001          $   --     $   --
         115,000,000        9,624,500 (2000)    Class A common shares,
                            9,460,000 (1999)    par value $.0001             962        946
          30,000,000        5,500,000           Class B common shares,
                                                par value $.0001             550        550
                                                                          ------     ------
                                                                          $1,512     $1,496
                                                                          ======     ======
</TABLE>

         Class A common  shares  are voting  and  participating.  Class B common
         shares are voting and  non-participating and may be exchanged to obtain
         Class A common shares after a restriction period.

                                       8

<PAGE>

                        TELEFFICIENCY HOLDING CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999


NOTE 5 - CAPITAL STOCK, OPTIONS AND WARRANTS (CONTINUED)

         The  following  comprises the warrants  outstanding  or committed to be
         issued at March 31, 2000, each for one share of Class A common stock:

<TABLE>
<CAPTION>
         Number of Warrants     Value                          Exercise Price    Expiration Date
         ------------------     -----                          --------------    ---------------
              <S>               <C>                            <C>               <C>
                165,000         N/A - Issued with 165,000      $1.00             May, 2000
                                CL A shares

                146,328         N/A - Issued with              $6.21 - $8.97     December, 2001
                                146,328 CL A shares

                507,500         $279,125                       $0.25             December, 2001

                217,500         $119,625                       $0.25             December, 2001

                447,500         $743,500                       $0.25             February, 2002

                600,000         $150,000                       $0.25             March, 2002
              ---------
              2,083,828
              =========
</TABLE>

         These  warrants  have been excluded  from the  calculation  of loss per
         share since the assumed exercise would decrease the loss per share and,
         therefore, are anti-dilutive.

         The assigned  value to warrants  granted for services is based upon the
         their fair market, at the date of issue.

         During the three months ended March 31, 2000,  the Company  issued  the
         following warrants:

         Number of Warrants   Value            Exercise Price    Expiration Date
         ------------------   -----            --------------    ---------------

         322,500              $403,125         $0.25             February 2002
         192,500              $240,625         $0.25             February 2002

         The value  assigned is based upon the February  2000 end of month close
         price  of  the   underlying   shares  as  quoted  by  market   sources,
         approximately $1.50 per share.

         During March, 2000, the Company issued 600,000 warrants  exercisable at
         $0.25 and expiring March 2002. The value  assigned of $150,000 is based
         on the value of  services  to be  performed.  The value  is included in
         deferred finance costs at March 31, 2000.

         During the period the Company  issued  50,000  shares in  exchange  for
         services to be performed.  The services  have a value of $75,000.  Such
         value is included in prepaid  expenses at March 31,  2000.  In addition
         114,500  shares were issued on the exercise of warrants for proceeds of
         $19,228.

                                       9

<PAGE>

                        TELEFFICIENCY HOLDING CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 5 - CAPITAL STOCK, OPTIONS AND WARRANTS (CONTINUED)

         At March 31, 2000 the Company had issued the following options:

<TABLE>
<CAPTION>
                          Number of
         Issued To         Options          Grant Date       Date Exercisable  Exercise Price   Expiration
         ---------         -------          ----------       ----------------  --------------   ----------
<S>                       <C>               <C>                  <C>               <C>          <C>
         Officers           500,000*        10/21/1999           Immediate         $0.21        10/21/2004

         Employees          497,000         11/09/1999           Immediate         $0.37        01/01/2002
                            100,000         10/15/1999           Immediate         $0.15        10/15/2000
                            200,000         06/30/1999           Immediate         $0.05        06/30/2001
                            300,000         06/17/1999           07/01/1999        $0.05        07/01/2004
                            221,000         06/17/1999           01/31/2000        $0.50        01/31/2005
                          ---------
                          1,818,000

         Consultants         75,000         01/01/2000           Immediate         $1.00        12/31/2000
                             50,000         01/01/2000           Immediate         $0.75        12/31/2000

         Officers           500,000         01/04/2000           Immediate         $0.75        01/04/2002
                          ---------
                          2,443,000
                          =========
</TABLE>

         *    Subsequently exercised.


