FORM 20-F
                      US SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

          [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12 (B) OR (G)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

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

                   For the fiscal year ended February 28, 1999

                                       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 0-14356

                         SUNCOM TELECOMMUNICATIONS INC.,
                                formerly known as

                       CAM-NET COMMUNICATIONS NETWORK INC.
             (Exact name of Registrant as specified in its charter)

                                     Canada
                 (Jurisdiction of incorporation or organization)

                             290 - 171 Water Street,
                   Vancouver, British Columbia, Canada V6B 1A7
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
  None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

                         Common Shares Without Par Value
                                (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:  None

<PAGE>i

Indicate the number of  outstanding  shares of each of the Company's  classes of
capital  or common  stock as of the close of the  period  covered  by the annual
report.

There were 80,355,306  common shares (the "Shares"),  without par value,  issued
and outstanding as of May 1, 1999.

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 period that the  Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. YES X NO .

Indicate by check mark which financial statement item the Registrant has elected
to follow.  ITEM 17         ITEM 18    X .
                    ----            -----

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS)

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. YES X NO .

<PAGE>ii

                             TABLE OF CONTENTS

                                                                     Page

GLOSSARY                                                              iii

PART I                                                                  1

          Item 1.       Description of the Business                     1

          Item 2.       Description of Property                        30

          Item 3.       Legal Proceedings                              31

          Item 4.       Control of the Company                         40

          Item 5.       Nature of Trading Market                       40

          Item 6.       Exchange Controls and Other Limitations
                        Affecting Security Holders                     41

          Item 7.       Taxation                                       42

          Item 8.       Selected Financial Data                        43

          Item 9.       Management's Discussion and Analysis of
                        Financial Condition and Results of
                        Operations                                      45

          Item 10.      Directors and Officers                          55

          Item 11.      Compensation of Directors and Officers          56

          Item 12.      Options to Purchase Securities                  59

          Item 13.      Interest of Management in
                        Certain transaction                             59

PART II                                                                 59

          Item 14.      Description of Securities to be
                        Registered                                      59

PART III                                                                60

          Item 15.      Defaults Upon Senior Securities                 60

          Item 16.      Changes in Securities and Changes in
                        Security for Registered Securities              60

PART IV                                                                 60

         Item 17.      Financial Statements                             60

         Item 18.      Financial Statements                             60

         Item 19.      Financial Statements & Exhibits                  61


EXHIBIT                Summary Reorganization Plan

SIGNATURES



<PAGE>iii


GLOSSARY

The following terms are used in this Report:

Call Center              A business that handles inbound/outbound telemarketing,
                         customer and technical   support,   customer  order
                         entry, customer  billing, order fulfillment,  bill
                         collection,  help  desk  services  and  other  computer
                         telephone applications.


Teleconstruction         The business of installing a fiber optic
                         telecommunications network in order to install curb
                         to home fiber optic capabilities by the year 2010.
                         This involves the installation of co-axial and copper
                         wire, T1 lines and the construction of microwave and
                         satellite relay towers.

eCommerce                Business transactions conducted over the Internet, and
                         involves real time, on-line order processing, fraud
                         control, payment acceptance and verification.

<PAGE>1


PART I

ITEM 1     DESCRIPTION OF THE BUSINESS

THE COMPANY

Suncom  Telecommunications,  Inc.  ("Suncom" or the "Company") was  incorporated
under the laws of the Province of British Columbia on January 29, 1982 under the
name  "Thunder  Oil & Gas Ltd.".  The  Company's  name was  changed to  "Thunder
Explorations  Ltd." on May 9, 1983. On April 22, 1985,  the Company  changed its
name to "CAM-NET  Communications  Network  Inc." and on  February  1, 1991,  the
Company was continued under the Canada Business  Corporations  Act (the "CBCA").
On August 1, 1997,  the Company  changed is name to "Suncom  Telecommunications,
Inc."

On May 5, 1999,  the  shareholders  of Suncom  approved a special  resolution to
change the Company name to  "VirtualSellers.com,  Inc." to reflect the Company's
change focus to  eCommerce  transaction  processing.  This name change will take
effect in late May,  1999.  The  shareholders  of Suncom also approved a special
resolution to change the Company's  domicile of  incorporation  from the federal
laws of Canada to the State of Wyoming,  United States, at the discretion of the
Board of Directors.  As of the date hereof,  the Board of Directors have not yet
determined  if they will  proceed with the change of the  Company's  domicile of
incorporation.

The Company had the following subsidiaries as of February 28, 1999:

<TABLE>
<S>                                           <C>                  <C>                <C>


             Subsidiaries                     Jurisdiction                            Percentage of
                                                  of               Date of             Securities
                                             Incorporation      Incorporation            Owned
----------------------------------------    ---------------     ---------------       -------------

Canadian-American Communications Inc.           British          March 6, 1984             100%
                                                Columbia

Canadian Northstar Transmission Systems Ltd.    CBCA             February 23, 1995         100%

Suncom Telemanagement Inc.                      British          November 23, 1994         100%
(formally Preferred Telemanagment Inc)          Columbia

CAM-NET Cellular Inc.                           Ontario          March 8, 1994             100%
(formally Direct Advantage, Inc.
and Invoice Reduction Services, Inc.)

CAM-NET Holdings Inc. 2                         Washington       October 20, 1986          100%

Northstar Transmission Systems Inc. 2, 3        Washington       October 20, 1986          100%

NorthNet Telecommunications Inc. 1              Illinois         February 6, 1998          100%
(d.b.a. NorthStar Telesolutions)

eCommerce Solutions Inc. (d.b.a.                Illinois         May 17, 1999              100%
VirtualSellers.com)
</TABLE>

<PAGE>2

1    NorthNet  Telecommunications  Inc.  (an Illinois  corporation  qualified to
     transact business in Indiana) is the only active subsidiary of the Company.

2    CAM-NET  Holdings  Inc. and Northstar  Transmission  Systems Inc. are being
     dissolved but a Notice of Dissolution has not yet been issued.

3    Northstar  Transmission Systems Inc. is a Washington  corporation qualified
     to transact business in Illinois and Indiana.

COMPANY

Suncom,  formerly known as CAM-NET Communications  Network, Inc., was a provider
of long distance services in Canada and the United States. The Company has since
reorganized  into a consolidator  in the Call Center  industry and a provider of
eCommerce transaction processing and customer services.

Through its  wholly-owned  subsidiary,  NorthNet  Telecommunications,  Inc. (dba
Northstar  Telesolutions),  Suncom  operates  one Call  Center.  The Call Center
provides  transaction  processing,  centralized  billing,  customer  service and
dispatch  functions for cable companies in the United States. The Call Center is
capable of providing full service customer and technical  support,  order entry,
customer  billing,  order  fulfillment,  bill collections and help desk services
(the "Call Center Services"). Although currently providing services to a limited
number of small  cable  companies,  Suncom  intends  to expand  the scope of its
operations  to offer the Call  Center  Services to other  businesses,  including
eCommerce  businesses,  Internet service providers,  providers of technical help
desk support services,  property management services, direct broadcast satellite
services, and retailers of medical, healthcare and consumer products.

In May, 1999,  Suncom  completed the acquisition of all of the property,  assets
and  undertaking of  VirtualSellers.com,  Inc.  ("VirtualSellers").  Suncom will
continue to operate  VirtualSellers'  business under a newly created  subsidiary
called  eCommerce  Solutions  Inc  (d.b.a.  VirtualSellers.com).   The  business
involves the provision of turnkey eCommerce transaction  processing and customer
services to small and medium  size  businesses.  With no monthly  fees and small
set-up charges, VirtualSellers.com can provide these businesses with immediately
available,  customized,  secure and  complete  eCommerce  services so that these
businesses can retail their products over the Internet. VirtualSellers.com earns
its  revenues  by charging  the  businesses  a  percentage  of each  transaction
conducted over the Internet.

In May, 1999,  Suncom  acquired all of the property,  assets and  undertaking of
CallDirect  Enterprises  Inc.  ("CallDirect").  Suncom will  continue to operate
CallDirect's business as a division of its subsidiary Suncom Telemanagement Inc.
CallDirect is a catalogue  reseller of telephone  related products and will soon
be a provider of transaction processing and customer services. Suncom intends to
use the Call  Center to  provide  customer  service  functions  for  CallDirect.
VirtuallSellers.com   has  developed  a  website  with   eCommerce   transaction
processing capabilities which will enable CallDirect to retail its products over
the Internet.

<PAGE>3


COMPANY HISTORY

Until its  reorganization in the fiscal year ended February 28, 1998, Suncom was
a telecommunications  holding company with subsidiaries operating in both Canada
and  the  United  States.   Through  its  subsidiaries,   the  Company  provided
comprehensive telecommunications services including long distance, local access,
cellular and complete telemanagement  services. The Company provided some or all
of such services to commercial and  residential  customers in British  Columbia,
Alberta, Ontario, Quebec and in the greater Chicago, Illinois area.

In July, 1994, the Company acquired Preferred Telemanagement Inc. ("Preferred").
Preferred offered long distance telephone services to customers mainly in Quebec
and Ontario. Preferred assumed the customers' telephone number, thereby becoming
the customer of record to the telephone  company.  This  permitted  Preferred to
offer a wide range of telemanagement services in addition to long distance.

In January, 1996, the Company completed the acquisition of Cam-Net Cellular Inc.
("CN  Cellular")  (formerly  1069708  Ontario Inc.  (until  September 25, 1996),
Invoice Reduction  Services Inc. (until July 19, 1995) and Direct Advantage Inc.
(until  January 26,  1996)).  The CRTC had earlier  directed a  subsidiary  of a
provincial  telephone  company,  Bell  Mobility,  to provide CN Cellular  with a
contract so that it could  provide  discounted  cellular  services.  CN Cellular
however  never  utilized the rights  granted unde this contract and those rights
have since lapsed.

In April,  1996,  the Company  entered into an agreement to merge with privately
owned  TeleHub  Communications  Corp.  ("TeleHub").   TeleHub  had  developed  a
technology  whereby its software,  the Virtual  Management,  Billing and Control
Platform  ("VMBC"),  was  designed  to route and  direct  voice,  data and video
communications  over an  asynchronous  transfer  mode  ("ATM")  network.  It was
anticipated  that a new U.S. based holding company  ("PubCo") would be formed to
effect the merger transaction, pursuant to which the shareholders of Telehub and
PubCo would  receive  shares of merged PubCo in exchange for their shares of the
merging companies.  It was also anticipated that PubCo would be the successor to
the Company's NASDAQ NMS listing.

On  September  6, 1996,  the  Company  entered  into a separate  agreement  with
TeleHub, whereby TeleHub agreed to design and implement for the Company a unique
technological  system of computer  operated programs (the "Programs") which were
to have  provided  the Company  with the  billing,  customer  service,  customer
accounting  and  network  platform  functions  necessary  for the  Company to be
competitive in the long distance industry.

TeleHub  never  supplied the Company with the Programs and therefore the Company
commenced  a lawsuit in the U.S.  District  Court for the  Northern  District of
Illinois,  Eastern  Division  seeking  repayment of the all of the funds paid to
Telehub plus  compensatory,  consequential and incidental  damages.  The Company
settled this action for  US $450,000 in October, 1997. In light of this dispute,

<PAGE>4



the proposed merger between the Company and Telehub was never consummated.

Reorganization under the Companies' Creditors Arrangement Act

Although the Company  supplied long distance  telephone  services to 6.4% of the
Canadian  business  market  and  2.2%  of  the  Canadian   residential   market,
competitive  pressures in the  telecommunications  industry,  increasingly  high
technology costs and the lack of sufficient working capital eroded the Company's
potential for profitability.

Despite a number of cost cutting measures carried out in the late 1995 and early
1996 and changes in management,  the Company's  ability to access the public and
private  markets in order to  generate  working  capital was  frustrated  by the
delisting of the Company by the Vancouver  Stock Exchange in October,  1996. The
Vancouver  Stock  Exchange  delisted the Company  because of  allegations by the
United States  Securities and Exchange  Commission that a former director of the
Company had used improper  methods to promote  sales of the Company's  Shares in
the market. The negative publicity surrounding the delisting eroded the customer
base and  supplier  confidence.  This,  together  with the failure of  Vancouver
Telephone  Company  Limited,  a major customer,  to pay a bill of  approximately
CDN$500,000,  adversely  affected  the  Company's  ability to go forward and put
enough  additional  pressure on the working capital  requirements of the Company
that  its  management  concluded  that  it  should  seek  protection  under  the
Companies'  Creditors  Arrangement Act ("CCAA"),  which is similar to bankruptcy
legislation.

On January 14, 1997, the Company filed for and the Court granted protection from
its  creditors  under the CCAA (the "CCAA  Proceeding").  Court  protection  was
required  to ensure  that the  Company's  assets  were kept  intact  during  the
reorganization  process in order to allow the  Company to carry on its  business
while  formulating  a  restructuring  plan.  The  accounting  firm of  KPMG  was
appointed by the Court as Monitor to oversee and to assist in the development of
the Company's  restructuring  plans (the  "Plan").  The creditors of the Company
approved  the Plan on July 31,  1997 and the Supreme  Court of British  Columbia
sanctioned the Plan on August 7, 1997.

The Company has  implemented  a majority of its  obligations  under the Plan but
there are still some remaining obligations under the Plan, as set out below.

Sale of Operating Assets

Shortly after receiving CCAA protection,  it became apparent to the Company that
it  would  not be able to  obtain  sufficient  new  financing  for its  business
operations early enough in the restructuring process to permit it to continue to
serve its customers.  In order to preserve the value of its assets and yield the
greatest  return to its  creditors,  the Company  determined  it was in its best
interest to sell the Company's  commercial and residential customer base for the
highest available price.

<PAGE>5



The Company sold its accounts receivable,  capital assets, licences and acquired
customer base to Primus Communications,  Inc., Primus  Telecommunications Canada
Inc. and 336246  Canada Inc.  (collectively,  "Primus")  for  approximately  CDN
$6,750,000   on  April  7,  1997  with   approval  of  the  Court  (the  "Primus
Transaction").  There was a holdback,  held by Russell & DuMoulin  in trust,  of
CDN$1,000,000 to secure the accuracy of  representations  and warranties made by
the  Company.  Approximately  $700,000  of  this  amount  is  being  held by the
Company's  auditors to pay to  creditors.  The holdback was to be retained for a
period of 150 days. To the extent that Primus made claims  against the holdback,
Russell & DuMoulin was required to retain an equivalent portion of the holdback.
Since Primus  advanced  claims  exceeding the amount of the  holdback,  the full
amount  of the  holdback  was held in trust  with  Russell  &  DuMoulin  pending
resolution of such claims.  Recently the Company  entered into a settlement with
Primus  regarding  the  holdback,  whereby the Company will receive  $25,000 for
consulting  services  and Primus  will  receive  $275,000 of the  holdback.  The
balance of the holdback has been distributed to creditors under the Plan.

