UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, DC. 20549
                           ------------------------

                                  FORM 10-K/A
                               (Amendment No. 2)

 (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, 2000
                                      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                                 75-2801677
 State or other jurisdiction of        (I.R.S. Employer Identification
 incorporation or organization                       No.)

                     700 SOUTH FLOWER STREET, SUITE 2950
                            LOS ANGELES, CA 90017
                   (Address of principal executive offices)
                                  (Zip Code)

                                 213-627-7599
             (Registrant's telephone number, including area code)

         SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                     NONE

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

                        COMMON STOCK, $0.001 PAR VALUE
                           ------------------------

      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 amount to this Form 10-K or any amount to this Form 10-K.  [ ]

      As of  January  23,  2001,  10,034,425  shares  of  Common  Stock  were
 outstanding. The aggregate market value of the 7,291,426   shares of  Common
 Stock held by  non-affiliates of Dial-Thru  International Corporation as  of
 such date approximated $7,291,426  using  the beneficial ownership  rules as
 adopted pursuant to  Section 13 of  the Securities Exchange  Act of 1934  to
 exclude stock  that  may  be  beneficially  owned  by  directors,  executive
 officers or ten percent stockholders, some of  whom might not be held to  be
 affiliates upon judicial determination.
<PAGE>

                      DOCUMENT INCORPORATED BY REFERENCE

      Part III of this Annual Report incorporates by reference information in
 the Proxy  Statement for  the Annual  Meeting of  Stockholders of  Dial-Thru
 International  Corporation  to  be   filed  with  Securities  and   Exchange
 Commission on or before February 28, 2001.

                          FORWARD-LOOKING STATEMENTS

      With the exception of historical information, the matters discussed  in
 this Annual Report on Form 10-K include "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 the Company or any  other
 person that the objectives or plans of the Company will be achieved or  that
 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  the Company's  belief of  the sufficiency  of  capital
 resources and its  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)  the
 Company's dependence upon favorable pricing from its 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)  the 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.  The Company does not undertake to update any  forward-looking
 statements contained herein. For a discussion  of these factors and  others,
 please see "Certain  Business Factors" in  Item 1 of  this Annual Report  on
 Form 10-K. Readers are cautioned not to place undue reliance on the forward-
 looking statements made in, or incorporated  by reference into, this  Annual
 Report on Form 10-K or in any document or statement referring to this Annual
 Report on Form 10-K.
<PAGE>

                                    PART I

 Item 1.   Business

                                 THE COMPANY

      Throughout this Annual Report, the  term "Company" refers to  Dial-Thru
 International Corporation, 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 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, the Company consummated a
 merger into a wholly owned subsidiary  to effect the reincorporation of  the
 Company under  the laws  of the  State  of Delaware  under the  name  "ARDIS
 Telecom & Technologies,  Inc."  On  November 2, 1999,  the Company  acquired
 (the "DTI  Acquisition") 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."   The Company's common  stock
 currently trades on the OTC Bulletin Board under the symbol "DTIX."

      Prior to December 7, 1998, the Company operated distinct businesses  in
 each of the software and telecommunications industries. On December 7, 1998,
 the Company  sold its  retail automation  software business  (the  "Software
 Business") to Affiliated Computer Services, Inc.  Therefore, the Company  no
 longer engages in the  Software Business, and is  now operating only in  the
 telecommunications industry (the "Telecommunications Business").

      The Company's  principal executive  offices are  located at  700  South
 Flower Street, Suite 2950, Los Angeles, California 90017, and its  telephone
 number is (213) 627-7599.


 General Description of Business

      From its inception until 1998,  the Company provided retail  automation
 software and related services to the retail petroleum and convenience  store
 industries.  In  late 1996, the  Company determined to  expand its  business
 operations  beyond  the  single  vertical  market  and  one  large  customer
 that  dominated  its  Software  Business.  After  evaluating  a  number   of
 alternative strategies, the  Company  decided  that  the  rapidly  expanding
 telecommunications market presented  an opportunity to  utilize some of  the
 technology and support capabilities that it had developed, and chose to make
 its entry  into  the  telecommunications  industry  via  the  pre-paid  long
 distance market.
<PAGE>

      On January  30, 1998,  the Company  acquired USCommunication  Services,
 Inc. ("USC")  in a  private  stock transaction.  USC  provided a  number  of
 telecommunication and  internet  products and  services,  including  prepaid
 phone  cards,  public  internet  access  kiosks,  and  pay  telephones.  USC
 primarily marketed its products and  services to individuals and  businesses
 in the transportation industry through national and regional truckstops  and
 trucking fleets. USC's products were  sold at selected locations  throughout
 the U.S., such as locations operated by Pilot Travel Centers, Petro Stopping
 Centers, and All  American Travel Centers.  USC also  marketed its  services
 directly through prepaid  phone card recharge  sales. The Company  concluded
 its acquisition of  USC believing  that it  would provide  the Company  with
 access to the telecommunications market. Certain capabilities of USC,  along
 with distribution channels, failed to meet the expectations of the  Company.
 On June  15,  1998,  the  Company executed  an  agreement  with  the  former
 principals of USC to rescind the USC acquisition effective May 27, 1998.

      During its experience with USC, the Company decided to develop its  in-
 house capabilities to expand its telecommunications operations and continued
 to focus on the  rapidly growing prepaid  phone card market.   In August  of
 1998, the Company entered into an agreement (the "PT-1 Agreement") with PT-1
 Communications, Inc. ("PT-1")  to acquire  long distance  telecommunications
 and debit services for  use in the Company's  marketing and distribution  of
 domestic and international prepaid phone cards.   The Company conducted  its
 domestic prepaid  phone card  business through  RDST, Inc.,  a wholly  owned
 subsidiary, by purchasing services from PT-1 until mid-1999 when it launched
 its facilities-based telecommunication operations.  In the second quarter of
 fiscal 1999, the  Company purchased  telecommunications switching  equipment
 and an  enhanced services  platform.   Following  a period  of  development,
 implementation  and  testing,   the  Company  commenced   operations  as   a
 facilities-based carrier in the fourth quarter of 1999.  Calls made with the
 Company's prepaid phone  cards could then  be routed  through the  Company's
 switching facilities,  giving  the Company  better  control over  costs  and
 quality of service.

      On November 2, 1999,  the Company acquired the  assets and business  of
 Dial-Thru  International  Corporation,  an  international   facilities-based
 carrier.  The Company continued operations of the acquired business  through
 its subsidiary, Dial-Thru.com.

      During the first  quarter of fiscal  2000, the  Company appointed  John
 Jenkins (founder of the acquired business) to the position of President  and
 Chief Operating Officer.   The Company  also announced the  creation of  its
 "Bookend Strategy," to allow it to effectively compete in the  international
 telecommunications market  (see "Business  Strategy" below),  and began  the
 merger of operations of the two businesses with an increased emphasis on the
 international business and a reduced focus  on the prepaid domestic  market.
 In the third quarter of fiscal 2000, the Company relocated all its  domestic
 operations, including its switching facilities, to its Los Angeles location.
 The Company  now operates  as a  facilities-based global  Internet  Protocol
 ("IP")  communications  company  providing  connectivity  to   international
 markets experiencing  significant  demand  for IP  enabled  services.    The
 Company 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. The  Company  utilizes Voice  over  Internet
 Protocol  (VoIP)  packetized   voice  technology   (and  other   compression
 techniques) to  improve  both  cost and  efficiencies  of  telecommunication
 transmissions, and is developing a private IP telephony network. The Company
 utilizes  state-of-the-art  digital   fiber  optic   cable,  oceanic   cable
 transmission  facilities,  international  satellites  and  the  Internet  to
 transport its communications. The Company believes that it will be a  strong
 competitor in the international telecommunications markets where it  chooses
 to compete.
<PAGE>

   Regulatory Environment.

      Regulation of Internet Telephony and the Internet.

      The use of the Internet to provide telephone service is a recent market
 development.  Currently, the 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.  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.   The FCC  noted that  it did  not
 have, as of the date of  the report, an adequate record  on which to make  a
 definitive pronouncement, but that the  record suggested that certain  forms
 of phone-to-phone Internet telephony appear  to have the same  functionality
 as non-Internet  telecommunications services  and lack  the  characteristics
 that would render them information 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  the
 Company's competitive pricing advantage.    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  the Company's costs  of providing  service.   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.
<PAGE>

      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   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 the  Company's 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 of 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 the Company's  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,
 state regulatory agencies of foreign governments begin to regulate  Internet
 telephony, such  regulation may  materially adversely  affect the  Company's
 business, financial condition or results of operations.
<PAGE>

      In addition, access to  the Company's services may  also be limited  in
 foreign countries where laws and regulations otherwise do not prohibit voice
 communication over the Internet.  The  Company has negotiated agreements  to
 provide its services in various countries.  No assurances can be given  that
 the Company 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  October 21,  2001.   The Company  cannot  predict
 whether substantial new  taxes will be  imposed on our  services after  that
 date.   In addition,  Congress and  other federal  entities are  considering
 other legislative and regulatory proposals  that would further regulate  the
 Internet.  Congress is, for example, currently considering legislation on  a
 wide  range  of  issues  including  Internet  spamming,  database   privacy,
 gambling, pornography  and child  protection, Internet  fraud, and  privacy.
 Congress has enacted  digital signature  legislation.   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 negatively  impact  the cost  of  doing
 business over  the  Internet and  materially  adversely affect  the  Company
 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
 which 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, and 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.
<PAGE>

      In addition, the European Union  has adopted a separate,  complementary
 directive which 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
 the Company does  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 the Company's business is uncertain.

                              BUSINESS STRATEGY

      The Company's core  business operations are  in the  telecommunications
 industry, and are concentrated  on the marketing  of IP telephony  services,
 including voice,  fax, data,  Web-based and  other enhanced  services.   The
 Company has  coined the  term "Bookend  Strategy"  to describe  its  primary
 focus,  which  is  to  establish  markets  for  telecommunication   services
 originating in foreign countries and in the corresponding ethnic segment  of
 the domestic market in the United States, and to provide these services  via
 direct private line  circuits between  those markets,  utilizing Voice  over
 Internet  Protocol   (VoIP)   and  other   digitized   voice   technologies.
 Furthermore, the  "Bookend Strategy"  calls for  filling  as much  of  these
 circuits as possible with retail traffic, and selling the remainder into the
 international wholesale market to fully utilize all capacity.  Products  are
 primarily dial  around products  that include  international dial-thru,  re-
 origination, fax over the Internet, and other enhanced services targeted  at
 small and medium  sized  businesses,  such  as  unified messaging, follow-me
 numbers,  and  DSL.  In essence  the Company  is selling  a bundled solution
 of  communication  services  to these  small to medium size businesses.  The
 Company  sells  telecommunications  services for both  foreign and  domestic
 origination  of  international  long  distance  into  the  wholesale market,
 primarily  on  a short-term  basis to  keep capacity available  for  Company
 produced retail  revenues.   The primary objective of the Company in selling
 into  the  wholesale  market  is  to  fill  its direct routes with wholesale
 traffic while it is developing revenue from its  retail marketing operations
 so that  no capacity  is wasted.   The  Company plans to expand  services in
 both  foreign and domestic  markets to include additional telecommunications
 products as well as Internet related services.
<PAGE>

      A key part  of the "Bookend  Strategy" is the  establishment of  direct
 routes for telecommunications traffic  to and from a  target country.   Once
 the Company has judged that a  candidate country meets the  requirements for
 availability of retail  revenue opportunities,  it then  must determine  the
 best manner in which to establish some form of dedicated connectivity.  This
 is  usually accomplished by  first establishing a licensing agreement within
 the country whereby we are licensed to sell these communication products and
 then putting  into place International Private  Leased Circuits (IPLC).   In
 order  to effectively  utilize  the IPLC  lines,  the Company must apply the
 appropriate technology to provide for compression  of the telecommunications
 traffic.  The emerging technology that seems best suited for the majority of
 installations  is VoIP or packetized voice  and  data.  This  allows  us  to
 legally  enter markets that have  not deregulated in a manner similar to the
 way  Sprint  and  MCI  entered  the  market in the United States in the late
 1970's and early 1980's prior to deregulation in the United States in 1984.

      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 (Internet Protocol or IP), IP Telephony was
 born.  IP Telephony not only provides  for a cost effective manner in  which
 to perform the  signal compression  needed  to  maximize the return from the
 use  of  the  IPLC  lines,  but  in  certain  cases allows  for  the use  of
 public  Internet  circuits for at  least  a  portion  of  the calls or other
 communications  being  made.  In  this  way, not  only  has  efficiency   of
 the  dedicated  circuits  been  improved,  but  also  some of  signaling and
 communications can be accomplished utilizing the public Internet.

      The  Company   currently  operates   its  domestic   telecommunications
 switching facility in Los Angeles,  California, providing for long  distance
 services worldwide.  Development of the private IP Telephony network and the
 use of  VoIP technology  is expected  to improve  both cost  and quality  of
 telecommunications services, as well  as facilitate the Company's  expansion
 into other Internet related opportunities.

      The Company  continues to  review an  acquisition strategy  within  its
 current industries and other related markets. Any material acquisitions  may
 result in significant changes in the Company's business.
<PAGE>

                            PRODUCTS AND SERVICES

      Dial Thru and Re-origination Services

      The Company  provides  a variety  of  international dial-thru  and  re-
 origination services.  The Company began  offering these services in  fiscal
 2000 following the completion of the DTI Acquisition.  In fiscal 2000, these
 services accounted for  approximately 68% of  the Company's  revenues.   The
 Company  expects  that  these  services  will  account  for  an   increasing
 percentage of the Company's total revenues  as the Company shifts its  focus
 away from  domestic prepaid  phone cards.    Generally, these  services  are
 provided to customers that  establish deposits with the  Company to be  used
 for long-distance  calling.    By  using  the  Company's  dial-thru  or  re-
 origination services, a caller outside of the United States can place a long
 distance telephone call which appears to have originated from the  Company's
 switch in Los Angeles to the Customer's location, and then connects the call
 through the Company's network to anywhere  in the world.  By completing  the
 calls in this manner, the Company is able to provide very competitive  rates
 to the  customer.   Wherever possible,  the Company  routes calls  over  its
 private network.  By using VoIP and other technologies to compress voice and
 data  transmissions  across  its  international  private  lines  and  public
 Internet circuits, the  Company can  offer its  voice and  data services  at
 costs that are substantially less than traditional communications services.

      PowerCall[TM]

      The Company offers PowerCall[TM] as a web-based e-commerce service that
 allows a customer to  use Internet signaling to  notify a business of  their
 interest, and to initiate a call to the customer from the business while the
 customer continues accessing the business' website.   This service allows  a
 merchant to include a PowerCall[TM] icon on its website in which a  customer
 may type its  telephone number in  the PowerCall[TM] box  and then click  an
 icon, prompting a  call from  the merchant to  the customer.   This  service
 allows a customer to talk to the merchant's representative while  continuing
 to view the website.  This service is much more convenient for the  customer
 than using toll-free  access lines which  typically require various  prompts
 through voice activated  menus.  Also,  for access by  customers around  the
 world, a long list of toll-free access numbers would be required.  PowerCall
 O services, including the  associated long distance calls,  are paid for  by
 the merchant, and  target markets are  focused where  the Company's  private
 network can be  utilized.   The PowerCallO  product has  been developed  and
 tested by the Company.

      PC-to-Phone

      The Company's PC-to-Phone services enable a user to place a call from a
 personal computer  to another  party  who uses  a  standard telephone.    To
 utilize this service, the customer's personal computer must be equipped with
 a sound card, speakers and a microphone.

      FaxThru[TM]

      The Company offers  FaxThru[TM] 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.
<PAGE>

      Global Roaming

      The Company's  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 the Company's
 telecommunications network throughout the world.

      Netborne[TM]

      The Company's NetBorne[TM]  product allows a  customer to  dial a  toll
 free  number  to  access  calling  services.    Upon  entering  a   personal
 identification  number  assigned   to  each   customer,  the   Dial-Thru.com
 telecommunications switch  (in Los  Angeles) receives  a signal  across  the
 Internet indicating that the customer wishes to initiate a call.  The switch
 then originates a call to the server which connects to the phone from  which
 the customer is calling, allowing the  customer to then place a call  across
 the Company's  network  to anywhere  in  the  world.   From  the  Customer's
 perspective, the use of  the card is  identical to that  of a prepaid  phone
 card; however, this technique  allows the Company to  offer its services  in
 countries where  the  use  of  prepaid phone  cards  may  be  prohibited  or
 restricted.