NOTE 6 - NET LOSS PER SHARE

         Net  consolidated  loss per share has been computed by dividing the net
         consolidated  loss  applicable to common  shareholders  by the weighted
         average  number  of  shares  of common  stock  outstanding  during  the
         respective  years  (15,124,500  in 2000 and  14,960,000  in 1999).  The
         effect of the exercise of the stock warrants and options referred to in
         Note 5 is not dilutive since they would reduce the loss per share.

                                       10

<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation.


RESULTS OF  OPERATIONS  -  Comparison  of the three  months ended March 31, 2000
(First Quarter Fiscal Year 2000) to the three months ended March 31, 1999 (First
Quarter Fiscal Year 1999)

     For the three  months  ended  March 31,  2000 the Company had a net loss of
$462,360 compared to a net loss of $213,193 for the three months ended March 31,
1999.  The  increase  in net loss is due to  management's  decision  to focus on
higher margin business.

     Total  revenue for the three  months  ended  March 31, 2000 was  $1,303,864
compared with  $2,122,139  for the same period in 1999.  The decline in sales is
due to the  Company's  decision to focus on higher  margin  business in 2000 and
provide  complete  solutions for  customers.  In 1999 a portion of the Company's
sales  were to the  wholesale  market.  While this  provided  the  Company  with
significant sales volume, the margins were small and  administration  costs were
high.  Providing complete solutions for customers enables the Company to achieve
higher margins.

     The cost of sales is comprised almost entirely of the costs of the products
sold by the Company.  For the three months ended March 31, 2000,  the  Company's
cost of sales  decreased by $570,028 or 43% from  $1,324,836 for the same period
in 1999.  This decrease is due to the  abandonment of the wholesale  business by
the Company.

     Operating  expenses in the three months  ended March 31, 2000  increased by
$920 to  $1,011,416  from  $1,010,496  for the same period in 1999.  Included in
expenses for the three months ended March 31, 2000 is interest of $68,358 on the
debentures.  Eliminating such debenture  interest expense,  the expenses for the
three  months  ended March 31, 2000 were  $943,058,  a decrease of $67,438 or 6%
from expenses for the same period in 1999.

     Gross  profit for the three  months  ended March 31, 2000 was  $549,056,  a
decrease  of  $248,247 or 31% from  $797,303  for the same  period in 1999.  The
decrease  in gross  profit is due to the  Company's  decision to focus on higher
margin business in 2000 and to provide complete solutions for customers.

     Individual expense categories  fluctuate from year to year depending on the
mix of business the Company  completes  in the year.  For the three months ended
March 31, 2000 subcontract  costs decreased by $140,584 or 57% from $245,888 for
the same period in 1999.  This decrease is due to the Company's  decision to use
employees instead of subcontractors for systems installations during the period.
Wages and  salaries  have  increased by $57,003 or 16% in the three month period
ended March 31, 2000 from $366,867 for the same period in 1999.  The majority of
this   increase  is   attributable   to  the   substitution   of  employees  for
subcontractors.  For the three  months  ended March 31, 2000  professional  fees
increased by $49,667 or 503% to $59,012 from $9,345 for the same period in 1999.
This increase is due to professional fees incurred in 2000 in connection

                                       11

<PAGE>

with the  preparation of financial  statements and  documentation  required as a
precondition to the Company's qualification on the NASD.OTC.

     For the three  months  ended March 31, 2000 the Company had  negative  cash
flow from operating  activities of $693,658  compared to a negative cash flow of
$189,552 for the three months ended March 31, 1999.  The negative  cash flow for
the three month period ended March 31, 2000 is primarily attributable to the net
use of cash in operating activities. Investing activities were nominal.

