UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

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

                                  FORM 10-K

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

                  FOR THE FISCAL YEAR ENDED OCTOBER 31, 2001
                                      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:

                        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,  2002,  13,808,494  shares  of  Common  Stock  were
 outstanding. The aggregate  market value of  the Common Stock  held by  non-
 affiliates  of  Dial-Thru   International  Corporation  as   of  such   date
 approximated $4,863,953.

                      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, 2002.

 ============================================================================

<PAGE>

                          FORWARD-LOOKING STATEMENTS

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


                                    PART I

 Item 1.   Business

                                 THE COMPANY

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

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

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

      General Description of Business

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

      On January 30, 1998, we 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. We  concluded  our acquisition  of  USC
 believing that it  would provide us  with access  to the  telecommunications
 market. Certain  capabilities  of  USC, along  with  distribution  channels,
 failed to meet our expectations. On June 15, 1998, we executed an  agreement
 with the former principals of USC  to rescind the USC acquisition  effective
 May 27, 1998.

      During our  experience with  USC, we  decided to  develop our  in-house
 capabilities to expand  our telecommunications operations  and continued  to
 focus on the rapidly growing prepaid phone card market.  In August of  1998,
 we  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 marketing and distribution of domestic and
 international prepaid phone cards.  We conducted our domestic prepaid  phone
 card business through RDST, Inc., a  wholly owned subsidiary, by  purchasing
 services from PT-1 until mid-1999.  In the second quarter of fiscal 1999, we
 purchased telecommunications switching  equipment and  an enhanced  services
 platform.  Following a period of development, implementation and testing, we
 commenced operations as a facilities-based carrier in the fourth quarter  of
 1999.  Calls made with our prepaid phone cards were then routed through  our
 switching facilities, giving  us better control  over costs  and quality  of
 service.

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

      During the  first quarter  of fiscal  2000, we  appointed John  Jenkins
 (founder of the acquired  business) to the position  of President and  Chief
 Operating Officer.  In  the third quarter of  fiscal 2000, we relocated  our
 Texas operations, including  our switching  facilities, to  our Los  Angeles
 location.  During the fourth quarter 2001, Mr. Jenkins was appointed by  the
 Board of  Directors to  the position  of  Chairman of  the Board  and  Chief
 Executive Officer.   Upon  Mr. Jenkins  appointment as  President and  Chief
 Operating Officer, we also announced the creation of our "Bookend  Strategy"
 (see "Business Strategy" below),  and the roll  out of our  facilities-based
 Internet Protocol  ("IP")  network,  whereby we  sell  Voice  over  Internet
 Protocol ("VoIP"), to allow us 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.
 We now  operate  as  a facilities-based  global  IP  communications  company
 providing connectivity  to  international markets  experiencing  significant
 demand for  IP enabled  services.   We provide  a variety  of  international
 telecommunications services targeted to  small and medium sized  enterprises
 (SME's),  wholesale  carriers  providing  international  and  domestic  long
 distance traffic, and consumers that include  the transmission of voice  and
 data traffic  and  the  provision  of  Web-based  and  other  communications
 services. We utilize VoIP packetized voice technology (and other compression
 techniques) to  improve both  costs  and efficiencies  of  telecommunication
 transmissions, and  are  developing a  private  VoIP telephony  network.  We
 utilize  state-of-the-art   digital  fiber   optic  cable,   oceanic   cable
 transmission  facilities,  international  satellites  and  the  Internet  to
 transport our communications. We believe that we will be a strong competitor
 in our chosen international telecommunications markets.

      During the fourth quarter of 2001,  we acquired the assets and  certain
 of the liabilities  of Rapid Link,  Incorporated, ("Rapid  Link") a  leading
 provider of  integrated  data  and voice  communications  services  to  both
 wholesale and retail customers around the world.  Rapid Link's state-of-the-
 art, global VoIP network reaches thousands of retail customers, primarily in
 Europe and Asia. We  believe that the acquisition  will enhance our  product
 lines, particularly our  Dial Thru and  Re-origination services, and  Global
 Roaming products, (see "Products  and Services" below  for a description  of
 these services) which are currently offered by Rapid Link to its  customers.
 Furthermore,  the  acquisition  will  allow  us  to  roll  out  services  to
 additional international markets and more  rapidly expand our VoIP  strategy
 due  to  the   engineering  and  operational   expertise  acquired  in   the
 transaction.


                            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 Federal Communications  Commission ("FCC")  is
 considering whether  to impose  surcharges  or additional  regulations  upon
 certain providers of Internet telephony.  On April 10, 1998, the FCC  issued
 its report  to  Congress  concerning the  implementation  of  the  universal
 service provisions of the  Telecommunications Act.  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 our 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 our costs of providing services.  For example, the
 FCC determined in 1999 that subscriber  calls to Internet service  providers
 should be classified for  jurisdictional purposes as  interstate calls.   On
 appeal, the U.S. Court  of Appeals remanded the  case to the FCC,  directing
 the  FCC  to  reconsider  this  determination.   If  the FCC  reaffirms  its
 original determination, the determination could affect a telephone carrier's
 cost for provision of service to these providers by eliminating the  payment
 of reciprocal compensation to carriers terminating calls to these providers.

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

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

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

      Local phone companies  seeking to  require that  providers of  Internet
 telephony services pay access charges to them have the option of filing suit
 as well as initiating regulatory proceedings.   In  January 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 our knowledge, there are currently no domestic and few foreign  laws
 or regulations  that  prohibit voice  communications  over the  Internet.  A
 number of countries that currently prohibit competition in the provision  of
 voice telephony have  also prohibited Internet  telephony.  Other  countries
 permit but regulate  Internet telephony.   If  Congress, the  FCC, or  State
 regulatory agencies  of  foreign  governments  begin  to  regulate  Internet
 telephony, such  regulation may  materially adversely  affect our  business,
 financial condition or results of operations.

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

      Congress  has  recently  adopted  legislation  that  regulates  certain
 aspects of  the  Internet,  including  on-line  content,  user  privacy  and
 taxation.  For example, the Internet Tax Freedom Act prohibits certain taxes
 on  Internet  uses through  October  21, 2001.   We cannot  predict  whether
 substantial new taxes will  be imposed on our  services provided after  that
 date.   In addition,  Congress and  other federal  entities are  considering
 other legislative and regulatory proposals  that would further regulate  the
 Internet.  Congress 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 increase the cost of doing business  over
 the  Internet  and  materially  adversely  affect  our  business,  financial
 condition, results of operations and future prospects.

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

      The European Union has also enacted several directives relating to  the
 Internet.  The European Union has, for example, adopted a directive on  data
 protection that imposes restrictions on the processing of personal data that
 are more restrictive than  current United States  privacy standards.   Under
 the directive, personal data may not be collected, processed or  transferred
 outside the European Union unless certain specified conditions are met.   In
 addition, persons whose personal data is processed within the European Union
 are guaranteed a number of rights, including the right to access and  obtain
 information about their data, the right  to have inaccurate data  rectified,
 the right to  object to the  processing of their  data for direct  marketing
 purposes and in certain other circumstances, 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.   Our transmission of  personal
 data is limited and we do  not anticipated it becoming a significant  source
 of revenue.

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

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


                              BUSINESS STRATEGY

      Our 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.  We have coined the
 term "Bookend Strategy" to describe our  primary focus, which is to  provide
 telecommunication services  originating  in  foreign countries  and  in  the
 corresponding ethnic segment domestically in the United States via state-of-
 the-art digital fiber  optic cable, oceanic  cable transmission  facilities,
 international satellites and the  Internet to transport our  communications.
 These services are provided either via direct private line circuits  between
 those markets, or, as in most cases, via the public Internet, utilizing VoIP
 and other digitized voice technologies. VoIP is voice communication that has
 been converted into digital packets and is then addressed, prioritized,  and
 transmitted over any form of broadband network utilizing the technology that
 makes the Internet possible.  These technologies allow us to transmit  voice
 communications with the same high-density compression as networks  initially
 designed for  data transmission,  and  at the  same  time utilize  a  common
 network for providing customers with data and enhanced Web-based services.

      By utilizing VoIP over the public  Internet, we avoid the high  network
 cost  associated  with  private  line  connections  to  each   international
 destination, which would  require us to  "fill" idle  network capacity  with
 traffic in order to offset high fixed costs, a practice that has plagued the
 telecommunications industry for  many years.   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.   In  essence,  we are  selling  a  bundled  solution  of
 communication services to these  small to medium size  businesses.  We  also
 sell  telecommunications  services  for   both  the  foreign  and   domestic
 origination of international  long distance into  the wholesale market.  Our
 primary objective in selling into the wholesale market is to fill our direct
 routes with  wholesale traffic  while we  are  developing revenue  from  our
 retail marketing  operations so  that no  capacity is  wasted.   We plan  to
 expand services in both foreign and  domestic markets to include  additional
 telecommunications products as well as Internet related services.

      A key part  of the "Bookend  Strategy" is the  establishment of  direct
 routes for telecommunications traffic to and from a target country.  Once we
 have judged that a candidate country meets the requirements for availability
 of retail revenue opportunities, we 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 them  into  place  either through  public  Internet  connections  or
 International Private  Leased  Circuits (IPLC).   In  order  to  effectively
 utilize these routing options, we must  apply the appropriate technology  to
 provide for the 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.

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

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

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

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

      We continue  to  review  an acquisition  strategy  within  our  current
 industries and other related  markets. Additional material acquisitions  may
 result in significant changes in our business.


                            PRODUCTS AND SERVICES

      Dial Thru and Re-origination Services

      We provide  a variety  of international  Dial Thru  and  Re-origination
 services.  We  began offering these  services in fiscal  2000 following  the
 completion of the DTI Acquisition.  In fiscal 2001, these services accounted
 for approximately 72% of our revenues.  We expect that these services, while
 accounting for a  majority of our  revenues, will account  for a  decreasing
 percentage of our total  revenues as we continue  to develop and market  new
 services. Generally, the Dial Thru and Re-origination Services are  provided
 to customers that establish deposits or  prepayments with us to be used  for
 long-distance  calling.   The   Dial  Thru  service  allows  customers   the
 convenience of making local and/or international calls in the same manner as
 traditional long distance  dialing.   In those  markets in  which we  cannot
 currently provide Dial Thru service,  we offer our Re-origination  services.
 Our Re-origination service allows a caller  outside of the United States  to
 place a long distance telephone call  which appears to have originated  from
 our switch in Los Angeles to the Customer's location, and then connects  the
 call through our network to anywhere in the world.  By completing the  calls
 in this  manner,  we are  able  to provide  very  competitive rates  to  the
 customer.  Wherever possible, we route  calls over our private network.   By
 using VoIP and other technologies to  compress voice and data  transmissions
 across our  international private  lines and  public Internet  circuits,  we
 offer our voice and data services at costs that are substantially less  than
 traditional communications services.

      FaxThru

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

      Global Roaming

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

      Prepaid Phone Cards

      During fiscal year 2000, we significantly reduced our emphasis on  this
 segment of our business in favor  of other products and services that  offer
 the opportunity for higher profit margins; however, we currently continue to
 offer prepaid products for domestic calling and outbound international  long
 distance calling,  as  well as  for  enhanced features  such  as  customized
 greetings and sequential calling.  During  fiscal 2001, 2000 and 1999,  this
 product  accounted  for  approximately 0%,  32% and  100%, respectively,  of
 revenue from continuing operations.  Currently, we do not offer this product
 to our  customers,  although  we are  exploring  opportunities  in  specific
 international markets.  It is not anticipated that this product will account
 for a significant amount of revenue going forward.

      1+ Services and Dial Around Products

      We are licensed to provide long distance service in most of the  United
 States and now  have begun  selling our 1+  long distance  service and  Dial
 Around products  to  business  customers.   We  are  also  targeting  ethnic
 segments of the United States which correspond to foreign countries in which
 we  have  facilities.   This  allows   us  to  add  a  complete  package  of
 communication services to the small to  medium size business customer,  thus
 allowing us to be its total "Bundled Communications Provider".

      PowerCall

      We have  developed PowerCall  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 icon on its website in which a customer  may
 type its telephone  number in the  PowerCall  box  and then  click an  icon,
 prompting a call from the merchant to  the customer.  The customer may  then
 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.   The merchant  pays for  PowerCall
 services, including the associated long distance calls,  and target  markets
 are focused  where our  private  network can  be  utilized.   The  PowerCall
 product has  been  developed and  tested  by us,  however  we have  not  yet
 developed a marketing program, nor are we actively selling this product.

      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.   Although  this  product  is
 available, it does not currently generate any revenue.