      Prepaid Phone Cards

      During fiscal year 2000, the Company significantly reduced its emphasis
 on this segment of the business in favor of other products and services that
 offer the  opportunity  for  higher profit  margins;  however,  the  Company
 currently continues to offer prepaid products for domestic calling, outbound
 international long distance calling,  as well as  enhanced features such  as
 customized greetings and sequential calling.   During fiscal 2000, 1999  and
 1998, the services and  products accounted for  approximately 30%, 100%  and
 100%, respectively,  of revenue  from continuing  operations.   The  Company
 expects that revenues from  these products and services  will account for  a
 decreasing percentage of the Company's total  revenues in the future as  the
 Company shifts its focus towards international services.

      Unified Messaging

      During the first part of 2001 the Company is adding several products to
 its bundled  package  including  Unified Messaging,  whereby a customer will
 have one phone number for  all communication needs.  A customer will receive
 all  calls, faxes, emails and voice  mail  via  one address or phone number.
 This will allow customers to access any communications function while on the
 road  domestically  or  internationally  by  simply dialing into the unified
 messaging box.

      1+ Services and Dial Around Products

      The Company is tarriffed in the United States and now has begun selling
 it's 1+ long distance service and Dial Around products to ethnic segments in
 the  United  States  where  it  has  corresponding facilities in the foreign
 country.  This allows us to add a complete package of communication services
 to the small to medium size business customer, thus  allowing the Company to
 be its total "Bundled Communications Provider".
<PAGE>


                                  SUPPLIERS

      The Company's 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,  the  Company believes  that  the loss  of  any
 carrier would not have a long term material adverse effect on the  Company's
 financial condition or results of operation.


                                  CUSTOMERS

      The Company  focuses most  of its  sales and  marketing efforts  toward
 small to  medium sized  businesses, particularly  those located  in  foreign
 markets where telecommunications deregulation has not  taken place or is  in
 the process of  taking place.   The  Company relies  heavily on  the use  of
 commissioned agents in  those markets.   By doing so,  the Company  believes
 that it is establishing a wide  base of customers with little  vulnerability
 based on lack of  customer loyalty.   The Company believes  the loss of  any
 individual customers would not materially impact its 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 the  Company.
 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,  the  Company  competes  with  such   dominant
 providers as AT&T Corp. ("AT&T"), MCI WorldCom Inc. ("WorldCom"), and Sprint
 Corporation ("Sprint"),  all  of which  are  substantially larger  than  the
 Company and have  (i) greater financial,  technical, engineering,  personnel
 and marketing resources; (ii) longer operating histories; (iii) greater name
 recognition;  and  (iv)  larger  consumer  bases  than  the  Company.  These
 advantages afford the Company's competitors the ability to (a) offer greater
 pricing  flexibility,  (b)  offer  more  attractive  incentive  packages  to
 encourage retailers  to  carry  competitive  products,  (c)  negotiate  more
 favorable distribution  contracts  with  retailers  and  (d)  negotiate more
 favorable  contracts  with  suppliers  of  telecommunication  services.  The
 Company also competes  with other  smaller,  emerging carriers including IDT
 Corporation,  ITXC Corp.,  DeltaThree Inc., Primus,  and Net2Phone Inc.  The
 Company believes that additional competitors may be attracted to the market,
 including internet-based  service  providers  and  other  telecommunications
 companies. The Company also believes that existing competitors are likely to
 continue to  expand  their service  offerings  to appeal  to  retailers  and
 consumers.
<PAGE>

      The   ability   of  the  Company  to   compete   effectively   in   the
 telecommunications services industry will depend upon the Company's  ability
 to (i)  continue  to  provide high  quality  services  at  prices  generally
 competitive with, or lower than, those  charged by its competitors and  (ii)
 develop new innovative products and services. There can be no assurance that
 competition from existing  or new  competitors or  a decrease  in the  rates
 charged for telecommunications services by  major long distance carriers  or
 other competitors will not have a  material adverse effect on the  Company's
 business, financial condition and results of operations, or that the Company
 will be able to compete successfully in the future.

      The market for international voice and fax call completion services  is
 highly competitive. The  Company competes both  in the  market for  enhanced
 Internet Protocol ("IP") communication services  and the market for  carrier
 transmission services.  Each of these markets is highly competitive, and the
 Company faces  competition  from  a  variety  of  sources,  including  large
 communication service  providers with  greater resources,  longer  operating
 histories  and  more   established  positions   in  the   telecommunications
 marketplace than  the  Company,  some of  which  have  commenced  developing
 Internet telephony  capabilities.   Most of  the Company's  competitors  are
 larger than  the Company,  although the  Company  also competes  with  small
 companies that focus primarily on Internet telephony.  The Company  believes
 that the primary competitive factors in  the Internet and IP  communications
 business are  quality of  service, price,  convenience and  bandwidth.   The
 Company believes 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.  The  Company also competes  in
 the growing markets of providing reorigination 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, the Company  expects them  to provide  PC-to-
 phone services in the future.

      Internet Telephone Service Providers

      A number of companies have started Internet telephony operations in the
 past  few  years.    AT&T  Clearing  House  and  GRIC  Communications   sell
 international voice and fax over the Internet and compete directly with  the
 Company.  Other Internet telephony companies, such as Net2Phone,  DeltaThree
 Inc., GlobalNet, and PhoneFree.com also provide Internet telephony  services
 and compete or may in the future compete with the Company.
<PAGE>

      Traditional Telecommunications Carriers

      A substantial  majority of  the telecommunications  traffic around  the
 world is carried by dominate carriers in each market.  These carriers,  such
 as British Telecom and Deutsch Telekom, have started to deploy packet-switch
 networks for voice and  fax traffic.  In  addition, other industry  leaders,
 such as  AT&T,  MCI WorldCom  and  Qwest Communications  International  have
 recently announced their intention to offer Internet telephony services both
 in the United  States and  internationally.   All of  these competitors  are
 significantly  larger  than  the  Company  and  have  substantially  greater
 financial, technical  and  market  resources;  larger  networks;  a  broader
 portfolio of services,  better name recognition  and customer loyalties;  an
 established customer base;  and an existing  user base  to cross-sell  their
 services.  These and  other competitors may be  able to bundle services  and
 products that  are  not  offered by  the  Company,  together  with  Internet
 telephony services, to gain  a competitive advantage on  the Company in  the
 marketing and distribution of products and services.

                           CERTAIN BUSINESS FACTORS

 Limited Operating History; Net Losses


      The Company commenced  its Telecommunications Business  in early  1998.
 For the years ended  October 31, 2000, 1999 and  1998, the Company  recorded
 net losses from continuing operations of  approximately $11.2 million,  $3.8
 million  and  $2.6  million,  respectively,  on  revenues  from   continuing
 operations of approximately $8.6  million,  $3.1  million and $2.2  million,
 respectively.  The losses  in  fiscal  2000 were primarily  attributable  to
 costs  associated with the refocusing and consolidation of operations of the
 Company following  the  merger  of two businesses, and costs associated with
 redirecting the Company away from the domestic  prepaid  phone  card  market
 and  toward  the  international  IP  telephony market.  The losses in fiscal
 1999  were  primarily  attributable to the  startup  costs  associated  with
 establishing  the  Company's  facilities-based  operations, marketing  costs
 associated  with  establishing  the  Company's  distribution  channels,  and
 research and development  costs associated with development of the Company's
 VIP Card[TM] product. The losses in fiscal 1998 were  primarily attributable
 to  the  Company's  unsuccessful acquisition of USC and a one-time charge of
 approximately  $1.2 million incurred in  connection with the  disposition of
 USC.  As the  Company  continues to  increase  its  distribution network and
 customer base, and develop its private IP telephony network, it may continue
 to experience losses.

<PAGE>

 Competition

      The  market  for  the  Company's   products  and  services  is   highly
 competitive.  The Company faces competition  from multiple sources, many  of
 which have greater  financial resources and  a substantial  presence in  the
 Company's markets and offer products or services similar to the services  of
 the Company.  Therefore, the Company may not be able to successfully compete
 in its markets, which could result  in a failure to implement the  Company's
 business strategy  adversely affect  the Company's  ability to  attract  and
 retain new customers.   In addition,  competition within  the industries  in
 which the Company operates is characterized  by, among other factors,  price
 and ability  to  offer enhanced  service  capabilities.   Significant  price
 competition would  reduce  the  margins  realized  by  the  Company  in  its
 telecommunications operations and  could have a  material adverse effect  on
 the Company.  In addition, many 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 the Company is  unable to provide cutting-edge  technology
 and value-added Internet products and services,  the Company will be  unable
 to compete in certain  segments of the market,  which could have a  material
 adverse  effect  on  its  business,  results  of  operations  and  financial
 condition.

 Government Regulation

      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  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 the  Company's
 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  the Company's product  or
 service using the Internet.  In  addition to new regulations being  adopted,
 existing laws may be applied to the Internet (see "The Company -  Regulatory
 Environment.")  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, and 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.
<PAGE>

 Future Capital Needs

      To fully implement its  business plan, the Company  will need to  raise
 additional funds within the next twelve months for capital expenditures  and
 working capital.  Because of the Company's limited operating history and the
 nature of  the Internet  industry, the  Company's future  capital needs  are
 difficult to predict.   The Company's growth models  are scaleable, but  the
 rate of  growth  is  dependent on  the  availability  of  future  financing.
 Additional capital  funding  may  be  required  for  any  of  the  following
 activities: capital  expenditures, advertising,  maintenance and  expansion;
 sales,  marketing,   research  and   development;  operating   losses   from
 unanticipated competitive pressures  or start-up  operations; and  strategic
 partnerships and alliances.  There is  no assurance that adequate levels  of
 additional financing will be available at  all or on acceptable terms.   Any
 additional financing could result in  significant dilution to the  Company's
 existing stockholders.    If  the Company  is  unable  to  raise  additional
 capital, it would  not be able  to implement its  business plan which  could
 have a material adverse effect on the Company's business, operating  results
 and financial condition.

 Technology Changes

      The industries  in which  the Company  competes 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 the Company 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 the  Company  will be  able  to keep  pace  with the  rapidly  changing
 consumer demands, technological trends and evolving industry standards.

 Strategic Relationships

      The   Company's  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  result in a  material adverse  effect on
 the financial condition and results of operations of the Company.

 Dependence on and Ability to Recruit and Retain Key Management and Technical
 Personnel

      The Company's success depends to a significant extent on its ability to
 attract and retain key personnel.  In particular,  the Company  is dependent
 on  its  senior  management  team  and  personnel  with  experience  in  the
 telecommunications industry and  experience in  developing and  implementing
 new products and services within the industry. The Company's future  success
 will depend, in part, upon its ability to attract and retain key personnel.
<PAGE>

 Market for Common Stock; Volatility of the Stock Price

      The Company cannot ensure that an active trading market for  the common
 stock exists  or will  exist in  the future.  However, even  if the  trading
 market for the common stock exists, the price at which the shares of  common
 stock trade is likely  to be subject to  significant volatility.  The market
 for the common stock may be influenced by many factors, including the  depth
 and liquidity  of  the  market for  the  Company's  common  stock,  investor
 perceptions of the Company, and general economic and similar conditions.

 Listing Status; Penny Stock Rules

      The Company's 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
 Company's common stock. In addition, the  Company's 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 the Company  common stock and the  ability of holders of  the
 Company's 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.  As  a  result  of  the  additional   suitability
 requirements and disclosure requirements imposed by the "penny stock" rules,
 an investor may find  it more difficult to  dispose of the Company's  common
 stock.

 Absence of Dividends

      The Company has never declared or paid any cash dividends on its common
 stock and does  not presently  intend to pay  cash dividends  on its  common
 stock in the foreseeable future.
<PAGE>


                             SALES AND MARKETING

      The Company  markets  long  distance  telecommunications  products  and
 services from its offices in Los Angeles, California.  The Company also  has
 a regional sales office located  in  Johannesburg,  South  Africa,  and  has
 offices  through  joint ventures  in   Caracas,  Venezuela,  Buenos   Aires,
 Argentina,  Jakarta,  Indonesia,  Hong Kong,  and  New  Delhi,  India.   The
 Company's revenues  are primarily derived from the following three channels:
 direct  sales  to  business accounts; sales through commissioned agents; and
 wholesale  sales to other  telecommunications  providers.  The Company plans
 to  expand its  sales  effort  to  both  domestic and international business
 accounts, as well as  add  products and services targeted toward residential
 customers in both markets.


                                   BACKLOG

      Telecommunications products  and services  are generally  delivered  to
 customers when ordered and, although continuing relationships with customers
 exist that produce  recurring revenue, there  is no  traditional backlog  of
 orders.


                                  EMPLOYEES

      As of January 23, 2001, the Company had approximately 35 full-time  and
 3 part-time employees, approximately 8  of which perform administrative  and
 financial functions,  approximately 20  of  which perform  customer  support
 duties and approximately 30 of  which have experience in  telecommunications
 operations and/or sales.  Approximately  23  employees are currently located
 in  Los Angeles,  California,  and approximately 15 employees operate out of
 field  offices.  No  employees are  represented  by  a labor  union, and the
 Company considers its employee relations to be excellent.

 Item 2.  Properties

      The Company currently occupies approximately 4,000 square feet  located
 at 700  South Flower  Street, Suite  2950, Los  Angeles, California,  90017,
 under an 18 month lease at $8,100 per month that expires in March 2001.  The
 Company  is  currently negotiating  for an expansion of space and expects to
 enter into a new 3 to 5 year lease at the same location.

      As a result  of the company's  change in focus,  the Company moved  its
 corporate headquarters  from the  Dallas,  Texas facility  and  consolidated
 operations and staff with the Los  Angeles, California office.  The  Company
 remains obligated under an operating lease agreement for the Dallas facility
 for the remaining lease  term with monthly  lease payments of  approximately
 $15,000.  The Company  is currently taking steps  to relieve itself of  this
 ongoing obligation.
<PAGE>

 Item 3.  Legal Proceedings

      On May  2,  2000, Star  Telecommunications,  Inc. ("Star")  filed  suit
 against the Company  in the  Superior Court of  the State  of California  in
 Santa Barbara, California, alleging a breach  of contract by the Company  in
 failing to pay  amounts due  under a  Carrier Service  Agreement, and  seeks
 damages of approximately $780,000.  The Company disputes the amounts alleged
 to be owed to Star, and has  filed a counter-claim for damages against  Star
 for  wrongful  acts  of  Star  under the Carrier Service Agreement.  Amounts
 alleged  to  be  owed  to  Star  are  reflected  in the Company's  financial
 statements.  The Company  is vigorously defending  this lawsuit and strongly
 believes  that  the  Company's  damages   resulting  from   Star's   actions
 significantly exceed the claims by Star.


 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 COMMON STOCK

      The Company  has 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.

      The Company's  Common Stock  is currently  traded on  the OTC  Bulletin
 Board under the symbol  "DTIX."  The  Company's principal executive  offices
 are located at 700 South Flower Street, Suite 2950, Los Angeles, California,
 90017, and its telephone number is (213) 627-7599.
<PAGE>

                 MARKET PRICES OF THE COMPANY'S COMMON STOCK

      The following table  sets forth for  the fiscal  periods indicated  the
 high and  low closing  sales price  per  share of  Company 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 1999
      First Quarter.......................     $ 0.40      $ 0.28
      Second Quarter......................     $ 0.52      $ 0.33
      Third Quarter.......................     $ 0.50      $ 0.41
      Fourth Quarter......................     $ 1.63      $ 0.41

 FISCAL 2000
      First Quarter.......................     $ 4.57      $ 0.69
      Second Quarter......................     $13.30      $ 4.00
      Third Quarter.......................     $ 6.63      $ 2.63
      Fourth Quarter......................     $ 3.88      $ 1.47

 FISCAL 2001
      First Quarter (through January 23, 2001) $ 2.19      $ 0.52


      The closing price for the Company  Common Stock on January 23, 2001  as
 reported on the OTC Bulletin Board was $1.00.

 Dividends

      The Company has never declared or paid any cash dividends on its Common
 Stock and does not presently intend to pay cash dividends on the its  Common
 Stock in  the foreseeable  future.   The Company  intends  to  retain future
 earnings for reinvestment in its business.

 Holders of Record

      There were  423 stockholders  of record  as of  January 23,  2001,  and
 approximately 3,000 beneficial stockholders.

 Recent Sales of Unregistered Securities

      Not Applicable.