     The Company financed negative cash flow through  additional  borrowings and
loan  receivable  repayments.  During the three  months ended March 31, 2000 the
Company  received  proceeds of $1,075,000  from the sale of 13%  Debentures  due
March 31,  2002 (the  "Debentures").  The  Company  repaid  $100,000 of the Loan
Payable  from the  Debenture  offering  proceeds and the balance of the proceeds
were used in  operations.  In addition,  the Company  repaid $88,480 of its Bank
Line of Credit with the Royal Bank of Canada.

     A  significant  proportion  of the  Company's  cash  flow  requirement  for
operating activities arises from inventory, accounts receivable as well as for a
reduction  of $156,234 in our  payables  and accrued  liabilities  for the three
months ended March 31, 2000 as compared to the same period in 1999.  The Company
typically  requires  payment for new products in cash upon delivery or within 30
days.  Payment terms tend to be given by the Company in connection with sales of
larger systems and sales to national accounts or larger  companies.  Other sales
are typically made against cash.

     Accounts  receivable  were  reduced by $63,068  or 10.5% from  $596,990  at
December  31, 1999 to  $533,922 at March 31,  2000.  The  reduction  in accounts
receivable  is  largely   attributable  to  management  and  staff  focusing  on
collections of aged accounts to provide the Company with better cash flow.

     The Company met its cash needs in the three  months  ending  March 31, 2000
through  borrowings under a CDN$705,000  (approximately  US$486,380 at the March
31, 2000 exchange  rate) line of credit with the Royal Bank of Canada (the "Bank
Line Of Credit") and the offering of $1,800,000  aggregate  principal  amount of
Debentures.  The Bank Line of Credit provides for demand loans and is secured by
substantially  all of the  Company's  assets.  Interest on  borrowings is at the
prime rate plus 2%. The  Company  can borrow  against the Bank Line of Credit if
needed,  assuming there is no breach of the covenants (which include requirement
for  minimum  working  capital and net worth,  limit  management  salaries,  and
require that the aggregate  principal  amount  outstanding at any time under the
credit agreement not exceed the "Borrowing base" which is based on inventory and
receivables) set forth in the credit agreement.  The Company has been in default
with the net worth  covenant as at March 31,  2000.  However,  the Royal Bank of
Canada has not  declared  an event of  default  under the Bank Line of Credit or
required outstanding loans to be repaid.

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<PAGE>

     During  the three  months  ending  March 31,  2000,  the  Company  received
proceeds of  $1,075,000  from the sale of the  Debentures  as the balance of the
total offering of an aggregate principal amount of $1,800,000.  The Company used
$100,000 of the proceeds to repay part of the demand loan and the balance of the
proceeds was used for working capital.

     On or about  September 29, 1999 the Company  entered into an agreement with
Cascade International Capital Corporation ("Cascade"), pursuant to which Cascade
will assist the Company in  obtaining an  acquisition  financing  commitment  of
$60,000,000. To date, no such commitment has been obtained.


Liquidity and Capital Resources

     To date, the Company has met its cash needs from:

*    The Bank Line of Credit;
*    The issuance of capital stock and warrants; and
*    Advances from related companies.

     In  February  2000,  the Company  completed  its  offering of an  aggregate
principal amount of $1,800,000 of 13% Debentures due March 31, 2002.

     The Company  believes that the  implementation  of its growth strategy will
result in greater  working  capital needs.  The Company  expects that such needs
will  arise  as a  result  of  increased  sales,  giving  risk to  proportionate
increases  in accounts  receivable.  In addition,  the Company  expects that the
amount of its account  receivables  as a percentage  of its total  revenues will
increase if, as anticipated,  the Company  increases the proportion of its sales
attributable to larger telecommunication systems and national accounts.

     At March 31, 2000,  the Company did not have any material  commitments  for
capital expenditures.  The Company currently anticipates that its available cash
resources  and  credit  facilities,  will be  sufficient  to meet its  presently
anticipated  working capital and capital  expenditure  requirements for at least
the next 12 months, including the payment of $234,000 in interest due in 2001.