The Company  also  determined  that there was  inherent  value in the  remaining
assets of Cam-Net  Communications  Inc.  ("CNC") and Cam-Net  Telecommunications
Inc.  ("CNT"),  including  significant  tax losses  accrued within the Company's
affiliated  groups as a result of business  losses incurred during recent years.
These  losses  would cease to have value over time and could not be readily used
by the Company.  On April 17, 1997 the Company sold all of the shares in CNC and
its  interest in CNT to London  Holdings  Inc  ("LTG") for cash  proceeds of CDN
$3,070,000 (the "LTG Transaction"),  approximately  CDN$62,000 of which has been
paid to LTG as a holdback  to secure an  indemnity  provided  by the  Company in
connection with the sale and $5,000 has been paid to creditors.  After deducting
commissions  of  CDN$60,000,  the  Company  realized  a  gain  on  the  sale  of
CDN$3,010,000  during the year ended Feburary 28, 1998.  The agreement  provided
that the intercompany debt owned by CNC to Cam-Net  Communications  Network Inc.
("CWK")  would be repaid to the Company in annual  installments  equal to 15% of
the annual profit of CNC for three fiscal years  commencing  April 30, 1997. The
first  CDN$500,000  of the  repayment  to the  Company  was to be  payable to GT
Communications  Inc.  pursuant  to the Plan in the CCAA  proceeding.  Since  the
Company  anticipated little or no repayment of such debt, it recently decided to
sell this receivable for CDN$525,000 with GT Communications  Inc. being entitled
to receive approximately $387,000 of the proceeds.

Secured Creditor Settlements

The first step in implementing the Plan was to satisfy the secured creditors. At
the CCAA filing  date,  AT&T held  registered  security  against the Company and
certain of its  subsidiaries  identified  in the Plan (the  "Issuer  Companies")
which was alleged to secure approximately CDN$2.8 million as at the end of June,
1997. The Company  disputed the validity of these claims and began  negotiations
with AT&T to resolve the disputed claims.  On July 3, 1997, the Court approved a
settlement  between the Company and AT&T which included payment of CDN$1,822,725
and issuance of  1,000,000  Shares and  warrants  whereby AT&T could  acquire an
additional 1,000,000 Shares of the Company at CDN$1.00 per share. AT&T has since
released the Company from any other claims.

<PAGE>6


GT Communications Inc. ("GT") alleged an equitable security interest against all
of the assets of the Issuer Companies based upon agreements alleged to have been
made by the Issuer  Companies to grant such  security to GT. GT claimed CDN $2.6
million. After extensive negotiations, the Court approved a settlement entitling
GT to an immediate  cash  settlement of CDN $1.4 million and  confirmation  of a
claim  of CDN  $500,000  as an  unsecured  creditor  to be paid  only  from  any
repayment  received by the Company  fro the LTG  Transaction.  Since the Company
anticipated little or no repayment from the LTG Transaction, it recently decided
to sell this  receivable  for  CDN$525,000  with GT  Communications  Inc.  being
entitled to receive approximately $387,000 of the proceeds.

Unsecured Creditor Settlements

On July 31, 1997,  the classes of creditors of the Issuer  Companies met and the
requisite number of creditors  holding the required value of claims approved the
Plan. The Plan provided for the distribution of proceeds from the sale of assets
and the recovery from lawsuits on account of creditors'  indebtedness.  The Plan
also provided that  creditors'  unpaid debt after receipt of dividends  would be
satisfied  by a  distribution  of the Shares by  issuing  warrants  whereby  the
unsecured  creditors would receive a portion of 13,000,000  Shares in proportion
to their unpaid indebtedness to the total of unpaid debt.

The  following  is a  general  review  of the  significant  events  in the  CCAA
Proceeding:

CDN$6,550,772  of the  CDN$6,750,000  received from the Primus  Transaction  and
approximately  CDN$3,000,000  received from the LTG Transaction were paid into a
trust  account.  CDN$1,000,000  of the  CDN$6,550,772  received  from the Primus
Transaction  represents a holdback which was to be released 150 days after April
8, 1997.  Primus made claims  exceeding  the entire  amount of the  holdback and
accordingly the holdback remained in trust.  Recently the Company entered into a
settlement with Primus regarding the holdback,  whereby the Company will receive
$25,000  for  consulting  services  and  Primus  will  receive  $275,000  of the
holdback.  The balance of the holdback has been  distributed to creditors  under
the Plan;

Secured  creditors  with  outstanding  claims  of  approximately   CDN$5,400,000
received  CDN$3,222,724  in cash, a total of 1,000,000 Shares and share purchase
warrants  to acquire a total of  1,000,000  Shares at  CDN$1.00  per  share.  In
addition,  the Company agreed to acknowledge an additional outstanding claim for
CDN$500,000  by GT,  provided that GT would be treated as an unsecured  creditor
with  respect  to such  claim,  and the  claim  would  be paid  only  out of the
repayment, if any, that the Company may realize from the LTG Transaction.  Since
the Company  anticipated  little or no repayment  from the LTG  Transaction,  it
recently decided to sell this receivable for CDN$525,000 with GT  Communications
Inc. being entitled to receive approximately $387,000 of the proceeds;


<PAGE>7


Government  claims,  which consist primarily of income,  sales or capital taxes,
were to be  settled  outside  the  Plan  and  approximately  CDN$580,000  of the
proceeds paid into the trust account were segregated to pay potential Government
claims. To February 28, 1999, $196,533 has been paid for Government claims;

CDN$200,000  of the proceeds paid into the trust account were  segregated to pay
for creditor  claims  arising  after the Company and its  Canadian  subsidiaries
entered  CCAA  protection.  As at February 28,  1999,  CDN$349,979  in post CCAA
claims had been paid;

CDN$280,000  of the proceeds paid into the trust account were  segregated to pay
for employee and consulting commissions relating to the assets sale and the sale
of CNC and CNT.  As at  February  28,  1999,  all  commissions  have  been  paid
amounting in the aggregate to CDN$280,715;

CDN$300,000  of the proceeds paid into the trust account were  segregated to pay
for legal, monitor and audit costs, and CDN$35,000 for employee severance. As at
February 28, 1999, CDN$675,533 had been paid for legal, monitor and audit costs,
and CDN$32,925 for employee severances;

CDN$300,000  of the proceeds paid into the trust account was paid to the Company
for working  capital  purposes on the condition  that the  CDN$300,000  would be
repayable to the trust account out of any further  recoveries  from  outstanding
litigation  and thus would be available to unsecured  creditors.  As of February
28, 1999,  CDN$300,000  has been fully repaid to the trust  account from lawsuit
recoveries; and

Unsecured creditors with outstanding claims of approximately CDN$31,000,000 were
to share in the funds  remaining in the trust  account  based on a formula which
allocated a portion of the  remaining  funds to the  Company's  creditors  and a
portion to the  Company's  subsidiaries'  creditors.  As at February  28,  1999,
unsecured creditor claims aggregating CDN$3,184,150 have been paid. In addition,
13,000,000 warrants to acquire, without any further consideration, Shares in the
capital of the Company were issued o November 8, 1998 to the unsecured creditors
based on the above formula.

The  remaining  restricted  cash held in trust may be  distributed  to unsecured
creditors  if and when the  matters  set out below are  settled  and  government
claims for various taxes have been negotiated.

During the year ended  February  28,  1998,  the  Company  recognized  a gain on
forgiveness of debt of approximately  CDN$25,700,000  representing total secured
and unsecured debt of approximately  CDN$34,200,000  less the CDN$6,100,000 paid
to secured and  unsecured  creditors  from the trust  account to date and less a
further  estimated  payment of  CDN$2,400,000.  To the extent  that there is not
enough  cash  in  the  trust  fund  to pay  the  estimated  CDN$2,400,000  after
settlement of Government claims and the Primus conditional payment dispute,  the
difference  will represent an additional  gain on forgiveness of debt which will
be  recognized  at  that  time.   During  the  year  ended  February  28,  1999,

<PAGE>8


approximately  $950,000 of the $2,400,000 was repaid from the trust fund leaving
a balance of approximately $1,450,000 in restricted accounts payable.

Significant events subsequent to approval of Plan

Significant events in relation to the implementation of the Plan,  subsequent to
its approval by the Court, are as follows:

               (a)    all Proofs of Claims of creditors have been resolved and
                      settled;

               (b)    two dividends  have been paid to all creditors in
                      accordance with the Plan;

               (c)    Canadian securities regulators have approved the
                      distribution of the warrants and the Shares;

               (d)    under the  settlement  with AT&T  1,000,000  Shares have
                      been delivered to AT&T;

               (e)    the following lawsuit recoveries have been made:

                     (i)   Bell Canada - CDN $100,000.00,
                     (ii)  TeleHub - US$450,000.00, and
                     (iii) BC Tel - CDN $17,500.00;

              (f)    distribution to AT&T Long Distance Services Company of
                     warrants to acquire up to 1,000,000 Shares at an exercise
                     price of CDN $1.00 per share.

On August 14, 1998, the Issuer Companies  obtained an order which permitted them
to:

               (a)  discharge all pending tax liabilities and transfer  certain
                    trust monies held by its counsel to satisfy those
                    obligations;

               (b)  distribute trust funds held by counsel to satisfy all post
                    filing liabilities arising after January 14, 1997 and prior
                    to August 7, 1997;

               (c)  use a summary method to resolve the claim to the
                    CDN$1,000,000 holdback from the Primus Transaction;

               (d)  distribute the 13,000,000 warrants and Shares issuable upon
                    exercise of the warrants to unsecured creditors on an
                    expedited basis having regard to the fact that the original
                    formula for the distribution of the warrants was dependent
                    upon final distribution of all dividends; and

               (e)  obtain a declaration that the Company has performed its
                    obligations to repay the CDN$300,000.00 advanced to it from
                    the trust account for working capital purposes, by remitting
                    net lawsuit recoveries in that amount.

<PAGE>9

On November 5, 1998, the Company  distributed to unsecured creditors warrants to
acquire up to 13,000,000  Shares  without  further  consideration.  Recently the
Company  entered into a settlement with Primus  regarding the holdback,  whereby
the Company will receive $25,000 for consulting services and Primus will receive
$275,000 of the holdback.  The balance of the holdback has been  distributed  to
creditors under the Plan.

Remaining Obligations under the Plan

The remaining  obligations of the Corporation  under the Plan and its agreements
made in  relation to  transactions  made during the term of the Plan are set out
below.  None of these  obligations  require the Company to expend  monies or use
assets required  subsequent to the approval of the Plan on August 7, 1997 and to
the extent that obligations  remain under the Plan that require  expenditures of
cash they are fully  secured by money in trust  except  where noted  below.  The
remaining obligations include:

(a)  pursuit of remaining viable lawsuit recoveries which will be at the cost of
     the Company. Any net proceeds realized on former CWK claims are entirely to
     the benefit of the Company  without the  requirement to distribute  them as
     dividends  under the Plan.  Any recoveries on former CNC claims are paid 6%
     to the CNC  creditor  pool and the balance is to the benefit of the Company
     without the requirement to distribute them as dividends under the Plan;

(b)  distribution  of  payments  for any  remaining  Government  claims from the
     Government claim reserve maintained to pay such claims; and

(c)  distribution  of available funds for dividends to creditors when such funds
     are received by the Company.

Business Plan

Much of the  information  included  in this Form 20-F  includes or is based upon
estimates,  projections or other "forward-looking statements" within the meaning
of Section 27A of the  Securities  Act of 1933 and Section 21E of the Securities
Exchange  Act of 1934 and are  subject  to the "safe  harbor"  created  by those
sections. While these forward-looking statements, and any assumptions upon which
they are  based,  are made in good  faith  and  reflect  the  Company's  current
judgment  regarding the direction of its  business,  actual  results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions,   or  other  future  performance   suggested  herein.  The  Company
undertakes no obligation to update forward-looking  statements to reflect events
or circumstances occurring after the date of such statements.

Such  estimates,  projections  or  other  "forward-looking  statements"  involve
various risks and uncertainties. The Company cautions the readers that important

<PAGE>10


factors in some cases have affected and, in the future,  could materially affect
actual  results and cause actual results to differ  materially  from the results
expressed  in  any  such  estimates,   projections  or  other   "forward-looking
statements".  (See  "Forward  Looking  Statements  and  Risk  Factors"  for more
information)

The Company's  initial  Business Plan intended to focus the new  organization on
two new core  businesses:  the  Teleconstruction  business  and the Call  Center
business.  After exploring several  opportunities in these business segments, it
became  apparent  to the  Company  that it would  focus  its  efforts  on a more
specific niche,  transaction  processing  services.  Utilizing a corporate shell
with a completely debt free balance sheet and a significant  amount in operating
loss  carry  forwards,   the  Company  has  been  pursuing  an  acquisition  and
consolidation  strategy  involving  two distinct  business  segments  based upon
transaction processing services.

The first  industry  segment is the Call  Center  business.  On January 1, 1998,
Suncom  purchased  its first  Call  Center in  Indianapolis,  Indiana,  which is
operated by NorthStar  Telesolutions.  This Call Center specializes in providing
transaction  processing  services  including  customer  and  technical  support,
customer order entry, customer billing, order fulfillment, bill collection, cash
management,  help desk services and other computer telephone  applications.  The
Call Center provides  transaction  processing  services to small and medium size
cable  companies and other service  organizations.  To increase the  transaction
processing  volume of the Call  Center,  the Company  expanded  its  services to
include  inbound  and  outbound  telemarketing  services.   These  telemarketing
services include targeted marketing campaigns,  cold calling,  inbound marketing
promotions, upselling campaigns and other such telemarketing services.

The Call Center industry generates more than US$80 billion in North America with
after tax profit margins of  approximately  7% to 10% and estimated growth rates
of 25% to 40%. The Company intends to concentrate on the business of transaction
processing and customer service. The Company has identified  additional industry
sectors, outside of cable companies, that the Company believes will benefit from
the specialized  transaction  processing/customer  service  products of the Call
Center.  Those industry sectors include eCommerce  businesses,  Internet service
providers,   providers  of  technical  help  desk  support  services,   property
management  services,  direct  broadcast  satellite  services,  and retailers of
medical, healthcare and consumer products. The Company intends to provide highly
specialized  administrative,  technical  and  clerical  functions  by  combining
customer care with computer  automation,  networking and data  management.  This
will enable the Company's  clients to concentrate  their  attention on marketing
and the growth of their businesses  while  maintaining a high degree of customer
care/service.