<PAGE>

<TABLE>

 Item 6.  Selected Financial Data


                                                   FISCAL YEARS ENDED OCTOBER 31

--------------------------------------------------
                                          2000       1999       1998       1997
     1996
                                         ------     ------     ------      -----
     -----
                                       (Restated)
 <S>                                    <C>        <C>        <C>         <C>
    <C>
 CONSOLIDATED STATEMENT OF OPERATIONS
   DATA (1):
 Revenues                               $ 8,591    $ 3,117    $ 2,189     $   --
    $   --
 Cost of revenues                         9,971      2,982      2,155         --
        --
 Operating expenses                       9,142      4,028      1,399         --
        --
 Interest income (expense)                 (665)        79       (101)        --
        --
 Loss on disposal of USC                     --         --     (1,155)        --
        --
 Income (loss) from continuing
   operations                           (11,187)    (3,815)    (2,621)        --
        --
 Income (loss) from discontinued
   operations                                --      5,528       (103)        87
       143
 Net income (loss)                      (11,187)     1,713     (2,724)        87
       143
 Net income (loss) per share(2)         $ (1.31)   $  0.25    $ (0.38)    $ 0.01
    $ 0.02

 CONSOLIDATED BALANCE SHEET DATA(1):
 Total assets
   Continuing operations                  6,102      4,467      1,411         --
        --
   Discontinued operations                   --         --      3,880      4,578
     4,741
 Working capital (deficiency)
   Continuing operations                 (4,829)     1,251     (1,460)        --
        --
   Discontinued operations                   --         --        622        664
       701
 Noncurrent obligations
   Continuing operations                    119        562         --         --
        --
   Discontinued operations                   --         --        147        178
       256
 Shareholders' equity                       508      2,865      1,064      2,220
     2,075


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

 (2)  All per share  amounts have been  retroactively adjusted  to reflect  a
      one-for-five  reverse  stock  split  of  the  Company's  Common   Stock
      effective December 21, 1995.

</TABLE>


<PAGE>
 Item 7.   Management's Discussion and  Analysis of  Financial Condition  and
      Results of Operations for the Fiscal Years Ended October 31, 2000, 1999
      and 1998

 General

      Dial-Thru  International  Corporation  is  a  facilities-based,  global
 Internet Protocol  (IP)  communications company  providing  connectivity  to
 international  markets  experiencing  significant  demand  for  IP   enabled
 services.      The   Company    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.   The  Company
 utilizes Voice  over Internet  Protocol (VoIP)  packetized voice  technology
 (and other compression techniques) to improve both cost and efficiencies  of
 telecommunication transmissions, and  is developing a  private IP  Telephony
 network.

      IP  Telephony,  or  Voice  over  Internet  Protocol  (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 the  Company 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 enhanced Web-based services.

      The Company primarily focuses  on markets where  competition is not  as
 keen, thereby  giving it  opportunities for  greater profit  margin.   These
 markets include regions  where deregulation  of telecommunications  services
 has not been  completed and smaller  markets that have  not attracted  large
 multi-national providers.  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   the   Company   better
 opportunities  to  engage  in  co-branding  of  jointly  marketed  products,
 including IP based enhancements  that it has  developed, rather than  simply
 basing a  strategy  on pricing  arbitrage.   As  a  result, the  Company  is
 proactively invited  to participate  rather than  reactively prevented  from
 entering new markets.

      Unlike many  new  VoIP carriers  in  the market  today,  the Company is
 focused on retail telecommunications sales to business customers,  including
 enhanced  product  offerings,  allowing  the  Company  to provide a complete
 package  of  communication  services,  not just wholesale  voice traffic.  A
 portfolio of enhanced offerings provides the  Company  with the  opportunity
 for  higher profit  margins  and  better customer loyalty,  thus making  the
 Company less susceptible to competitive forces and market churn.

      In tandem with overseas partners, the Company is deploying a "book-end"
 strategy targeting markets at  both ends of international  circuits.  As  an
 example, while  cooperating with  partners to  target the  SME market  in  a
 selected foreign region, the Company also targets corresponding  expatriates
 and foreign owned businesses back in the  U.S.   By providing these services
 in cooperation  with the carrier that will ultimately terminate the calls in
 the caller's "home" country, the Company  enjoys  reduced  facilities costs,
 increased economies of scale, lower  customer acquisition costs, and  higher
 customer retention.
<PAGE>

      Focusing on  cooperation in  emerging markets  also gives  the  Company
 added benefit of being able to develop and exploit labor cost advantages not
 found in industrial markets.  For example, the Company plans to  develop new
 and extremely  low-cost call  center applications  that  will tie  into  and
 enhance its new  Web and  VoIP applications.   By  relying on  VoIP  and IP,
 rather than  traditional  voice technology,  the  Company ensures  that  its
 network infrastructure  is  extremely cost-effective  and  state-of-the-art.
 These are assets  that not only  help to build  the Company's business,  but
 also make the  Company more attractive  as a potential  partner to  overseas
 carriers and incumbent telephone companies.

      During the fiscal  year ended October  31, 2000,  the Company  acquired
 substantially  all  the  assets  and  business  of  Dial-Thru  International
 Corporation, a California corporation.  During the fiscal year ended October
 31, 1999, the  Company disposed  of its  Software Business  and its  primary
 business consisted of  its Telecommunications Business.   During the  fiscal
 year ended October 31, 1998, the  Company operated two distinct  businesses,
 the Software Business and the Telecommunications  Business.  On December  7,
 1998,  the  Company  consummated  the  sale  of  the  Software  Business  to
 Affiliated Computer  Services, Inc.  (ACS).   As a  result of  the  Software
 Business Sale, the Company  no longer engages in  the Software Business  and
 its  business  is  focused   solely  on  its  Telecommunications   Business.
 Therefore, historic  financial  information  attributable  to  the  Software
 Business will be reported as discontinued operations.

      The following  discussion  and  analysis  of  financial  condition  and
 results of operations  covers the years  ended October 31,  2000, 1999,  and
 1998 and  should  be  read  in  conjunction  with  the  Company's  Financial
 Statements and the Notes thereto commencing at page F-1 hereof.


 Results of Operations-2000 Versus 1999

 General

      On November 2, 1999, the Company consummated the acquisition (the  "DTI
 Acquisition") of substantially all of the  assets and business of  Dial-Thru
 International Corporation, a California corporation now known as  DTI-LIQCO,
 Inc.,  including   the  rights   to   the  name   "Dial-Thru   International
 Corporation." On January 14, 2000, the stockholders of the Company  approved
 the  Company's  proposed  change   of  its  name   from  "ARDIS  Telecom   &
 Technologies, Inc." to "Dial-Thru International Corporation" and on  January
 19, 2000, the Company officially changed its name to Dial-Thru International
 Corporation.
<PAGE>

      In the second quarter of fiscal 2000, the Company shifted focus  toward
 its global IP  telephony strategy; providing  connectivity to  international
 markets experiencing significant  demand for  IP enabled  services and  then
 targeting the corresponding ethnic segment in the U.S.  This change in focus
 by the Company has lead to a shift from its prepaid long distance operations
 and toward higher margin  international opportunities. This strategy  allows
 the  Company  to  form  local  partnerships  with  foreign  PTT's  (entities
 responsible for providing  telecommunications services  in foreign  markets,
 usually government owned or controlled) and ISP's, and to provide IP enabled
 services  based   on  the   in-country  regulatory   environment   affecting
 telecommunications and  data  providers. Through  these  relationships,  the
 Company is able  to acquire a  direct equity  interest or  partnership/joint
 venture interest in the local business and expects its interest to  increase
 as foreign ownership regulations  of telecommunications companies  diminish.
 As an early  market entrant building  "super-regional" networks,  management
 believes the Company is positioned for long-term growth and the provision of
 high margin, value-added services.


      In the third quarter of fiscal  2000, the Company further  concentrated
 its efforts toward its global VoIP telecommunications strategy by completing
 the  consolidation  of  its  Dallas,  Texas  and  Los  Angeles,   California
 operations  into  a  single facility in Los Angeles,  which  also houses two
 sets of the Company's telecommunications switching  equipment  and  enhanced
 services  platforms.  Significant  reductions  in  cost  have resulted  from
 combining  operational  organizations.  Costs  incurred  to  accomplish this
 include  the  relocation  of  office  facilities  and  staff,  as  well   as
 costs associated with reduction of  personnel  resulting from  redundancies.
 Defocusing  on  the  prepaid market caused the Company to  incur other costs
 associated with  the closure  of  certain distribution  channels,  and  also
 resulted in a  reduction of revenues.  The  reduction of revenues,  however,
 came  from  the  low  or  negative  margin  portion  of  the  business  that
 the  Company  is moving  away  from.  This refocusing and  consolidation  of
 operations is also expected to result in  not  only greater  savings  in the
 future,  but  also  higher  profits  and  more  sustainable  revenues.  This
 consolidation  and  reduction  in  staff  will  also  allow  the  Company to
 significantly  reduce  its overhead and contribute to its goal  of  reaching
 positive  cash  flow in the near term.   The decision to proceed  with  this
 consolidation of operations allows the Company to maximize the amount of its
 resources available to be directed toward the continued growth of its global
 network infrastructure.


      In addition to helping customers  achieve significant savings on  long-
 distance voice  and fax  calls by  routing calls  over the  Internet or  the
 Company's private network, the Company's customers benefit by utilizing non-
 traditional (Voice  over Internet  Protocol, "VoIP")  methods to  call  into
 international locations,  thus  receiving  significant  discounts  on  their
 monthly bills. The Company expects to be able to offer new opportunities  to
 existing ISP's and Web-enabled corporate call centers engaged in  electronic
 commerce that want to  expand into voice services  and are seeking to  lower
 long-distance costs. The  benefits delivered by  virtue of participating  in
 the worldwide  market  include a  wide  selection of  products,  competitive
 pricing, ease of access to vast numbers of consumers, and convenient methods
 of purchase.  Management believes the Company's foreign partners receive the
 benefits of global marketing exposure, reduced cost of sale, reduced cost of
 advertising, and access to  technology that otherwise  would not be  readily
 available.
<PAGE>

      Revenues


      For the year  ended October  31, 2000,  the Company  had revenues  from
 continuing operations of $8,591,000, an increase of $5,475,000 or 176%  over
 1999.  This increase is primarily attributable to revenues of  approximately
 $5,836,000 arising  from  the  business acquired  in  the  DTI  Acquisition.
 There  is  significant  growth projected  from  this business as the Company
 continues to add customers and additional products  to the existing customer
 base thus allowing greater customer retention and profit  margin  from  each
 existing customer.  Although the shift of business from  the prepaid  market
 to international  IP communications resulted in a reduction of revenues from
 the prepaid portion of the Company's business, management believes that this
 shift  will  ultimately  allow  the  Company  to increase and sustain higher
 margins,  as well  as  improve customer  retention  and EBITDA growth in the
 years  to  come.  As  a result of the shift away from the prepaid phone card
 business, deferred revenue has declined.


      Expenses


      For the year ended October 31, 2000, the Company had total direct costs
 of revenues relating to revenues  from continuing operations of  $9,971,000,
 an increase of  $6,989,000 or 234%  from 1999.   This increase is  primarily
 attributable to  the Company's  176% increase  in  sales combined  with  the
 negative margins resulting  from the  Company's prepaid  phone card  product
 line  and  the  reduction  thereof.  A  substantial portion of this negative
 margin  was  related  to  the  Company's  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.  The  Company anticipates a
 significant reduction in  these  costs as carrier and facilities obligations
 are  settled,  which  will  have a positive impact  on future operations and
 earnings.



      General  and   administrative  expenses   attributable  to   continuing
 operations,  comprised  primarily  of  management,  accounting,  legal   and
 overhead expenses,  were  $5,202,000  and $2,683,000  for  the  years  ended
 October 31,  2000 and  October  31, 1999  respectively.   This  increase  of
 $2,519,000, or  94%,  is  primarily  attributable  to costs associated  with
 the  DTI  Acquisition of $447,000,  costs  associated  with  the  merger  of
 the businesses  and  the relocation of  the Dallas, Texas  operations to Los
 Angeles,  California  of  $330,000,  costs  associated  with the closing  of
 field  distribution  centers  for prepaid phone cards of $271,000, and costs
 associated with refocusing  business efforts  away from the  less profitable
 prepaid  phone  card  market   to   the  higher  margin   international   IP
 communications market of $1,479,000.  In  addition, approximately $1,000,000
 of  this  $2,519,000  increase  relates  to  bad debt expenses  recorded for
 uncollectible  trade receivables  associated with  the  DTI business and the
 Company's prepaid phone card business and  a note receivable associated with
 the prepaid phone card  business.  The remaining increase during the year of
 approximately $1,500,000 is directly related to the business acquired in the
 DTI  Acquistion.  As part of the Company's cost reduction efforts associated
 with the merger of the two  businesses,  management implemented  changes  in
 expenditure  policies  which  have  reduced,  and  will  continue to reduce,
 overall general and administrative and overhead costs in future periods.

<PAGE>


      Sales and  marketing  expenses attributable  to  continuing  operations
 increased from $1,254,000  for the year ended October 31, 1999 to $2,800,000
 for the year ended October 31, 2000.  This increase  of $1,546,000  or  123%
 is primarily due  to a non-cash charge  of $1,937,184  recorded for warrants
 previously  issued  to  employees  who  changed  their status to independent
 distributors offset partially by a reduction  in  emphasis  on  the  prepaid
 phone card  portion of the  Company's business, which has a much higher cost
 of  sales and  marketing than the international IP telephony portion  of the
 business.  In addition,  the Company has  transitioned a significant portion
 of  its sales and  marketing activities into  countries  where  the  Company
 is  building  infrastructure.   This  has allowed the  Company to achieve  a
 reduction in these costs  during  the  year,  and will continue to recognize
 significant  savings  in future  periods.  Given these  changes in  strategy
 during the year, management anticipates continuing reductions in the cost of
 sales and marketing as a percentage of revenue.

      The  Company  also  recorded  an impairment charge of $575,542 to write
 down advertising credits to their estimated fair value.


      Depreciation  and  amortization  expenses  attributable  to  continuing
 operations increased approximately  $474,000  or  521%, from $91,000 for the
 year ended October 31, 1999 to $565,000 for the year ended October 31, 2000.
 Of this increase, approximately $218,000  relates  to  the  depreciation and
 amortization  of the assets of the business acquired in the DTI Acquisition.
 The remaining increase of approximately  $256,000  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  Company  had  net  interest expense of $665,000 in fiscal 2000, as
 compared to net interest income of $79,000 in fiscal 1999.  The net interest
 expense  in  2000  was  comprised  of  approximately  $679,000  of financing
 expenses  attributable  to  the  financing  of  $1,000,000  of   convertible
 debentures,  offset by a net interest income of  approximately $15,000.  The
 interest  and  financing  costs  of  approximately  $96,000  for  1999  were
 primarily associated  with  the Founders Equity indebtedness that was repaid
 during fiscal 1999,  as  well as equipment financing costs for the Company's
 switching facilities and  platform.  These  costs  during  fiscal  1999 were
 offset  by interest income of  approximately $175,000 earned on the proceeds
 from  the  Software  Business sale  and  the  Company's note receivable from
 USCommunications Services, Inc.


      As a result  of the  foregoing, the Company  incurred a  net loss  from
 continuing operations of $11,187,000, or $1.31 per share, for the year ended
 October 31, 2000  compared with  a net  loss from  continuing operations  of
 $3,815,000, or $0.56  per share, for the year ended  October 31, 1999.   The
 Company's efforts with regard to the consolidation of business and reduction
 in staff associated  with  the  relocation of operations to Los Angeles have
 allowed the Company to reduce its overhead  and will contribute to  its goal
 of reaching positive cash flow in the near term.

<PAGE>

 Results of Operations-1999 Versus 1998

      At  the  beginning   of  fiscal   1999,  the   Company  conducted   its
 Telecommunications Business as a  switchless reseller of  telecommunications
 services.   During the  fourth quarter  of fiscal  1999, the  Company  began
 operating  its  own  telecommunications  switching  equipment  and  enhanced
 services  platform  and  migrated  from  providing  its   telecommunications
 services as  a switchless  reseller of  products of  PT-1 Communications  to
 conducting its Telecommunications Business  as a facilities-based  operator.
 As a  facilities-based  operator,  the Company  defers  the  recognition  of
 revenue and expenses  until the  customer utilizes a  phone card  or a  card
 containing unused  calling time  expires.   As  a switchless  reseller,  the
 Company recognized revenue upon the shipment  and invoicing of phone  cards,
 as the Company performed no further services after shipment.  Therefore, the
 results of  operations for  fiscal 1999  may not  reflect the  revenues  and
 expenses associated with phone cards shipped later in fiscal 1999  while the
 Company operated as a facilities-based operator.

      The Company's financial statements for the year ended October 31,  1999
 and management's discussion and  analysis of the  results of operations  for
 1999 reflect the  results of operations  of the Telecommunications  Business
 only.  On December 7, 1998, the Company sold its software business, and  the
 results of operations of the Software Business have been condensed into  the
 line item  captioned "Discontinued  Operations" in  the Company's  financial
 statements  and,  because  the  Software  Business  has  been  discontinued,
 management has  not discussed  the results  of operations  for the  Software
 Business in 1999 as compared to 1998.