                                  SUPPLIERS

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


                                  CUSTOMERS

      We focus our retail 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,  and wholesale  customers in  the  United States  and  foreign
 markets.  We  rely heavily  on the use  of commissioned  agents to  generate
 retail sales  in the  foreign markets.   By  doing so,  we believe  that  we
 establish a wide base of customers  with little vulnerability based on  lack
 of customer loyalty.   Our wholesale  customers are  primarily large  public
 telecommunications customers  in  the United  States,  and medium  to  large
 foreign Postal, Telephone and Telegraph ("PTT's") (entities responsible  for
 providing telecommunications services in foreign markets, usually government
 owned or controlled).  We believe the loss of any individual customers would
 not materially impact our business.


                                 COMPETITION

      The telecommunications services industry is highly competitive, rapidly
 evolving and  subject to  constant technological  change.   Other  providers
 currently offer  one  or  more  of  each of  the  services  offered  by  us.
 Telecommunication service companies  compete for consumers  based on  price,
 with the dominant  providers conducting extensive  advertising campaigns  to
 capture  market  share.  As  a  service   provider  in  the  long   distance
 telecommunications industry, we compete with such dominant providers as AT&T
 Corp. ("AT&T"),  MCI  WorldCom  Inc. ("WorldCom"),  and  Sprint  Corporation
 ("Sprint"), all  of which  are substantially  larger than  us 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  us.  These  advantages  afford  our
 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.  We also  compete with  other smaller,  emerging
 carriers including IDT Corporation, ITXC Corp., DeltaThree Inc., Primus, and
 Net2Phone Inc.  We believe that  additional competitors may be attracted  to
 the  market,   including   internet-based  service   providers   and   other
 telecommunications companies. We also believe that existing competitors  are
 likely to continue to expand their service offerings to appeal to  retailers
 and consumers.

      The market for international voice and fax call completion services  is
 highly competitive.  We compete  both in  the market  for enhanced  Internet
 communication services  and the  market for  carrier transmission  services.
 Each of these markets is highly competitive, and we face 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 us, some of which have  commenced
 developing VoIP capabilities.  Most of  our competitors are larger than  us,
 although we also compete with small companies that focus primarily on  VoIP.
 We believe that  the primary competitive  factors in the  Internet and  VoIP
 communications business  are  quality  of service,  price,  convenience  and
 bandwidth.   We   believe  that  the  ability  to  offer  enhanced   service
 capabilities, including new services, will become an increasingly  important
 competitive factor in the near future.

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

      Internet Telephone Service Providers

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

      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  us  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 us, together with Internet telephony services, to gain  a
 competitive advantage on us  in the marketing  and distribution of  products
 and services.


                                 RISK FACTORS

 Insufficient Cash Flow to Satisfy Debt Obligations

      For the years ended  October 31, 2001, 2000 and  1999, we recorded  net
 losses from  continuing operations  of approximately  $2.5  million,   $11.2
 million  and  $3.8  million,  respectively,  on  revenues  from   continuing
 operations of approximately $7.0  million,  $8.6  million and $3.1  million,
 respectively.  As a result, we  currently have a working capital deficit  of
 over $6 million.  In addition, we  have a significant amount of trade  debt,
 of which approximately 30% is past  due, excluding disputes for  overcharges
 with our  underlying carriers  of approximately  $750,000.   To be  able  to
 service our debt  obligations we must  generate significant  cash flows  and
 obtain additional financing.

      We did not  commence our Telecommunications  Business until early  1998
 and our limited operating  history makes it  difficult to accurately  assess
 our general prospects in this industry and the effectiveness of our business
 strategy.  In addition, we have limited meaningful historical financial data
 upon which to forecast our future sales and operating expenses.  Our  future
 performance will also be  subject to prevailing  economic conditions and  to
 financial, business and other  factors.  Accordingly,  we cannot assure  you
 that we will successfully implement our business strategy or that our actual
 future cash flows from operations will  match our current projections or  be
 sufficient to satisfy our debt obligations and working capital needs.

      To  implement  our  business  strategy,  we  will  also  need  to  seek
 additional  financing.   There  is no  assurance  that  adequate  levels  of
 additional financing will be  available at all or  on acceptable terms.   In
 addition, any additional financing could  result in significant dilution  to
 our existing stockholders.  If we are unable to obtain additional  financing
 on terms that are acceptable to us, we could be forced to dispose of  assets
 to make  up  for  any shortfall  in  the  payments due  on  our  debt  under
 circumstances that might not be favorable to realizing the highest price for
 those assets.   A substantial portion  of our assets  consist of  intangible
 assets, the value of which will depend upon a variety of factors,  including
 without limitation, the  success of  our business.  As a  result, we  cannot
 assure you that  our assets  could be sold  quickly enough,  or for  amounts
 sufficient, to meet our obligations.

      If we are unable to generate  sufficient cash flow or otherwise  obtain
 funds necessary  to make  required  payments on  our  trade debt  and  other
 indebtedness, we may not be able to continue our operations.

 Competition

      The market for  our products and  services is highly  competitive.   We
 face competition from multiple sources, many of which have greater financial
 resources and a substantial  presence in our markets  and offer products  or
 services similar  to  our  services.   Therefore,  we  may not  be  able  to
 successfully compete in  our markets,  which could  result in  a failure  to
 implement our business strategy, adversely affecting our ability to  attract
 and retain new customers.  In addition, competition within the industries in
 which we operate is characterized by, among  other factors,  price  and  the
 ability to offer  enhanced services.   Significant  price competition  would
 reduce the margins realized by us in our telecommunications operations.   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  we
 are unable  to  provide  cutting-edge technology  and  value-added  Internet
 products and services, then we will be unable to compete in certain segments
 of the market, which could have  a material adverse effect on our  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 legally  imposed interruptions in Internet  telephony
 in these and other foreign countries.  Interruptions or restrictions on  the
 provision of Internet  telephony in foreign  countries may adversely  affect
 our ability to continue to offer services in those countries, resulting in a
 loss of customers and revenues.

      New regulations  could increase  the cost  of doing  business over  the
 Internet or restrict or  prohibit the delivery of  our products or  services
 using the Internet.  In addition to new regulations being adopted,  existing
 laws  may  be  applied   to  the  Internet   (see  "Business  -   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 , an  FCC-Administered Fund for  the support  of
 local telephone service in rural and high-cost areas, cross-border commerce,
 copyright, trademark and patent infringement, and other claims based on  the
 nature and content of Internet materials.

 Technology Changes

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

 Strategic Relationships

      Our international business,  in part, is  dependent upon  relationships
 with distributors, governments or  providers of telecommunications  services
 in foreign markets.  The failure to develop or maintain these  relationships
 could result in  a material adverse  effect on our  financial condition  and
 results of operations.

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

      Our success depends to a significant  extent on our ability to  attract
 and retain key  personnel. In  particular, we  are dependent  on our  senior
 management team  and personnel  with  experience in  the  telecommunications
 industry and  experience in  developing and  implementing new  products  and
 services within the industry. Our future success will depend, in part,  upon
 our ability to attract and retain key personnel.

 Expansion

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

        -    respond to competitive developments;

        -    succeed in our marketing efforts; and

        -    upgrade our products, services and technologies.

        We cannot assure  you that we  will be successful  in addressing  the
 risks we  face or  that we  will  be successful  in our  proposed  expansion
 activities. The failure to do so would have a material adverse effect on our
 business and financial condition.

 Market for Common Stock; Volatility of the Stock Price

      We 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 our common stock, investor perceptions of us, and  general
 economic and similar conditions.

 Listing Status; Penny Stock Rules

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

 Absence of Dividends

      We have never declared or paid  any cash dividends on our common  stock
 and do not presently intend to pay cash dividends on our common stock in the
 foreseeable future.


                             SALES AND MARKETING

      We market long distance  telecommunications products and services  from
 our offices in Los Angeles, California and Atlanta, Georgia. We also have  a
 wholly owned subsidiary  in Mannheim, Germany  and a  regional sales  office
 located in Johannesburg, South Africa, and offices through joint ventures in
 Caracas, Venezuela, and Buenos Aires, Argentina.  Our 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.  We  plan to expand our  sales effort to  both
 domestic and international business  accounts, as well  as add products  and
 services targeted toward residential customers in both markets.

      We have substantial revenues in foreign markets.  For the years  ending
 October 31, 2001  and 2000,   $6,658,939, or 95%, and $5,836,932, or 68%  of
 our total  revenue for  each year,  respectively,   originated from  Western
 Europe, Africa and South East Asia.   For the year ending October 31,  1999,
 we had no foreign revenue.

                                   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.


                            INTELLECTUAL PROPERTY

      The Company doesn't hold  any significant patents  or trademarks.   The
 Company's products  and services  are available  to other  telecommunication
 companies.


                                  EMPLOYEES

      As of January 23, 2002, we  had approximately 77 full-time and 2  part-
 time  employees,  approximately  20  of  which  perform  administrative  and
 financial functions,  approximately 38  of  which perform  customer  support
 duties and approximately 59 of  which have experience in  telecommunications
 operations and/or sales.  Approximately 20 current employees are located  in
 Los Angeles, California, and approximately  59 employees operate in  offices
 worldwide.  No employees are represented  by a labor union, and we  consider
 our employee relations to be excellent.


 Item 2.  Properties

      Our principal executive office is  located in Los Angeles,  California,
 where we  lease 7,716  square feet  in two  locations.   Our operations  and
 information systems are located in Atlanta,  Georgia, where we lease  17,034
 square feet.  Our German operations  are located in Mannheim and  Frankfurt,
 Germany, where  we  lease  8,395  square  feet.   We  also  have  sales  and
 administrative offices in, Caracas  Venezuela, Buenos Aires, Argentina,  and
 Johannesburg, South Africa.

      In addition, our  subsidiary in Germany,  acquired from  Rapid Link  in
 October 2001, is  facilities based provider  of telecommunications  services
 and utilizes significant property and equipment to operate its business.  As
 of October 31,  2001, we  had $559,821,  or 11%  of our  total property  and
 equipment was located at our Germany subsidiary.


 Item 3.  Legal Proceedings

 On June  12, 2001,  Cygnus  Telecommunications Technology,  LLC  ("Cygnus"),
 filed a patent  infringement suit (case  no. 01-6052) in  the United  States
 District  Court,  Central  District  of  California,  with  respect  to  our
 "international  call-back"  technology.   This  technology  drives  our  Re-
 Origination Services  and allows  our foreign  based customers  to  initiate
 international telephone  calls  by first  calling  a switch  in  the  United
 States, which then initiates a "call  back" to the customer sight  providing
 the customer with an open phone line to place a call anywhere in the  world.
 The injunctive relief that Cygnus sought  in this suit has been denied,  but
 Cygnus continues  to  seek compensatory  and  punitive damages  as  well  as
 attorneys' fees and costs.  We  deny the alleged infringement and intend  to
 defend the case vigorously, but our  ultimate legal and financial  liability
 with respect to this legal proceeding cannot be estimated with any certainty
 at this time.

      On May  2,  2000, Star  Telecommunications,  Inc. ("Star")  filed  suit
 against us  in  the Superior  Court  of the  State  of California  in  Santa
 Barbara, California, alleging a breach of  contract by us in failing to  pay
 amounts due  under  a Carrier  Service  Agreement, and  seeking  damages  of
 approximately $780,000. We disputed the amounts alleged to be owed to  Star,
 and filed a counter-claim against Star  for damages resulting from  wrongful
 acts under the Carrier Service Agreement.

       During the quarter ended January 31, 2001 we settled the lawsuit  with
 Star.  In conjunction with the settlement we received a carrier usage credit
 in the amount of   $780,000 for previous  services, and future services  for
 one year of  domestic carrier services at no charge for transporting traffic
 between Los  Angeles, New  York and  Miami.   The $780,000  credit for  past
 services is recorded as forgiveness of debt in the accompanying statement of
 operations. We also received 1,100,000 shares of common stock of Star, which
 were recorded at  fair value  totaling $446,820.   On March  13, 2001,  Star
 filed for Chapter 11 reorganization.  As a result the investment of $446,820
 was written off.  We will not be utilizing the one-year of no-charge carrier
 services.


 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

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

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

                 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 our Common Stock as  reported
 on the OTC Bulletin Board.   The market quotations presented reflect  inter-
 dealer prices, without retail mark-up, mark-down or commissions and may  not
 necessarily reflect actual transactions.

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


      The closing price for our Common Stock on January 23, 2002 as  reported
 on the OTC Bulletin Board was $0.39.