The  Company  plans to  continue  to seek out  additional  opportunities  to add
capacity,  technology and expertise to its Call Center business.  The Company is
cultivating  new  customers  for the Call Center  which  provide  cable  related
services,  such as  local  and long  distance  telecommunications  and  Internet
access.  Suncom  anticipates that the services offered by its various  customers
can be bundled and/or cross marketed.

<PAGE>11


The second  industry  segment is the eCommerce  business.  In May, 1999,  Suncom
completed the  acquisition  of all of the property,  assets and  undertaking  of
VirtualSellers. Suncom will continue to operate VirtualSellers' business under a
newly   created    subsidiary    called   eCommerce    Solutions   Inc   (d.b.a.
VirtualSellers.com).  VirtualSellers.com's  business  involves the  provision of
turnkey  eCommerce  transaction  processing  services  for small and medium size
businesses.  With no monthly fees and small set-up  charges,  VirtualSellers.com
can provide these businesses with immediately available,  customized, secure and
complete  eCommerce  services so that these businesses can retail their products
over  the  Internet.  VirtualSellers.com  earns  its  revenue  by  charging  the
businesses a percentage of each  transaction  conducted over the Internet.  This
offers a significant  advantage  for the large number of small and  medium-sized
businesses that do not wish to spend a large amount of time and money developing
and maintaining the ability to process  business  transactions  and retail their
products over the Internet.

While there are many companies  offering partial solutions to businesses wanting
to sell products on-line over the Internet, VirtualSellers.com is one of the few
companies that provides a complete eCommerce  solution.  VirtualSellers.com  has
provided this full service eCommerce solutions to over 100 companies.  For those
businesses  that have existing  websites,  VirtualSellers.com's  objective is to
provide eCommerce transaction processing services within hours after passing the
standard screening and approval process. Prior to providing any of its eCommerce
transaction  processing  services,  a potential business is extensively screened
and subsequently monitored to ensure that such business is a legitimate existing
business  with the ability to deliver the products  that it is offering for sale
over the Internet.

VirtualSellers.com  has the  capability  to develop,  construct  and  maintain a
website  on the  Internet  in a very short  period of time for those  businesses
without  websites.   In  addition,   VirtualSellers.com   offers  a  variety  of
transaction  processing services to assist these businesses with their eCommerce
requirements,  including integrated on-line marketing, product ordering, billing
and payment  collection.  VirtualSellers.com  also designs website pages,  hosts
websites,  provides a secure  environment  for ordering and payment  collection,
retains commissions at the point-of-sale, and provides these businesses with all
documentation  necessary to effect  immediate  delivery of any products  ordered
over the Internet.

The  Company  has  discovered  that a large  number  of small  and  medium  size
businesses do not have the time nor resources to develop, construct and manage a
website  designed to retail their  products or services over the Internet.  Many
larger corporations continue to outsource their eCommerce transaction processing
requirements in order to gain greater product focus and minimize the incremental
costs  associated  with  marketing  their  products  on-line over the  Internet.
Although the Company is focused on transaction processing for existing websites,
the ability to provide development  services is essential for modifying websites
so that they can be adapted to process these eCommerce processing  transactions.
Developing  relationships  with website  development firms and advertising firms
with interactive divisions is a focus of the Company.

<PAGE>12


By focusing on back end transaction processing, VirtualSellers.com is positioned
to help businesses at any stage in the development of their eCommerce solutions.
For instance,  VirtualSellers.com can provide businesses with complete eCommerce
transaction processing systems or provide specified services in conjunction with
the businesses existing website and Internet service provider.  This flexibility
provides  VirtualSellers.com  with a critical  competitive  advantage and it can
co-exist  with  the  website   designers  and/or  Internet   service   provider.
Additionally,   VirtualSellers.com  has  created  an  affiliate/revenue  sharing
program  whereby  such  providers  are  encouraged  to be a source of  referrals
instead  of  potential   competitors.   This  program  allows  Internet  service
providers,  website  designers,  website portals providers and others to partner
with the Company for both strategic benefit and financial gain.

VirtualSellers.com  has been in  operation  for the past year and a half and has
established clients with a wide range of business,  including celebrity-oriented
websites  for the Kansas City Royals,  Frank  Sinatra and former AFL Kansas City
Chief's  football coach Hank Stram, and product  orientated  websites for Beanie
Babies and various music products.

Management  believes many  eCommerce  related  companies can become  partners or
clients  of  VirtualSellers.com.  As a  result,  the  Company  has  created  the
VirtualSellers.com  affiliate  program.  This program  allows  Internet  service
providers,  website designers,  website portal providers,  and others to partner
with the Company both for strategic  benefit and financial gain. The Company has
finalized an agreement with American  Information  Systems Inc. ("AIS"), a large
Chicago-based Internet service provider that host websites for various business.
AIS  could be  considered  a  potential  competitor  if it  chose  to enter  the
eCommerce transaction processing business.  Instead,  VirtualSellers.com and AIS
have  entered  into  an  exclusive  eCommerce  Partnership  Agreement,  granting
VirtualSellers.com  the  exclusive  rights to market its  eCommerce  transaction
processing  services  to over  160,000  websites  listed  in the AIS  directory,
Netmall.com.  Under the terms of the agreement,  the Company will be exclusively
promoted  to Netmall  merchants  by AIS for the  purpose of  enabling  eCommerce
transactions and providing back-office  operations,  including fraud prevention,
invoicing and shipping.

Large systems integrators may not be direct competition as they provide complete
eCommerce systems to major  corporations  such as Disney,  Sony and The Gap. The
Company has chosen to target small to medium-sized businesses that cannot afford
to develop eCommerce capabilities.  There will be clients that need more complex
systems as they grow and the  Company  has  pursued  relationships  with  system
integrators  to pass the client on in a seamless  manor and  continue to receive
future revenue streams.

VirtualSellers.com  has proven its ability to partner with potential competitors
by signing an agreement  with DVC  Interactive  ("DVCI"),  a subsidiary of Dugan
Valva Contess Inc. Under the agreement,  the Company and DVCI will  reciprocally
refer new  business  prospects  and  provide  services  to certain  clients  and
customers of the other party.  The Company  will provide  eCommerce  transaction
processing  services,   Call  Center  services,   technical  support  and  fraud
protection  services,  while DVCI will provide the website  development and high

<PAGE>13


level design and marketing services. In addition, DVCI will pass on clients that
are currently too small for them to service under a revenue  sharing plan.  DVCI
is a full services  strategic,  creative and technical company which enables its
clients to use the Internet and other  interactive  technologies  to drive their
businesses.

Data Quest has predicted  that Internet  commerce will grow to over $150 billion
by the year 2000, with 70% of that amount being sales of consumer durable goods.
In November, 1998, Forester predicted that "worldwide eCommerce sales will reach
as high as $3.2 trillion in 2003,  representing  nearly 5% of all global sales."
Forester expects on-line  consumers to spend $7.4 billion on travel,  $5 billion
on financial services, $3.8 billion on computers, $2.7 billion on entertainment,
and $1.1 billion on books an music in the year 2001.

The market for VirtualSellers.com's  services include any businesses that sell a
deliverable or tangible  product.  VirtualSellers.com  intends to use a two-fold
strategy to establish a secure position in the eCommerce transaction  processing
marketplace. First, VirtualSellers.com intends to enter into exclusive marketing
agreements  with  businesses in connection  with all of their  eCommerce  needs.
Second, VirtualSellers.com intends to develop and promote innovative value-added
programs   like   its   webring   link   program.   By   strategically   placing
VirtualSellers.com's customers on an existing webring, these businesses will get
more  exposure  to  potential  customers  without  any  additional   advertising
expenses.

VirtualSellers.com  creates  an on-line  shopper  friendly  environment  that is
conducive  to  facilitating  transactions.  VirtualSellers.com  has  produced an
average   hit-to-sales   ratio  of  4.7%  versus  an  industry  average  of  1%.
VirtualSellers.com  objective  is to  achieve  a  0.001%  market  share  of  the
eCommerce transaction processing market by the year 2002. The Company attributes
this market share  estimate to the ease of  implementing  eCommerce  transaction
processing  services and that most sales are anticipated to result from existing
customers of VirtualSellers.com.

Suncom also has the ability to provide VirtualSellers.com's  eCommerce customers
with the services  offered by the Call Center.  This should  result in increased
transaction  volume by giving  consumers  multiple  avenues by which to purchase
products as well as personal sales, order and billing services.

Suncom is in the  process of closing  the  acquisition  of all of the  property,
assets  and   undertaking  of  CallDirect   Enterprises   Inc.   ("CallDirect").
CallDirect,  based in British  Columbia,  Canada,  is a  catalogue  reseller  of
innovative  high-tech  products  including:   headsets,   telephones,   cellular
products, automotive, multimedia,  entertainment,  travel, security and computer
accessories  for office,  home and personal use.  CallDirect  has a distribution
agreement  with US based  Hello  Direct,  Inc.  to sell its  products in Canada.
Suncom will continue to operate CallDirect's  business as a division of Suncom's
subsidiary,  Suncom  Telemanagement Inc. Recently,  the business has encountered
cash flow problems despite sales of approximately  CDN$2 million in 1998. Suncom
intends  to use  the  Call  Center  to  provide  CallDirect's  customer  service
functions  which  should  prove to reduce  the  operating  costs of  CallDirect.
VirtualSellers.com has developed a website with eCommerce transaction processing

<PAGE>14


capabilities  which will enable  CallDirect to retail its products  on-line over
the Internet.  The new website should increase the customer base and the Company
anticipates this may lead to a lower operating cost per customer.

To  facilitate  the growth of the Call Center and eCommerce  business  segments,
Suncom is in the  process  of  raising  up to $1.5  million  dollars by way of a
private  placement of convertible  notes.  As at May 15, 1999, over $725,000 has
been raised.

MATERIAL ACQUISITIONS

Network Teleconnect Ltd., Alldial Communications Inc., Telesolutions Corporation
and VisionTel Communications Inc.

In December,  1992,  the Company  purchased  all the  outstanding  shares in the
capital  of  Network   Teleconnect   Ltd.   ("Network   Teleconnect"),   Alldial
Communications Inc. ("Alldial"), Telesolutions Corporation ("Telesolutions") and
VisionTel  Communications  Inc.  ("VisionTel")  on an arm's length basis in four
separate   transactions.   Network  Teleconnect,   Alldial  and  VisionTel  were
non-facilities-based   carriers   which   provided   alternate   long   distance
telecommunications  services  similar to those  provided by the  Company,  while
Telesolutions,  through its subsidiary Consumers Telephone Corporation, operated
as an aggregator,  without its own network, aggregating long distance traffic to
take advantage of the bulk discount services offered by the telephone companies.
All the customers of these acquired  companies  were served  directly by CNC and
CNT.

Network   Teleconnect   and  Alldial  were   relatively   small  carriers  which
concentrated  primarily on providing alternate long distance  telecommunications
services to small and medium sized business customers.  As partial consideration
for the  purchase of the shares of Network  Teleconnect,  the Company  agreed to
issue up to 52,830  Shares  to  Network  Teleconnect  shareholders,  subject  to
certain off-set  provisions and  performance  criteria.  The Company  ultimately
issued  27,197  Shares  to  Network   Teleconnect   shareholders   which,  after
reconciliation of all off-sets, finalized the consideration payment.

Alldial  commenced  providing  alternate  long  distance  services  in 1992  and
operated in  Sudbury,  Ontario.  As partial  consideration  for the  purchase of
Alldial,   the  Company   agreed  to  issue  up  to  10,415  Shares  to  Alldial
shareholders,  subject to certain  off-set  provisions.  The Company  ultimately
issued 6,750 Shares Alldial  shareholders  which,  after  reconciliation  of all
off-sets, finalized the consideration payment.

Telesolutions    concentrated    on    providing    alternative    long-distance
telecommunication  services to the residential market. In addition to the Shares
issued to acquire  shareholder loans, the Company initially issued 44,869 Shares
as part of the acquisition price for the shares of Telesolutions, subject to the
Company  being  obliged to  repurchase  such  Shares in  certain  circumstances.
Pursuant to that obligation, the Company repurchased all of the 44,869 Shares on
May 31, 1993 for CDN$673,000. The Company also agreed to issue additional Shares
to  the  former  shareholders  of  Telesolutions,  subject  to  certain  off-set
provisions  and  performance  criteria.  The Company  ultimately  issued 170,548

<PAGE>15


additional Shares which,  after  reconciliation  of all off-sets,  finalized the
consideration payment.

VisionTel  was the  largest  of the  companies  acquired  in 1992  and  provided
alternative  long-distance  services to business  customers in Toronto,  Ottawa,
Hamilton,  London,  Guelph, Sarnia and Barrie,  Ontario,  Montreal,  Quebec, and
Vancouver and Victoria,  British Columbia. As part of the purchase price for the
shares of VisionTel,  the Company  agreed to issue to the former  shareholder of
VisionTel, subject to certain off-set provisions and performance criteria, up to
236,129  Shares.  The purchase  agreement  governing the  VisionTel  acquisition
required  the  Company's  former  auditors  to  prepare  post-closing  financial
statements,  as of  December  9, 1992,  and to deliver  such  statements  to the
parties  within 60 days  after the  closing  of the  transaction.  The fact that
VisionTel's  financial  books and records were neither  accurate nor  up-to-date
resulted  in  substantial   delay  in  preparing  the   post-closing   financial
statements,  which were  ultimately  delivered  on June 24,  1993.  Based on the
information  contained in the  post-closing  financial  statements,  the Company
believed that a substantial reduction in the remaining  consideration to be paid
to the former shareholder of VisionTel was warranted.  Based on that belief, the
Company  did  not  issue  any  additional  share  consideration  to  the  former
shareholder.   In  May,  1993,  the  former  shareholder  of  VisionTel  and  GT
Communications Inc. (formerly VisionTel) commenced legal proceedings against the
Company in respect of this matter.  (See ITEM 3 - Legal  Proceedings  for furthe
information.)

Business Telecommunications Corp.

In August,  1993, the Company  completed the acquisition of 60% of the shares of
Business  Telecommunications  Corp. ("BTC") in consideration for the issuance of
40,000  Shares at a deemed price of US$13.00 per Share.  Subject to the approval
of the United  States  Federal  Communications  Commission,  the  Company had an
option  to  acquire   the   remaining   outstanding   BTC  shares  for   nominal
consideration.  The  Company  did not seek such  approval.  BTC  provided  large
US-based commercial customers with telecommunications  services between Chicago,
Illinois and Milwaukee, Wisconsin.