      Revenues

      For the year  ended October  31, 1999,  the Company  had revenues  from
 continuing operations of  $3,117,000, an increase  of $928,000  or 42%  over
 1998.   This  increase  is primarily  attributable  to  the  development  of
 distribution channels and  an increased  customer base,  resulting from  the
 Company's marketing  efforts in  preparation for  launching its  facilities-
 based operations.

      Revenues from  discontinued operations  were  $1,687,000 for  the  year
 ended October 31,  1999,  as  compared to  $9,380,000  for  the  year  ended
 October 31, 1998.  The Company also  received $7,395,000 (comprised of gross
 proceeds of $7,625,000, less working capital adjustments) from ACS in fiscal
 1999 from  the  sale  of the  Software  Business,  resulting in  a  gain  of
 $5,310,000.
<PAGE>

      Expenses

      For the year ended October 31, 1999, the Company had total direct costs
 of revenues relating to revenues  from continuing operations of  $2,982,000,
 an increase  of $827,000  or 38%  from  1998.   This increase  is  primarily
 attributable to the Company's 42% increase in sales.

      General  and   administrative  expenses   attributable  to   continuing
 operations,  comprised  primarily  of  management,  accounting,  legal   and
 overhead expenses, were $2,683,000 and $437,000 for the years ended  October
 31, 1999 and 1998,  respectively.  General  and administrative expenses  for
 fiscal 1998 were accounted for as  either continuing operations expenses  or
 discontinued operations expenses.  Because the Company's business operations
 in 1998 were primarily comprised  of discontinued operations, a  significant
 portion of  the general  and administrative  expenses  for fiscal  1998  was
 included with  discontinued operations.   In  fiscal  1999, as  the  Company
 continued to grow its Telecommunications business, the Company increased its
 number of employees from approximately 25  to 45 persons, and a  significant
 portion of the  corporate overhead  and management  salaries were  primarily
 associated with the Telecommunications Business.  General and administrative
 expenses also  included  research  and  development  costs  associated  with
 development of the Company's VIP Card[TM] product.

      Sales and  marketing  expenses attributable  to  continuing  operations
 increased from $389,000 to $1,254,000 for the year ended October 31, 1998 to
 October 31, 1999.  These increases were a result of the Company's  increased
 marketing efforts within  the United  States and  to targeted  international
 markets.    These  expenses  include  start-up  costs  associated  with  the
 establishment of  distribution  channels  in  various  markets,  promotional
 discounts and licensing and printing costs  for phone cards bearing  symbols
 associated with various ethnic regions.

      The Company had net interest income in fiscal 1999 of $79,000, compared
 to net interest expense of $101,000 in fiscal 1998.  The net interest income
 in 1999 was comprised of approximately $175,000 earned on the proceeds  from
 the  Software  Business  sale  and   the  Company's  note  receivable   from
 USCommunications  Services,  Inc.,  reduced  by  approximately  $96,000   of
 interest and financing expenses that were attributable to both the  Founders
 Equity indebtedness  that was  repaid during  fiscal 1999  and to  equipment
 financing costs for the Company's switching facilities and platform. .   The
 interest and financing  expenses for fiscal  1998 were primarily  associated
 with financing provided  by Founders Equity  Group to the  Company that  was
 repaid during the first and second quarters of fiscal 1999.

      As a result  of the  foregoing, the Company  incurred a  net loss  from
 continuing operations of $3,815,000, or $0.56 per share, for the year  ended
 October 31, 1999.
<PAGE>


 Quarterly Results of Operations

<TABLE>
 The following table sets forth selected unaudited quarterly information
 for the Company for the last eight fiscal quarters:

                                              Quarter Ended

                                 January 31   April 30   July 31   October 31
  Year
                                     $           $          $           $
    $
                                 ---------   ---------  ---------   ---------
-----------
 <S>                            <C>         <C>         <C>        <C>
<C>
 1999
  Revenue                        1,542,719     846,020    500,107     228,065
3,116,911
  Income (Loss) from operations   (526,574)   (689,486)  (941,952) (1,735,679)
(3,893,691)
  Effect of discontinued
    operations                   2,233,870   1,366,518  1,378,525     331,014
5,309,927
  Net Income (Loss)              1,707,296     693,837    456,294  (1,144,047)
1,713,380
  Basic and diluted income
    (loss) per share                  0.26        0.10       0.07       (0.18)
     0.25


 2000
  Revenue                        3,806,767   2,823,704    952,667   1,008,311
8,591,449
  Income (Loss) from operations (2,120,321) (4,402,381)  (848,626) (3,150,736)
(10,522,064)
  Net Income (Loss)             (2,083,370) (4,659,540)  (965,071) (3,478,761)
(11,186,742)
  Basic and diluted income
    (loss) per share                 (0.26)      (0.56)     (0.11)      (0.38)
    (1.31)

  Discontinued operations in 1999 represents income from sale of businesses
</TABLE>


<PAGE>

 Liquidity and Sources of Capital

      The Company's growth  models for its  business are  scaleable, but  the
 rate of growth  is dependent  on the  availability of  future financing  for
 capital resources.  The  Company plans to commit  at least $2.0 million  for
 capital  investment  for  fiscal  2001,  and  plans  to  finance  additional
 infrastructure development externally through  debt and/or equity  offerings
 and internally through  the operations of  its Telecommunications  Business.
 The  Company  plans  to obtain  vendor financing  for a major portion of its
 equipment  needs  associated  with  expansion.  The  Company  also  plans to
 exchange a portion of its prepaid media credits to reduce  accounts payable,
 and  to  liquidate  an  additional  portion of its prepaid media credits for
 cash.   The  Company  believes  that,  with  sufficient   capital,  it   can
 significantly accelerate its  growth  plan. The  Company's failure to obtain
 additional  financing  or  to  exhange  or  liquidate  media  credits  could
 significantly delay the  Company's implementation of  its business  plan and
 have a  material adverse  effect on  its business,  financial condition  and
 operating results.


      At October 31, 2000,  the  Company  had  cash and cash  equivalents  of
 approximately $74,000, a  decrease of $772,000  from the  balance at October
 31, 1999.  Because the  Company is  in a growth mode  and at  the  same time
 refocused its  operations  during  fiscal  2000,  cash flow  was constrained
 and  resulted  in  slow payment  to  vendors  and  growth  in payables.  The
 Company's cash flow commitments include covering current operating overhead,
 outstanding  debt of $1 million, a note payable to shareholder  of $346,000,
 and settling a significant portion of its trade payables of $3.9 million (as
 of Oct. 31, 2000).  The Company has made a significant  reduction in monthly
 overhead expenses, the debt is expected  to be  converted to equity, and the
 Company  expects  significant  reduction  of  payables  through  settlements
 with carriers and  use of trade  credits.  There  are no   other significant
 commitments or uncertainties that management is currently aware of.

      The Company believes that  it will be able to significantly improve its
 cash flow situation in the coming year for the following reasons:

      1. The  Company  has  lowered  operating  expenses  by  reorganizing
         operating staff and  changing channels of distribution.  This has
         resulted in savings in excess of $250,000 per month.
      2. The   Company   expects   a   favorable   settlement  with   Star
         Telecommunications  that  will  reduce payables  and  future cash
         requirements.   The  Company  expects to  eliminate  a payable of
         $780,000 receive approximately one million shares of common stock
         in  Star, and  receive  carrier usage  credits  for  one year for
         domestic services which value will be determined as use occurs.
      3. The  Company expects to be able to convert $1 million  in debt to
         equity.
      4. The Company expects  to  be able  to bring  in additional  equity
         investments of 1 to 3 million dollars during of fiscal year 2001,
         with $1 million being received in the second quarter.
      5. The  Company expects to be  able to convert at least $1.5 million
         of its prepaid  media credits into cash or services during fiscal
         2001.
      6. The  Company  expects  an  increase  in  recurring  revenues  and
         improvements in profit  margin due  to changes  in product  focus
         sufficient to produce  positive monthly  operating  cash flow  by
         fiscal year end.
      7. During  the next twelve month period the Company believes it will
         need approximately  $2  million thru improved operating cash flow
         or additional financing transactions.

<PAGE>


      Cashflows from Operations

      Net cash used in continuing operating activities totaled $4,157,000 for
 the year ended  October 31, 2000,  compared to net  cash used in  continuing
 operating activities of $3,613,000 for the year ended October 31, 1999.  The
 increase in net cash used in operating activities for the year ended October
 31, 2000 was primarily due  to the net loss  for such period of $11,187,000,
 adjusted  for:  loss  from  disposal  of   fixed  assets  of  $121,000   and
 depreciation and amortization  of $565,000;  bad debt  expense of  $695,000;
 impairment provision  on advertising credits of $576,000; stock and warrants
 issued  for  services  of  $1,937,000;   inventory  write-offs  of  $59,000;
 financing  fees  and  amortization  of  debt  discount  of $679,000; and net
 changes  in operating assets  and  liabilities of $2,398,000.  For  the year
 ended October  31, 1999,  the net  cash used  in  operating  activities  was
 comprised of the Company's net income of $1,713,000, adjusted for: gain from
 discontinued operations of  $5,528,000;  depreciation  and  amortization  of
 $91,000;  stock  and  warrants  issued  for  services of  $80,000; bad  debt
 expense of $406,000; and net changes  in operating assets and liabilities of
 $375,000.


      Cashflows from Investing and Financing Activities

      Net cash provided by investing activities of continuing operations  was
 approximately $50,000 for the year ended October 31, 2000, compared to  cash
 provided by investing activities  of $6,074,000 for  the year ended  October
 31, 1999.  The decrease in the current year is primarily attributable to the
 sale of the Software Business, which  generated proceeds of $7,395,000,  for
 the year ended October 31, 1999.   Also contributing to the decrease in  the
 current year was the  reduction in the Company's  purchases of property  and
 equipment of $1,162,000, payments received on notes receivable of  $255,000,
 and cash assumed from the DTI Acquisition of $69,000.
<PAGE>

      Net cash provided by financing activities of continuing operations  for
 the year ended October 31, 2000 was $3,335,000, compared to net cash used in
 financing activities of $2,006,000 for the year ended October 31, 1999.  The
 change in cash  provided by financing  activities was due  primarily to  the
 repayment of $833,000 on notes payable and capital lease obligations, offset
 by the release of restricted cash  of $1,238,000, the raising of  $1,000,000
 through the  sale  of  convertible debentures  and  $1,400,000  through  the
 issuance of  a common  stock subscription  agreement,  and $531,000  in  net
 proceeds received  upon  the  exercise  of stock  options.    Cash  used  in
 financing activities  for the  year ended  October  31, 1999  reflected  the
 repayment of borrowings of $1,500,000, security of certain notes payable and
 letters of credit of  $1,238,000, reduced by net  proceeds of $724,000  from
 notes payable.

      Other Capital Resources

      The  Company  has  recently  suffered  from  liquidity  and  cash  flow
 constraints.  As  of October  31, 2000, the  Company had  a working  capital
 deficit of $4,829,000, compared to a  working capital surplus of  $1,251,000
 at October 31, 1999.  As of  October 31, 2000, the Company's current  assets
 of $646,000 include $1,387,000 of gross trade accounts receivable, of  which
 approximately 31% was comprised of an international customer account,  which
 is overdue by  more than a  year.  This  customer account  balance is  fully
 reserved  as  of  October  31,  2000.   In  addition,  approximately  24% is
 comprised of trade accounts receivables related to the prepaid calling  card
 business, of  which 100%  is  reserved at  year-end.   Contributing  to  the
 working capital  deficit  was  an increase  in  trade  accounts  payable  of
 $3,594,000 since the prior  fiscal year, as well  as increases in  long-term
 debt of $522,000 and advances from shareholder of $346,000.

      Net  property  and   equipment  from   continuing  operations   totaled
 $1,540,000 at October 31, 2000.   The majority of property and equipment  is
 comprised of  telecommunications  switch and  platform  equipment,  computer
 equipment and computer software.   Property and equipment  held for sale  at
 year-end of  $320,000 represents  internally constructed  equipment for  the
 prepaid telecommunications  industry.   At  October  31, 2000,  the  Company
 entered into an  Asset Purchase  Agreement to  sell this  technology for  $1
 million, for which payment will be collected over the next year.

      In connection with the rescission the Company's acquisition of USC, USC
 executed a note payable to the Company in the amount of $724,660.  The  note
 receivable totaled  $460,000  at  October 31,  1999  and  represented  funds
 provided to USC.   On August  17, 1999, USC  commenced voluntary  bankruptcy
 proceedings and on January  7, 2000, the  Company received bankruptcy  court
 approval to settle the USC note for $300,000.  The settlement proceeds  were
 received by the Company on January 25, 2000.  At the time of settlement, the
 outstanding principal balance of the USC note was approximately $460,000.

<PAGE>
 Acquisition

      Acquisitions

      The Company  continues to  review an  acquisition strategy  within  its
 Telecommunications Business.  From  time to  time  the Company  will  review
 acquisition candidates with  products, technologies or  other services  that
 could enhance  the  Company  product offerings  or  services.  Any  material
 acquisitions could result in the Company issuing or selling additional  debt
 or equity securities, obtaining additional debt or other lines of credit and
 may result in  a decrease to  the Company working  capital depending on  the
 amount, timing and nature of the consideration  to be paid.  The Company  is
 not currently  a party  to any  agreements, negotiations  or  understandings
 regarding any material acquisitions.


 Item 7a.  Quantitative and Qualitative Disclosures About Market Risk

      Not applicable.


 Item 8a.  Financial Statements and Supplementary Data

      The information required by Item 8  of Form 10-K is presented at  pages
 F-1 to F-25.


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

      Not applicable.


                                   PART III

 Item 10.  Directors and Executive Officers

      The information  required  by  this  item  will  be  contained  in  the
 Company's definitive proxy statement  which the Company  will file with  the
 Commission no later  than February 28,  2001 (120 days  after the  Company's
 fiscal year  end covered  by  this Report)  and  is incorporated  herein  by
 reference.

 Item 11.  Executive Compensation and Other Information

      The information  required  by  this  item  will  be  contained  in  the
 Company's definitive proxy statement  which the Company  will file with  the
 Commission no later  than February 28,  2001 (120 days  after the  Company's
 fiscal year  end covered  by  this Report)  and  is incorporated  herein  by
 reference.

 Item 12.  Security Ownership of Certain Beneficial Owners and Management

      The information  required  by  this  item  will  be  contained  in  the
 Company's definitive proxy statement  which the Company  will file with  the
 Commission no later  than February 28,  2001 (120 days  after the  Company's
 fiscal year  end covered  by  this Report)  and  is incorporated  herein  by
 reference.
<PAGE>

 Item 13.  Certain Relationships and Related Transactions

      The information  required  by  this  item  will  be  contained  in  the
 Company's definitive proxy statement  which the Company  will file with  the
 Commission no later  than February 28,  2001 (120 days  after the  Company's
 fiscal year  end covered  by  this Report)  and  is incorporated  herein  by
 reference.

                              PART IV

 Item 14.  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  the
 Report. See the index on Page F-1.

 (3) EXHIBITS

      The following is  a list  of all exhibits  filed with  this Form  10-K,
 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 USCommunications 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)

 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)
<PAGE>

 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)

 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.

 11.1 * Statement re: Computation of earnings per share

 21.1 * Subsidiaries of the Registrant

 23.1 * Consent of Independent Certified Public Accountants



    *   Filed with 10-K and/or 10-K/A amendment # 1.


 (B)  REPORTS ON FORM 8-K

      No reports on  Form 8-K were  filed by the  Company during the  quarter
 ended October 31, 2000.
<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



                               By:  /s/ ROGER D. BRYANT
                                    ------------------------------------
                                    Roger D. Bryant
                                    CHAIRMAN AND CHIEF EXECUTIVE OFFICER

 Dated August 2, 2001





<PAGE>

 Item 8.  Financial Statements and Supplementary Data



             DIAL-THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES

                        INDEX TO FINANCIAL STATEMENTS


 1. Consolidated Financial Statements

    Report of Independent Certified Public Accountants                  F-2

    Consolidated Balance Sheets at October 31, 2000 and 1999            F-3

    Consolidated Statements of Operations for the fiscal
      years ended October 31, 2000, 1999 and 1998                       F-4

    Consolidated Statements of Shareholders' Equity for the
      fiscal years ended October 31, 2000, 1999 and 1998                F-5

    Consolidated Statements of Cash Flows for the fiscal
      years ended October 31, 2000, 1999 and 1998                       F-6

    Notes to Consolidated Financial Statements                          F-7

 2. Financial Statement Schedule

    Report of Independent Certified Public Accountants                  S-1

    Schedule II - Valuation and Qualifying Accounts                     S-2


   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



 The Board of Directors and Shareholders Dial-Thru International  Corporation
 We have audited  the accompanying consolidated  balance sheets of  Dial-Thru
 International Corporation and subsidiaries as of October 31, 2000 and  1999,
 and the related consolidated statements of operations, shareholders'  equity
 and cash flows for each of the years in the three year period ended  October
 31, 2000.  These consolidated financial statements  are  the  responsibility
 of the Company's management.  Our responsibility is to express an opinion on
 these consolidated financial statements based on our audits.