 Dividends

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


 Holders of Record

      There were 439 stockholders of record as of January 23, 2002.

 Recent Sales of Unregistered Securities

      On October 24, 2001, we issued  a 10% convertible note (the "Note")  to
 three of our executives, which provided financing of $1,945,958.  The  Notes
 were issued  to  our  Chief Executive  officer  for  $1,745,958,  our  Chief
 Financial Officer  for  $100,000,  and  our  Executive  Vice  President  for
 $100,000.   Each  Note maturity  date  is October  24,  2003. Each  Note  is
 convertible into our common stock at the option of the holder at each of the
 six, twelve,  eighteen and  twenty four  month anniversary  of the  date  of
 issuance of the  note.  The  conversion price is  equal to  the closing  bid
 price of our common stock on the last trading day immediately preceding  the
 conversion.

       On October  12, 2001, we completed the acquisition  of certain  assets
 and liabilities of Rapid Link.  The aggregate purchase price was $2,116,481,
 including $1,450,000 in cash, $198,481 in acquisition related costs, and the
 issuance of 600,000  shares of our  common stock, valued  at $468,000.   The
 value of  the 600,000  common shares  was determined  based on  the  closing
 market price of our common stock, $0.78, on October 12, 2001.

       On  April  11,  2001,  we  issued  a  6%  convertible  debenture  (the
 "Debenture") to Global Capital Funding  Group L.P, which provided  financing
 of   $1,000,000.   The  Debenture  maturity  date  is April  11,  2003.  The
 conversion price is equal to the lesser of  (i) 100% of the volume  weighted
 average of sales price as reported by the Bloomberg L.P. of the common stock
 on the last  trading day  immediately preceding  the Closing  Date   ("Fixed
 Conversion Price") and (ii) 70% of the average of the five (5) lowest volume
 weighted average  sales prices  as reported  by  Bloomberg L.P.  during  the
 twenty (20) Trading Days immediately preceding but not including the date of
 the related Notice of Conversion.  On April 11, 2001, in connection with the
 issuance of the  Debenture, we also  issued to the  holder of the  Debenture
 warrants to acquire  an aggregate of  100,000 shares of  common stock at  an
 exercise price of  $0.89 per share,  which expire on  April 11,  2006.   For
 services rendered  in  connection  with  the  Debenture,  we  issued  to  DP
 Securities, Inc.  25,000 warrants  to acquire  common stock  at an  exercise
 price of $0.89, which expires on April 11, 2006.

       On December 15, 2000,  we issued 90,000 shares  of common stock to  an
 accredited  investor,  Scotty  Cook,  a  former  Director,  at  no  cost  as
 compensation for  consulting services  performed for  us.   At the  time  of
 issuance, our common stock price was $1.125.

       On  September 8,  2000,  we issued  914,285  shares (which  are  fully
 vested and nonforfeitable) of our 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.

       On August 8, 2000, we received $1 million from an accredited  investor
 in exchange for the issuance of 285,714 of common shares.  On September  11,
 we received and  additional $400,000 from  the same investor  and issued  an
 additional 114,286  common shares.   These  issuances were  each part  of  a
 single offering made only to that one accredited investor in Texas.

       On March  28, 2000,  we issued  1,000,000 shares  of common  stock  in
 connection with our purchase of Dial Thru International on November 2, 1999,
 in accordance with the earnout terms of the Asset Purchase Agreement.

      On February 4, 2000, we  issued non-interest bearing convertible  notes
 (the  "Notes")  to  nine  accredited  investors,  which  together   provided
 financing of $1,000,000.  The notes were payable on the earlier of one  year
 from the date of issuance or the consummation of a debt or equity  financing
 in excess of $5,000,000, or convertible into common stock at a rate of $4.00
 per share if  the notes  were not repaid  within 90  days from  the date  of
 issuance.   On that same date, in connection with the issuance of the Notes,
 we 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.   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 they  had  not  been repaid  within  six  months
 following the date of issuance.  During March 2001, terms of the Notes  were
 modified  and  the   debt  was   converted  into   400,000  common   shares.
 Additionally, in connection  with the conversion,  the warrants to  purchase
 250,000 shares of common stock were modified to allow for an exercise  price
 of  $0.01 per share and  150,000 additional warrants with an exercise  price
 of $3.00 per share were issued to the note holders.

       On November 2, 1999,  we consummated the acquisition of  substantially
 all of the assets and business  of Dial-Thru International Corporation  (the
 "Seller"), a California corporation. We issued to the Seller an aggregate of
 1,000,000 shares  of  common  stock, recorded  a  total  purchase  price  of
 $937,500 using  our 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.

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

       Each of  the issuance  noted above  was exempt  from the  registration
 requirements of the Securities Act by virtue of Section 4(2) thereunder.

<PAGE>
<TABLE>

 Item 6.  Selected Financial Data

                                                       FISCAL YEARS ENDED OCTOBER 31
                                           ----------------------------------------------------
                                            2001        2000       1999        1998       1997
                                           -------     -------    -------     -------    ------
 <S>                                      <C>         <C>        <C>         <C>        <C>
 CONSOLIDATED STATEMENT OF OPERATIONS
   DATA (1):
 Revenues                                 $  7,002    $  8,591   $  3,117    $  2,189   $    --
 Cost of revenues                            3,625       9,971      2,982       2,155        --
 Operating expenses                          5,365       9,142      4,028       1,399        --
 Other income (expense)                        647        (665)        79        (101)       --
 Gain on sale of software business              --          --      5,309          --        --
 Loss on disposal of USC & equipment            --          --         --      (1,155)       --
 Income (loss) from continuing operations   (2,684)    (11,187)    (3,815)     (2,621)       --
 Income (loss) from discontinued
   operations                                   --          --        218        (103)       87
 Extraordinary item - forgiveness of debt       --
 Net income (loss)                          (2,684)    (11,187)     1,713      (2,724)       87

 Income (loss) from continuing
   operations per share (2)               $  (0.25)   $  (1.31)  $  (0.56)   $  (0.37)      --
 Net income (loss) per share (2)          $  (0.25)   $  (1.31)  $   0.25    $  (0.38)  $  0.01


 CONSOLIDATED BALANCE SHEET DATA (1):
 Total assets
    Continuing operations                   12,644       6,102      4,467       1,411        --
    Discontinued operations                     --          --         --       3,880     4,578
 Working capital (deficiency)
    Continuing operations                   (6,626)     (4,829)     1,251      (1,460)       --
    Discontinued operations                     --          --         --         622       664
 Noncurrent obligations
    Continuing operations,
      net of discount                        1,967         119        562          --        --
    Discontinued operations                     --          --         --         147       178
 Shareholders' equity                        2,079         508      2,865       1,064     2,220

 --------------------
 (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 our 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, 2001, 2000
      and 1999

 General

      The following  discussion  and  analysis  of  financial  condition  and
 results of operations  covers the years  ended October 31,  2001, 2000,  and
 1999 and should be read in conjunction with our Financial Statements and the
 Notes thereto commencing at page F-1 hereof.

 Results of Operations-2001 Versus 2000

 General

      On November 2,  1999, we  consummated the  DTI Acquisition  and in  the
 second quarter  of fiscal  2000, we  shifted focus  toward our  global  VoIP
 strategy;  providing  connectivity  to  international  markets  experiencing
 significant demand for VoIP and other IP enabled services and then targeting
 the corresponding ethnic segment in the U.S.  This change in focus  has lead
 to a shift from  our prepaid long distance  operations toward higher  margin
 international  opportunities.  This  strategy   allows  us  to  form   local
 partnerships  with  foreign  PTT's   (entities  responsible  for   providing
 telecommunications services in foreign markets, usually government owned  or
 controlled) and  Internet Service  Providers ("ISP's"),  and to  provide  IP
 enabled services based  on the in-country  regulatory environment  affecting
 telecommunications and data providers.  Through these relationships, we  are
 able to  acquire  a  direct equity  interest  or  partnership/joint  venture
 interest in  the local  business  and expect  our  interest to  increase  as
 foreign ownership regulations of  telecommunications companies diminish.  As
 an early  market  entrant  building  "super-regional"  networks,  management
 believes that we are  positioned for long-term growth  and the provision  of
 high margin, value-added services.

       In the  third quarter  of  fiscal 2000,  we further  concentrated  our
 efforts toward our global VoIP telecommunications strategy by completing the
 consolidation of our  Dallas, Texas and  Los Angeles, California  operations
 into a single facility  in Los Angeles,  which also houses  two sets of  our
 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 us  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 we moved away from.  This refocusing and  consolidation
 of operations has resulted in not only   greater savings  , but also  higher
 profits and more sustainable revenues.  This consolidation and reduction  in
 staff has allowed us  to   significantly  reduce our overhead, and  although
 our operations have  not yet produced  positive cash flow,  we believe  that
 continued cost  reductions and  moderate revenue  growth would  allow us  to
 achieve positive results in the near future.

       On October 12, 2001, we  completed the acquisition from Rapid Link  of
 certain assets and executory contracts of Rapid Link, USA, Inc. ("Rapid Link
 USA") and 100% of the common  stock of Rapid Link Telecommunications,  GMBH,
 ("Rapid Link Germany") a German Company.   Rapid Link is a leading  provider
 of high quality integrated  data and voice  communications services to  both
 wholesale and retail customers around the world.

      Revenues

       Our primary source  of revenue is  the sale of  voice and fax  traffic
 internationally over  our  VoIP  network,  which  is  measured  in  minutes,
 primarily to small and  medium sized enterprises ("SME's").   We charge  our
 customers a fee per minute of usage that are dependent on the destination of
 the call and is recognized in the period in which the call is completed.

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

      Expenses

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

       For the  year ended October  31, 2001, we  had total  direct costs  of
 revenues relating to  revenues from continuing  operations of $4,967,000,  a
 decrease of $5,004,000, or  50%, from $9,971,000 in  2000.  Included in  the
 cost is  $1,194,000 attributable  to Rapid  Link  operations.  Excluding the
 impact of Rapid Link, costs of revenues were $3,773, 000 or 69% of revenues,
 for  the fiscal  year ended October  31, 2001, compared  to  $9,971,000,  or
 116% of revenues, for the fiscal year ended October 31, 2000.  A substantial
 portion  of  this  negative  margin for 2000 related to our  sale of prepaid
 phone  cards for  use  between  the United  States  and  Mexico.  Changes in
 competitive  pricing  structures combined with changes in predicted  average
 call durations  resulted in carrier  costs exceeding  revenues.  By focusing
 our business away  from  low  margin  prepaid  calling  cards  to delivering
 higher margin international communication services to SME's in niche markets
 utilizing our VoIP network, we have realized higher margins on  sales across
 our product lines.  We anticipate the margin contribution from Rapid Link to
 be consistent with our current margin results.

       General  and   administrative  expenses   include  salaries,   payroll
 taxes, benefit expenses and related  costs for general corporate  functions,
 including  executive  management,  finance  and  administration,  legal  and
 regulatory, information technology and human resources.

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

       Sales  and  marketing  expenses  include  expenses  relating  to   the
 salaries, payroll  taxes, benefits  and commissions  that we  pay for  sales
 personnel  and  the  expenses  associated  with  advertising  and  marketing
 programs, including expenses relating to our outside public relations firms.

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

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

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

      Settlements  with  two  major  carriers  over  charges in prior periods
 amounted to a total credit to the statements of operations of $1,790,000 for
 the year ended October 31, 2001.  Of this  amount, $780,000 is the result of
 our settlement  with Star  Telecommunications ("Star").   Also  included  is
 $446,820 representing common stock received from Star in connection with our
 dispute settlement.  The investment in common stock was subsequently written
 off as Star filed for Chapter 11 reorganization in March 2001.

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

      Results of Operations-2000 Versus 1999

      Revenues

      For the year ended  October 31, 2000, we  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 we  continue  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 our business, we believes that this shift will ultimately
 allow us 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, we  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  our  176% increase  in  sales combined  with  the  negative
 margins resulting from our prepaid phone card product line and the reduction
 thereof.  A substantial portion of  this negative margin was related to  our
 sale of prepaid phone  cards for use between  the United States and  Mexico.
 Changes in competitive pricing structures combined with changes in predicted
 average call durations  resulted in carrier  costs exceeding  revenues.   We
 anticipate a significant reduction  in these costs  as carrier and  facility
 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  our  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 Acquisition.  As part of our cost reduction
 efforts associated with  the merger of  the two  businesses, we  implemented
 changes in expenditure policies,  which have reduced,  and will continue  to
 reduce overall  general  and administrative  and  overhead costs  in  future
 periods.