On  November  27,  1996,   Suncom   disposed  of  its  interest  in   Integrated
Telemanagement  Inc.  ("ITI") and BTC for cash  consideration  of US$350,000 and
notes  receivable  totalling  US$2.0 million subject to a reduction in the notes
receivable if the net financing  liabilities of ITI and BTC at the disposal date
exceeded  US$1.6  million.  Several  items  relating to the sale,  including the
amount of the net  financing  liabilities  of ITI and BTC,  are in dispute  and,
accordingly,  collection  of the cash and notes is  uncertain.  To reflect  this
uncertainty,  the Company has recorded only nominal consideration resulting in a
gain on sale of CDN$663,783,  which represents the net financial  liabilities of
ITI and BTC at the  date of the  disposal  as  recorded  in the  Company's  1998
Consolidated Financial Statements.

Preferred Telemanagement Inc.

Effective  July 1, 1994,  the Company  acquired  all the issued and  outstanding
share capital of Preferred Telemanagement Inc. ("Preferred") for cash and Shares
totaling  approximately  CDN$3.0  million.  Preferred had over 1,900  commercial

<PAGE>16


customers in Ontario and Quebec  representing  more than  CDN$500,000 in monthly
charges.  Preferred had a marketing  plan under which it assumed the  customers'
telephone numbers thereby becoming the customer to the telephone  company.  This
permitted Preferred to offer a wide range of telemanagement services in addition
to long  distance.  On July 7, 1995,  the original  Agreement with Preferred was
amended  resulting in the Company issuing an additional  192,432 Shares at their
fair value of CDN$2.31  per Share.  Preferred  subsequently  changed its name to
Suncom Telemanagement Inc.

Integrated Telemanagement Inc.

In October,  1995,  Suncom  acquired  all of the shares of ITI, a Chicago  based
privately held  telemanagement  firm offering  services similar to the Company's
telemanagement services in the greater Chicago, Illinois area. The consideration
payable to the  shareholders of ITI was five times monthly  revenue  measured in
September,  1995, five times  incremental  monthly revenue measured in November,
1995 in excess of the September, 1995 revenue and three times monthly revenue in
October,  1997 in excess of the November,  1995 revenue,  all payable in Shares.
The  consideration was to be reduced in the event the gross profit margin of ITI
for the  six  months  ended  December  31,  1995  was  less  than  32% or if ITI
operations suffered a loss in such period. The amount was to be increased if the
gross profit margin was greater than 32% or in the event ITI earned  profits for
the period. The consideration payable in 1997 was subject to similar adjustments
for the two year period ending December 31, 1997. The Company  ultimately issued
1,241,912  Shares at US$1.64  per share to the former  shareholders  of ITI.  On
November 27, 1996,  the Company  disposed of its interest in ITI. (See "Business
Telecommunications Corp." for complete details of the disposition.)

Direct Advantage Inc.

In January,  1996,  Suncom  completed its  acquisition of Direct  Advantage Inc.
("Direct  Advantage")(formerly  1069708 Ontario Inc. (until  September 25, 1996)
and Invoice Reduction  Services Inc. (until July 19, 1995)). The principal asset
held by Direct  Advantage  at that time was an  agreement,  entered  into at the
direction  of the CRTC,  requiring  Bell  Mobility  to provide  cellular  mobile
telephone  service  to Direct  Advantage  for resale by Direct  Advantage.  This
service was to be provided  by Bell  Mobility at th rate of CDN$0.20  per minute
until June 30, 1997. The  consideration  payable to the  shareholders  of Direct
Advantage  consisted of  CDN$200,000  cash,  590,147 Shares at a deemed price of
CDN$1.40 per Share and 200,000 share purchase  warrants  exercisable at CDN$1.37
per  Share.  The  warrants  have since  expired  unexercised.  Direct  Advantage
subsequently changed its name to CN Celluar on January 26, 1996.

Global

On July 17, 1996, the Company  entered into a non-binding  letter of intent (the
"Letter")  with  Global  Telemedia  International,  Inc.  ("Global"),  a Florida
corporation  which  offers  a  wide  variety  of  discounted  telecommunications
services. Pursuant to the terms and conditions of the Letter, the Company was to

<PAGE>17


acquire  all of the issued  and  outstanding  shares of Global for an  aggregate
maximum consideration of CDN$5.00 per common share payable pursuant to a formula
set forth in the Letter.  The  transaction  was  subject to certain  conditions,
including (without limitation) due diligence examination of Global,  approval by
the  shareholders  of the  Company,  approval of the Board of  Directors of both
parties, and the execution of a definitive Purchase and Sale Agreement. Pursuant
to the Letter,  the Company  advanced  US$250,000  to Global,  as  evidenced  by
promissory notes in such aggregate principal amount (the "Notes"). Regardless of
whether the transaction  closed, the Company had the right to (i) call the Notes
and receive payment  therefor within 30 business days; (ii) convert the Notes to
the exclusive  right to use the Global software used to manage Vision 21 for the
Canadian  market  place;  or  (iii)  convert  the  Notes  to  equity  in  Global
(collectively,  the  "Paragraph  H Rights").  Global did not go forward with the
transaction  contemplated in the Letter and as a result the Company  commenced a
lawsuit and was awarded judgment in the amount of US $450,000.  The Company does
not  anticipate  that  it  will be able  to  recover  any of the  amount  of the
judgment. See ITEM 3 - Legal Proceedings for more information.

NorthNet Telecommunications dba "NorthStar Telesolutions"

On January 1, 1998,  the Company  purchased its first  customer Call Center just
outside of Indianapolis,  Indiana for US$105,000 in consideration for a one year
note  payable on  December  31,  1998 or  convertible  into  Shares at a rate of
US$0.10 per share. On January 5, 1999, NorthNet Telecommunications  ("NorthNet")
exercised its options to convert the note payable into  1,050,000  Shares.  This
Call  Center  is  operated  by  NorthNet  and does  business  under  the name of
NorthStar Telesolutions. NorthStar Telesolutions provides customer and technical
support,   inbound/outbound   telemarketing  services,  customer  billing,  bill
collections,  order fulfilment,  cash management, and dispatch services to small
to mid sized cable companies.

Campbell Technologies

On May 11, 1998,  the Company  announced  the signing of a lock-up  agreement to
conditionally acquire a stake in Campbell Technologies ("Campbell"), pursuant to
a full blown  takeover  bid to be  launched  within 60 days.  Campbell  provides
Internet  services  and  eCommerce  services.  The  Company  entered  into a due
diligence  period pending a tender offer. On May 19, 1998, the Company  released
Campbell from the lock-up agreement and withdrew its offer for Campbell's common
stock,  as the Company's due diligence  produced  differing  valuation  opinions
regarding Campbell that made completion of takeover bid impracticable.
Tricor Telemanagement Inc.


<PAGE>18

On May 27,  1998,  the Company  announced  it had signed an agreement to acquire
Tricor   Telemanagement   Inc.   ("Tricor"),   a  privately   held  provider  of
telecommunications  consulting  services to  businesses  in the U.S. and Canada.
Tricor had annualized revenues of CDN$500,000.  Under the agreement, the Company
was  required to issue 1.2  million  Shares in three  equal  instalments  over a
12-month period in exchange for Tricor shares. This acquisition would have given
the  Company  the  ability  to  offer  the  combined  customer  base  of the two
companies'  expert   consulting  and  professional   solution  in  the  area  of
telecommunications.  Due to the change in the focus of its business, the Company
decided not to proceed with this acquisition.

Telemetrix   Resource  Group  Inc.,  Tracy  Corporation  II  dba  Western  Total
Communications and Telemetrix Inc.

On  August  19,  1998,   Suncom  entered  into  an  agreement  (the  "Telemetrix
Agreement")  which would have resulted in a business  combination of Suncom with
Telemetrix  Resource  Group  Inc.,  a  Colorado   corporation   ("TRG"),   Tracy
Corporation II which does business as Western Total  Communications,  a Nebraska
company  ("WTC"),   and  Telemetrix  Inc.,  a  Nevada  company   ("Telemetrix").
Shareholders  of  Suncom,  TRG and WTC  would  have  ended  up  with  shares  in
Telemetrix  whose  shares were  intended to trade  initially on the OTC Bulletin
Board with an application to have the shares listed on the NASDAQ NMS.

Closing of the business combination was contingent upon a considerable number of
conditions being satisfied, including:  satisfactory due diligence, satisfactory
legal  opinions  about each of the companies and the tax  consequences  to their
shareholders,  Suncom receiving shareholder approval at a special meeting called
to approve the  transaction,  a fairness opinion from a qualified third party, a
valuation of the assets of TRG and WTC and British  Columbia  court  approval of
the transaction.

On January 6, 1999,  the Company  announced  that it would not proceed with this
business  combination as it decided to pursue its dedicated  eCommerce  strategy
and concentrate its efforts on the Internet market.  TRG, WTC and Telemetrix are
indebted  to the  Company  in the  amount  of  approximately  US$70,000  for due
diligence,  legal and accounting  costs and expenses  incurred by the Company in
connection with the business combination.

VirtualSellers.com, Inc.

In May, 1999, Suncom acquired of all of the property,  assets and undertaking of
VirtualSellers.com,  Inc. As consideration for the acquisition, Suncom paid cash
of US$170,000,  assumed  indebtedness  of US$28,928,  issued 500,000 Shares at a
deemed price of $0.10 per Share and issued 361,710 share purchase warrants. Each
warrant  entitles the holder to purchase one Share at a price of $1.50 per Share
for a period of two  years.  As part of the  acquisition,  Suncom  entered  into
employment agreements with two of the founders of VirtualSellers.

<PAGE>19

Suncom will continue to operate  VirtualSellers'  business under a newly created
subsidiary  called  eCommerce  Solutions  Inc (d.b.a.  VirtualSellers.com).  The
business involves the provision of turnkey eCommerce transaction  processing and
customer services to small and medium size businesses.  With no monthly fees and
small set-up  charges,  VirtualSellers.com  can provide  these  businesses  with
immediately  available,  customized,  secure and complete  eCommerce services so
that  these   businesses   can  retail  their   products   over  the   Internet.
VirtualSellers.com earns its revenues by charging the businesses a percentage of
each transaction conducted over the Internet.

CallDirect Enterprises Inc.

In May, 1999, Suncom acquired of all of the property,  assets and undertaking of
CallDirect Enterprises Inc. As consideration for the acquisition,  Suncom issued
1,200,000  Shares at a deemed price of $0.50 per Share.  Suncom also assumed the
outstanding indebtedness of CallDirect,  approximately CDN$500,000, which Suncom
settled  for  approximately   CDN$109,000.   Suncom  will  continue  to  operate
CallDirect's business as a division of its subsidiary Suncom Telemanagement Inc.
CallDirect is a catalogue  reseller of telephone  related products and will soon
be a provider of transaction processing and customer services. Suncom intends to
use the Call  Center to  provide  customer  service  functions  for  CallDirect.
VirtuallSellers.com   has  developed  a  website  with   eCommerce   transaction
processing capabilities which will enable CallDirect to retail its products over
the Internet.

FORWARD LOOKING STATEMENTS AND MATERIAL RISKS IN THE COMPANY'S BUSINESS

Much of the  information  included  in this Form 20-F  includes or is based upon
estimates,  projections or other "forward-looking statements" within the meaning
of Section 27A of the  Securities  Act of 1933 and Section 21E of the Securities
Exchange  Act of 1934 and are  subject  to the "safe  harbor"  created  by those
sections. While these forward-looking statements, and any assumptions upon which
they are  based,  are made in good  faith  and  reflect  the  Company's  current
judgment  regarding the direction of its  business,  actual  results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions,   or  other  future  performance   suggested  herein.  The  Company
undertakes no obligation to update forward-looking  statements to reflect events
or circumstances occurring after the date of such statements.

Such  estimates,  projections  or  other  "forward-looking  statements"  involve
various risks and  uncertainties  as outlined  below.  The Company  cautions the
readers that  important  factors in some cases have affected and, in the future,
could  materially  affect  actual  results  and cause  actual  results to differ
materially  from the results  expressed in any such  estimates,  projections  or
other  "forward-looking  statements".  Readers  should  carefully  consider  the
following factors in evaluating the Company,  its business and any investment in
the Company.

<PAGE>20

History of Losses

The  Company  has  incurred  substantial  net losses and has a  substantial  net
operating loss carryover.  These losses were mainly incurred in operations which
the Company no longer  operates.  The Company has incurred losses since entering
the  alternate  long distance  telecommunications  business and has continued to
lose money during the  transition of becoming a transaction  processing/customer
service  company.  For the period ended  February 28, 1998, the Company showed a
profit of CDN  $24,535,877  as a result of the gain on  forgiveness of debt. For
the year ended February 28, 1999,  the Company  showed losses of  CDN$2,429,137.
The Company projects that it will continue to incur losses for the period ending
February 28, 2000, but should be at a positive monthly run rate after that time.
While the Company feels confident that it can secure  additional funds through a
rights offering and  successfully  carry out its business plan,  there can be no
assurance  that  the  Company  will   accomplish   these  tasks  and  return  to
profitability.

Working Capital and Liquidity

The Company currently has a working capital surplus of CDN$1,200,000 but has had
significant  working capital  deficiencies in the past. As of February 28, 1999,
the  accumulated  deficit  was  CDN$12,521,323.  Furthermore,  the  Company  has
experienced  negative  cash  flows  during  each  of the  last  three  years  of
operations. The Company has historically depended upon capital infusion from the
issuance of long term debt and equity  securities  to provide the cash needed to
fund operations. The Company's ability to continue in business is dependent upon
the  Company's  continued  ability to obtain  significant  funding from external
sources,  initially from the proceeds of a private  placement and then from debt
and equity markets.  There can be no assurances that the Company will be able to
raise sufficient funds from these or other sources to execute its business plan.

Dependence Upon Key Customers

The Company is dependent  upon a limited  number of customers  for a substantial
portion of its revenues.  The acquisitions of CallDirect and  VirtualSellers and
diversification  of the Company's  business  serve to reduce this risk. To date,
the  Company  has  acquired  one Call  Center in  Indianapolis,  Indiana,  which
currently  services various cable companies.  The loss of any of these customers
would  have a  material,  significant  adverse  impact  upon the  Call  Center's
revenues and prospects for profits but would no  significantly  impact  Suncom's
working capital,  liquidity or the long term prospects.  Each customer accounted
for no more  than 25% of the Call  Center's  total  revenue  for the year  ended
February 28, 1999.  Although  the Company  expects to expand its customer  base,
there can be no  assurance  that the  Company  will be  successful  and,  if the
customer base is expanded,  that the Company will be able to retain its existing
customers.  Furthermore, an unexpected decline in sales to any of such customers
could have a material adverse effect upon the Company. In addition, there are no
firm contracts  governing the Company's  relationship with any of its customers.
Accordingly, such business relationships could be terminated or curtailed at any
time.  The lack of firm  contracts  between the Company and its customers  could

<PAGE>21


have a material  adverse impact on the Company's  revenue.  Although the Company
intends  to  diversify  out of the  cable  industry  and is  currently  pursuing
opportunities  to acquire and consolidate  additional Call Centers,  there is no
guarantee that the Company will be successful in its plans.