 We conducted  our  audits in  accordance  with generally  accepted  auditing
 standards.  Those standards require that  we plan and perform the audits  to
 obtain  reasonable  assurance  about  whether  the  consolidated   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 audits provide a reasonable basis for our opinion.

 In our opinion,  the  consolidated  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, 2000 and 1999, and the consolidated results  of their operations
 and their cash flows for each of the years  in the  three year  period ended
 October  31,  2000,  in  conformity  with  generally   accepted   accounting
 principles.

 As described in Note C,  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 from operations for each of
 the  last  three  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 reduce its liabilities, 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.


 As more  fully  described  in Note  S, subsequent  to the  issuance  of  the
 Company's fiscal  2000 financial  statements and  our report  thereon  dated
 December 1, 2000  we  became aware that  these financial statements  include
 advertising credits initially recorded at $2,453,027 which should have  been
 recorded at $3,028,569 which equals  the fair value of the Company's  common
 stock issued to acquire these credits.  These revised  financial  statements
 also reflect an impairment charge of  $575,542 which writes the  advertising
 credits down  to $2,453,027, the  Company's  estimated fair  value of  these
 credits at October 31, 2001. In addition, these revised financial statements
 have  been  amended  to include  a  charge  of $1,937,184 in connection with
 stock warrants which were  originally issued to employees  for  services who
 subsequently  changed  there status and became distributors of the Company's
 prepaid products.  The financial  statements  as  of  and for the year ended
 October 31, 2000 include the effect of these restatements.  In our  original
 report we expressed an  unqualified opinion  on  the  fiscal  2000 financial
 statements,  with  an  additional  explanatory  paragraph  which   expressed
 substantial  doubt  about  the  Company's  ability to  continue  as  a going
 concern.  Our opinion  on  the  revised financial statements,  as  expressed
 herein, remains  unqualified  and  the  explanatory  paragraph as previously
 presented remains unchanged.


                                              /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


<CAPTION>
                     ASSETS
                                                              October 31,
                                                        -----------------------
                                                           2000         1999
                                                        ----------   ----------
                                                        (Restated)
<S>                                                    <C>          <C>
CURRENT ASSETS
  Cash and cash equivalents                            $    73,867  $   846,141
  Restricted cash                                                -      613,634
  Trade accounts receivable, net of allowance
    for doubtful accounts of $930,766 and
    $181,675 in 2000 and 1999, respectively                455,819      297,914
  Inventory                                                      -      141,017
  Prepaid expenses and other                               116,785       92,074
  Current portion of long-term receivable,
    net of allowance for doubtful accounts
    of $55,000 and $20,000 in 2000 and
    1999, respectively                                           -      300,000
                                                        ----------   ----------
      Total current assets                                 646,471    2,290,780
                                                        ----------   ----------

PROPERTY AND EQUIPMENT, net                              1,539,544    1,421,328
PROPERTY AND EQUIPMENT HELD FOR SALE                       320,307            -
RESTRICTED CASH, NET OF CURRENT PORTION                          -      624,099
LONG-TERM RECEIVABLE, NET OF CURRENT PORTION, net
  of allowance for doubtful accounts of $40,000
  and $30,000 in 2000 and 1999, respectively                     -       50,000
ADVERTISING CREDITS, net of impairment provision
  of $575,542                                            2,453,027            -
OTHER ASSETS                                               205,473       80,582
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS
  OF COMPANY ACQUIRED, net of amortization of
  $104,148 in 2000                                         937,327            -
                                                        ----------   ----------
TOTAL ASSETS                                           $ 6,102,149  $ 4,466,789
                                                        ==========   ==========
<PAGE>


       LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Current portion of long-term debt, net
    of debt discount of $315,988 in 2000                   684,012      162,000
  Current portion of capital lease                         102,472            -
  Trade accounts payable                                 3,930,315      336,053
  Accrued liabilities                                      365,765      306,239
  Deferred revenue                                          47,190      235,104
  Note payable to shareholder                              346,000            -
                                                        ----------   ----------
      Total current liabilities                          5,475,754    1,039,396
                                                        ----------   ----------

LONG-TERM DEBT, NET OF CURRENT PORTION                           -      562,000
CAPITAL LEASE, NET OF CURRENT PORTION                      118,615            -

COMMITMENTS AND CONTINGENCIES (Notes C and O)

SHAREHOLDERS' EQUITY
  Preferred stock, $.001 par value, 10,000,000
    shares authorized, none issued or outstanding                -            -
  Common stock, 44,169,100 shares authorized; $.001
    par value; 9,895,090 shares issued and 9,883,068
    shares outstanding in 2000 and 6,881,005 shares
    issued and outstanding in 1999                           9,895        6,881
  Additional paid-in capital                            33,838,158   24,940,093
  Accumulated deficit                                  (33,262,907) (22,076,165
  Accumulated other comprehensive income                    (5,416)      (5,416)
  Treasury stock, 12,022 common shares in 2000 at cost     (54,870)           -
  Subscription receivable - common stock                   (17,080)           -
                                                        ----------   ----------
      Total shareholders' equity                           507,780    2,865,393
                                                        ----------   ----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             $ 6,102,149  $ 4,466,789
                                                        ==========   ==========

  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,

---------------------------------------
                                                     2000          1999
 1998
                                                  ----------    ----------
----------
                                                  (Restated)
<S>                                             <C>            <C>
<C>
REVENUES
     Dial thru services                         $  5,836,392   $         -    $
       -
     Prepaid phone cards and other                 2,755,057     3,116,911
1,479,588
     Prepaid phone cards - USC                             -             -
 709,525
                                                 -----------    ----------
----------
           Total revenues                          8,591,449     3,116,911
2,189,113

COSTS AND EXPENSES
     Dial thru services                            5,750,839             -
       -
     Prepaid phone cards and other                 4,220,570     2,982,290
1,589,811
     Prepaid phone cards - USC                             -             -
 565,151
     Sales & marketing                               862,582     1,254,429
 388,506
     Non-cash sales & marketing expense for
       issuance of warrants                        1,937,184             -
       -
     General & administrative                      5,201,608     2,682,545
 436,939
     Selling general & administrative - USC                -             -
 554,253
     Impairment charge recorded to write down
       advertising credits                           575,542             -
       -
     Depreciation and amortization                   565,188        91,338
  19,356
                                                 -----------    ----------
----------
           Total cost and expenses                19,113,513     7,010,602
3,554,016
                                                 -----------    ----------
----------

                  Operating loss                 (10,522,064)   (3,893,691)
(1,364,903)

OTHER INCOME (EXPENSE)
     Interest and financing costs                   (679,258)      (95,836)
(155,318)
     Interest income                                  14,580       174,604
  54,535
     Loss on disposal of USC                               -             -
(1,155,385)
                                                 -----------    ----------
----------
           Total other income (expense)             (664,678)       78,768
(1,256,168)

NET LOSS FROM CONTINUING OPERATIONS              (11,186,742)   (3,814,923)
(2,621,071)

DISCONTINUED OPERATIONS
     Income (loss) from operation of software
        business, net of income taxes of $0                -       218,376
(103,091)
     Gain on sale of software business, net
        of income taxes of $0                              -     5,309,927
       -
                                                 -----------    ----------
----------
NET INCOME (LOSS)                               $(11,186,742)  $ 1,713,380
$(2,724,162)
                                                 ===========    ==========
==========

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
  Continuing operations                         $      (1.31)  $     (0.56)   $
   (0.37)
  Discontinued operations                                  -          0.81
   (0.01)
                                                 -----------    ----------
----------
    Net earnings (loss)                         $      (1.31)  $      0.25    $
   (0.38)
                                                 ===========    ==========
==========

SHARES USED IN THE CALCULATION OF PER
  SHARE AMOUNTS:
  Basic common shares                              8,544,105     6,803,471
7,095,937
  Dilutive impact of stock options, warrants
     and convertible debentures                            -             -
       -
                                                 -----------    ----------
----------
  Dilutive common shares                           8,544,105     6,803,471
7,095,937
                                                 ===========    ==========
==========

  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' EQUITY



                  Accumulated Subscription

                     Other    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, 1997         6,611,005 $ 23,290,733  $      -   $
 -   $(21,065,383)  $(5,416) $      -  $ 2,219,934

Issuance of common stock
 and warrants in connection
 with acquisition of USC            1,500,000    2,647,398         -
 -              -         -         -    2,647,398
Effect of USC rescission           (1,500,000)  (1,079,322)        -
 -              -         -         -   (1,079,322)
Net Loss                                    -            -         -
 -     (2,724,162)        -         -   (2,724,162)
                                   ----------  -----------   -------
-----------    -----------    ------   -------   ----------
Balance at October 31, 1998         6,611,005   24,858,809         -
 -    (23,789,545)   (5,416)        -    1,063,848

Shares and warrants
 issued as compensation               250,000       80,165         -
 -              -         -         -       80,165
Effect of change from no par
 to $.001 par value common
 stock                                      -  (24,932,113)        -
24,932,113              -         -         -            -
Shares issued upon
 exercise of options                   20,000           20         -
7,980              -         -         -        8,000
Net income                                  -            -         -
 -      1,713,380         -         -    1,713,380
                                   ----------  -----------   -------
-----------    -----------    ------   -------   ----------
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
Warrants issued as compensation             -            -         -
1,937,184              -         -         -    1,937,184
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
Net loss                                    -            -         -
 -    (11,186,742)                  -  (11,186,742)
                                   ----------  -----------   -------
-----------    -----------    ------   -------   ----------
Balance at October 31, 2000 -
 restated                           9,895,090 $      9,895  $(54,870)  $
33,838,158   $(33,262,907)  $(5,416) $(17,080) $   507,780
                                   ==========  ===========   =======
===========    ===========    ======   =======   ==========

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

</TABLE>

<PAGE>

<TABLE>

            DIAL-THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS


<CAPTION>
                                                                  Year ended
October 31,

--------------------------------------
                                                             2000          1999
        1998
                                                          ----------
----------    ----------
                                                          (Restated)
<S>                                                     <C>            <C>
    <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income  (loss)                                    $(11,186,742)  $
1,713,380   $(2,724,162)
  Adjustments to reconcile net income (loss) to net
    cash used in continuing operating activities:
      Loss (income) from discontinued operations                   -
(218,376)      103,091
      Loss from disposal of fixed assets                     121,360
-             -
      Gain on disposal of software business                        -
(5,309,927)            -
      Loss on disposal of USC                                      -
-     1,568,076
      Stock and warrants issued for services               1,937,184
80,165             -
      Bad debt expense                                       694,526
405,825             -
      Inventory write-off                                     58,526
-             -
      Financing fees and amortization of debt
         discount                                            679,258
-             -
      Impairment provision on advertising credits            575,542
-             -
      Depreciation and amortization                          565,188
91,338        19,356
      (Increase) decrease in:
         Trade accounts receivable                          (173,826)
(201,526)     (292,086)
         Inventory                                            82,491
88,655      (229,672)
         Prepaid expenses and other                           30,301
(63,072)      (29,002)
         Other assets                                       (128,851)
(180,389)      (17,387)
      Increase (decrease) in:
         Trade accounts payable                            2,854,082
(286,783)      771,799
         Accrued liabilities                                 (78,150)
78,661       227,578
         Deferred revenue                                   (187,914)
189,071        46,033
                                                          ----------
----------    ----------
  Net cash used in operating activities from
    continuing operations                                 (4,157,025)
(3,612,978)     (556,376)
                                                          ----------
----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from sale of software business                          -
7,394,917             -
  Purchase of property and equipment                        (274,609)
(1,436,337)      (78,493)
  Advances made under note receivable                              -
-      (724,660)
  Cash in DTI at acquisition date                             69,137
-             -
  Payments received on note long-term receivable             255,000
115,569             -
                                                          ----------
----------    ----------
  Net cash provided by (used in) investing
    activities of continuing operations                       49,528
6,074,149      (803,153)
                                                          ----------
----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from (repayment of) advances
    from shareholder                                         (54,000)
(1,500,000)    1,500,000
  Proceeds from debt                                       1,000,000
-             -
  Proceeds from note payable                                       -
805,000             -
  Payments on note payable                                  (724,000)
(81,000)            -
  Payments on capital leases                                 (55,140)
-             -
  Proceeds from common stock subscription                  1,400,000
-             -
  Proceeds from exercise of stock options                    585,500
8,000             -
  Purchase of treasury stock                                 (54,870)
-             -
  Cash restricted as collateral for note and
    letters of credit                                      1,237,733
(1,237,733)            -
                                                          ----------
----------    ----------
  Net cash provided by (used in) financing
    activities of continuing operations                    3,335,223
(2,005,733)    1,500,000
                                                          ----------
----------    ----------
Cash provided by (used in) discontinued operations                 -
183,094       (61,733)
                                                          ----------
----------    ----------
NET INCREASE (DECREASE) IN CASH                             (772,274)
638,532        78,738

Cash and cash equivalents at beginning of year               846,141
207,609       128,871
                                                          ----------
----------    ----------
Cash and cash equivalents at end of year                 $    73,867   $
846,141   $   207,609
                                                          ==========
==========    ==========
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING
  AND FINANCING ACTIVITIES
  Offset of note receivable against trade
    accounts payable                                     $         -   $
-   $   148,963
  Note receivable issued for deposit repayment           $         -   $
100,000   $         -
  Switch equipment obtained through issuance
    of capital lease                                     $   227,772   $
-   $         -


  The accompanying notes are an integral part of these consolidated financial
                                  statements.
</TABLE>

<PAGE>


             DIAL-THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 NOTE A - ORGANIZATION AND NATURE OF BUSINESS

 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.

 Prior to  December  7,  1998,  the Company  operated  in  the  software  and
 telecommunications industries.  On  December 7, 1998,  the Company sold  its
 retail automation software business (the "Software Business") to  Affiliated
 Computer Services, Inc. ("ACS").  Therefore,  the Company no longer  engages
 in  the   Software   Business,   and  is   now   operating   only   in   the
 telecommunications industry (the "Telecommunications Business").  Results of
 operations in prior periods  have been restated  to reclassify the  Software
 Business as discontinued operations.  The  measurement date for the sale  is
 December 7, 1998, the date the shareholders approved the transaction.

 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").

 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.  Effective with the acquisition of Dial-Thru
 International Corporation in fiscal 2000, 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  now provides  a variety  of
 international and  domestic communication  services including  international
 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.

 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.
<PAGE>


 NOTE B - SUMMARY OF SIGNIFICANT 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 and Dial-Thru.com, Inc., a Delaware corporation.  The  Company's
 99% investment in  Dial-Thru International  Limited ("Hong  Kong"), a  joint
 venture (which has had  limited activity), is  included in the  accompanying
 consolidated  financial  statements  using   the  consolidation  method   of
 accounting.    All significant intercompany  accounts and transactions  have
 been eliminated.

 Revenue Recognition

 The following describes the Company's  revenue recognition policies by  type
 of activity:

   Continuing Operations:

   Prepaid services sold  while the Company owned USCommunications  Services,
   Inc. ("USC") -  This policy applied to  revenue generated from January  to
   May 1998.  Revenue  recognition originated from customer usage of  prepaid
   calling cards.  The Company sold cards to retailers and distributors at  a
   fixed price.   When  the retailer  or distributor  was invoiced,  deferred
   revenue was recognized.   The Company recognized revenue, and reduced  the
   deferred revenue  account as the customer  utilized calling time and  upon
   expiration of cards containing unused calling time.

   Prepaid  services sold  as  a switchless  reseller  of  telecommunications
   services - This  policy applied to revenue  generated from August 1998  to
   July  1999.   Revenue was  recognized when  the prepaid  phone cards  were
   invoiced and shipped.  The  Company performed no other services after  the
   cards were shipped.

   Prepaid services sold as  a facility-based operator - This policy  applies
   to revenue  generated subsequent to  August 1999.   Revenue is  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.

   Revenues generated by international re-origination and dial-thru  services
   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 generated during the year ended October 31, 2000.