      Sales and  marketing  expenses attributable  to  continuing  operations
 decreased from $1,254,000 for the year ended October 31, 1999 to  $2,800,000
 for the year ended October 31, 2000.   This decrease 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  our business, which  has a much higher cost of  sales
 and marketing than the international IP  telephony portion of the  business.
 In addition, we  have transitioned a  significant portion of  our sales  and
 marketing activities into  countries where we  are building  infrastructure.
 This has allowed us 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,  we  anticipate  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.

           We  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 our  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  our note  receivable  from  US  Communications
 Services, Inc.

      As a result of  the foregoing, we 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.  Our efforts  with
 regard to the consolidation of business,  and reduction in staff  associated
 with the relocation of operations to  Los Angeles have allowed us to  reduce
 our overhead and will contribute to its goal of reaching positive cash  flow
 in the near term.



 Quarterly Results of Operations

<TABLE>

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

                                                     Quarter Ended
                                 January 31   April 30   July 31   October 31      Year
                                     $           $          $           $            $
                                 ---------   ---------  ---------   ---------  -----------
 <S>                            <C>         <C>         <C>        <C>         <C>
 2000
  Revenue                        3,806,767   2,823,704    952,667   1,008,311    8,591,449
  Loss from operations          (2,120,321) (4,402,381)  (848,626) (3,150,736) (10,522,064)
  Net Loss                      (2,083,370) (4,659,540)  (965,071) (3,478,761) (11,186,742)
  Basic and diluted loss
    Per share from operations        (0.26)      (0.56)     (0.11)      (0.38)       (1.31)

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

</TABLE>


 Liquidity and Sources of Capital

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

      At October 31, 2001,  we had cash and  cash equivalents of $94,985,  an
 increase of $21,118 from the balance at October 31, 2000.  As of October 31,
 2001, we had a working capital deficit of $6,626,000, compared to a  working
 capital deficit of $4,829,000 at October 31, 2000.  As of October 31,  2001,
 our current  assets  of  $1,971,365  included  net  accounts  receivable  of
 $1,832,768, which has increased  as a result of  the growth in our  revenues
 and the acquisition of Rapid Link.

      During the  fiscal  year ended  October  31,  2001, net  cash  used  in
 operating activities was $867,000,  compared to net  cash used in  operating
 activities of $4,157,000 for  the fiscal year ended  October 31, 2000.   The
 net cash used in operating activities for the period ended October 31,  2001
 was primarily due to a net loss of $2,684,000 adjusted for:  forgiveness  of
 debt of  ($780,000); financing  fees and  amortization of  debt discount  of
 $597,731; depreciation  and amortization  of  $818,000; stock  and  warrants
 issued for services  of $258,616; and  net changes in  operating assets  and
 liabilities of $796,000.  For the year ended October 31, 2000, the net  cash
 used in operating activities was comprised of a net loss of  $11,187,000 for
 year ended  October 31,  2000 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.

      Cash used in investing  activities was $1,557,000  for the fiscal  year
 ended October 31, 2001, compared to cash provided by investing activities of
 $50,000 for the prior fiscal period.  For the fiscal year ended October  31,
 2000, we had receipts of $255,000 from notes receivable, offset by  $275,000
 of capital expenditures.   The investing  activities for  the twelve  months
 ended October  31, 2001  include approximately  $1.5  million, net  of  cash
 acquired, used for the purchase of  Rapid Link, and $61,000 attributable  to
 capital expenditures.

      Cash provided by financing activities for the fiscal year ended October
 31, 2001,  totaled  $2,445,000,  compared  to  cash  provided  by  financing
 activities of $3,335,000 for  the fiscal year ended  October 31, 2000.   For
 2001, significant  components  of  cash  provided  by  financing  activities
 include $1,000,000 in proceeds from a convertible debenture, and proceeds of
 $1,945,000 from convertible  notes executed  with three  of our  executives.
 During the  year ended  October 31,  2000, 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.

      We are subject  to various risks  in connection with  the operation  of
 our  business  including,  among  other  things,  (i)  changes  in  external
 competitive market factors,  (ii) inability to  satisfy anticipated  working
 capital or other  cash requirements, (iii)  changes in  the availability  of
 transmission facilities,  (iv)  changes  in  our  business  strategy  or  an
 inability to  execute  our strategy  due  to unanticipated  changes  in  the
 market, (v) various competitive factors that  may prevent us from  competing
 successfully in the  marketplace, and  (vi) our  lack of  liquidity and  our
 ability to raise  additional capital.   We  have an  accumulated deficit  of
 approximately $35.8 million  as of October  31, 2001, as  well as a  working
 capital deficit  of approximately  $6.6 million.   Funding  of  our  working
 capital deficit, current  and future  operating losses,  and expansion  will
 require continuing capital investment.  Our  strategy is to fund these  cash
 requirements through  operations,  debt  facilities  and  additional  equity
 financing.  As of the date of this report:

   1) we are  currently in  negotiations to  obtain both  debt and/or  equity
      financing, and have closed on an additional $550,000 of financing.
   2) we have  successfully negotiated  payment terms  on $1  million of  our
      past due trade payables with our largest vendor,  and we have agreed to
      remit equal monthly installments in excess of our normal monthly  usage
      billing.
   3) our trade  accounts payable  and carrier  costs include  disputes  with
      certain vendors over what we believe are improper charges primarily for
      termination of our domestic and international minutes.  This amount  is
      approximately  $750,000  at   October  31,  2001.   We  have   received
      approximately $1,400,000 of such credits in fiscal 2001.
   4) our German subsidiary  received a net $1  million refund for a  license
      fee  previously  paid,  which  will  be  used  to  pay  down  past  due
      liabilities.

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

      Our current  capital  expenditure  requirements  are  not  significant,
 primarily due  to the  equipment  acquired from  Rapid  Link.   Our  capital
 expenditures for fiscal 2001 were approximately $61,000, and we anticipate a
 similar amount for fiscal 2002.  In February 2000, we consummated a  private
 placement of  $1,000,000  in  principal amount  of  convertible  debentures.
 During the second  quarter of 2001,  the notes were  converted into  400,000
 shares of  our common stock at a conversion price of  $2.50 per share.   The
 holders of the notes  were also issued warrants  to acquire an aggregate  of
 250,000 shares of our common stock at an exercise price of one half at $3.00
 per   share and  one half  at $2.75  per   share.   As  a condition  of  the
 conversion of  the notes  into common  stock, the  exercise price  of  these
 warrants were   re priced to $0.01, and an additional 125,000 warrants  were
 issued with an  exercise price of $3.00.

      On April  11,  2001,  we  executed  a  6%  convertible  debenture  (the
 "Debenture") with Global Capital Funding Group L.P, which provided financing
 of   $1,000,000.   The  Debenture  maturity  date is  April  11, 2003.   The
 conversion price equals  the lesser  of   (i)  100% of  the volume  weighted
 average of sales price as reported by the Bloomberg L.P. of the common stock
 on the last  trading day  immediately preceding  the Closing  Date   ("Fixed
 Conversion Price") and (ii) 70% of the average of the five (5) lowest volume
 weighted average sales  prices as  reported by  Bloomberg L.P.   during  the
 twenty  (20)  Trading Days  immediately   proceeding but  not including  the
 date of the related Notice of Conversion  ("the "Formula Conversion Price").
 In an event of default the amount declared due and payable on the  Debenture
 shall be at the Formula Conversion Price.

      In October  2001,  the  Company executed  10%  convertible  notes  (the
 "Notes")  with  three  of  our  executives,  which  provided  financing   of
 $1,945,958. The Notes mature October 24, 2003. The Notes are secured by  all
 Company assets and are  convertible into our common  stock at the option  of
 the holder at each  of the six-, twelve-,  eighteen- and twenty- four  month
 anniversary of the date of  issuance of the note.   The conversion price  is
 equal to the closing bid price of our  common stock on the last trading  day
 immediately preceding the conversion. We also  issued to the holders of  the
 Notes warrants to acquire an aggregate  of 1,945,958 shares of common  stock
 at an exercise price of $0.78 per share, which expire on October 24, 2006.

      Acquisitions

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


 Item 7a.  Quantitative and Qualitative Disclosures About Market Risk

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


 Item 8a.  Financial Statements and Supplementary Data

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


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

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


                                   PART III


 Item 10.  Directors and Executive Officer of the Registrant

      The information  required  by  this  item  will  be  contained  in  our
 definitive proxy statement, which we will file with the Commission no  later
 than February 28, 2002 (120 days after  our fiscal year end covered by  this
 Report) and is incorporated herein by reference.


 Item 11.  Executive Compensation

      The information  required  by  this  item  will  be  contained  in  our
 definitive proxy statement, which we will file with the Commission no  later
 than February 28, 2002 (120 days after  our 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  our
 definitive proxy statement which we will  file with the Commission no  later
 than February 28, 2002 (120 days after  our fiscal year end covered by  this
 Report) and is incorporated herein by reference.


 Item 13.  Certain Relationships and Related Transactions

      The information  required  by  this  item  will  be  contained  in  our
 definitive proxy statement which we will  file with the Commission no  later
 than February 28, 2002 (120 days after  our 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  this
 Report. See the index on Page F-1.

      (3) EXHIBITS

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

 EXHIBIT

 NO.  DESCRIPTION OF EXHIBIT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 21.1*     Subsidiaries of the Registrant

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

 23.2*     Consent of Arthur Andersen LLP


 *    Filed herewith.

 (B)  REPORTS ON FORM 8-K


      During the  quarter  ended October  31,  2001, the  Company  filed  one
 Current  Report  on  Form 8-K.  That  report,  filed  on October  29,  2001,
 described the  Registrant's  acquisition  of certain  assets  and  executory
 contracts of Rapid Link, Inc. in response to items 2 and 7 of that Form.

<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/ John Jenkins
                                   John Jenkins
                                   CHAIRMAN, CHIEF EXECUTIVE OFFICER
                                   and PRESIDENT



                              POWER OF ATTORNEY


 Date: January 29, 2002

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


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

    /s/ JOHN JENKINS         Chairman, Chief Executive       January 29, 2002
    John Jenkins             Officer and President and
                             Director

    /s/ ALLEN SCIARILLO      Chief Financial Officer         January 29, 2002
    Allen Sciarillo          and secretary (principal
                             financial and principal
                             accounting officer)

    /s/ LAWRENCE VIERRA      Executive Vice President        January 29, 2002
    Lawrence Vierra          and Director

    /s/ ROBERT M. FIDLER     Director                        January 29, 2002
    Robert M. Fidler

    /s/ NICK DeMARE          Director                        January 29, 2002
    Nick DeMare


<PAGE>

 EXHIBIT INDEX

 EXHIBIT

 NO.       DESCRIPTION OF EXHIBIT

 21.1      Subsidiaries of the Registrant

 23.1      Consent of King Griffin & Adamson P.C.

 23.2      Consent of Arthur Andersen LLP


<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 Public Accountants                            F-2

    Consolidated Balance Sheets at October 31, 2001 and 2000            F-4

    Consolidated Statements of Operations for the fiscal years
      ended October 31, 2001, 2000 and 1999                             F-5

    Consolidated Statements of Shareholders' Equity for the fiscal
      years ended October 31, 2001, 2000 and 1999                       F-6

    Consolidated Statements of Cash Flows for the fiscal years ended
      October 31, 2001, 2000 and 1999                                   F-7

    Notes to Consolidated Financial Statements                          F-8

 2. Financial Statement Schedule

    Report of Independent 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 PUBLIC ACCOUNTANTS
                   ----------------------------------------


       To Dial-Thru International, Inc.:

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

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

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

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


 Arthur Andersen LLP


 Atlanta, Georgia
 January 9, 2002



<PAGE>


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


 The Board of Directors and Shareholders
 Dial-Thru International Corporation

 We have audited  the accompanying consolidated  balance sheet  of  Dial-Thru
 International Corporation and subsidiaries  as of October 31, 2000  and  the
 related consolidated statements of operations, shareholders' equity and cash
 flows for each of the years in the two year period ended  October 31,  2000.
 These   financial  statements  are  the   responsibility  of  the  Company's
 management.  Our responsibility is to express an opinion on  these financial
 statements based on our 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 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 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 the
 consolidated results  of their operations and  their cash flows  for each of
 the years in the two year period ended October 31, 2000,  in conformity with
 generally accepted accounting principles.