The eCommerce  business  segment operated under the name  VirtualSellers.com  is
estimated  to  produce  80%  to  90%  of  Suncom's  revenue.  While  several  of
VirtualSellers'  clients may produce  substantial  sales,  none will account for
more than 7% of  VirtualSellers'  total revenue.  The remaining revenues will be
generated  from the Call  Center  and  CallDirect  operations.  As with the Call
Center, an unexpected  decline in sales to any of its eCommerce  customers could
have a material adverse effect upon the Company.

Competition

Many of the Company's competitors in both the Call Center and eCommerce business
segments  are  substantially  larger  than the  Company  and have  significantly
greater  financial  resources  and  marketing  capabilities  than  the  Company,
together with better name recognition.  It is also possible that new competitors
may emerge and acquire  significant  market  share.  Competitors  with  superior
resources  and  capabilities  may be able to utilize such  advantages  to market
their  products and services  better,  faster  and/or  cheaper than the Company.
Increased  competition  is likely to result in price  reductions,  reduced gross
margins and loss of market  share,  any of which  could have a material  adverse
effect  upon  the  Company's  business,  results  of  operations  and  financial
condition. In addition,  there can be no assurance that the Company will be able
to compete successfully against its present or future competitors.

The  telecommunications  and  Internet  markets are both very  competitive.  The
Company will compete  directly with  companies  providing  similar  products and
services which may have certain commercial advantages.  Suncom's success depends
on  management's   ability  to  identify  and  make  acquisitions  of  operating
"telephone  call  centers"  and other  related  telecommunication  and  Internet
businesses.  The goal is to  capitalize  on the first to market  lead  while the
market is wide open.

Suncom's ability to compete successfully will require it to develop and maintain
technologically  advanced  products  and  services,  attract  and retain  highly
qualified  personnel,  obtain a significant  customer base using the  "eCommerce
solutions" and "telephone  call center" and related  services,  whether alone or
with third  parties.  There can be no assurance that the Company will be able to
achieve these objectives.  Failure to do so would have a material adverse effect
on Suncom's business,  operating results and financial  condition.  Furthermore,
the Company's potential products and services, if successfully  developed,  will
compete directly with other existing and subsequently  developed  products using
competing technologies. There can be no assurance that the Company's competitors
will not succeed in developing or marketing  technologies  and products that are
more effective and  commercially  desirable than those  developed or marketed by
the Company or that would  render the  Company's  technology  and  products  non
competitive. Failure of the Company's potential products to compete successfully
with products using competing  technologies  will have a material adverse effect
on the Company's business, operating results and financial condition.

<PAGE>22


VirtualSellers has entered an industry that is in its infancy. Competition comes
in  several  forms.  There are  traditional  companies  that sell  hardware  and
software;  there are design  companies  that  develop  eCommerce  solutions  for
business;  and there are on-line  malls that house a multitude  of websites  for
various businesses. In general, these are not direct competitors in that they do
not supply complete eCommerce transaction development and processing services.

The closest direct competition to the services provided by VirtualSellers  comes
from iCat, ViaWeb, iBill and Octagon.  Each of these companies provides software
for eCommerce  transaction  processing and hosts companies  wanting to outsource
the eCommerce portion of their websites. However, many of these companies do not
provide the back-office  services,  merchant services,  customer service,  order
tracking,  or technical  services.  VirtualSellers  has chosen to concentrate on
superior service and making the eCommerce transaction itself easy for the client
and their  customers  - safe,  secure and  timely.  VirtualSellers'  competitive
advantage  is  derived  from the fact  that it  provides  a  complete  eCommerce
solution/service to small and medium size businesses.

Dependence Upon Key Personnel

The loss of the  services  of any of the  Company's  management  and  other  key
employees, for any reason, may have a materially adverse effect on the prospects
of the  Company.  The  Company  has  entered  into a  month-to-month  employment
agreement with Dennis Sinclair,  the President and CEO of the Company.  As such,
there is  nothing  preventing  Dr.  Sinclair  from  departing  at any time  from
employment with the Company.  Although the Company believes that the loss of Dr.
Sinclair will not have a material  adverse impac upon the Company,  there can be
no assurance in this regard,  nor any assurance that the Company will be able to
find a suitable replacement to Dr. Sinclair.  Furthermore,  the Company does not
maintain  "key man" life  insurance  on the lives of Dr.  Sinclair  or any other
officers of the Company.  To the extent that the services of any key employee of
the Company  become  unavailable,  the Company  will be required to retain other
qualified  persons;  however,  there can be no assurance that it will be able to
employ qualified persons upon acceptable terms.

The Company's business is labor intensive and places  significant  importance on
its ability to recruit and retain  technical  and  professional  personnel.  The
success of the Company is therefore dependent upon its ability to identify, hire
and retain additional qualified  personnel,  for whose services the Company will
be in  competition  with  other  prospective  employers,  many of which may have
significantly  greater  resources  than the  Company.  Additionally,  demand for
qualified  personnel  conversant  with certain  technologies  is intense and may
outstrip  supply as new and  additional  skills are  required  to keep pace with
evolving computer technology. There can be no assurance that the Company will be
able to hire and, if so, retain such additional qualified personnel.  Failure to
attract and retain such personnel could have a material  adverse effect upon the
Company.

<PAGE>23


Reliance upon Technology and Computer Systems

The  Company's  Call  Center  and   transaction   processing   systems   utilize
sophisticated   and   specialized   telecommunications,   network  and  computer
technology,  and has focused on the  application of this  technology to meet its
clients' needs. The Company anticipates that it will be necessary to continue to
invest in and develop new and enhanced  technology on a timely basis to maintain
its  competitiveness.  Significant capital  expenditures may be required to keep
its technology up to date.  Investments in technology and future  investments in
upgrades and  enhancements  to software for such  technology may not necessarily
maintain the Company's  competitiveness.  The Company's future success will also
depend in part on its ability to anticipate and develop  information  technology
solutions which keep pace with evolving  industry  standards and changing client
demands.  In  addition,  the  Company's  business is highly  dependent  upon its
computer and  telephone  equipment  and software  systems,  and the temporary or
permanent  loss  of such  equipment  or  systems,  through  casualty,  operating
malfunction or otherwise, could have a material adverse effect upon the Company.

Dependence upon Trend Toward Outsourcing

The Company's  business and growth  depends in large part on the industry  trend
toward outsourcing information technology and administrative services. There can
be no assurance that this trend will  continue,  as  organizations  may elect to
perform such services in-house.  The Company intends to alleviate its dependence
upon any one revenue stream by expanding its business operations  vertically and
horizontally.  Nevertheless, a significant change in the direction of this trend
toward outsourcing could have a material adverse effect on the Company.

Risk of Emergency Interruption of Call Center and Network Operations

The  Company's  operations  are  dependent  upon its ability to protect its Call
Center, its eCommerce business and its information databases against damage that
may be caused by fire, power failure,  telecommunications failures, unauthorized
intrusion,  computer  viruses  and  other  emergencies.  The  Company  has taken
precautions to protect itself and its customers from events that could interrupt
delivery of the Company's  services.  These precautions include off-site storage
of backup data,  fire  protection and physical  security  systems,  backup power
generators and a disaster  recovery  plan.  The Company also maintains  business
interruption    insurance   in   amounts   the   Company   considers   adequate.
Notwithstanding such precautions, there can be no assurance that a fire, natural
disaster, human error, equipment malfunction or inadequacy,  or other event will
not occur.

Similar  precautions  have been  implemented with the development of the network
and telecommunication systems for the eCommerce transaction processing business.
Duplication  has been  built into the  networks  by having  redundant  equipment
maintained  onsite.  Back-up  generators and power protection  systems have been
installed to ensure  continuous  operations and firewalls have been installed to
ensure system integrity and safety.  Duplicate  providers of bandwidth have been
chosen to ensure that connectivity wil be  uninterrupted.  All this ensures that

<PAGE>24


customers  and vendors will have  continuous  service to the  eCommerce  systems
pending  a   complete   interruption   of  the   telecommunications   and  power
infrastructures.  Notwithstanding  such  precautions,  there can be no assurance
that a fire, natural disaster, human error, equipment malfunction or inadequacy,
or other event will not occur.

Uncertain Ability to Manage Growth

The Company's  ability to achieve its planned  growth is dependent upon a number
of  factors  including,  but not  limited  to, its  ability  to hire,  train and
assimilate  management  and  other  employees,  the  adequacy  of the  Company's
financial  resources,  the Company's ability to identify and efficiently provide
and perform  such new  products  and  services as the  Company's  customers  may
require in the future and its  ability to adapt its own  systems to  accommodate
its expanded operations. In addition, there can be no assurance that the Company
will be able to achieve its planned  expansion or that it will be able to manage
successfully  such expanded  operations.  Failure to manage  anticipated  growth
effectively and efficiently could have a material adverse effect on the Company.

Implementation of Acquisition Strategy

Although the Company has recently  completed the acquisition of the Call Center,
VirtualSellers and CallDirect,  it intends to pursue other  acquisitions.  There
can be no  assurance  that  the  Company  will  be  able to  consummate  or,  if
consummated,  successfully  integrate the  operations  and  management of future
acquisitions. Acquisitions involve significant risks which could have a material
adverse  effect  on  the  Company,  including:  (i)  diversion  of  management's
attention to the assimilation of the business to b acquired;  (ii) the risk that
the acquired  business  will fail to maintain  the quality of services  that the
Company has  historically  provided;  (iii) the need to implement  financial and
other systems and add management resources;  (iv) the risk that key employees of
the  acquired   business  will  leave  after  the  acquisition;   (v)  potential
liabilities  of the  acquired  business;  (vi)  unforeseen  difficulties  in the
acquired operations; (vii) adverse short-term effects on the Company's operating
results;  (viii) lack o success in assimilating or integrating the operations of
acquired  businesses with those of the Company;  (ix) the dilutive effect of the
issuance of additional equity securities; (x) the incurrence of additional debt;
and (xi) the  amortization of goodwill and other  intangible  assets involved in
any acquisitions that are accounted for using the purchase method of accounting.
There can be no  assurance  that the Company  will  successfully  implement  its
acquisition  strategy.  Furthermore,  there can be no assurance any  acquisition
will  achieve  levels of  revenue  and  profitability  or  otherwise  perform as
expected,  or be consummated on acceptable terms to enhance  shareholder  value.
The Company is currently  reviewing various companies for acquisition but has no
arrangements  or  understanding  with any  party  with  respect  to any  further
acquisitions.   The  Company,   however,   continues   to  monitor   acquisition
opportunities.

<PAGE>25


Rapid Technological Change

The future  success of the Company will depend in large part upon its ability to
keep pace with  technology.  Rapid  changes  have  occurred,  and are  likely to
continue to occur.  There can be no  assurance  that the  Company's  development
efforts  will not be rendered  obsolete by  research  efforts and  technological
advances  made by others.  The market for  information  technology  services  is
characterized   by  rapid   technological   advances,   frequent   new   product
introductions and enhancements,  and changes in customer requirements.  Although
the Company believes that the Call Center and eCommerce  business are sufficient
for the present, it is believed that the Company's future success will depend in
large  part on its  ability to  service  new  products,  platforms  and  rapidly
changing  technology.   These  factors  will  require  the  Company  to  provide
adequately trained personnel to address the increasingly sophisticated,  complex
and evolving  needs of its  customers.  The  Company's  ability to capitalize on
future  acquisitions in the Call Center and eCommerce  industries will depend on
its ability to (i) enhance its software and successfully integrate such software
into the Company's technical product support services,  (ii) adapt such software
to new hardware and operating system requirements and (iii) develop new software
products  in  an  industry  characterized  by  increasingly  rapid  product  and
technological obsolescence.  Any failure by the Company to anticipate or respond
rapidly to technological advances, new products and enhancements,  or changes in
customer requirements could have a material adverse effect on the Company.

Reliance on Collaborative Relationships

The Company plans to pursue collaborative arrangements with other market leaders
to develop, manufacture and market eCommerce and telecommunication services. One
such agreement  already exists with ASI, a web hosting  company that has 160,000
business available to market our complete  e-commerce  solutions.  The Company's
future  success  will  depend in large part on its  ability to  continue to form
collaborative  arrangements with third parties,  their strategic interest in the
potential products under development and, eventually, their success in marketing
or  willingness  to purchase any such  products.  These programs may require the
Company to share control over its marketing  programs or restrict its ability to
engage in certain areas of product development,  production and marketing. These
programs  may  also  be  subject  to  unilateral  termination  by the  Company's
collaborative  partners  without cause or default and without an ability to cure
any defaults. Accordingly, the Company may compete with its partners (and others
to whom disclosure  maybe made) for commercial sales of any products or services
developed in these arrangements. There can be no assurance that the Company will
be able to enter into  collaborative  arrangements  on  commercially  reasonable
terms,  that these  arrangements,  if  established,  will  result in  successful
programs to develop,  manufacture or market  products or that, if those programs
are successful,  the Company's  collaborative  partners will not seek to compete
directly  through  jointly  developed  products  themselves  or obtain them from
alternative sources.


<PAGE>26


Need for Additional Financing

The Company's ability to continue in business depends upon its continued ability
to obtain financing.  The Company is currently raising  additional funds through
the sale of  additional  equity  and is looking to secure  asset  financing  for
network  computer  equipment.  If this  additional  capital were raised  through
borrowing  or  other  debt  financing,   the  Company  would  incur  substantial
additional  interest expense.  Sales of additional equity securities,  through a
traditional  underwritten  offering,  would  dilute,  on a pro rata  basis,  the
percentage  ownership of all holders of common shares. There can be no assurance
that any such financing would be available upon terms and conditions  acceptable
to the Company,  if at all. The  inability to obtain  additional  financing in a
sufficient  amount when needed and upon  acceptable  terms and conditions  could
have a material adverse effect upon the Company.