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<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

     There are no legal  proceedings  against  the  Company  and the  Company is
unaware of such proceedings contemplated against it.

Item 2. Changes in Securities.

     During  December 1999 through  February 2000, the Company offered and sold,
through  Shepherd  Financial  Group,  LLC, 3  Hawthorn  Parkway,  Vernon  Hills,
Illinois,  18 units at a price of $100,000 per unit  consisting  of (i) $100,000
principal  amount of the Company's Series A 13% Debentures due December 31, 2002
and (ii) a stock purchase warrant entitling the holder thereof to purchase up to
30,000  shares of Class A Common  Stock at an exercise  price of $0.25 per share
(the  "Debenture  Units").  The Company sold 7.25 Debenture Units as at December
31,  1999  (receiving  $725,000  in  gross  proceeds)  and the  remaining  10.75
Debenture Units during the first quarter of 2000 (receiving  $1,075,000 in gross
proceeds).  In connection with the offer and sale of the 18 Debenture Units, the
Company agreed to pay Shepherd  Financial  Group, LLC a placement fee calculated
as follows:  (i) for every  Debenture Unit sold, up to a maximum of 10 Debenture
Units,  a warrant to purchase up to 70,000  shares of Class A Common  Stock at a
price of $0.25 per share for a period of 2 years following the closing date; and
(ii) for every  Debenture  Unit sold in excess  of 10  Debenture  Units,  a cash
payment equal to 5% ($5,000 per Debenture Unit) of the proceeds  received by the
Company from the sale of any Debenture Unit in excess of 10 Debenture Units. The
Company believes that the transactions were exempt from  registration  under the
Act,  pursuant  to  Section  4(2)  and the  rules  and  regulations  promulgated
thereunder as a transaction by an issuer not involving any public offering.

     On January 1, 2000,  in  consideration  of  services  to be rendered to the
Company in  connection  with the  development  of an in-house  public  relations
group,  the Company granted  consultants  50,000 shares of Class A Common Stock;
75,000  options to purchase Class A Common Stock with an exercise price of $1.00
and an  expiration  date of December  31, 2000;  and 50,000  options to purchase
Class A Common Stock with an exercise  price of $0.75 and an expiration  date of
December 31, 2000.  The Company  believes that the  transaction  was exempt from
registration  under  the  Act,  pursuant  to  Section  4(2)  and the  rules  and
regulations  promulgated  thereunder as a transaction by an issuer not involving
any public offering.

     On March 9, 2000 in consideration of services to be rendered to the Company
in connection with assisting the Company to obtain  financing  commitments,  the
Company issued a consultant 600,000 warrants to purchase shares of the Company's
Class A Common Stock at a price of $0.25 per share.  The Company  believes  that
the transaction was exempt from registration  under the Act, pursuant to Section
4(2) and the rules and regulations promulgated thereunder as a transaction by an
issuer not involving any public offering.

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<PAGE>

     All such shares are "restricted securities," as that term is defined in the
rules and  regulations  promulgated  under the Securities Act subject to certain
restrictions   regarding   resale.    Certificates   evidencing   all   of   the
above-referenced securities have been stamped with a restrictive legend and will
be subject to stop transfer orders.

Item 3. Defaults Upon Senior Securities.

     Not Applicable.

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

     Not Applicable.

Item 5. Other Information.

     Not Applicable.

Item 6. Exhibits and Reports on Form 8-K.

     (a) Financial Data Schedule

     (b) There  were no  reports  on Form 8-K filed by the  Company  during  the
quarter.

                                       15

<PAGE>

                                   SIGNATURES

     In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Date: May 19, 2000                          TELEFFICIENCY HOLDING CORPORATION


                                            /s/ Michael Brunet
                                            -------------------------
                                            Michael Brunet, President

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