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



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


<PAGE>
<TABLE>
             DIAL-THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS


                     ASSETS
                                                              October 31,
                                                        -----------------------
                                                           2001         2000
                                                        ----------   ----------
 <S>                                                   <C>          <C>
 CURRENT ASSETS
   Cash and cash equivalents                           $    94,985       73,867
   Trade accounts receivable, net of allowance
     for doubtful accounts of $228,729 and
     $1,025,766 in 2001 and 2000, respectively           1,832,768      455,819
   Prepaid expenses and other                               43,612      116,785
                                                        ----------   ----------
       Total current assets                            $ 1,971,365      646,471
                                                        ----------   ----------

 PROPERTY AND EQUIPMENT, net                             5,135,027    1,539,544
 PROPERTY AND EQUIPMENT HELD FOR SALE                      320,307      320,307
 ADVERTISING CREDITS, net                                2,376,678    2,453,027
 OTHER ASSETS                                               78,762      205,473
 GOODWILL AND OTHER INTANGIBLE ASSETS, net
   of amortization of $291,202 and $104,148 in
   2001 and 2000, respesctively                          2,762,010      937,327
                                                        ----------   ----------
 TOTAL ASSETS                                          $12,644,149  $ 6,102,149
                                                        ==========   ==========

 LIABILITIES AND SHAREHOLDERS' EQUITY

 CURRENT LIABILITIES
   Current portion of long-term debt, net of
     debt discount of $315,988 in 2000                           -      684,012
   Current portion of capital leases                       385,787      102,472
   Trade accounts payable                                5,037,338    3,930,315
   Accrued carrier costs                                   917,415            -
   Accrued Liabilities                                   1,416,159      365,765
   Deferred revenue                                        738,576       47,190
   Note payable to shareholder                             102,443      346,000
                                                        ----------   ----------
       Total current liabilities                         8,597,718    5,475,754
                                                        ----------   ----------

 CAPITAL LEASE, NET OF CURRENT                             286,102      118,615
 NOTES PAYABLE RELATED PARTY, net of
   debt discount of $819,470                             1,126,488            -
 CONVERTIBLE DEBENTURE, net of
   debt discount of $445,155                               554,845            -
 COMMITMENTS AND CONTINGENCIES (Note 15)

 SHAREHOLDERS' EQUITY
   Preferred stock, $.001 par value; 10,000,000
     shares authorized, none issued and outstanding              -            -
   Common stock, 44,169,100 shares authorized,
     $.001 par value; 12,119,090 and 9,895,000
     shares issued in 2001 and 2000, respectively           12,119        9,895
   Additional paid-in capital                           38,174,588   33,838,158
   Accumulated deficit                                 (35,947,213) (33,262,907)
   Accumulated other comprehensive income                  (88,548)      (5,416)
   Treasury stock, 12,022 common shares at cost            (54,870)     (54,870)
   Subscription receivable - common stock                  (17,080)     (17,080)
                                                        ----------   ----------
       Total shareholders' equity                        2,078,996      507,780
                                                        ----------   ----------
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $12,644,149  $ 6,102,149
                                                        ==========   ==========

          The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>

             DIAL-THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS


                                                            Year ended October 31,
                                                 -------------------------------------------
                                                     2001             2000           1999
                                                 -----------      -----------    -----------
 <S>                                            <C>              <C>            <C>
 REVENUES
      Reorigination and dial thru services      $  7,001,862     $  5,836,392   $          -
      Prepaid phone cards and other                        -        2,755,057      3,116,911
                                                 -----------      -----------    -----------
            Total revenues                         7,001,862        8,591,449      3,116,911

 COSTS AND EXPENSES
      Re-origination and dial thru services        4,967,214        5,750,839              -
      Prepaid phone cards and other                        -        4,220,570      2,982,290
      Sales & marketing                              824,388          862,582      1,254,429
      Non-cash sales & marketing expense for
          issuance of warrants                       258,616        1,937,184              -
      General & administrative                     3,464,468        5,201,608      2,682,545
      Impairment charge related to write down
         advertising credits                               -          575,542
      Depreciation and amortization                  818,324          565,188         91,338
                                                 -----------      -----------    -----------
            Total cost and expenses               10,333,010       19,113,513      7,010,602
                                                 -----------      -----------    -----------
                   Operating loss                 (3,331,148)     (10,522,064)    (3,893,691)

 OTHER INCOME (EXPENSES)
      Interest and financing costs                  (710,788)        (679,258)       (95,836)
      Interest income                                  1,384           14,580        174,604
      Write-off of investment in marketable
        securities                                  (446,820)               -              -
      Other income related to settlement
        of disputes                                1,789,373                -              -
      Gain on sales of equipment                      13,693                -              -
                                                 -----------      -----------    -----------
            Total other income (expense)             646,842         (664,678)        78,768

 NET LOSS FROM CONTINUING OPERATIONS              (2,684,306)     (11,186,742)    (3,814,923)

 DISCONTINUED OPERATIONS
      Income from operation of
         software business, net                            -                -        218,376
      Gain on sales of software business, net              -                -      5,309,927
                                                 -----------      -----------    -----------
 NET (LOSS) INCOME                              $ (2,684,306)    $(11,186,742)  $  1,713,380
                                                 ===========      ===========    ===========
 BASIC AND DILUTED (LOSS) EARNINGS PER SHARE:
   Continuing operations                        $      (0.25)    $      (1.31)  $      (0.56)
   Discontinued operations                              0.00             0.00           0.81
                                                 -----------      -----------    -----------
     Net (loss) earnings                        $      (0.25)    $      (1.31)  $       0.25
                                                 ===========      ===========    ===========
 SHARES USED IN THE CALCULATION OF PER
   SHARE AMOUNTS:
   Basic common shares                            10,900,115        8,544,105      6,803,471
   Dilutive impact of stock options, warrants
      and convertible debentures                           -                -              -
                                                 -----------      -----------    -----------
   Dilutive common shares                         10,900,115        8,544,105      6,803,471
                                                 ===========      ===========    ===========


          The accompanying notes are integral part of these statements

</TABLE>
<PAGE>
<TABLE>
             DIAL-THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                                                                       Other    Receivable -
                                                                                                    Accumulated
                                     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, 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
Shares issued for
  advertising credits                 914,285          914         -      3,027,655              -         -         -    3,028,569
Shares issued for cash                400,000          400         -      1,399,600              -         -         -    1,400,000
Shares issued upon exercise
  of options and warrants             699,800          700         -        601,880              -         -   (17,080)     585,500
Purchase of treasury stock                  -            -   (54,870)             -              -         -         -      (54,870)
Issuance of warrants in
  connection with convertible notes         -            -         -        995,246              -         -         -      995,246
Warrants issued as compensation             -            -         -      1,937,184              -         -         -    1,937,184
Net loss                                    -            -         -              -    (11,186,742)        -         -  (11,186,742)
                                   ----------  -----------   -------    -----------    -----------    ------   -------   ----------
Balance at October 31, 2000         9,895,090        9,895   (54,870)    33,838,158    (33,262,907)   (5,416)  (17,080)     507,780
===================================================================================================================================

Shares issued upon exercise           134,000          134         -         34,223              -         -         -       34,357
  of options and warrants
Issuance of common stock in
 connection with consulting
 agreement                             90,000           90         -        101,160              -         -         -      101,250
Conversion of convertible notes       400,000          400         -        999,600              -         -         -    1,000,000
Shares issued to a shareholder      1,000,000        1,000         -      1,030,200              -         -         -    1,031,200
Issuance of warrants in connection
  with convertible debentures               -            -         -         79,931              -         -         -       79,931
Embedded beneficial conversion
  feature of convertible notes
  including change for conversion
  factor                                    -            -         -        828,111              -         -         -      828,111
Issuance of warrants in connection
  with convertible notes-related
  party                                     -            -         -        496,598              -         -         -      496,598
Issuance of common stock in
  connection with acquisition
  of rapid link                       600,000          600         -        467,400              -         -         -      468,000
Issuance of warrants in connection
  with convertible notes                    -            -         -        141,841              -         -         -      141,841
Issuance of warrants in connection
  with consulting agreement                 -            -         -        157,366              -         -         -      157,366
COMPREHENSIVE INCOME
Net Income                                  -            -         -              -     (2,684,306)        -         -   (2,684,306)
Other accumulated
  comprehensive Income / (loss)
    Foreign currency tranlation
      adjustment                            -            -         -              -              -   (83,132)        -      (83,132)
                                   ----------  -----------   -------    -----------    -----------    ------   -------   ----------
    Total Comprehensive Income              -            -         -              -     (2,684,306)  (83,132)        -   (2,767,438)
-----------------------------------------------------------------------------------------------------------------------------------
Balance at October 30, 2001        12,119,090 $     12,119  $(54,870)  $ 38,174,587   $(35,947,213) $(88,548) $(17,080) $ 2,078,996
===================================================================================================================================

          The accompanying notes are integral part of these statements

</TABLE>
<PAGE>
<TABLE>

             DIAL-THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                  Year ended October 31,
                                                          ---------------------------------------
                                                             2001          2000           1999
                                                          ----------    -----------    ----------
  <S>                                                   <C>            <C>            <C>
  CASH FLOWS FROM OPERATING ACTIVITIES
   Net (loss) income                                   $  (2,684,306)  $(11,186,742)  $ 1,713,380
   Adjustments to reconcile net income (loss) to net
    cash used in continuing operating activities:
     Loss (income) from discontinued operations                    -              -      (218,376)
     (Gain)/Loss from disposal of fixed assets               (13,693)       121,360             -
     Gain on disposal of software business                         -              -    (5,309,927)
     Stock and warrants issued for services                  258,616      1,937,184        80,165
     Non-cash vendor credit                                 (780,000)             -             -
     Bad debt expense                                        140,167        694,526       405,825
     Inventory write-off                                           -         58,526             -
     Non-cash interest expense                               597,731        679,258             -
     Impairment provision on advertising credits                   -        575,542             -
     Depreciation and amortization                           818,324        565,188        91,338
     (Increase) decrease in:
       Trade accounts receivable                          (1,031,471)      (173,826)     (201,526)
       Inventory                                                   -         82,491        88,655
       Prepaid expenses and other                            103,094         30,301       (63,072)
       Advertising Credits                                    76,349              -             -
       Other assets                                          136,481       (128,851)     (180,389)
     Increase (decrease) in:
       Trade accounts payable                                549,194      2,854,082      (286,783)
       Accrued Carrier Costs                                 666,728              -             -
       Accrued liabilities                                   217,158        (78,150)       78,661
       Deferred revenue                                       78,628       (187,914)      189,071
                                                          ----------    -----------    ----------
   Net cash used in operating activities from
     continuing operations                                  (867,000)    (4,157,025)   (3,612,978)
                                                          ----------    -----------    ----------
  CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from sale of software business                         -              -     7,394,917
   Purchase of property and equipment                        (60,609)      (274,609)   (1,436,337)
   Cash in DTI at acquisition date                                 -         69,137             -
   Cash paid for Rapid Link acquisition,
     net of cash acquired                                 (1,495,814)             -             -
   Payments received on note receivable                            -        255,000       115,569
                                                          ----------    -----------    ----------
   Net cash (used in) provided by investing
    activities of continuing operations                   (1,556,423)        49,528     6,074,149
                                                          ----------    -----------    ----------
  CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from (repayment of) advances
     from shareholder                                              -        (54,000)   (1,500,000)
   Proceeds from convertible debentures                    1,000,000      1,000,000             -
   Proceeds from note payable                                      -              -       805,000
   Payments on note payable                                        -       (724,000)      (81,000)
   Proceeds from note payable - related party              1,599,486              -             -
   Payments on capital leases                               (106,172)       (55,140)            -
   Proceeds from common stock subscription                         -      1,400,000             -
   Proceeds from exercise of stock options                    34,357        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)
   Effects of changes in foreign exchange rates              (83,132)             -             -
                                                          ----------    -----------    ----------
   Net cash provided by (used in) financing
    activities of continuing operations                    2,444,539      3,335,223    (2,005,733)
                                                          ----------    -----------    ----------
  Cash provided by (used in) discontinued operations               -              -       183,094
                                                          ----------    -----------    ----------
  NET INCREASE (DECREASE) IN CASH                             21,118       (772,274)      638,532

  Cash and cash equivalents at beginning of year              73,867        846,141       207,609
                                                          ----------    -----------    ----------
  Cash and cash equivalents at end of year               $    94,985   $     73,867   $   846,141
                                                          ==========    ===========    ==========
  SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING
   AND FINANCING ACTIVITIES
   Note receivable issued for deposit repayment          $         -   $          -   $   100,000
   Switch equipment obtained through issuance
     of capital lease                                    $         -   $    227,772   $         -
   Conversion of Note payable shareholder
     to Note Payable Related Party                       $   346,000   $          -   $         -
   Conversion of Convertible Note to Common Stock        $(1,000,000)  $          -   $         -
   Common stock issued for acquisiton of Rapid Link      $   468,000   $          -   $         -
   Common stock issued for acquisiton of Dial Thru
     International                                       $ 1,031,200   $          -   $         -
   Warrants issued for Debt                              $ 1,404,056   $          -   $         -
   Cash paid for interest                                $    11,174   $          -   $    92,000
   Cash paid for income taxes                            $         -   $          -   $         -


          The accompanying notes are an integral part of these statements.