Although the Company believes that it can raise financing sufficient to meet its
immediate  needs, it will require funds to finance its development and marketing
activities  in the  future.  There can be no  assurance  that such funds will be
available or available on terms satisfactory to the Company. If additional funds
are raised by issuing equity securities,  further dilution to existing or future
stockholders  is likely to  result.  If  adequate  funds  are not  available  on
acceptable terms when needed,  the Company may be required to delay,  scale-back
or eliminate marketing of one or more of its products or development programs or
obtain funds through arrangements with collaborative partners or others that may
require the Company to relinquish rights to certain of its technologies, product
candidates  or  potential  products  that it  would  not  otherwise  relinquish.
Inadequate  funding  also could impair the  Company's  ability to compete in the
marketplace and could result in its dissolution.  The Company regularly examines
opportunities  to expand its technology base and product line through means such
as licenses,  joint ventures and  acquisition of assets of ongoing  business and
may  issue  securities  in  connection  with  such  transactions.   However,  no
commitments to enter into or pursue and such  transaction have been made at this
time and there can be no assurance that any such  discussions will result in any
transaction being concluded.

Marketing

The Company  will be  required to develop a marketing  and sales force that will
effectively  demonstrate  the  advantages  of its  services  and  products.  The
Company's  marketing and selling  experience  of their  services to date is very
limited.  The Company may also elect to enter into  agreements or  relationships
with third parties regarding the  commercialization or marketing of its products
and  services.  There  can be no  assurance  that  the  Company  will be able to
establish adequate sales and distribution capabilities,  that it will be able to
enter  into  marketing   agreements  or  relationships  with  third  parties  on
financially  acceptable terms or that any third parties with whom it enters into
such arrangements will be successful in marketing the Company's products.

<PAGE>27


Market for the Company's Securities and Possible Volatility of Share Prices

The market price of the Shares,  has fluctuated  significantly  and is likely to
continue  to  fluctuate  in the future.  Announcements  by the Company or others
regarding  the  receipt  of  customer  orders,  changes  in  recommendations  of
securities  analysts,  results  of  customer  field  trials,  timing of  product
shipments,  scientific  discoveries,   technological  innovations,   litigation,
product developments,  patents or proprietary rights, government regulation, and
general market  conditions may have a significant  impact on the market price of
the Shares.

Year 2000

The year 2000 poses  potential  problems  to computer  programs  which have been
written  using  two  digits  rather  than four to define  the  applicable  year.
Computer  programs  of  the  Company,  its  suppliers  or  customers  that  have
date-sensitive  software may recognize a date using "00" as the year 1900 rather
than the year 2000.  This could  result in system  failures  or  miscalculations
causing  disruptions of operations  including,  among other things,  a temporary
inability to process  transactions,  send invoices,  or engage in similar normal
business activities.

The Company is working to resolve the  potential  impact of the year 2000 caused
by support vendors such as banks, credit card companies,  credit card processing
facilities,   and  telephone  companies.  The  Company  has  not  completed  its
assessment,  but currently believes that costs of addressing this issue will not
have a material adverse impact on the its financial  position.  However,  if the
Company and third  parties upon which it relies are unable to address this issue
in a timely manner, it could result in a material financial risk to the Company.
In order to assure  that this does not occur,  the  Company  plans to devote all
resources  required  to resolve  any  significant  year 2000  issues in a timely
manner.  It should be noted that all of the  aforementioned  third party vendors
are large  organizations  and have a plan for  addressing  year 2000 problems in
place. They have devoted  substantial  resources to this as it has the potential
to dramatically impact their business.

Year 2000 and the Call Center

With  reference to the Call  Center's  telephone  system (which was purchased in
August 1998) and computer system,  the Company has received  written  assurances
from their respective suppliers that they are all year 2000 compliant.  The most
significant  risk  that has been  identified  by the  Company  is the  potential
disruption  in  telephone  service if regional or  national  telephone  carriers
experience year 2000 incompatibility problems. If the Call Center is deprived of
access to  telephone  service  for a  significant  period of time,  the  Company
expects that it may lose  approximately one to four percent of its daily revenue
from Call Center  operations.  The Company is in the process of  contacting  its
clients and advising them of this potential problem,  so as to minimize the risk
of jeopardizing its existing client contracts.

The Company  has also  identified  disruption  in credit  card  processing  as a
potential  risk. As this could impact on cash flow from Call Center  operations,
the Company is contacting it clients with the view to determining how they would
like the Company to handle late  payments/disconnects  if credit card processing

<PAGE>28


is  delayed.  In view of the efforts  being made by  financial  institutions  to
counter this risk, the Company believes that this is a relatively small risk.

Year 2000 and eCommerce

VirtualSellers  has  installed  or  migrated to year 2000  compatible  products.
VirtualSellers has fixed all applications  including hardware,  system software,
application  software,  voice mail,  telephone  systems  and billing  platforms.
Testing has been performed at two levels.  First,  the individual  elements that
make up the system were tested to ensure each functions  correctly.  Second, the
total  information  technology  environment  has been  tested to ensure that all
interfaces  work properly  including  applications  from outside our environment
that feed data and dates to VirtualSellers' systems.

VirtualSellers'  business  facility  has battery  back-up  for 12 hours,  but is
otherwise at the same risk of power and  telephone  disruption as are most other
businesses.   If  power  and  telephone   services  are  disrupted   nationwide,
VirtualSellers'  customers will be unable to send Internet  orders until service
is restored.  It is  anticipated  that while some sales may be lost as a result,
most will merely be postponed since  VirtualSellers'  competitors will likely be
similarly affected. On the other hand, if power and telephone service disruption
is  localized,  there is  greater  potential  for lost  sales,  since  potential
customers may in that case place orders with competitors in a non-affected area.
The financial  impact of disruption to such service,  if any, is not expected to
become  material  unless  service is disrupted for more than three to five days.
Clients  will be advised in  advance of this risk and as a result,  the  Company
does not foresee any significant loss of clients.

Disruption  in credit card  processing  also poses some  potential  risk. If the
operation of credit card systems is interrupted,  VirtualSellers can hold orders
for batch  processing  and set up an automated  message  explaining any delay in
order-processing to persons placing orders. If the delay is significant, persons
placing orders will be contacted to discuss alternative forms of payment, and to
verify  whether  they wish to keep  credit card orders  pending  restoration  of
credit card processing  services.  It i anticipated that the financial impact to
VirtualSellers  will  only  become  material  if  credit  card  connections  are
disrupted for more than ten days. VirtualSellers will be informing its customers
of these potential issues.

Authorization and Discretionary Issuance of Preferred Stock

The  Company  is  authorized  to issue  150,000,000  each of Class A and Class B
Preference  Shares,  with such  designations,  rights and  preferences as may be
determined  from  time to time  by its  Board  of  Directors.  Accordingly,  the
Company's  Board of Directors is empowered,  without  stockholder  approval,  to
issue Preference Shares with dividend,  liquidation,  conversion or other rights
which  could  adversely  affect the rights of the  Company's  Shareholders.  The
issuance of Preference  Shares could,  among other things,  adversely affect the
voting power of the Company's  Shareholders  and,  under certain  circumstances,
make it more  difficult  for a third  party  to  gain  control  of the  Company,
discourage bids for Shares at a premium or otherwise adversely affect the market
price for Shares.

<PAGE>29


Limited Liability of Directors, Officers and Others

The Company's bylaws contain  provisions  limiting the liability of officers and
directors  of the  Company  for all acts,  receipts,  neglects  or  defaults  of
themselves  and all other  officers or directors of the Company or for any other
loss,  damage or expense  happening  to the Company  which  shall  happen in the
execution  of the duties of such  officers or  directors.  Such  limitations  on
liability may reduce the likelihood of derivative  litigation  against  officers
and  directors  of the  Company  and  may  discourage  or  deter  the  Company's
Shareholders  from  suing  officers  and  directors  of the  Company  based upon
breaches of their duties to the Company,  though such an action,  if successful,
might otherwise benefit the Company and its shareholders.

Potential Expenses Arising from Indemnification of Officers and Directors

The Company's bylaws contain provisions  entitling its directors and officers to
indemnification from all costs, charges, expenses,  including any amount paid to
settle an action or satisfy a judgment  reasonably  incurred by such  officer or
director  with  respect  to any  civil,  criminal  or  administrative  action or
proceeding  to which such officer or director is made a party by reason of being
or having been an officer or director of the Company. The Company has authorized
the  indemnification  of its officers and directors in such other  circumstances
permitted  under  the  CBCA  which  may  reduce  the  likelihood  of  derivative
litigation   against   directors  and  officers  and  may  discourage  or  deter
shareholders  from suing  directors  or officers for breaches of their duties to
the Company,  though such an action, if successful,  might otherwise benefit the
Company  and  its  shareholders.  The  Company's  bylaws  also  provide  for the
indemnification of directors and officers of the Company from judgments,  fines,
amounts paid in settlement and  reasonable  expenses as a result of an action or
proceeding  in which they may be  involved  by reason of being or having  been a
director  or officer of the Company as long as the acts were done in good faith.
The  Company is not  presently  aware of any claims  which  would  result in its
indemnification of its directors and officers.  Such provisions do not eliminate
the personal  liability of its directors and officers for monetary  damages as a
result  of a breach  of  fiduciary  duty.  The  Company  wil  indemnify  against
reasonable  costs and expenses  incurred in connection with any action,  suit or
proceeding to which any of such  individuals  were made a party by reason of his
or her being or having been such a director  of officer,  unless such person has
been  adjudicated to have been liable for negligence or misconduct in his or her
corporate duties. Although the Company may obtain an insurance policy which will
cover  such  indemnity,  there can be no  assurance  that such a policy  will be
available or that,  if  available,  it will be adequate.  To the extent that the
Company is required to expend funds to indemnify  officers and directors,  there
could be a material adverse effect upon the financial condition of the Company.

Furthermore,  the  Company's  bylaws  allow for  insurance  for the  benefit  of
officers and  directors  of the Company  against  such  liabilities  and in such
amounts  as  the  Board  of  Directors  may  determine.  The  Company  currently
subscribes to Directors and Officers Liability Insurance from Tri-City Brokerage
of Illinois, Inc. for $2,000,000 for each claim and as an annual aggregate.

<PAGE>30


Dilution and Dividend Policy

The grant and exercise warrants of creditors or otherwise or stock options would
likely  result in a dilution of the value of the Shares.  Moreover,  the Company
may seek  authorization  to increase the number of its authorized  shares and to
sell additional securities and/or rights to purchase such securities at any time
in the future. Dilution of the value of the Shares would likely result from such
sales.

In addition,  the Company may  determine to grant  additional  stock  options or
other forms of equity-based  incentive  compensation to the Company's management
and/or  employees to attract and retain such personnel.  The Company also may in
the future  offer  equity  participation  in  connection  with the  obtaining of
non-equity  financing,  such as  debt or  leasing  arrangements  accompanied  by
warrants to purchase  equity  securities  of the Company.  Any of these  actions
could have a dilutive effect upon the holders of the Shares.

The Company has never paid a cash  dividend on the Shares and does not expect to
pay dividends in the foreseeable future.

Anti-Takeover Provisions

At the  present  time,  the  Company's  Board of  Directors  has not adopted any
shareholder  rights  plan or any  anti-takeover  provisions  in its  Charter  or
Bylaws.

Litigation

The Company is involved in  substantial  and continuing  litigation.  A detailed
discussion of such  litigation and the Company's  discussion of the prospects of
each  pending  matter  is  contained  in the  section  entitled  "ITEM 3 - LEGAL
PROCEEDINGS".

ITEM 2         DESCRIPTION OF PROPERTY

The Company currently has four leased office locations:

(a)  The  Company's  executive  office is  located  at 290 - 171  Water  Street,
     Vancouver  British  Columbia,  V6B 1A7. The office  space is  approximately
     1,200  square  feet and is leased on a  month-to-month  basis for a monthly
     base rent of $825.00;

(b)  The Company has  additional  office space located at Suite 1000,  120 North
     LaSalle, Chicago,  Illinois, 60602. The office space is approximately 3,400
     square feet and is leased on a yearly basis;

(c)  The  Company,  through its  subsidiary  NorthNet  Telecommunications  Inc.,
     leases the Company's  Call Center  located in Greenwood,  Indiana.  This is
     approximately an 8,000 square foot facility; and

<PAGE>31

(d)  The  Company  has  recently  leased a  warehouse  facility  located at 3075
     Tollview Drive,  Rolling  Meadows,  IL to house  VirtualSellers'  eCommerce
     business.  This is  approximately  an 20,000  square foot  facility  and is
     leased  for a five year term for a monthly  based  rent,  during  the first
     year, of $18,333 plus property operating costs and taxes.

ITEM 3 LEGAL PROCEEDINGS

GT COMMUNICATIONS INC.

The  Company was named as a  defendant  in a lawsuit  filed on May 19, 1993 (the
"Lawsuit") by GT Communications Inc. (formerly named VisionTel  Holdings,  Inc.)
("GT") in the British Columbia Supreme Court which arose out of a share purchase
agreement (the "VisionTel  Agreement") dated December 9, 1992 among the Company,
GT (then  known as  VisionTel  Holdings  Inc.),  Edmond N.  Chisel  and  Giorgio
Alorra-Abbondi for the sale and purchase of the issued and outstanding shares of
VisonTel Communications Inc. ("VisonTel"). GT alleged that the Company failed to
meet  its  obligations  as  purchaser  under  the  VisionTel  Agreement  by  not
delivering  either certain  payments of money or Shares at specified  times. The
Company  claimed that it was prevented from making any such delivery  because of
certain breaches by GT of the VisionTel  Agreement  relating to  representations
and warranties  concerning  VisionTel's  financial records.  The Company filed a
counterclaim  against GT seeking damages allegedly caused by the  aforementioned
breaches by GT of the VisionTel Agreement. In September 1995, the parties agreed
to adjourn the legal proceedings and the matter went to binding arbitration.  In
February 1996, the arbitrator ruled that the Company should pay GT an additional
CDN $3.4 million plus interest.

Pursuant to the terms of an  agreement  dated  March 21,  1996 (the  "Settlement
Agreement"),  the  Company  and  GT  subsequently  settled  their  dispute  over
consideration  due under the VisionTel  Agreement.  The Company agreed to pay GT
CDN $4 million in monthly  installments of varying amounts  extending into March
1997, plus interest at 16% per annum, compounded monthly. Under the terms of the
Settlement  Agreement,  CDN $100,000 of the indebtedness was payable in cash and
the  balance  was  payable in cash or in common  shares of the  Company,  at the
option of the  Company,  with a market  value  equal to the cash  payments  due,
provided  the  proceeds  from the resale of such  shares  equal to a certain set
amount (the "Fixed  Amount").  If the proceeds  were less than the Fixed Amount,
the Company was to pay to GT the  difference  between the amount of the proceeds
and the Fixed Amount,  thereby guaranteeing that GT will receive an aggregate of
approximately CDN $3.9 million from the resale of such shares.