   Discontinued Operations:

   Software Licenses and Products - Revenue was recognized when the  software
   or products were  delivered to the customer, collectibility was  probable,
   and no significant vendor obligations remained after delivery.
<PAGE>

   Software Development  Contracts - Revenue  was recognized  as the  Company
   performed the  services in accordance  with the contract  terms.   Revenue
   from  long-term   contracts  was  recognized   using  the   percentage-of-
   completion method.   Progress to  completion was measured  based upon  the
   relationship that total  costs incurred to date  bears to the total  costs
   expected to  be incurred on a  specified project.   Losses on fixed  price
   contracts were recorded when estimable.

   Service Agreements -  Revenue from maintenance and support agreements  was
   generally recognized in one of the following ways:

   - Billed annually in advance and recognized ratably over the ensuing year.

   - Billed and recognized monthly based on a fixed fee per site.

   - Billed and  recognized monthly at a minimum base fee plus a variable fee
     which was dependent on call volumes.


 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.

 Restricted Cash

 At October  31 1999,  $1,238,000 of  cash was  pledged as  collateral on  an
 outstanding note  payable  and letters  of  credit, and  was  classified  as
 restricted cash on the  balance sheet.  The  portion of the restricted  cash
 which pertains to the long-term portion  of the note payable was  classified
 correspondingly, as long-term.

 Inventory

 Inventory, which consisted primarily  of activated  and inactivated  calling
 cards, is stated at the lower of cost  or market.  Cost is determined  using
 the first-in, first-out (FIFO) method.

 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.
<PAGE>

 Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

 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.

 Excess of Cost over Fair Value of Net Assets of Company Acquired

 Excess of cost over fair value of net assets of company acquired  represents
 the excess of purchase price over the fair market value of identifiable  net
 assets at the date of acquisition.  This amount is amortized on a  straight-
 line basis over ten years.  Accumulated amortization of excess of cost  over
 fair value of  net assets of  company acquired was  $104,148 at October  31,
 2000.

 Capitalized Software Costs Related to Discontinued Operations

 Under provisions of the Statement of Financial Accounting Standards No.  86,
 "Accounting for  the Costs  of  Computer Software  to  be Sold,  Leased,  or
 Otherwise Marketed",  software  development  costs in  connection  with  the
 discontinued  operations  were  charged  to  expense  when  incurred   until
 technological feasibility for  the product  had been  established, at  which
 time the costs were capitalized until the product was available for release.
 The Company began amortizing capitalized software costs upon general release
 of the  software products  to  customers.   The  Company evaluated  the  net
 realizable value  for each  of its  capitalized  projects by  comparing  the
 estimated future  gross  revenues  from  a  project  less  estimated  future
 disposal costs to  the amount of  the unamortized capitalized  cost.   Costs
 were being amortized using the greater  of (1) the ratio that current  gross
 revenues for a capitalized  software project bears to  the total of  current
 and future gross revenue  for that project or  (2) the straight-line  method
 over the remaining economic life of the related projects which was estimated
 to be a period of between four and five years.  Amortization of  capitalized
 software  costs  related   to  the  discontinued   operations  amounted   to
 approximately $19,000, and $231,000, in 1999, and 1998, respectively.

 Earnings (Loss) Per Share

 Basic earnings  (loss) per  share is  computed  using the  weighted  average
 number of shares of  common stock outstanding during  each period.   Diluted
 earnings (loss) per share is computed  using the weighted average number  of
 shares of common stock outstanding during each period 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  and warrants  and
 convertible debentures are  excluded from  the calculation  of net  earnings
 (loss) per share for each year as their effect on continuing operations  net
 loss would be antidilutive.
<PAGE>

 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  generally
 accepted accounting  principles 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 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.

 Reclassifications

 Certain reclassifications  were  made  to the  1999  and  1998  consolidated
 financial statements to conform to the current year presentation.
<PAGE>


 NOTE C - GOING CONCERN UNCERTAINTY

 The consolidated financial statements have  been prepared on the  assumption
 that the Company will continue as a  going concern.  The Company incurred  a
 net loss of $11,186,742 during the fiscal year ended October 31, 2000.  Cash
 used by  operating activities  for the  same period  aggregated  $4,157,025.
 Current liabilities at October 31, 2000 of $5,475,754 exceed current  assets
 of $646,471 by $4,829,283.   In addition,  the Company incurred  significant
 losses from continuing  operations and negative  cash flows  for the  fiscal
 years ended October  31, 1999 and  1998. The  Company's continued  existence
 depends upon the  success of management's  efforts to  raise the  additional
 capital necessary to meet the Company's obligations as they come due and  to
 obtain sufficient capital to execute its  given business plan.  The  Company
 intends to  obtain  additional  capital and  reduce  its  existing  accounts
 payable primarily in the following manner:


   1) the  Company is  currently  in negotiations  to  obtain both  debt  and
      equity financing;
   2) the Company is  in the process of  exchanging prepaid media credits  to
      reduce accounts payable;
   3) the Company is in the process  of liquidating a portion of its  prepaid
      media credits for cash;
   4) the Company  is in the  process of obtaining  vendor financing for  the
      majority of its equipment needs for expansion;
   5) the Company believes that  its suit against Star Telecommunications  is
      meritorious and will  conclude with  a significant  positive impact  to
      both accounts payable and the asset base of the Company.

 There can be no degree of assurance  that the Company will be successful  in
 completing additional financing  transactions.   The consolidated  financial
 statements do not include any adjustments to reflect the possible effects of
 the  recoverability  and  classification  of  assets  or  classification  of
 liabilities which may result from the  inability of the Company to  continue
 as a going concern.


 NOTE D - ACQUISITIONS AND RESCISSION

 USC Acquisition and Rescission

 On January 30,  1998, the  Company acquired  USC in  a transaction  recorded
 under the purchase method  of accounting.  The  total purchase price of  the
 acquisition was  $2,667,398 and  consisted of  1,500,000 common  shares  and
 2,500,000 warrants for 1 common share each.  The Company shares were  valued
 at the trading price at the acquisition date with the warrants being  valued
 using the Black-Scholes pricing model.  The following assumptions were  used
 in the Black-Scholes  model; dividend yield  of 0%,  expected volatility  of
 112%, risk free interest  rate of 6% over  a 3 year  period and an  expected
 life of 3 years.  Effective  in May of 1998,  the Company and principals  of
 USC agreed to rescind  the USC acquisition, and  that the economic  benefits
 and burdens of any revenues received or expenses incurred following May  27,
 1998 would accrue to USC.   On June 15, 1998,  the Company and USC  executed
 definitive documents to reflect  the rescission of  the acquisition of  USC,
 resulting in  the  Company  recovering 1.5  million  shares,  and  canceling
 2,500,000 warrants.   Cash payments  made on  behalf of  USC were  recovered
 through a note receivable in the  original principal amount of $724,660,  of
 which approximately $300,000 (net of reserve  of $160,000) in principal  was
 outstanding at  October  31,  1999.   On  August  17,  1999,  USC  commenced
 voluntary bankruptcy proceedings  under Chapter 11  of the Bankruptcy  Code.
 The Company collected  $300,000 of  this balance  as a  final settlement  in
 January 2000.

 The Company recognized a loss on the disposition of $1,155,385.  The loss on
 disposal is calculated as  the difference between the  fair value of  common
 stock and warrants returned by USC and the net investment in USC, recognized
 by the Company through its disposition date.
<PAGE>

 Acquisition of Talk Time Inc.

 On June 16, 1998, the Company acquired the assets of Talk Time, a  wholesale
 distributor of  prepaid calling  cards to  convenience stores  in the  Rocky
 Mountain and Oklahoma regions.   The asset  purchase agreement provided  for
 the acquisition of certain assets and  the assumption of obligations with  a
 cash purchase price approximating $54,000.   In addition, the owner of  Talk
 Time received 50,000  warrants to purchase  50,000 shares  of the  Company's
 common stock at  $1 per  share.   The exercise  price for  the warrants  was
 reduced to $.53  per share on  July 1, 1998.   The value  of these  warrants
 using the  Black-Scholes  method approximates  the  fair value  assigned  by
 management to the net assets acquired of $3,000.  The following  assumptions
 were used  in  the  Black-Scholes model;  dividend  yield  of  0%,  expected
 volatility of 112%, risk free interest rate of 6% and an expected life of  2
 years.

 The warrants vest  upon attainment of  target revenues as  specified in  the
 warrant agreement.  On June 30, 1999, 25,000 of the warrants expired without
 vesting.  Prior to  the expiration of the  remaining 25,000 warrants,  these
 warrants were canceled and an amended warrant agreement was issued on  March
 1, 2000 for the purchase of 50,000  shares of the Company's common stock  at
 $.53 per  share.   25,000  of  the  warrants vested  immediately,  with  the
 remaining 25,000 warrants vesting upon the attainment of target revenues  as
 specified in the warrant agreement (see Note M).

 Acquisition of Dial-Thru International Corporation

 On  November  2,   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.  As of October 31, 2000, no additional
 shares were earned by the Seller based  on revenue and earnings goals.   The
 acquisition was accounted for as a purchase.  Excess of cost over fair value
 of net  assets of  company acquired  recorded in  the acquisition  is  being
 amortized over a  period of  10 years.   The  results of  operations of  the
 acquired entity are included in the  consolidated operations of the  Company
 from November 1, 1999.


 The fair value of assets and liabilities acquired consisted of:

  Cash                               $    69,137
  Accounts receivable, net               583,605
  Fixed assets                           505,082
  Other assets                            64,512
  Liabilities                         (1,326,311)
  Excess of cost over fair value
    of net assets of company
    acquired                           1,041,475
                                      ----------
                                     $   937,500
                                      ==========

<PAGE>

 Unaudited pro-forma financial information for the fiscal years ended October
 31, 1999 and  1998, as though  the acquisition had  occurred on November  1,
 1997 is as follows:
                                                     Unaudited
                                                Year ended October 31,
                                              -------------------------
                                                 1999           1998
                                              ----------     ----------
  Revenues                                   $ 9,623,932    $ 7,015,627
                                              ==========     ==========
  Net loss from continuing operations        $(3,931,216)   $(2,748,699)
                                              ==========     ==========
  Discontinued operations income (loss)      $ 5,528,303    $  (103,091)
                                              ==========     ==========
  Net income (loss)                          $ 1,597,087    $(2,851,790)
                                              ==========     ==========
  Net loss per common share from continuing
    operations (basic and diluted)           $     (0.50)   $    (0.34)
                                              ==========     ==========
  Net income (loss) per common share
    (basic and diluted)                      $      0.20    $    (0.35)
                                              ==========     ==========
  Weighted average common shares outstanding
    (basic and diluted)                        7,802,375     8,095,937
                                              ==========     ==========


 NOTE E - NASDAQ DELISTING

 On August  25,  1997,  the U.S.  Securities  and  Exchange  Commission,  The
 National Association of Securities Dealers, Inc. and the NASDAQ Stock Market
 approved increases in  the listing and  maintenance standards governing  the
 NASDAQ SmallCap Market.  On June 8, 1998, the Company was delisted  from the
 NASDAQ SmallCap Market  for failing to  meet such requirements,  and is  now
 traded on the  OTC Bulletin Board.   The delisting  of the Company's  Common
 Stock may adversely affect the liquidity of the Company's Common Stock,  the
 operations of the Company and the ability of the Company to raise capital in
 the future.



 NOTE F - 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 using the Company's quoted common stock price on September 8,  2000,
 totaling  $3,028,569.  Through  October 31,  2000  the Company  recorded  an
 impairment charge of $575,542 to reduce the credits to their estimated  fair
 value.  The estimated fair value was established using a discount of 25% off
 face value which is  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, but  the Company intends  primarily to use  these
 credits to  pay for  certain trade  liabilities.   There is  no  contractual
 expiration date  for  these  trade credits  and  there  are  no  limitations
 relating to the  use of these  credits.  No  credits were  utilized for  the
 period ended October  31, 2000.   The trade credits  will be offset  against
 liabilities  as  used  or  charged  to  expense  as  utilized  for   placing
 advertisements. (Also see Note S)

<PAGE>


 NOTE G - CONVERTIBLE DEBENTURES

 Convertible Debentures to Shareholders

 On December 15, 1997, the Company executed a convertible loan agreement (the
 "Original Agreement")  with  a  shareholder,  Founders  Equity  Group,  Inc.
 ("Founders"), which provided financing  of up to  $500,000.  Funds  obtained
 under the loan agreement  were collateralized by all  assets of the  Company
 and bore interest at 10%.  Required payments were for interest only and were
 due monthly beginning February 1, 1998.  Borrowings under the loan agreement
 matured January 1, 1999, unless otherwise redeemed or converted.  Under  the
 terms of the loan agreement, Founders  had the option to exercise its  right
 at any time  to convert all,  or in multiples  of $25,000, any  part of  the
 borrowed funds into  the Company's  Common Stock  at a  conversion price  of
 $1.25 per share.  The conversion price was subject to adjustment for certain
 events and transactions as specified in the loan agreements.   Additionally,
 the outstanding principal amount was redeemable at the option of the Company
 at 110% of par.

 On February  5, 1998,  Founders and  the Company  entered into  a  financial
 consulting agreement pursuant to which Founders agreed to provide  financial
 advisory and consulting services to the  Company, and the Company agreed  to
 pay to Founders a fee equal to 3% of the value of the consideration received
 in any sale or merger of  any division or subsidiary of  the Company.  As  a
 result of  this agreement,  Founders has  received $120,000  of the  initial
 proceeds of the sale  of the Software Business.   Founders agreed to  forego
 any further  payments  attributable to  the  Company's receipt  of  deferred
 payments in connection with the sale.

 On February 11, 1998,  the Company and Founders  executed a loan  commitment
 letter (the "Loan Commitment") which provided for multiple advance loans  of
 up to $2  million upon  terms similar  to the  Original Agreement;  however,
 indebtedness outstanding  under the  Loan  Commitment was  convertible  into
 shares of Common Stock  at a conversion price  equal to the average  closing
 prices of  the Common  Stock over  the five-day  trading period  immediately
 preceding the  date  of  each  advance.    As  consideration  for  the  Loan
 Commitment, the Company paid a commitment fee of $10,000.

 As of March 31, 1998, Founders (and certain of its affiliates) entered  into
 the First Restated Loan Agreement (the "Loan Agreement") which  consolidated
 all rights and  obligations of the  Company to Founders  under the  Original
 Agreement and  the  Loan  Commitment.   Amounts  advanced  under  the  First
 Restated Loan Agreement  bore interest at  the rate of  12% per annum,  were
 secured by a  lien on  all other Company  assets and  were convertible  into
 shares of Common Stock, at the option of  Founders, at $0.80 per share.   On
 August 25, 1998, Founders agreed to release its lien on all of the Company's
 assets upon the consummation of the sale of the Software Business (See  Note
 J).   As  consideration  for  the release,  the  Company  agreed,  upon  the
 consummation of  the  sale,  to  repay $1.0  million  of  the  $1.5  million
 currently outstanding under  the Loan Agreement,  and to  allow Founders  to
 convert  the  remaining  $0.5  million  plus  accrued  but  unpaid  interest
 outstanding under  the Loan  Agreement  into shares  of  Common Stock  at  a
 conversion price of $0.50 per share.   The Company used $1,000,000 from  the
 Software Business sale proceeds to pay down the Founders debt.
<PAGE>

 On December 11, 1998, the Company  and Founders executed Amendment No. 1  to
 the First  Restated Loan  Agreement.   As  a result  of the  amendment,  the
 Company agreed to defer Founders'  conversion of the remaining  indebtedness
 outstanding under the Loan Agreement in exchange for (a) Founders' waiver of
 any registration obligation  under the Registration  Rights Agreement  dated
 May 1,  1997 or  under the  Loan Agreement  until February  1, 1999  or  the
 Company's earlier  delivery  of  a conversion  notice  with  regard  to  the
 outstanding indebtedness, (b) the adjustment of the conversion price for the
 remaining convertible  indebtedness  outstanding under  the  Loan  Agreement
 ($500,000) from $0.50 per share to the greater of $0.50 per share or 75%  of
 the average closing  price of  the Common Stock  over the  ten trading  days
 preceding the delivery of a conversion  notice, and (c) Founders'  agreement
 to convert  the  remaining  outstanding  principal  amount  under  the  Loan
 Agreement ($500,000) upon written  notice from the  Company at the  adjusted
 conversion agreed to price described above.   Further, the amendment to  the
 First Restated  Loan Agreement  reduced the  interest  rate payable  on  the
 outstanding principal amount from 12% to  9% per annum.  The amendment  also
 terminated any additional  funding obligations of  Founders under the  First
 Restated Loan  Agreement.   On  March 31,  1999,  the Company  and  Founders
 extended the maturity  date of the  Founders First  Restated Loan  Agreement
 from April 1, 1999 to July 1, 1999.  On May 4, 1999, the Company repaid  the
 balance of the amounts outstanding ($500,000) under the First Restated  Loan
 Agreement with  Founders  and  the Company's  obligations  under  the  First
 Restated Loan Agreement were terminated.