</TABLE>

             DIAL-THRU INTERNATIONAL CORPORATION AND SUBSIDIARIES

                        NOTES TO CONSOLIDATED STATEMENTS




 NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

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

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

 Nature of Business
 ------------------
 During 1998 and  1999, the Company's  operations included  mainly sales  and
 distribution  of  prepaid  domestic  and  international  calling  cards   to
 wholesale and retail customers.  Effective with the acquisition of Dial-Thru
 International Corporation,  the  Company  changed  its  focus  from  prepaid
 calling cards  to  becoming  a  full  service,  facility-based  provider  of
 communication  products   to  small   and  medium   size  businesses,   both
 domestically and internationally.   The Company  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.

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

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


 Financial Condition
 -------------------
 The Company is subject to various risks in connection with the operation  of
 its  business  including,  among  other  things,  (i)  changes  in  external
 competitive  market factors, (ii)  inability to satisfy anticipated  working
 capital or other  cash requirements, (iii)  changes in  the availability  of
 transmission facilities, (iv) changes in the Company's business strategy  or
 an inability to  execute is strategy  due to unanticipated   changes in  the
 market, (v) various competitive  factors that may  prevent the Company  from
 competing successfully in the  marketplace, and (vi)  the Company's lack  of
 liquidity and its ability to raise  additional capital.  The Company has  an
 accumulated deficit  of approximately $35.9 million as of October 31,  2001,
 as well as a working capital deficit of approximately $6.6 million.  Funding
 of the  Company's  working capital  deficit,  current and  future  operating
 losses, and  expansion  of  the  Company  will  require  continuing  capital
 investment.   The Company's  strategy is  to  fund these  cash  requirements
 through debt  facilities and  additional equity  financing.   As of the date
 of this report.

   1) the Company  is currently in  negotiations to obtain  both debt  and/or
      equity financing, and in January 2002, closed on an additional $550,000
      of debt financing.
   2) the Company has successfully negotiated payment terms on $1 million  of
      its past due trade payables with its largest vendor, and has agreed  to
      remit equal monthly installments in excess of its normal monthly  usage
      billing.
   3) the Company's trade accounts payable and accrued carrier costs  include
      disputes with  certain  vendors  over what  the  Company  believes  are
      improper  charges  primarily  for  termination  of  our  domestic   and
      international minutes.    This  amount  is  approximately  $750,000  at
      October 31, 2001. The Company has received approximately $1,400,000  of
      such credits in fiscal 2001.
   4) the Company's German subsidiary received a net $1 million refund for  a
      license fee previously paid,  which will be used  to pay down past  due
      liabilities.

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


 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

 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.

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

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

 Goodwill and Other Intangible Assets
 ------------------------------------
 Intangible assets, net of accumulated amortization, as of October 31, 2001
 and 2000 consisted of the following:

                                                2001                  2000
                                            -----------           -----------
     Goodwill                              $  2,072,675          $  1,041,475
     Licenses and other                         980,537                     -
                                            -----------           -----------
                                              3,053,212             1,041,475
     Less accumulated amortization            (291,202)             (104,148)
                                            -----------           -----------
                                           $  2,762,010          $    937,327
                                            ===========           ===========

 Excess of cost over fair value of net assets of company acquired  (Goodwill)
 represents the  excess of  purchase  price over  the  fair market  value  of
 identifiable  net  assets  at  the  date of  acquisition.   This  amount  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
 $275,665 and $104,148 at October 31, 2001 and 2000, respectively.

 The Company's German subsidiary, acquired from  Rapid Link  in October 2001,
 obtained  a  license  from  the  German  authorities in February 2000.  This
 license gives the Company the right  to provide and run a  telecommunication
 net in Germany.  The license  has been recorded  at its fair market value of
 $933,864 as of the acquisition date,  October 1, 2001.  The right to use the
 license is unlimited, and the right does not expire.  In accordance with the
 Company's accounting policy, this asset is amortized straight line over five
 years, its estimated economic useful life.  The amortization  for the fiscal
 year ending October 31, 2001 is $15,537.

 In November 2001,  the  Company  received  a  refund  for the full amount of
 the  orginal  license  fee  of  $1.5  million.  The Company anticipates that
 approximately $500,000 will be returned  to  the  German  authorities  as  a
 revised  license fee.  This refund will be recorded in the Company financial
 results for the first quarter of fiscal 2002.

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

 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.

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

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

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

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

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

 Comprehensive Income
 --------------------
 SFAS No.  130, "Reporting  Comprehensive Income"  ("SFAS 130"),  sets  forth
 rules for the reporting and display of comprehensive income (net income plus
 all other changes in net assets  from non owner sources) and its  components
 in the financial  statements.  At October 31, 2001, 2000 and 1999 the  major
 component of other comprehensive income consisted of an unrealized loss from
 currency  translation,  which  is  stated  as  a  component of shareholders'
 equity.

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

 New Accounting Pronouncements
 -----------------------------
 In June 2001, the Financial Accounting Standards Board ("FASB") issued  SFAS
 No. 141,  "Business Combinations,"  and SFAS  No. 142,  "Goodwill and  Other
 Intangible  Assets."  SFAS  No.  141  requires  all  business   combinations
 initiated after June 30, 2001 to be accounted for using the purchase method.
 In addition, companies are required to review goodwill and intangible assets
 reported in connection  with prior acquisitions,  possibly disaggregate  and
 report separately  previously  identified  intangible  assets  and  possibly
 reclassify certain intangible assets into goodwill. SFAS No. 142 establishes
 new guidelines for accounting for goodwill  and other intangible assets.  In
 accordance  with  SFAS  No.  142,  goodwill  associated  with   acquisitions
 consummated after June 30,  2001 is not  amortized. The Company  implemented
 the remaining  provisions  of  SFAS  No. 142  on  November  1,  2001.  Since
 adoption, existing  goodwill is  no longer  amortized  but instead  will  be
 assessed  for  impairment  at  least  annually.  The  Company  is  currently
 determining the  impact  of  adopting this  standard  under  the  transition
 provisions of SFAS No.  142.  Goodwill amortization expense for Fiscal  2001
 and 2000 was $171,517 and $104,148 respectively.

 In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset  Retirement
 Obligations."   SFAS   No.  143,  addresses  accounting  and  reporting  for
 obligations associated with the retirement of tangible long-lived assets and
 the  associated asset retirement costs.  This  statement  is  effective  for
 fiscal  years  beginning  after  June 15, 2002.  The  Company  is  currently
 assessing the impact of this new standard.

 In July 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of Long-
 Lived Assets," which is effective for fiscal years beginning after  December
 15, 2001. The provisions of this statement provide a single accounting model
 for impairment of long-lived assets. The Company is currently assessing  the
 impact of this new standard.

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


 NOTE 3 - ACQUISITIONS

 Dial-Thru International Corporation Acquisition
 -----------------------------------------------
 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.   In  March  2001,  the  additional
 1,000,000 shares of  common stock were  issued to the  Seller in  accordance
 with  the terms of the  Asset Purchase Agreement, and  the Company  recorded
 additional purchase price   of $1,031,200 using  the Company's common  stock
 price at  the  time  of approval  of  the  issuance.   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)
  Goodwill                               2,072,675
                                        ----------
                                       $ 1,968,700
                                        ==========

 Rapid Link, Inc. Acquisition
 ----------------------------
      On October 12, 2001, Dial Thru International Corporation ("Dial  Thru")
 completed the acquisition of certain assets  and liabilities of Rapid  Link,
 USA, Inc. ("Rapid  Link USA") and  100% of the  common stock  of Rapid  Link
 Telecommunications, GMBH,  ("Rapid Link  Germany")  a German  Company,  from
 Rapid Link Inc. ("Rapid Link"). The results of the businesses acquired  from
 Rapid  Link  have  been  included  in  operations  of  the  Company  in  the
 consolidated financial statements from  the date of acquisition.  Rapid Link
 is  a  provider  of  high  quality integrated  data and voice communications
 services  to  both  wholesale  and  retail customers around the world.   The
 aggregate  purchase  price  was  $2,116,481,  including $1,450,000  in cash,
 common  stock  valued at $468,000, and an additional $198,481 in acquisition
 related costs.  The value of the 600,000 common  shares was determined based
 on  the  closing  market  price of Dial Thru's common shares on  October 12,
 2001. The value of the common stock is guaranteed by Dial Thru to be no less
 than $300,000  at the time of the Registration of the shares. Dial Thru will
 either (i)  issue  additional  shares to Rapid Link in excess of the 600,000
 Shares; or (ii) pay to Rapid Link additional cash consideration, so that the
 minimum  value  of  the  consideration received is $300,000.  Any additional
 consideration  will  not  change  the  recorded  cost  of  Rapid  Link.  The
 following table summarizes  the estimated fair value of the assets  acquired
 and liabilities assumed at the date of the acquisition.  In accordance  with
 Statement of Financial Accounting Standards No. 141  Business  Combinations,
 the  Company   has  allocated  the  purchase  price to net  assets acquired,
 resulting in negative goodwill.  Therefore  the Company has  reduced the net
 book value  of  fixed assets by $1,345,630, the amount representing negative
 goodwill.

 The fair value of assets and liabilities acquired consisted of:

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



 The following unaudited pro-forma consolidated results of operations for the
 years ended  October 31,  2001 and  2000, assume  that the  acquisitions had
 occurred on November 1, 1999 is as follows:


                                                         Unaudited
                                                    Year ended October 31,
                                                 ---------------------------
                                                     2001            2000
                                                 -----------    ------------
  Revenues                                      $ 32,933,450   $  61,371,944
                                                 ===========    ============
  Net loss                                      $ (8,734,575)  $ (26,569,378)
                                                 ===========    ============
  Net loss per common share (basic and diluted) $      (0.76)  $       (2.91)
                                                 ===========    ============
  Weighted average common shares outstanding
    (basic and diluted)                           11,500,115       9,144,105
                                                 ===========    ============


 NOTE 4 - ADVERTISING CREDITS

 On September 8,  2000, the Company  issued 914,285 shares  (which are  fully
 vested and nonforfeitable) of the Company's  common stock  in exchange   for
 $3.2 million face value of advertising  credits.  These credits were  issued
 by Millenium Media  Ltd. and  Affluent Media  Network, national  advertising
 agencies and media placement brokers.  The Company recorded the  advertising
 credits on the  date the shares  were issued, September  8, 2000, using  the
 Company's  quoted  common  stock  price of  $3.3125,  totaling   $3,028,569.
 Through October 31, 2001  the Company has recorded  an impairment charge  of
 $575,542 to reduce  the credits to  their estimated fair  value, and sold  a
 portion of  the credits  for cash,  reducing the  balance by  an  additional
 $76,349,  reduced  the  impairment by  $11,610 during  the year due to sales
 above  the estimated value of the credits.  The  estimated  fair  value  was
 established at the end of fiscal 2000  using a discount of 25% off the  face
 value, which was based on  management's  estimate of the dollar value of the
 credits to be used in settling  various outstanding trade obligations.  Such
 credits can be used by the Company  to place electronic media and periodical
 advertisements.  With  the  acquisition  of  Rapid Link,  and  the expanding
 market presence of the Company  worldwide, it  is  management's intention to
 utilize the remaining advertising credits to promote the Company's  products
 and  services.  There  is  no  contractual expiration date for  these  trade
 credits and there are no limitations relating to the use of these credits.


 NOTE 5 - SETTLEMENT OF LEGAL/CARRIER DISPUTES

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


 NOTE 6 - CONVERTIBLE DEBENTURES

 Convertible Debentures to Accredited Investors
 ----------------------------------------------
 On February 4, 2000, the  Company executed non-interest bearing  convertible
 note agreements (the "Notes") with nine accredited investors, which provided
 financing of $1,000,000.  The notes were 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, or converted into common stock at a  rate
 of $4.00 per share if the notes were not repaid within 90 days from the date
 of issuance. The Company recorded  financing fees of approximately  $117,000
 in February 2000 related to the  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.

 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  they 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
 related to the issuance of additional  warrants. 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
 amortized  the total debt discount of $877,996 over the initial maturity  of
 the Notes of one year.