               After filing for CCAA protection,  the Company settled GT's claim
on the following basis:

(a)  an immediate cash payment to GT of CDN $1,400,000; and

(b)  confirmation of a claim under the CCAA proceedings of CDN $500,000, with no
     right to receive  dividends or warrants  under the Plan, to be secured only
     against the LTG contingent payment,  with a proxy granted to GT in favor of
     the Company in relation to the Claim.


<PAGE>32


See EXHIBIT 1.1 for further details.

WILLIAM PRATT

A civil action was filed on or about August 27, 1993 in the Los Angeles Superior
Court by William  Pratt  against  several  defendants,  including  the  Company,
seeking  monetary  damages in the amount of  approximately  US $577,000.  In his
complaint,  Mr.  Pratt  alleges  several  causes of action  with  respect to the
financing and support of a race car for one season, including breach of contract
and other  related  causes of action.  Mr.  Pratt  obtained  an entry of default
against the defendants on November 16, 1993. The Company's  motion to vacate the
default judgment was denied as were the Company's appeals to the Appellate Court
and the State Supreme Court.  Claims of US $577,000 were made by the Company and
disallowed  by the Courts.  A Proof of Claim in the amount of CDN  $250,000  was
settled in the CCAA  Proceeding and Mr. Pratt became part of the CNC/CNT General
Creditors  and will  receive a  pro-rated  portion of the CDN  $250,000  through
dividend payments from the CNC/CNT Pool.

See EXHIBIT 1.1 for further details.

FEENEY / DELINKO

The Company and certain present and former officers and directors of the Company
have been named as defendants in two class action complaints filed in the United
States District Court for the Eastern  District of  Pennsylvania  (the "Court"),
James J. Feeney v. Cam-Net Communications Network Inc., et al. Case #94-CV-6431)
and  Jeff  Delinko  v.  Cam-Net  Communications  Network,  Inc.,  et al.,  (Case
#95-593).  The Feeney action names Daryl Buerge, Robert Moore and Michael Gilley
as  additional  defendants  and was filed on October 2, 1994 and served upon the
Company in December,  1994. The Delinko action names these individuals and Jamie
Stallwood,  a former vice president of the Company as additional  defendants and
was filed on February 1, 1995 but has not been  served  upon the  Company.  Both
actions seek damages for purchasers of the Company's  common stock for specified
periods  and allege that the  Company  made  certain  misleading  statements  or
omissions  in  violation  of Section  10(b) and Rule 10b-5 under the  Securities
Exchange  Act of 1934 which  inflated  the price of the common  stock during the
class  period.  The Feeney and Delinko  actions seek damages for  purchasers  of
common  stock from August 7, 1993 to February  15, 1994 and from July 7, 1993 to
July 28, 1994, respectively.

The  Plaintiffs  and the Company  entered into a  Stipulation  and  Agreement of
Compromise and  Settlement  (the  "Settlement")  which was approved by the Court
pursuant  to the terms of a Final  Judgment  and Order of  Dismissal  of Actions
dated as of May 14,  1996.  The  Settlement  released  the Company and all other
defendants  from liability to all purchasers of common stock of the Company from
July 7, 1993  through and  including  September  2, 1994,  unless the  purchaser
validly and timely  requested  to be excluded  from the  Settlement  Class.  The
holders of a total of 2300 shares of common  stock  opted out of the  Settlement

<PAGE>33


Class. The Settlement provided for the payment by the Company of expenses of the
settlement  in an amount up to US $175,000  and the  issuance  of the  Company's
common stock in the amount of US  $2,225,000.  A Proof of Claim in the amount of
CDN $1,250,000 was settled in the CCAA Proceeding and the Plaintiffs became part
of the CNC/CNT General Creditors and will receive a pro-rated portion of the CDN
$1,250,000 through dividend payments from the CNC/CNT Pool.

See EXHIBIT 1.1 for further details.

GLOBAL TELEMEDIA INTERNATIONAL, INC.

On July 17, 1996, the Company  entered into a non-binding  letter of intent (the
"Letter")  with  Global  Telemedia  International,  Inc.  ("Global"),  a Florida
corporation  which  offers  a  wide  variety  of  discounted  telecommunications
services.  Pursuant to the terms and conditions of the Letter, the Company would
acquire  all of the issued  and  outstanding  shares of Global for an  aggregate
maximum  consideration  of CDN $5.00 per  common  share  payable  pursuant  to a
formula  set  forth in the  Letter.  The  transaction  was  subject  to  certain
conditions,  including (without limitation) due diligence examination of Global,
approval  by the  shareholders  of the  Company  and  approval  of the  Board of
Directors  of both  parties,  and  negotiation  and  execution  of a  definitive
Purchase and Sale Agreement.  In addition,  the Letter provides that, regardless
of the closing of the proposed transaction described therein, with respect to US
$250,000  which has been  advanced  by the  Company  to Global as  evidenced  by
promissory notes in such aggregate  principal amount (the "Notes"),  the Company
shall have the right to (i) call the Notes and receive  payment  therefor within
30  business  days;  (ii)  convert  the Notes to the  exclusive  right to Global
software  used to  manage  Vision 21 for the  Canadian  market  place;  or (iii)
convert the Notes to equity in Global.

The Company  commenced  action  against  Global in the US District Court for the
Northern  District of Georgia,  to collect monies due from Global to the Company
under the Notes.  The Company was  successful at trial  obtaining an award of US
$450,000  but does not expect  that it will be able to  collect on the  judgment
against Global because of Global's lack of assets.

VANCOUVER TELEPHONE COMPANY LTD.

Vancouver  Telephone Company Ltd. ("VanTel") is a former customer of the Company
who has refused to pay outstanding invoices totaling  approximately US $500,000.
The Company commenced a lawsuit in November 1996 in the Supreme Court of British
Columbia (Vancouver  Registry) seeking payment of the monies.  VanTel raised the
defenses that the Company:  (a) failed to provide contractual services to VanTel
in a manner and of a quality required by VanTel; (b) unilaterally terminated the
contract between the Company and VanTel without adequate notice or proper cause;
and (c)  failed  to give  proper  notice  of  price  increases  to  VanTel  (the
"Defences").  VanTel brought a counterclaim  as against the Company,  in January
1997,  alleging  damages in the form of higher rates and less favorable  payment
terms and loss of business as a result of the Company's actions. The Company was
successful in obtaining an order striking the Defences on a preliminary  motion.

<PAGE>34


VanTel has  appealed  that order and the appeal is  schedule t be heard in June,
1999. A trial of the Company's claim has been scheduled for November,  1999. Any
recovery from this lawsuit will be paid as follows:  6% to the CNC creditor pool
and the balance to the Company  without the  requirement  to distribute  them as
dividends under the Plan.

PACIFIC GATEWAY EXCHANGE

Pacific Gateway  Exchange is a former customer of the Company who has refused to
pay outstanding invoices totaling  approximately US $100,000. No action has been
undertaken at this date, but is expected in the near future.

COMMSEN COMMUNICATIONS INC.

The Company has made a claim against Commsen  Communications Inc. ("Commsen") in
the amount of $400,000 with Commsen  advancing a counterclaim for $250,000.  The
Company commenced the action in the Ontario Supreme Court.

BELL CANADA

The Company has  recovered US $100,000 in a disputed  Proof of Claim  process in
the  CCAA  proceeding.  The  monies  will  form  part of the  CNC/CNT  Pool  for
distribution  as a dividend to CNC/CNT  General  Creditors.  See EXHIBIT 1.1 for
further details.

BC TEL

The Company has  recovered  CDN $17,500 in a disputed  Proof of Claim process in
the CCAA proceeding.  The monies will be paid to the Company directly,  with the
exception  of  CDN  $1,050  which  will  form  part  of  the  CNC/CNT  Pool  for
distribution as a dividend to CNC/CNT General Creditors.

CCAA PROCEEDING

On January 14, 1997, the Company filed for and the Court granted protection from
its  creditors  under  the  Companies   Creditors   Arrangement  Act,  which  is
legislation  similar to bankruptcy  legislation (the "CCAA  Proceeding").  Court
protection  was  required to ensure that the  Company's  assets were kept intact
during the reorganization  process in order to allow the Company to carry on its
business while formulating a restructuring plan. The accounting firm of KPMG was
appointed by the Court as Monitor to oversee and to assist in the development of
the Company's  restructuring  plans (the  "Plan").  The creditors of the Company
approved  the Plan on July 31,  1997 and the Supreme  Court of British  Columbia
sanctioned the Plan on August 7, 1997.

The Company has  implemented  a majority of its  obligations  under the Plan but
there are still some remaining obligations under the Plan, as set out below.

<PAGE>35


Sale of Operating Assets

Shortly after receiving CCAA protection,  it became apparent to the Company that
it  would  not be able to  obtain  sufficient  new  financing  for its  business
operations early enough in the restructuring process to permit it to continue to
serve its customers.  In order to preserve the value of its assets and yield the
greatest  return to its  creditors,  the Company  determined  it was in its best
interest to sell the Company's  commercial and residential customer base for the
highest available price.

The Company sold its accounts receivable,  capital assets, licences and acquired
customer base to Primus Communications,  Inc., Primus  Telecommunications Canada
Inc. and 336246  Canada Inc.  (collectively,  "Primus")  for  approximately  CDN
$6,750,000   on  April  7,  1997  with   approval  of  the  Court  (the  "Primus
Transaction").  There was a holdback,  held by Russell & DuMoulin  in trust,  of
CDN$1,000,000 to secure the accuracy of  representations  and warranties made by
the  Company.  Approximately  $700,000  of  this  amount  is  being  held by the
Company's  auditors to pay to  creditors.  The holdback was to be retained for a
period of 150 days. To the extent that Primus made claims  against the holdback,
Russell & DuMoulin was required to retain an equivalent portion of the holdback.
Since Primus  advanced  claims  exceeding the amount of the  holdback,  the full
amount  of the  holdback  was held in trust  with  Russell  &  DuMoulin  pending
resolution of such claims.  Recently the Company  entered into a settlement with
Primus  regarding  the  holdback,  whereby the Company will receive  $25,000 for
consulting  services  and Primus  will  receive  $275,000 of the  holdback.  The
balance of the holdback has been distributed to creditors under the Plan.

The Company  also  determined  that there was  inherent  value in the  remaining
assets of Cam-Net  Communications  Inc.  ("CNC") and Cam-Net  Telecommunications
Inc.  ("CNT"),  including  significant  tax losses  accrued within the Company's
affiliated  groups as a result of business  losses incurred during recent years.
These  losses  would cease to have value over time and could not be readily used
by the Company.  On April 17, 1997 the Company sold all of the shares in CNC and
its  interest in CNT to London  Holdings  Inc  ("LTG") for cash  proceeds of CDN
$3,070,000 (the "LTG Transaction"),  approximately  CDN$62,000 of which has been
paid to LTG as a holdback  to secure an  indemnity  provided  by the  Company in
connection with the sale and $5,000 has been paid to creditors.  After deducting
commissions  of  CDN$60,000,  the  Company  realized  a  gain  on  the  sale  of
CDN$3,010,000  during the year ended Feburary 28, 1998.  The agreement  provided
that the intercompany debt owned by CNC to Cam-Net  Communications  Network Inc.
("CWK")  would be repaid to the Company in annual  installments  equal to 15% of
the annual profit of CNC for three fiscal years  commencing  April 30, 1997. The
first  CDN$500,000  of the  repayment  to the  Company  was to be  payable to GT
Communications  Inc.  pursuant  to the Plan in the CCAA  proceeding.  Since  the
Company  anticipated little or no repayment of such debt, it recently decided to
sell this receivable for CDN$525,000 with GT Communications  Inc. being entitled
to receive approximately $387,000 of the proceeds.

<PAGE>36


Secured Creditor Settlements

The first step in implementing the Plan was to satisfy the secured creditors. At
the CCAA filing  date,  AT&T held  registered  security  against the Company and
certain of its  subsidiaries  identified  in the Plan (the  "Issuer  Companies")
which was alleged to secure approximately CDN$2.8 million as at the end of June,
1997. The Company  disputed the validity of these claims and began  negotiations
with AT&T to resolve the disputed claims.  On July 3, 1997, the Court approved a
settlement  between the Company and AT&T which included payment of CDN$1,822,725
and issuance of  1,000,000  Shares and  warrants  whereby AT&T could  acquire an
additional 1,000,000 Shares of the Company at CDN$1.00 per share. AT&T has since
released the Company from any other claims.

GT Communications Inc. ("GT") alleged an equitable security interest against all
of the assets of the Issuer Companies based upon agreements alleged to have been
made by the Issuer  Companies to grant such  security to GT. GT claimed CDN $2.6
million. After extensive negotiations, the Court approved a settlement entitling
GT to an immediate  cash  settlement of CDN $1.4 million and  confirmation  of a
claim  of CDN  $500,000  as an  unsecured  creditor  to be paid  only  from  any
repayment  received by the Company  fro the LTG  Transaction.  Since the Company
anticipated little or no repayment from the LTG Transaction, it recently decided
to sell this  receivable  for  CDN$525,000  with GT  Communications  Inc.  being
entitled to receive approximately $387,000 of the proceeds.

Unsecured Creditor Settlements

On July 31, 1997,  the classes of creditors of the Issuer  Companies met and the
requisite number of creditors  holding the required value of claims approved the
Plan. The Plan provided for the distribution of proceeds from the sale of assets
and the recovery from lawsuits on account of creditors'  indebtedness.  The Plan
also provided that  creditors'  unpaid debt after receipt of dividends  would be
satisfied  by a  distribution  of the Shares by  issuing  warrants  whereby  the
unsecured  creditors would receive a portion of 13,000,000  Shares in proportion
to their unpaid indebtedness to the total of unpaid debt.