 Convertible Debentures to Accredited Investors

 On February 4, 2000, the  Company executed non-interest bearing  convertible
 note agreements  (the "Agreements")  with nine  accredited investors,  which
 provided financing of $1,000,000.  The  notes are payable on the earlier  of
 one year from the date of issuance  or the Company's consummation of a  debt
 or equity  financing in  excess of  $5,000,000, and  may be  converted  into
 common stock at a rate of $4.00 per share if the notes are not repaid within
 90 days from the  date of issuance. The  Company recorded financing fees  of
 approximately $117,000  in February  2000 related  to  these notes  for  the
 difference in the conversion price of $4.00 and the market price of $4.47 on
 the date the notes were approved by the Board of Directors.

 The Company also issued to the holders  of the notes warrants to acquire  an
 aggregate of 125,000 shares  of common stock at  an exercise price of  $3.00
 per share, which expire five years from  the date of issuance.  In  February
 2000, the Company recorded a debt discount of approximately $492,000.   This
 amount represents the Company's estimate of the fair value of these warrants
 at the  date  of  grant  using the  Black-Scholes  pricing  model  with  the
 following assumptions:  applicable  risk-free  interest rate  based  on  the
 current treasury-bill interest rate at the grant date of 6%; dividend yields
 of 0%; volatility  factors of  the expected  market price  of the  Company's
 common stock of 1.62; and an expected life of the warrants of three years.
<PAGE>

 On August 4,  2000, additional  warrants to acquire  up to  an aggregate  of
 125,000 shares of common stock at an exercise price of $2.75 per share  were
 issued to the holders of  the notes, as the  convertible notes had not  been
 repaid within six months  following the date of  issuance.  Additional  debt
 discount of approximately $386,000 was recorded during the fourth quarter of
 fiscal 2000.   This amount was  calculated using  the Black-Scholes  pricing
 model with  the following  assumptions: applicable  risk-free interest  rate
 based on the current  treasury-bill interest rate at  the grant date of  6%;
 dividend yields of 0%;  volatility factors of the  expected market price  of
 the Company's common stock of 2.01; and an expected life of the warrants  of
 three years.  The Company is amortizing the total debt discount of  $877,996
 over the initial maturity of these notes of one year.  The amount charged to
 expense and accumulated  amortization for the  year ended  October 31,  2000
 totaled approximately $562,008. The balance of  debt net of the  unamortized
 discount of $315,988 was $684,012 at October 31, 2000.


 NOTE H - NOTE PAYABLE TO SHAREHOLDER

 In connection with the acquisition of Dial-Thru International Corporation on
 November 2, 1999, the  Company assumed a related  party note payable to  the
 sole owner of the acquired entity of approximately $400,000.  The note bears
 interest at 6% per  annum, is payable in  quarterly installments of  $50,000
 plus interest beginning  November 1, 1999,  and matures on  August 1,  2001.
 The outstanding balance at October 31, 2000 was $346,000, and is  classified
 as a current liability.


 NOTE I - NOTES PAYABLE

 On April 13, 1999, the Company executed  a loan agreement with Bank One  for
 $805,000.  The loan bore  interest at prime less  .5% (7.75% at October  31,
 1999),  was  payable  in  monthly  installments  of  $13,500  plus  interest
 beginning May 13, 1999, and matured April 13, 2004.  The loan was secured by
 cash equivalents of  $900,000.   The purpose of  this loan  was to  purchase
 telephone switch equipment  and software to  operate the switch.   The  loan
 balance at October 31, 2000 was $724,000 of which $162,000 is classified  as
 a current liability. On February 14,  2000, the Company utilized  restricted
 cash collateralizing this  loan to  pay off  amounts outstanding  ($724,000)
 under the loan agreement.


 NOTE J - DISPOSITION OF SOFTWARE BUSINESS AND DISCONTINUED OPERATIONS

 On December 7, 1998, the Company  obtained shareholder approval to sell  the
 Software Business to Affiliated Computer  Systems, Inc. ("ACS"), a  Delaware
 corporation.  The  Asset Purchase Agreement  dated as of  September 3,  1998
 provided for the  sale of the  computer equipment,  purchased software,  and
 internally developed  software  for $3,770,000  in  cash and  an  additional
 $3,625,000 of deferred  payments during 1999.  As of October  31, 1999,  the
 Company had received all of the deferred payments.  These payments have been
 recorded as additional gain on the sale of the Software Business, reduced by
 costs associated with the sale.  The net gain resulting from disposition  of
 the Software Business was $5,309,927.
<PAGE>

 Summarized operating results  of discontinued  Software Business  operations
 are as follows:


                                      Period from
                                 November 1,1998 through      Year Ending
                                   December 7, 1998        October 31, 1998
                                       ----------             ----------
 Revenues                             $ 1,686,945            $ 9,380,064
 Costs and expenses                     1,468,569              9,483,155
                                       ----------             ----------
 Net income (loss)                    $   218,376            $  (103,091)
                                       ==========             ==========


 NOTE K - PROPERTY AND EQUIPMENT

<TABLE>
 Property and equipment consists of the following at October 31:

                                               2000               1999
                                             ---------         ----------
 <S>                                        <C>               <C>
 Telephone switch equipment                 $1,776,773        $   982,699
 Vending machines                                    -             97,346
 Leasehold improvements                              -             21,544
 Furniture and fixtures                         78,676             68,395
 Office equipment                               46,154                  -
 Computer equipment                            166,583             77,406
 Computer software                             267,507            267,438
                                             ---------         ----------
                                             2,335,693          1,514,828
 Less accumulated depreciation and
   amortization                               (796,149)           (93,500)
                                             ---------         ----------
                                            $1,539,544         $1,421,328
                                             =========          =========

 At October 31, 2000 and 1999, the gross amount of capital lease assets and
 related accumulated amortization recorded under capital leases was as
 follows:
                                               2000               1999
                                             ---------         ----------
 <S>                                        <C>               <C>
 Telephone switch equipment                 $  184,220        $         -
 Office equipment                               43,552                  -
                                             ---------         ----------
                                               227,772                  -
 Less accumulated amortization                 (21,173)                 -
                                             ---------         ----------
                                            $  206,599        $         -
                                             =========         ==========
</TABLE>

 Amortization  of  assets  held  under   capital  leases  is  included   with
 depreciation expense.  Depreciation and amortization expense from continuing
 operations amounted  to $565,188,  $91,338 and  $19,356 in  2000, 1999,  and
 1998, respectively.
<PAGE>

 NOTE L - 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.  As these assets had  not yet been transferred to the  buyer
 at October 31, 2000, the sale of  the assets has not been recognized  during
 the year ended October 31, 2000.

 NOTE M - STOCK OPTIONS AND WARRANTS


 Warrant Issuances to Employees

<TABLE>
 Employee warrant activity for the three years ended October 31, 2000 was as
 follows:

                                                                  Weighted
                                        Number        Warrant     Average
                                          of         Price Per    Exercise
                                       Warrants        Share       Price
                                      --------     -----------    --------
  <S>                                <C>          <C>            <C>
  Warrants outstanding at
    October 31, 1997                   475,000    $    2.25      $    2.25
   Warrants granted                    875,000         0.53           0.53
   Warrants exercised                        -          -              -
   Warrants canceled                  (475,000)        2.25           2.25
                                      --------     -----------    --------
  Warrants outstanding at
    October 31, 1998                   875,000         0.53           0.53
   Warrants granted                    150,000     0.46 - 0.80        0.60
   Warrants exercised                        -          -              -
   Warrants canceled                         -          -              -
                                      --------     -----------    --------
  Warrants outstanding at
    October 31, 1999                 1,025,000     0.46 - 0.80        0.54
   Warrants granted                    590,000     0.81 - 1.44        1.33
   Warrants exercised                 (125,000)        0.53           0.53
   Warrants canceled                  (835,000)    0.46 - 1.44        0.75
                                      --------     -----------    --------
  Warrants outstanding at
    October 31, 2000                   655,000    $0.53 - 1.44        0.83
                                      ========     ===========    ========
</TABLE>
<PAGE>

 In September 1997, the Company  executed employment agreements with  certain
 executives which provided  for the issuance  of warrants ("1997  Performance
 Warrants") to each executive as  additional compensation.  These  agreements
 were effective July 1, 1997.   The aggregate number  of shares to be  issued
 upon exercise  of such  1997 Performance  Warrants is  475,000.   Each  1997
 Performance Warrant expires  10 years  from the  date of  issuance, and  was
 exercisable at  a  price  of $2.25  per  share,  the closing  price  of  the
 Company's Common Stock  on July  17, 1997,  the date  that the  compensation
 committee approved  the issuance  of such  warrants.   The 1997  Performance
 Warrants  vest  50%  upon  the  "Trigger  Date"  and  50%  on  the  one-year
 anniversary of the  Trigger Date.   As used in  each warrant agreement,  the
 Trigger Date means the date of the earlier of the following events: (i)  the
 earnings per share of  the Company (after tax)  equals or exceeds $0.30  per
 share during any fiscal year, (ii) the closing price of the Company's Common
 Stock equals or exceeds $8.00 per  share for sixty-five consecutive  trading
 days, or (iii) a Change of Control.

 Effective on January 30, 1998, pursuant  to a trigger event, 475,000 of  the
 1997 Performance  Warrants vested  concurrent with  the issuance  of  common
 stock and warrants in connection with the acquisition of USC.  During fiscal
 1998, 1997 Performance  Warrants to  acquire 100,000  shares were  canceled.
 The exercise  price of  $2.25 was  in excess  of the  trading price  at  the
 vesting date, and accordingly no expense pursuant to APB No. 25 was recorded
 by the Company  during 1998.   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
 $650,011 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  .99;  and  an  expected  life  of  the
 Performance Warrants of 5 years.

 Effective July 20,  1998, the  remaining 375,000  1997 Performance  Warrants
 were repriced to 0.53 per share,  the closing price of the Company's  Common
 Stock on that date.  The repricing was made because management believed that
 the higher priced options were no  longer a motivating factor.  The  options
 repriced are reflected in the cancellation and grant activity for 1998.

 Effective July 20,  1998, an  additional 500,000  performance warrants  were
 issued to  certain  executives ("1998  Performance  Warrants").   Each  1998
 Performance Warrant  expires 10  years after  the date  of issuance  and  is
 exercisable at  a  price  of $0.53  per  share,  the closing  price  of  the
 Company's Common Stock on July 20, 1998.  The 1998 Performance Warrants vest
 upon achieving  either  $50 million  in  revenue  in any  period  of  twelve
 consecutive months  with positive  earnings during  such months,  or upon  a
 change of control of the Company.   In accordance with  APB No. 25, and  its
 related interpretations, the Company has recorded no compensation expense to
 date.  Compensation expense will be recognized when it becomes probable that
 an event, which will trigger vesting, will occur.
<PAGE>

 Effective July  15, 1999,  50,000 performance  warrants  were issued  to  an
 employee of the Company  ("1999 Performance Warrants").  The warrants expire
 two years from the date of vesting  and are exercisable at $0.46 per  share,
 the closing  price of  the Company's  stock  on July  15,  1999.   The  1999
 Performance Warrants  vest  upon  achieving target  revenues  in  excess  of
 $750,000 per month for three consecutive  months during the vesting  period.
 In accordance with APB No. 25, and its related interpretations, the  Company
 has recorded no compensation expense to date.  Compensation expense will  be
 recognized when  it  becomes probable  that  an event,  which  will  trigger
 vesting, will occur.

 On August 16,  1999, the  Company issued  a warrant  to an  employee of  the
 Company to acquire  50,000 shares of  common stock at  an exercise price  of
 $0.55 per share, the closing price  of the Company's common stock on  August
 13, 1999.  On October 1, 1999, the  Company issued a warrant to an  employee
 of the Company to acquire 50,000 shares of the Company's common stock at  an
 exercise price of $0.80 per share, the closing price of the Company's common
 stock on September 30, 1999.  Each  of these warrants vests in 25,000  share
 increments on the first and second anniversary dates of the warrant, and are
 exerciseable during the two year period following the date of vesting.   The
 right to  purchase  any shares  under  these warrants  terminates  upon  any
 termination of employment  with the Company.   Each of  these warrants  were
 issued as consideration for services.  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  $82,774 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 .90;  and an expected
 life of the warrants ranging from 3 - 6 years.

 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  490,000 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
 $782,834 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.

 During March 2000, one  employee exercised 125,000  warrants at an  exercise
 price of $0.53 per share. Also in March 2000, 275,000 warrants with exercise
 prices ranging from $0.46  to $0.81 that were  previously issued to  various
 employees  were  amended, changing  the vesting period of the warrants only.
 At various dates during 2000, 560,000 warrants with exercise prices  ranging
 from $0.53 to $1.44 were canceled or expired.

 The warrants issued to employees that were exercisable  at the  years  ended
 October  31,  2000,  1999  and  1998  were  350,000,  375,000  and  375,000,
 respectively.

 The  weighted  average  fair  value of the warrants granted during the years
 ended  October  31,  2000,  1999  and  1998  is  $1.33,  $0.60  and   $0.53,
 respectively.
<PAGE>


 Warrant Issuances to Non-Employees

<TABLE>
 Non-Employee warrant activity for the three years ended October 31, 2000 was
 as follows:

                                                                  Weighted
                                        Number        Warrant     Average
                                          of         Price Per    Exercise
                                       Warrants        Share       Price
                                      --------     -----------    --------
  <S>                                <C>          <C>            <C>
  Warrants outstanding at
    October 31, 1997                    50,000    $    2.00      $    2.00
   Warrants granted                     50,000         0.53           0.53
   Warrants exercised                        -          -              -
   Warrants canceled                         -          -              -
                                      --------     -----------    --------
  Warrants outstanding at
    October 31, 1998                   100,000     0.53 - 2.00        1.27
   Warrants granted                    120,000     0.29 - 0.88        0.56
   Warrants exercised                        -          -              -
   Warrants canceled                   (25,000)        0.53           0.53
                                      --------     -----------    --------
  Warrants outstanding at
    October 31, 1999                   195,000     0.29 - 2.00        0.93
   Warrants granted                    660,000     0.46 - 3.00        1.53
   Warrants exercised                  (31,200)    0.46 - 0.81        0.61
   Warrants canceled                   (50,000)        0.88           0.88
                                      --------     -----------    --------
  Warrants outstanding at
    October 31, 2000                   773,800    $0.29 - 3.00   $    1.50
                                      ========     ===========    ========
</TABLE>

 Effective June 16, 1998,  50,000 warrants were issued  relating to an  asset
 purchase agreement entered into by the  Company (see note D).  The  warrants
 were initially exercisable  at a  price of  $1 per  share, and  subsequently
 repriced to $0.53  per share on  July 20, 1998.   These  warrants vest  upon
 attainment of certain target revenues as specified in the warrant agreement.
 On June  30, 1999,  25,000 of  the warrants  expired without  vesting.   The
 remaining 25,000 warrants expired on June 30, 2000.

 On January 11,  1999, the  Company retained a  consultant to  assist in  its
 strategic planning and investor relations activities by issuing warrants  to
 acquire 50,000 shares of Company common  stock at an exercise price of  $.29
 per share.  The right to acquire  25,000 shares under such warrant vests  on
 January 10, 2000, and the right to acquire the remaining 25,000 shares under
 the warrant vests on July 10, 2000.The Company recorded expense of $5,942 in
 1999 related  to  these warrants.    This amount  represents  the  Company's
 estimate of the fair value of  these warrants at the  date of grant using  a
 Black-Scholes pricing model with the following assumptions: applicable risk-
 free interest rate 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 1.02; and an expected
 life of the warrant of one year.
<PAGE>

 October 26,  1999, the  Company issued  a warrant  to a  distributor of  the
 Company's prepaid phone cards to acquire 50,000 shares of common stock at an
 exercise price of $0.88 per share, the closing price of the Company's common
 stock on October 25,  1999.  The warrant  is exerciseable beginning  October
 26, 2001  and  expires  October  26,  2003.   This  warrant  was  issued  as
 consideration for services.

 During the fiscal year ended October 31, 1999, the Company issued a  warrant
 to purchase 20,000  shares of the  Company's common stock  for provision  of
 services at an exercise price  of $.45 per share.  The fair market  value of
 these warrants is  not significant,  and therefore  is not  included in  the
 proforma disclosure or net income for the year.