 During March  2001,  terms of  the  Notes were  modified  and the  debt  was
 converted into 400,000 common shares.  Additionally, in connection with  the
 conversion, the warrants  to purchase 250,000  shares of  common stock  were
 modified to allow  for an exercise  price of   $0.01 per  share and  150,000
 additional warrants with an exercise price of $3.00 per share were issued to
 the note holders. The  amount charged to expense  for the fiscal year  ended
 October 31,  2001  and 2000  totaled  approximately $316,000  and  $562,000,
 respectively.   In connection  with the  grant of   the  additional  150,000
 warrants to the note holders, the Company recorded additional debt  discount
 of approximately $142,000  which was  immediately expensed  as the  warrants
 were exercisable at the date of grant, and the note has been redeemed in its
 entirety. 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 5%;  dividend
 yields of  0%;  volatility factors  of  the  expected market  price  of  the
 Company's common stock  of 1.47;  and an expected  life of  the warrants  of
 three years.

 Convertible Debenture with Global Capital Funding Group L.P.
 ------------------------------------------------------------
 On April 11,  2001, the  Company executed  a 6%  convertible debenture  (the
 "Debenture") with Global Capital Funding Group L.P, which provided financing
 of   $1,000,000.   The  Debenture  maturity  date  is April  11,  2003.  The
 Debenture is secured by $320,307 of property & equipment held for sale.  The
 conversion price is equal to the lesser of  (i) 100% of the volume  weighted
 average of sales price as reported by the Bloomberg L.P. of the common stock
 on the last  trading day  immediately preceding  the Closing  Date   ("Fixed
 Conversion Price") and (ii) 80% of the average of the five (5) lowest volume
 weighted average  sales prices  as reported  by  Bloomberg L.P.  during  the
 twenty (20) Trading Days immediately preceding but not including the date of
 the related Notice of Conversion ("the  "Formula Conversion Price").  In  an
 event of default the amount declared due and payable on the Debenture  shall
 be at  the Formula  Conversion  Price.   The  Formula Conversion  Price  was
 adjusted downward to 70%  in accordance with the  terms of the Debenture  as
 the Company's  registration  statement was  not  declared effective  by  the
 Securities and Exchange Commission  on the date  required by the  Debenture.
 The Company has calculated the beneficial conversion feature embedded in the
 Debenture in accordance with Emerging Issues Task Force  ("EITF")  00-27 and
 recorded $496,598 as a  deferred financing fee.  This fee is being amortized
 over the two year life of the Debenture.  During the year ended  October 31,
 2001,  the Company  recorded $106,034 as interest expense.  The Company also
 issued to the holder of  the  debenture  warrants to acquire an aggregate of
 100,000 shares of common stock  at  an  exercise  price  of $0.89 per share,
 which expire on April 11, 2006.  The  Company  recorded  deferred  financing
 fees  of  approximately $80,000 related to the  issuance  of  the  warrants.
 This amount represents the relative fair value of the warrants in accordance
 with  EITF 00-27,  and is amortizing the fees  over the two year life of the
 Debenture.  For the year  ended  October 31, 2001, the Company  has recorded
 interest expense of $25,340 relating to the warrants.


 NOTE 7 - 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  bore
 interest at 6% per annum, and was payable in quarterly installments.

 The balance due  at October  31, 2000  was $346,000  and was  included as  a
 current liability.   During  the fiscal  year ended  October 31,  2001,  the
 Company borrowed an additional $1,502,401 from  the shareholder, and used  a
 majority  of  the  proceeds for  its acquisition of Rapid  Link.  The  total
 balance due in  October 2001 of  $1,745,958 was transferred  to a  long-term
 convertible note.   (See  Note  9). The  remaining  balance of  $102,493  at
 October 31, 2001 is included in the Notes Payable to Shareholder.


 NOTE 8 - 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%, was payable in  monthly
 installments of  $13,500 plus  interest beginning  May 13,  1999, and  would
 mature 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  was  classified  as  a  current
 liability. On  February  14,  2000, the  Company  utilized  restricted  cash
 collateralizing this loan and paid off amounts outstanding ($724,000)  under
 the loan agreement.

 Interest expense in connection  with the Bank One  loan was $0, $29,587  and
 $18,799 for  the  fiscal  years  ended  October  31,  2001,  2000  and  1999
 respectively.


 NOTE 9 - NOTES PAYABLE - RELATED PARTY

 In October, 2001, the Company executed  a 10% convertible note (the  "Note")
 with  three  executives  of  the   Company,  which  provided  financing   of
 $1,945,958.  The Note maturity date is October 24, 2003. The Note is secured
 by all Company  assets. The Note  is convertible into  the Company's  common
 stock at the option of  the holder at each  of the six-, twelve-,  eighteen-
 and twenty- four month anniversary of the date of issuance of the note.  The
 conversion price is equal to the  closing bid price of the Company's  common
 stock on the  last trading day  immediately preceding the  conversion.   The
 Company has calculated  the beneficial  conversion feature  embedded in  the
 Note  in  accordance  with  EITF  00-27   and  recorded  debt  discount   of
 approximately $171,000 which will be amortized over two years.  The  Company
 also issued to the holders of the  Note warrants to acquire an aggregate  of
 1,945,958 shares of common  stock at an exercise  price of $0.78 per  share,
 which expire on October 24, 2003.  Additional debt discount of approximately
 $657,000 was recorded during the fourth quarter of fiscal 2001.  The Company
 determined the  additional debt  discount by  allocating the  relative  fair
 value  to  the  Note and  the  warrants.   The  Company  is  amortizing  the
 additional debt discount over the initial maturity of the Note of two years.
 For the  fiscal  year ended  October  31,  2001, the  Company  has  recorded
 approximately $8,529 of interest expense.


 NOTE 10 - 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.

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

                                      Period from
                               November 1, 1988 through
                                    December 7, 1998
                                       ----------
 Revenues                              $1,686,945
 Cost and expenses                      1,468,569
                                        ---------
 Net income (loss)                     $  218,376
                                        =========


 NOTE 11 - PROPERTY AND EQUIPMENT

 Property and equipment consists of the following at October 31:

                                                      2001            2000
                                                  -----------     -----------
 Telephone switch equipment                      $  3,760,015    $  1,776,773
 Leasehold improvements                               262,085               -
 Furniture and fixtures                               229,554          78,676
 Office equipment                                      64,396          46,154
 Computer equipment                                 1,375,838         166,583
 Computer software                                    849,619         267,507
                                                  -----------     -----------
                                                    6,541,507       2,335,693
 Less: accumulated depreciation and amortization   (1,406,480)       (796,149)
                                                  -----------     -----------
                                                 $  5,135,027    $  1,539,544
                                                  ===========     ===========

 At October 31, 2001 and 2000, the gross amount of capital lease assets and
 related accumulated amortization recorded under capital leases were as
 follows:
                                                      2001            2000
                                                  -----------     -----------
 Telephone switch equipment                      $    792,502    $    184,220
 Office equipment                                      11,494          43,552
                                                  -----------     -----------
                                                      803,996         227,772
 Less: accumulated amortization                      (110,619)        (21,173)
                                                  -----------     -----------
                                                 $    693,377    $    206,599
                                                  ===========     ===========

 Amortization  of  assets  held  under   capital  leases  is  included   with
 depreciation expense.  Depreciation and amortization expense from continuing
 operations amounted to $818,324,  $565,188, and $91,338  in 2001, 2000,  and
 1999, respectively.


 NOTE 12 - PROPERTY AND EQUIPMENT HELD FOR SALE

 Property and  equipment  held  for sale  represents  internally  constructed
 equipment for the prepaid telecommunications industry.  On October 31, 2000,
 the Company entered into an Asset Purchase Agreement to sell this technology
 for $1 million,  however the  sale was not  consummated.   The Company  will
 continue  to  search  for  a buyer for  the asset, and  is current utilizing
 the assets  as  collateral  against its $1  million  convertible  debenture.
 Management  believes   the  property   and  equipment   held   for  sale  is
 appropriately valued and realizable.


 NOTE 13 - STOCK OPTIONS AND WARRANTS

 Warrant Issuances to Employees
 ------------------------------
 Employee warrant activity for the three years ended October 31, 2001 was as
 follows:

                                                                  Weighted
                                       Number        Warrant       Average
                                         of         Price Per     Exercise
                                      Warrants        Share         Price
                                      --------     -----------    --------
  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                    820,000       0.81-1.44        1.36
   Warrants exercised                 (125,000)           0.53        0.53
   Warrants canceled                  (810,000)    0.46 - 1.44        0.76
                                     ---------     -----------    --------
  Warrants outstanding at
    October 31, 2000                   910,000     0.53 - 1.44        1.09

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


 Effective July  15, 1999,  50,000 performance  warrants  were issued  to  an
 employee  of  the  Company   ("1999   Performance   Warrants").   Each  1999
 Performance Warrant  expires 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 Opinion 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, occurs.

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

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

 The warrants issued to  employees that were exercisable  at the years  ended
 October 31,  2001,  2000  and  1999  were  286,667,  350,000,  and  375,000,
 respectively.

 Warrant Issuances to Non-Employees
 ----------------------------------
 Non-Employee warrant activity for the three years ended October 31, 2001 was
 as follows:

                                                                   Weighted
                                        Number        Warrant       Average
                                          of         Price Per     Exercise
                                       Warrants        Share         Price
                                       --------     -----------    --------

  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                     (75,000)    0.53 - 0.88        0.76
                                       --------     -----------    --------
  Warrants outstanding at
    October 31, 2000                    748,800     0.29 - 3.00        1.49

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


 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 vested  on
 January 10, 2000, and the right to acquire the remaining 25,000 shares under
 the warrant vested 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.

 On 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 exercisable beginning October 26,
 2001 and expires October 26, 2003.  This warrant was issued as consideration
 for services.

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

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

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

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

 During fiscal 2001, warrants to purchase 100,500 shares of common stock with
 an exercise price ranging from $0.01 to $0.53 were exercised.  In  addition,
 20,000 warrants with  an exercise  price ranging  from $0.45  to $3.00  were
 canceled or expired.

 The warrants issued to non-employees that  were  exercisable  at October 31,
 2001, 2000 and 1999 were 1,103,300, 70,000, and 20,000, respectively.

 The weighted average  fair value of  the warrants granted  during the  years
 ended October  31,  2001,  2000  and 1999  were  $2.80,  $1.53,  and  $0.93,
 respectively.

 Stock Options
 -------------
 The  Company  has  adopted  a  stock option plan (the "Stock Option  Plan").
 The 1990 Stock Option Plan, as amended, authorizes the Board of Directors to
 grant up to 2,300,000 options to purchase common shares of the Company.   No
 options will be granted to any  individual director or employee which  will,
 when exercised,  exceed 5%  of  the issued  and  outstanding shares  of  the
 Company.  The  term of any  option granted under  the 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 that 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.

 Activity under the Stock Option Plan  for the three years ended October  31,
 2001 was as follows:

                                                                    Weighted
                                         Number        Option       Average
                                           of           Price       Exercise
                                         Shares       Per Share      Price
                                       ---------     -----------    --------
  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

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


<TABLE>

 The following table summarizes information about employee warrants and stock
 options outstanding at October 31, 2001:


                                                 Weighted
                                  Weighted       Average
     Range of       Options/      Average    Exercise Price Of  Options/       Prices of
     Exercise       Warrants     Remaining   Options/Warrants   Warrants   Options/Warrants
      Prices       Outstanding      Life       Outstanding     Exercisable    Exercisable
   ------------     ---------       ----           ----        ---------          ----
  <S>              <C>             <C>            <C>          <C>               <C>
  $   0 - $0.99     4,915,258       3.30           0.63          853,300          0.59
  $1.00 - $1.99       576,500       1.21           1.44          293,829          1.44
  $2.00 - $2.99       200,000       2.30           0.80          200,000          2.19
  $3.00 - $3.99       450,000       3.53           3.33          300,000          3.50
                    ---------       ----           ----        ---------          ----
                    6,141,758       3.09           0.91        1,647,129          1.46
                    =========       ====           ====        =========          ====

</TABLE>

 Statements of Financial Accounting Standards No. 123

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

                                     2001              2000             1999
 ---------------------------------------------------------------------------
 Risk-free interest rate                5%                6%              6%
 Expected dividend yield                0%                0%              0%
 Expected lives                    4 years        1-3 years        3-6 years
 Expected volatility          133 % - 159%              213%             90%


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



                                     2001            2000            1999
                                  ----------     -----------     -----------
 Net Income (loss):
    As reported                  $(2,684,306)   $(11,186,742)   $  1,713,380
    Pro forma                    $(2,950,373)   $(11,425,397)     (1,619,853)
 Net loss per share
    As reported:
        Basic and diluted        $     (0.25)   $      (1.31)   $       0.25
    Pro forma:
        Basic and diluted        $     (0.27)   $      (1.34)   $       0.24


 NOTE 14 - INCOME TAXES

 The temporary  differences that  give rise  to the  deferred tax  assets  or
 liabilities at October 31, 2001 and 2000 are as follows:


                                                 2001              2000
                                              ----------       -----------
 Deferred tax assets
   Net operating loss carryovers             $10,789,919      $  8,962,015
   Accounts receivable                           100,075           348,760
   Advertising credits                           190,134           195,684
   Stock warrants                                      -           658,643
   Accrued liabilities                           228,714           173,912
                                              ----------       -----------
     Total gross deferred tax assets          11,308,842        10,339,014

 Deferred tax liabilities
   Property and equipment                        (34,314)          (71,574)
                                              ----------       -----------
     Total gross deferred tax liabilities        (34,314)          (71,574)
                                              ----------       -----------
                                              11,274,528        10,267,440
         Valuation allowance                 (11,274,528)      (10,267,440)
                                              ----------       -----------
   Net deferred tax assets                   $         -      $          -
                                              ==========       ===========


 The increase in the valuation allowance for the years ended October 31, 2001
 and  2000  of  $1 million and $3.8 million,  respectively,  was related to a
 change in operating loss carryforwards.

 At October 31, 2001,  the Company has net  operating loss carryforwards  for
 federal income tax purposes of approximately  $32  million, which expire  in
 2006 through 2017.  Utilization of net operating losses is subject to annual
 limitations provided for by the Internal Revenue Code. The annual limitation
 may  also  result  in  the  expiration   of  net  operating  losses   before
 utilization.

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


 NOTE 15 - COMMITMENTS AND CONTINGENCIES

 The Company is obligated under various capital leases for equipment used  in
 operating the business with  terms expiring at  various dates through  2005.
 The Company leases  its branch office  facilities and  its corporate  office
 under various noncancelable operating leases with terms expiring at  various
 dates through 2006, and has also  entered into various operating leases  for
 equipment used  in the  Company's business.   Rental  expense for  operating
 leases was $228,882, $290,175 and $210,157  for the years ended October  31,
 2001, 2000 and 1999, respectively.

 Future minimum  lease  payments  under noncancelable  operating  leases  and
 capital leases as of October 31, 2001 are as follows:


                                                Capital         Operating
                                                Leases            Leases
                                              ----------       -----------
       Year ending October 31,
                        2002                 $   434,494      $    440,754
                        2003                     256,906           398,863
                        2004                      53,123           124,594
                        2005                      12,188            82,942
                        2006                           -            56,389
                                              ----------       -----------
       Total minimum lease payments              756,711      $  1,103,542
                                                               ===========

       less: Amount representing interest        (84,822)
                                              ----------
       Present value of net minimum
            capital lease payment                671,889

       Less: current installments of
         obligations under capital lease        (385,787)
                                              ----------
       Obligations under capital leases,
         excluding current installments      $   286,102
                                              ==========


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

 On June  12, 2001,  Cygnus  Telecommunications Technology,  LLC  ("Cygnus"),
 filed a patent  infringement suit (case  no. 01-6052) in  the United  States
 District  Court,  Central  District  of  California,  with  respect  to  our
 "international  call-back"  technology.   This  technology  drives  our  Re-
 Origination Services  and allows  our foreign  based customers  to  initiate
 international telephone  calls  by first  calling  a switch  in  the  United
 States, which then initiates a "call  back" to the customer sight  providing
 the customer with an open phone line to place a call anywhere in the  world.
 The injunctive relief that Cygnus sought  in this suit has been denied,  but
 Cygnus continues  to  seek compensatory  and  punitive damages  as  well  as
 attorneys' fees and costs.  We  deny the alleged infringement and intend  to
 defend the case vigorously, but our  ultimate legal and financial  liability
 with respect to this legal proceeding cannot be estimated with any certainty
 at this time.


 NOTE 16 - BENEFIT PLAN

 Effective January 1, 1994, the Company  implemented a 401(k) Profit  Sharing
 Plan for all  employees of  the Company.   The Plan  provides for  voluntary
 contributions by employees into the Plan subject to the limitations  imposed
 by the Internal Revenue Code Section 401(k).  The Company may match employee
 contributions to a discretionary percentage of the employee's  contribution.
 The Company's matching funds are determined  at the discretion of the  Board
 of Directors and are subject to a seven-year vesting schedule from the  date
 of original  employment.   The Company  made matching  contributions of  $0,
 $10,566 and $18,659  for the years  ended October 31,  2001, 2000 and  1999,
 respectively.


 NOTE 17 - BUSINESS AND CREDIT CONCENTRATIONS

   Continuing Operations:

   One customer accounted for  approximately 11% of revenues during the  year
   ended October  31, 2001 and  15% of trade  accounts receivable balance  at
   October  31, 2001.  The  company continues  to  provide services  to  this
   customer  and plans  to expand  its  existing relationship.  One  customer
   accounted for  approximately 17% of revenues  during the year October  31,
   2000 and 0% of the trade accounts receivable balance at October 31,  2000.
   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  had 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.
   Subsequent to  October 31, 1999, bankruptcy  proceedings were settled  and
   the Company agreed to a full  settlement of outstanding debts owed by  USC
   in  the  amount of  $300,000.   The  remaining  $160,000  note  receivable
   balance was 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 were concentrated  in  The  Southland  Corporation
   (Southland),  which  accounted  for  approximately  0%,  0%,  and  86%  of
   the  Company's  total  revenue for  fiscal  years  2001,  2000  and  1999,
   respectively.  At  October 31,  2001,  2000 and  1999,  Southland  had  no
   accounts  receivable  outstanding.  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.


 NOTE 18 - SEGMENT INFORMATION

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

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

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

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


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



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

                                      All other
                                       foreign
                           Africa     countries    Domestic        Total
                         ---------    ---------    --------      ---------
 Fiscal 1999            $        -   $        -   $3,116,911    $3,116,911
 Fiscal 2000             1,891,191    3,945,201    2,755,057     8,591,449
 Fiscal 2001             2,953,817    3,694,171      353,874     7,001,862


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


 NOTE 19 - RESTATEMENT

 Fiscal Year Ended October 31, 2001
 ----------------------------------
 The Company  is restating  its financial  statements  for the  first  fiscal
 quarter ended January 31, 2001, to reflect non-cash compensation charges  of
 $258,616 for common stock and warrants issued in connection with  investment
 banking services provided to the Company.  The common stock was recorded  at
 the fair  market  value at  the  time of  issuance,  and the  warrants  were
 recorded in accordance with SFAS 123.

 The Company  is restating  its financial  statements for  the second  fiscal
 quarter ended  April 30,  2001, to  reflect additional  interest expense  of
 $155,587 for  additional warrants  issued to  the holders  of the  Company's
 Convertible Notes  (see  Note 6),  totaling  $141,840, and  amortization  of
 deferred financing fees of  $13,747 for the  amortization of the  beneficial
 conversion feature  embedded in  the  Company's Convertible  Debentures,  in
 accordance with EITF 00-27 (See Note 6).  The Company is restating its long-
 term liabilities  and  equity  to reflect  the  deferred  financing  fee  of
 $496,598, which  represents  the fair  value  of the  beneficial  conversion
 feature, which is being amortized over the life of the Convertible Debenture
 of two years.  The Company is also restating equity for the issuance of  the
 warrants noted above for $141,840.

 The Company  is restating  its financial  statements  for the  third  fiscal
 quarter ended September 30, 2001, to reflect additional interest expense  of
 $41,241 for  the  amortization  of  the  deferred  financing  fees  for  the
 Convertible Debenture noted above.

 The adjustments above were not recorded in the Company's quarterly financial
 statements during the fiscal year ended October 31, 2001.

 The  effect  of  these  restatements  on  the  unaudited  interim  financial
 statements for the quarters ended January 31, 2001, April 31, 2001, July 31,
 2001 and the year ended October 31, 2001 are as follows:


                                     Quarter Ended                Year Ended
                           ----------------------------------    ------------
                           January 31,    April 30,  July 31,     October 31,
                              2001          2001       2001          2001
                            ---------     -------     --------     ---------
 Total assets              $        -    $       -   $       -    $        -
 Total liabilities                  -      482,851     (41,241)      441,610
 Increase in net loss         258,616      155,587      41,241       455,444
 Increase in net loss
   per share                     0.02         0.01        0.00          0.04
 Total equity                       -      638,438           -       638,438



 NOTE 20 - QUARTER-BY-QUARTER COMPARISION

<TABLE>

 Summarized quarterly financial data for the years ended October 31, 2001, 2000 and 1999 are as follows:


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

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

 1999
 Quarters:
      Revenues, net                          1,542,719          846,020          500,107          228,065
      Operating loss                          (526,574)        (689,486)        (941,952)      (1,735,679)
      Income from discontinued operations    2,233,870        1,366,518        1,378,525          331,014
      Net (loss) income                      1,707,296          693,837          456,294       (1,144,017)
      Net (loss) income per share-basic           0.26             0.10             0.07            (0.18)
      Net (loss) income per share-diluted         0.26             0.10             0.07            (0.18)

</TABLE>


 NOTE 21 - CAPITAL STOCK

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

 In March  2001, the  Company  issued 1,000,000  shares  of common  stock  as
 additional consideration  for the  purchase of  Dial Thru  International  in
 accordance with terms  of the  Asset Purchase  Agreement   with the  seller.
 (See Note 3).

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

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

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

 In November, 1999, the Company consummated the acquisition of  substantially
 all of the assets and business  of Dial-Thru International Corporation  (the
 "Seller"), a California  corporation. The Company  issued to  the Seller  an
 aggregate of 1,000,000  shares of common  stock, recorded  a total  purchase
 price of $937,500  using the Company's  common stock price  at the time  the
 acquisition was  announced,  and agreed  to  issue an  additional  1,000,000
 shares of its common  stock upon the  acquired business achieving  specified
 revenue and earnings goals.  (See Note 3).

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

 In January, 1999 the Company issued  250,000 shares of the Company's  common
 stock to employees of  the Company as compensation.  In connection with  the
 issuance, the Company recorded $74,225 of compensation expense, such expense
 being calculated as the difference between  the trading price of the  common
 stock on the date of issuance and the proceeds received for the issuance.

 During the year ended October 31, 2001, 2000 and 1999, options and  warrants
 to purchase 134,000,  699,800  and  20,000, respectively, shares  of  common
 stock  were exercised.


 NOTE 22 - SUBSEQUENT EVENTS

 Subsequent to October 31, 2001, Global Capital, holder of the Company's $1.0
 million  Debenture,   has  converted   $350,000   of  the   Debenture   into
 approximately 1,285,000 shares or common stock.

 In January,  2002, the  Company executed  a  6% convertible  debenture  (the
 "Debenture") with  GCA Strategic  Investment  Fund Limited,  which  provided
 financing of  $550,000.  The Debenture  maturity date is January 2003.   The
 conversion price is equal to the lesser of (i) 100% of the volume   weighted
 average of sales price as reported by the Bloomberg L.P. of the common stock
 on the last  trading  day  immediately preceding   the Closing   Date("Fixed
 Conversion Price")  and (ii)  85% of  the average  of the  three (3)  lowest
 volume weighted average   sales  prices   as reported   by   Bloomberg  L.P.
 during  the twenty (20) Trading Days immediately preceding but not including
 the date of the related Notice of Conversion.

<PAGE>

           REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE


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

 /s/ Arthur Andersen LLP

 Atlanta, Georgia
 January 9, 2002

<PAGE>

 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



 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, 2001, 2000 and 1999




                              Balance at                            Balance at
                               the beg                               the end
                              of period   Additions   Deductions    of period
                              ----------   ---------   ----------    ---------
 <S>                          <C>          <C>       <C>           <C>
 2001
 ----
 Allowance for uncollectable
    accounts                  $1,025,766   $140,167  $937,204 (1)  $   228,729
                               =========    =======   =======       ==========
 Impairment provision for
   advertising credits        $  575,542   $      -  $ 11,610      $   563,932
                               =========    =======   =======       ==========

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

 1999
 ----
 Allowance for uncollectable
   accounts                   $    4,001   $405,825  $178,151 (1)  $   231,675
                               =========    =======   =======       ==========

 (1) Write offs.

</TABLE>