 On November  2, 1999  the Company  issued warrants  to a  consultant of  the
 Company to acquire  10,000 shares of  common stock at  an exercise  price of
 $0.81  per  share.  These  warrants  vested  immediately.  The fair value of
 these warrants is insignificant.

 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 are performance based.  In
 connection with the change  in  status  and  related  changes in the vesting
 schedule,  during  the  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.

 On February  4, 2000  and August  4, 2000,  the Company  issued warrants  to
 several  investors  in  connection  with  debt financing to acquire  250,000
 shares of common stock at an exercise price ranging  between $2.75 and $3.00
 per share.  The warrants vested immediately (see Note G).


 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.


 During fiscal 2000,  50,000 warrants with  an exercise price  of $0.88  were
 canceled.

 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.


 The warrants issued to non-employees that  were  exercisable  at  the  years
 ended  October  31,  2000,  1999  and  1998  were  70,000,  20,000 and none,
 respectively.

 The weighted average fair value of the warrants  granted  during  the  years
 ended  October  31,  2000,  1999  and  1998  was  $1.50,  $0.93  and  $1.27,
 respectively.
<PAGE>

 Stock Options

 In 1990, the Company adopted a stock option plan (the "Stock Option  Plan").
 The Stock  Option Plan  authorizes the  Board of  Directors to  grant up  to
 1,200,000 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  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  Stock Option Plan  have up to  10  year terms and
 have vesting periods which range from 0 to 3 years from the grant date.  The
 exercise price of  any options granted  under the Stock  Option Plan is  the
 fair market value at the date  of grant. As of  October 31, 1997, the  Board
 had granted certain options under the Stock Option Plan in excess of  shares
 authorized under the  plan.  On  February 26, 1998,  the Board of  Directors
 increased the number  of shares issuable  under the  Company's Stock  Option
 Plan from 1.2  million shares to  2.3 million shares  so that stock  options
 previously granted by the  Board in excess of  those permitted by the  Stock
 Option Plan could be covered by the plan.

<TABLE>
 Activity under the Stock Option Plan  for the three years ended October  31,
 2000 was as follows:


                                                                  Weighted
                                        Number        Warrant     Average
                                          of         Price Per    Exercise
                                       Warrants        Share       Price
                                      --------     -----------    --------
  <S>                                <C>          <C>            <C>
  Options outstanding at
    October 31, 1997                 1,017,700    $1.50 - 5.00   $    2.23
   Options granted                     199,050     0.38 - 1.41        0.94
   Options exercised                         -          -              -
   Options canceled                   (122,600)    1.41 - 5.00        2.17
                                      --------     -----------    --------
  Options outstanding at
    October 31, 1998                 1,094,150     0.38 - 5.00        1.95
   Options granted                     901,450     0.28 - 0.48        0.40
   Options exercised                   (20,000)        0.40           0.40
   Options canceled                   (912,300)    0.28 - 5.00        1.97
                                      --------     -----------    --------
  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
                                      ========     ===========    ========
</TABLE>
<PAGE>

 Effective December 11,  1998, employee  options to  purchase 792,150  shares
 were repriced to $.40 per share, the closing price of the Company's stock on
 that date.  The repricing was  made because the Board of Directors  believed
 that the higher priced  options were no longer  a motivating factor for  key
 employees and officers.   The repriced  options are reflected  above in  the
 cancellation and grant activity for 1999.

 The options  issuable  to employees  that  were exercisable  at  year  ended
 October 31,  2000,  1999, and  1998  were 464,100,  1,043,300  and  732,850,
 respectively.

 The weighted-average  fair value  of the  options granted  during the  years
 ended October  31, 2000,  1999, and  1998 is  $  1.44, $  0.24 and  $  0.49,
 respectively.

 The weighted-average remaining  contractual life of  options outstanding  at
 October 31, 2000, 1999 and  1998 is 1.62 years,  2.12 years and 4.37  years,
 respectively.

 Under APB 25,  because the exercise  price of the  Company's employee  stock
 options equals  the market  price of  the underlying  stock on  the date  of
 grant, no compensation expense is recognized.

 Pro forma information regarding  net income (loss)  and earnings (loss)  per
 share is required by SFAS No. 123, and has been determined as if the Company
 had accounted for  its employee stock  options and warrants  under the  fair
 value method of that statement.  The fair value for options was estimated at
 the date  of grant  using  a Black-Scholes  option  pricing model  with  the
 following assumptions:  applicable risk-free  interest  rates based  on  the
 current treasury-bill interest rate at the grant date, which approximated 6%
 in 2000 and 1999, respectively and 5.4% to 6.0% in 1998; dividend yields  of
 0% in all three  years; volatility factors of  the expected market  price of
 the Company's common stock of approximately  2.13 in 2000, .90 in 1999;  and
 between .94 and 1.0 in 1998; and an  expected life of the option of  between
 one and three years in 2000,  three and six years in  1999, and two and  six
 years in 1998.

 The Black-Scholes option valuation model was developed for use in estimating
 the fair value of traded options which have no vesting restrictions and  are
 fully transferable.  In addition, option valuation models require the  input
 of  highly  subjective  assumptions  including  the  expected  stock   price
 volatility.     Because   the   Company's  employee   stock   options   have
 characteristics significantly different  from those of  traded options,  and
 because changes in  the subjective input  assumptions can materially  affect
 the fair value estimate, in management's opinion, the existing models do not
 necessarily provide  a reliable  single measure  of the  fair value  of  its
 employee stock options.
<PAGE>

 For  purposes  of pro forma  disclosure, the  estimated  fair value  of  the
 options and warrants is amortized to expense over the vesting period of  the
 related option  or  warrant.   The  effects  of  applying SFAS  No.  123  in
 computing the pro forma  disclosures presented below  are not indicative  of
 future amounts as only  options and warrants  granted subsequent to  October
 31, 1995 have been  included  in the pro forma computations.  The  Company's
 pro forma information for the years ended October 31, 2000, 1999 and 1998 is
 as follows:


<TABLE>
                                           2000         1999           1998
                                       -----------    ---------     ----------
 <S>                                  <C>            <C>           <C>
 Net income (loss) as reported        $(11,186,742)  $1,713,380    $(2,724,162)
 SFAS No. 123 Pro forma adjustments:
  Stock options                           (238,655)     (81,849)      (261,726)
  Performance warrants                           -      (11,678)      (650,011)
                                       -----------    ---------     ----------
 Pro forma net income (loss)          $(11,425,397)  $1,619,853    $(3,635,899)
                                       ===========    =========     ==========


 Income (loss) per share as
   reported - basic and diluted       $      (1.31)  $     0.25    $     (0.38)
                                       ===========    =========     ==========
 Pro forma income (loss) per
   share - basic and diluted          $      (1.34)  $     0.24    $     (0.51)
                                       ===========    =========     ==========

</TABLE>

<PAGE>

 NOTE N - INCOME TAXES


<TABLE>
 The temporary  differences that  give rise  to the  deferred tax  assets  or
 liabilities at October 31, 2000 and 1999 are as follows:

                                            2000              1999
                                         ----------        ----------
 <S>                                    <C>               <C>
 Deferred tax assets
   Net operating loss carryovers        $ 8,962,015       $ 6,252,711
   Accounts receivable                      348,760            78,770
   Advertising credits                      195,684                 -
   Stock options and warrants               658,643                 -
   Other assets                             173,710           173,710
   Other                                        202               202
                                         ----------        ----------
 Total gross deferred tax assets         10,339,014         6,505,393


 Deferred tax liabilities
   Property and equipment                   (71,574)                -
   Other                                          -              (447)
                                         ----------        ----------
 Total gross deferred tax liabilities       (71,574)             (447)
                                         ----------        ----------
                                         10,267,440         6,504,946
         Valuation allowance            (10,267,440)       (6,504,946)
                                         ----------        ----------
   Net deferred tax assets              $         -       $         -
                                         ==========        ==========

 The reconciliation  of income  tax at  the statutory  United States  federal
 income tax  rates to  income tax  provision (benefit)  for the  years  ended
 October 31, is:

                                     2000          1999           1998
                                  ----------     ---------     ----------
  <S>                            <C>            <C>           <C>
  Income tax (benefit) at
    statutory rate               $(3,803,492)   $  582,549    $  (923,263)
  Change in valuation allowance    3,762,494      (592,047)       390,118
  Difference related to USC
    rescission                             -             -        533,145
  Other                               40,998         9,498              -
                                  ----------     ---------     ----------
                                 $         -    $        -    $         -
                                  ==========     =========     ==========
</TABLE>


 At October 31, 2000,  the Company has net  operating loss carryforwards  for
 federal income tax purposes of approximately $26.3 million, which expire  in
 2006 through  2015.   Utilization of  net operating  losses are  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.
<PAGE>


 NOTE O - 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.
 One of the leases  in the amount of  $40,865 was in  default at October  31,
 2000 and accordingly,  the entire  obligation has  been shown  as a  current
 liability.   The  Company  leases  its  branch  office  facilities  and  its
 corporate office  under various  noncancelable operating  leases with  terms
 expiring at various dates  through 2004, and has  also entered into  various
 operating leases  for equipment  used in  the  Company's business.    Rental
 expense for operating leases was $290,175  and $210,157 for the years  ended
 October 31, 2000 and 1999, respectively.

<TABLE>
 Future minimum  lease  payments  under noncancelable  operating  leases  and
 capital leases as of October 31, 2000 are as follows:

                                            Capital     Operating
                                             Leases       Leases
                                            --------     ---------
      <S>                                  <C>          <C>
      Year ending October 31,
               2001                        $ 142,372    $  365,037
               2002                           77,756       394,738
               2003                           58,316       389,947
               2004                                -       161,170
               2005                                -             -
                                            --------     ---------
      Total minimum lease payments           278,444    $1,310,892
                                                         =========
      Less amount representing interest      (57,357)
                                            --------
      Present value of net minimum
        capital lease payments               221,087

      Less current installments of
        obligations under capital leases    (102,472)
                                            --------
      Obligations under capital leases,
         excluding current installments    $ 118,615
                                            ========
</TABLE>

 On May 2, 2000,  Star Telecommunications, Inc.  ("Star") filed suit  against
 the Company  in the  Superior Court  of  the State  of California  in  Santa
 Barbara, California, alleging a breach of contract by the Company in failing
 to pay amounts due under a  Carrier Service Agreement, and seeks damages  of
 approximately $780,000.  The Company disputes the amounts alleged to be owed
 to Star, and has filed a counter-claim for damages against Star for wrongful
 acts of Star  under the Carrier  Service Agreement.   Amounts alleged to  be
 owed to  Star are  reflected in  the Company's  financial statements.    The
 Company is vigorously defending this lawsuit and strongly believes  that the
 Company's damages  resulting from  Star's actions  significantly exceed  the
 claims by Star.


<PAGE>
 NOTE P - 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 employees  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 $10,566,
 $18,659, and  $0 for  the years  ended  October 31,  2000, 1999,  and  1998,
 respectively.



 NOTE Q - BUSINESS AND CREDIT CONCENTRATIONS

   Continuing Operations:

   One customer accounted for  approximately 17% of revenues during the  year
   ended October 31, 2000 and 0% of the trade accounts receivable  balance at
   October  31,  2000.   One  customer  accounted for  approximately  18%  of
   revenues during the  year ended October 31, 1999.   This  customer made up
   approximately 6% of the  trade accounts receivable balance at October  31,
   1999.  The receivable balance was however fully reserved.  The Company  no
   longer  provides  service to  this  customer,  since its  migration  to  a
   facilities-based  operation.     Management  provides  an  allowance   for
   doubtful  accounts  which  reflects  its  estimate  of  the  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.

   The Company  has a note  receivable and accrued  interest from its  former
   subsidiary,  USC, under  which  approximately $460,000  in  principal  was
   outstanding  at October  31, 1999.    On August  17, 1999,  USC  commenced
   voluntary bankruptcy proceedings  under Chapter 11 of the Bankruptcy  Code
   (See Note  D).   Subsequent to  October 31,  1999, bankruptcy  proceedings
   were  settled  and  the  Company  has  agreed  to  a  full  settlement  of
   outstanding debts owed  by USC in the amount  of $300,000.  The  remaining
   $160,000 note receivable balance has been charged to operations in 1999.

   Discontinued Operations:

   The  Company derived  its sales  primarily from  customers in  the  retail
   petroleum market.   The Company performed  periodic credit evaluations  of
   its  customers  and   generally  did  not  require  collateral.     Billed
   receivables  were  generally due  within  30  days.   Credit  losses  have
   historically been insignificant.

   The Company's  revenues (See Note  J) were concentrated  in The  Southland
   Corporation ("Southland"), which accounted for approximately 0%, 86%,  and
   87% of the Company's total revenue  for fiscal years 2000, 1999 and  1998,
   respectively. At October 31, 2000, 1999 and 1998, Southland accounted  for
   0%, 0% and 77%, respectively of total accounts receivable.  The  Company's
   revenues derived  from its relationship  with Southland included  products
   and services provided directly by the Company to Southland and  indirectly
   through NCR  Corporation ("NCR") to Southland  pursuant to NCR's  contract
   with Southland. No other customer accounted for over 10% of the  Company's
   total revenues.
<PAGE>



 NOTE R - SEGMENT INFORMATION


 The Company  is organized  by line  of  business.   The  two major  line  of
 business operating segments are prepaid phone cards and dial thru  services.
 While  the  Chief  Executive  Officer  of the  Company evaluates results  in
 a number  of different  ways,  the line  of business management structure is
 the primary basis for which financial performance is assessed.

 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, 1999 the Company only had one segment, its
 prepaid phone card business.

 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:


<TABLE>

 During the Year Ended               Prepaid
 October 31, 2000                  Phone Cards  Dial Thru Services    Total
 ------------------------------    -----------      ----------     ----------
 <S>                               <C>             <C>
 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


 Net  loss  for  the  segments  excludes corporate general and administrative
 activity.
</TABLE>

<PAGE>

 NOTE S - RESTATEMENT

 Advertising credits acquired by the Company (see Note F) originally recorded
 at a  discount to  face value  of  $2,453,027 have  been restated  in  these
 financial statements to be  recorded at $3,028,569  which equals the  quoted
 value of the common shares issued to  acquire the trade credits on the  date
 of the transaction.  During the year ended October 31, 2000 the Company also
 restated the  financial statements  to record  an impairment  charge to  the
 trade credits of $575,542  thereby writing the  credits down to  $2,453,027,
 their estimated fair value at October 30, 2000.

 In addition the Company has restated these financial statements to record  a
 non-cash charge of $1,937,184 in connection with warrants originally  issued
 to  employees  who  changed  their  status  and  became  distributors of the
 Company's  prepaid  calling  card  business.   This  amount  was  previously
 included in the pro forma adjustment to net loss in connection with SFAS 123
 pro forma disclosure provisions.

 The  effect  of  these  restatements  on  the  unaudited  interim  financial
 statements for the quarters ended January 31, 2000, April 31, 2000, July 31,
 2000 and the year ended October 31, 2000 are as follows:


                                       Quarter Ended              Year Ended
                              --------------------------------    -----------
                              January 31,  April 30,  July 31,    October 31,
                                  2000       2000       2000          2000
                              -----------  ---------  --------    -----------
 Total assets                $         -  $        - $       -   $          -
 Total liabilities                     -           -         -              -
 Increase in net loss                  -   1,937,184         -      2,512,726
 Increase in net loss per share        -        0.23         -           0.29
 Total equity                          -           -         -              -


<PAGE>

              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



 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
 years ended  October  31, 2000  and  1999.  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>

<TABLE>
                     DIAL-THRU INTERNATIONAL CORPORATION

               SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

             For the years ended October 31, 2000, 1999 and 1998



                              Balance at                            Balance
                              beginning                             at end
                              of period  Additions   Deductions    of period
                              ---------  ---------   ----------    ---------
 <S>                          <C>         <C>       <C>           <C>
 2000 (Restated)
 ----
 Allowance for uncollectible
   accounts                   $ 231,675   $983,760  $189,669 (1)  $ 1,025,766
                               ========    =======   =======       ==========
 Impairment provision for
   advertising credits        $       -   $575,542  $      -      $   575,542
                               ========    =======   =======       ==========


 1999
 ----
 Allowance for uncollectible
   accounts                   $   4,001   $405,825  $178,151 (1)  $   231,675
                               ========    =======   =======       ==========
 1998
 ----
 Allowance for uncollectible
   accounts                   $  26,900   $      -  $ 22,899 (2)  $     4,001
                               ========    =======   =======       ==========


 (1)  Write offs.

 (2)  Collections on accounts previously written off.
</TABLE>