The  following  is a  general  review  of the  significant  events  in the  CCAA
Proceeding:

CDN$6,550,772  of the  CDN$6,750,000  received from the Primus  Transaction  and
approximately  CDN$3,000,000  received from the LTG Transaction were paid into a
trust  account.  CDN$1,000,000  of the  CDN$6,550,772  received  from the Primus
Transaction  represents a holdback which was to be released 150 days after April
8, 1997.  Primus made claims  exceeding  the entire  amount of the  holdback and
accordingly the holdback remained in trust.  Recently the Company entered into a
settlement with Primus regarding the holdback,  whereby the Company will receive
$25,000  for  consulting  services  and  Primus  will  receive  $275,000  of the
holdback.  The balance of the holdback has been  distributed to creditors  under
the Plan;

Secured  creditors  with  outstanding  claims  of  approximately   CDN$5,400,000
received  CDN$3,222,724  in cash, a total of 1,000,000 Shares and share purchase

<PAGE>37


warrants  to acquire a total of  1,000,000  Shares at  CDN$1.00  per  share.  In
addition,  the Company agreed to acknowledge an additional outstanding claim for
CDN$500,000  by GT,  provided that GT would be treated as an unsecured  creditor
with  respect  to such  claim,  and the  claim  would  be paid  only  out of the
repayment, if any, that the Company may realize from the LTG Transaction.  Since
the Company  anticipated  little or no repayment  from the LTG  Transaction,  it
recently decided to sell this receivable for CDN$525,000 with GT  Communications
Inc. being entitled to receive approximately $387,000 of the proceeds;


Government  claims,  which consist primarily of income,  sales or capital taxes,
were to be  settled  outside  the  Plan  and  approximately  CDN$580,000  of the
proceeds paid into the trust account were segregated to pay potential Government
claims. To February 28, 1999, $196,533 has been paid for Government claims;

CDN$200,000  of the proceeds paid into the trust account were  segregated to pay
for creditor  claims  arising  after the Company and its  Canadian  subsidiaries
entered  CCAA  protection.  As at February 28,  1999,  CDN$349,979  in post CCAA
claims had been paid;

CDN$280,000  of the proceeds paid into the trust account were  segregated to pay
for employee and consulting commissions relating to the assets sale and the sale
of CNC and CNT.  As at  February  28,  1999,  all  commissions  have  been  paid
amounting in the aggregate to CDN$280,715;

CDN$300,000  of the proceeds paid into the trust account were  segregated to pay
for legal, monitor and audit costs, and CDN$35,000 for employee severance. As at
February 28, 1999, CDN$675,533 had been paid for legal, monitor and audit costs,
and CDN$32,925 for employee severances;

CDN$300,000  of the proceeds paid into the trust account was paid to the Company
for working  capital  purposes on the condition  that the  CDN$300,000  would be
repayable to the trust account out of any further  recoveries  from  outstanding
litigation  and thus would be available to unsecured  creditors.  As of February
28, 1999,  CDN$300,000  has been fully repaid to the trust  account from lawsuit
recoveries; and

Unsecured creditors with outstanding claims of approximately CDN$31,000,000 were
to share in the funds  remaining in the trust  account  based on a formula which
allocated a portion of the  remaining  funds to the  Company's  creditors  and a
portion to the  Company's  subsidiaries'  creditors.  As at February  28,  1999,
unsecured creditor claims aggregating CDN$3,184,150 have been paid. In addition,
13,000,000 warrants to acquire, without any further consideration, Shares in the
capital of the Company were issued o November 8, 1998 to the unsecured creditors
based on the above formula.

The  remaining  restricted  cash held in trust may be  distributed  to unsecured
creditors  if and when the  matters  set out below are  settled  and  government
claims for various taxes have been negotiated.

<PAGE>38

During the year ended  February  28,  1998,  the  Company  recognized  a gain on
forgiveness of debt of approximately  CDN$25,700,000  representing total secured
and unsecured debt of approximately  CDN$34,200,000  less the CDN$6,100,000 paid
to secured and  unsecured  creditors  from the trust  account to date and less a
further  estimated  payment of  CDN$2,400,000.  To the extent  that there is not
enough  cash  in  the  trust  fund  to pay  the  estimated  CDN$2,400,000  after
settlement of Government claims and the Primus conditional payment dispute,  the
difference  will represent an additional  gain on forgiveness of debt which will
be  recognized  at  that  time.   During  the  year  ended  February  28,  1999,
approximately  $950,000 of the $2,400,000 was repaid from the trust fund leaving
a balance of approximately $1,450,000 in restricted accounts payable.

Significant events subsequent to approval of Plan

Significant events in relation to the implementation of the Plan,  subsequent to
its approval by the Court, are as follows:

(a)  all Proofs of Claims of creditors have been resolved and settled;

(b)  two dividends have been paid to all creditors in accordance with the Plan;

(c)  Canadian  securities  regulators  have  approved  the  distribution  of the
     warrants and the Shares;

(d)  under the  settlement  with AT&T  1,000,000  Shares have been  delivered to
     AT&T;

(e)  the following lawsuit recoveries have been made:

               (i) Bell Canada - CDN $100,000.00,
               (ii) TeleHub - US$450,000.00, and
               (iii) BC Tel - CDN $17,500.00;

(f)  distribution to AT&T Long Distance  Services Company of warrants to acquire
     up to 1,000,000 Shares at an exercise price of CDN $1.00 per share.

On August 14, 1998, the Issuer Companies  obtained an order which permitted them
to:

(a)  discharge  all pending tax  liabilities  and transfer  certain trust monies
     held by its counsel to satisfy those obligations;

(b)  distribute  trust  funds  held  by  counsel  to  satisfy  all  post  filing
     liabilities arising after January 14, 1997 and prior to August 7, 1997;

(c)  use a summary  method to resolve  the claim to the  CDN$1,000,000  holdback
     from the Primus Transaction;

<PAGE>39

(d)  distribute the 13,000,000 warrants and Shares issuable upon exercise of the
     warrants to unsecured  creditors on an expedited basis having regard to the
     fact that the  original  formula for the  distribution  of the warrants was
     dependent upon final distribution of all dividends; and

(e)  obtain a  declaration  that the Company has performed  its  obligations  to
     repay the CDN$300,000.00  advanced to it from the trust account for working
     capital purposes, by remitting net lawsuit recoveries in that amount.

On November 5, 1998, the Company  distributed to unsecured creditors warrants to
acquire up to 13,000,000  Shares  without  further  consideration.  Recently the
Company  entered into a settlement with Primus  regarding the holdback,  whereby
the Company will receive $25,000 for consulting services and Primus will receive
$275,000 of the holdback.  The balance of the holdback has been  distributed  to
creditors under the Plan.

Remaining Obligations under the Plan

The remaining  obligations of the Corporation  under the Plan and its agreements
made in  relation to  transactions  made during the term of the Plan are set out
below.  None of these  obligations  require the Company to expend  monies or use
assets required  subsequent to the approval of the Plan on August 7, 1997 and to
the extent that obligations  remain under the Plan that require  expenditures of
cash they are fully  secured by money in trust  except  where noted  below.  The
remaining obligations include:

(a)  pursuit of remaining viable lawsuit recoveries which will be at the cost of
     the Company. Any net proceeds realized on former CWK claims are entirely to
     the benefit of the Company  without the  requirement to distribute  them as
     dividends  under the Plan.  Any recoveries on former CNC claims are paid 6%
     to the CNC  creditor  pool and the balance is to the benefit of the Company
     without the requirement to distribute them as dividends under the Plan;

(b)  distribution  of  payments  for any  remaining  Government  claims from the
     Government claim reserve maintained to pay such claims; and

(c)  distribution  of available funds for dividends to creditors when such funds
     are received by the Company.

See EXHIBIT 1.1 and Note 2 to the Consolidated  Financial Statements for further
details on the Plan and its implementation.

AT & T

In early,  1999,  it came to the  Company's  attention  that  three  independent
affiliates  of AT&T  Wireless  Network had adopted the name  "Suncom"  and began
offering customers access to a variety of wireless  telecommunications  services
and products under that name. The Company  negotiated a settlement of US$975,000

<PAGE>40


from Triton PCS Operating Company LLC for the rights to the Suncom trademark and
tradename in exchange for the Company  agreeing to phase out the use of its name
within 60 days of the settlement.  Accordingly, on May 5, 1999, the shareholders
of  Suncom  approved  a  special  resolution  to  change  the  Company  name  to
"VirtualSellers.com,  Inc." to reflect the  Company's  change focus to eCommerce
transaction processing. This name change will take effect in late May 1999.


ITEM 4         CONTROL OF THE COMPANY

To the best of the Company's knowledge no person beneficially owns more than 10%
of any class of the Company's voting securities.  The following table sets forth
the amount of shares  held by certain  nominees  and  beneficially  owned by the
officers and directors of the Company as a group as of May 1, 1999.
-------------------------------------------------------------------------------

Title of                 Identity of Person or      Amount       Percent of
Class                        or Group               Owned         Class (1)
-----------------       -----------------------  ------------    ------------
Officers and                     N/A             6,550,082(2)       8.1%
Directors
(4 persons)

Notes:

(1) There were  80,355,306  common  shares issued and  outstanding  as of May 1,
1999.

(2) The Company  believes that all persons hold legal title and has no knowledge
of actual ownership.

ITEM 5         NATURE OF TRADING MARKET

The Company's common stock was traded on the Vancouver Stock Exchange in British
Columbia, Canada until October 31, 1996 when it was de-listed, and on the NASDAQ
- National  Market ("NMS") in the United States until November 5, 1996,  when it
was  de-listed.  From  November,  1996  to  November  1997,  there  was  limited
transactional  volume  through pink slip  trading.  The Company was approved for
listing on the National  Association  of  Securities  Dealers'  Over-the-Counter
Bulletin  Board (the  "OTCBB")  on  November  5, 1997 under the symbol  "SNLMF".
Although the Company  ultimately  intends to list its common stock on the NASDAQ
Small Cap or NMS, it does not  currently  meet the listing  requirements  of the
Small Cap or NMS.


<PAGE>40

The high and low trades on the  Vancouver  Stock  Exchange  and the high and low
bids on the NASDAQ NMS for the periods referenced below were as follows:
<TABLE>
<S>                      <C>         <C>          <C>            <C>     <C>         <C>


Quarter Ended                         VSE(1)                       NASDAQ-NMS(2)
---------------                       ---                          -------------

                         High       Low           Volume         High      Low       Volume
                         ------   ------        ----------      ------    -----   ------------

May 31, 1996              4.05     0.90          7,909,200       3.00      0.66     58,709,971

August 31, 1996           3.40     1.70          2,768,184       1.56      1.06     25,753,376

November 30, 1996         2.90     1.40          1,988,873       2.22      0.88     14,767,910
</TABLE>


(1)     Amounts in Canadian Dollars.
(2)     Amounts in United States Dollars.

Results from  November 30, 1996  through May 1, 1998 are not  obtainable  as the
company  was listed on the OTCBB and does not make these  statistics  available.
Beginning  May 1, 1998,  the NASD  changed the way it treats  foreign  reporting
entities such as the Company and made these  statistics  available on an ongoing
basis.

The high and low trades on the OTCBB for the  periods  referenced  below were as
follows:


Quarter Ended                                OTCBB(1)
-------------
                           High         Low           Volume
                          ------      ------       -----------
August 31, 1998            0.52        0.25         10,695,600

November 30, 1998          0.40        0.12         14,078,000

February 28, 1999          0.70        0.155        40,085,600

(1)     Amounts in United States Dollars.

As of May 1, 1999,  the  registrar and transfer  agent for the Company  reported
that 74,164,177 Shares were registered to 1929 residents  residing in the United
Sates and 6,381,106 Shares were registered to 48 residents of Canada.


ITEM 6   EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

There are no government  laws,  decrees or  regulations in Canada which restrict
the export or import of capital or which  affect the  remittance  of  dividends,
interest or other payments to non-resident holders of the Company's  securities.
Any   remittances  of  dividends  to  United  States   residents  and  to  other
non-residents are, however, subject to withholding tax. See "ITEM 7 - Taxation."

Except as provided in the Investment  Canada Act (the "Investment  Act"),  there
are no limitations under the laws of Canada, the Province of British Columbia or
in the Articles of Continuance or other constituting documents of the Company on
the  right of  foreigners  to hold or vote  shares  or other  securities  of the
Company.

The  Investment  Act will  prohibit  implementation,  or if  necessary,  require
divestiture of an investment deemed  "reviewable" under the Investment Act by an

<PAGE>42


investor  that  is  not a  "Canadian"  as  defined  in  the  Investment  Act  (a
"non-Canadian"), unless after review the minister responsible for the Investment
Act ("the Minister") is satisfied that the "reviewable"  investment is likely to
be of net benefit to Canada.  An  investment  in  securities of the Company by a
non-Canadian  (other than an "American" as defined in the Investment  Act) would
be  reviewable  under the  Investment  Act if it was an  investment  to  acquire
control  of the  Company  and the value of the assets of the  Company  was CDN$5
million or more.  A  non-Canadian  (other than an  American)  would be deemed to
acquire  control of the Company for the  purposes of the  Investment  Act if the
non-Canadian acquired a majority of the outstanding voting shares of the Company
(or less  than a  majority  but  controlled  the  Company  in fact  through  the
ownership of one third or more of the outstanding  voting shares of the Company)
unless it could be  established  that, on the  acquisition,  the Company was not
controlled in fact by the acquirer through the ownership of such shares. Certain
transactions in relation to the Company's securities would be exempt from review
under the Investment Act, including, among others, the following:

1.   acquisition  of shares by a person in the ordinary  course of that person's
     business as a trader or dealer in securities;

2.   acquisition of control of the Company in connection with the realization of
     security  granted for a loan or other financial  assistance and not for any
     purpose related to the provisions of the Investment Act; and

3.   acquisition of control of the Company by reason of an amalgamation, merger,
     consolidation  or  corporate  reorganization  following  which the ultimate
     direct or indirect control of the Company,  through the ownership of voting
     interests, remains unchanged.

The  Investment Act was amended with the World Trade  Organization  Agreement to
provide for special review thresholds for "WTO Investors" of countries belonging
to the World Trade Organization, among others, nationals and permanent residents
(including "WTO Investor controlled entities" as defined in the Investment Act).
Under the Investment Act, as amended, an investment in the Company's  securities
by WTO  Investors  would be  reviewable  only if it was an investment to acquire
control of the  Company  and the value of the assets of the Company was equal to
or greater than a specified amount (the "Review Threshold"),  which is published
by the Minister  after its  determination  for any  particular  year. The Review
Threshold is currently CDN $172 million.

ITEM 7         TAXATION

CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES

The following is a general summary of the principal  Canadian federal income tax
consequences  applicable  to a  holder  of  the  Company's  securities  who is a
resident  of the United  States and who is not a resident of Canada and who does

<PAGE>43


not use or  hold,  and is not  deemed  to use or  hold,  his/her  securities  in
connection with carrying on a business in Canada (a "US Resident holder").

This general summary is based upon the current  provisions of the Income Tax Act
(Canada)  (the "ITA"),  the  regulations  thereunder  (the  "Regulations"),  the
current  publicly  announced  administrative  and assessing  policies of Revenue
Canada, Taxation, and all specific proposals (the "Tax Proposals,') to amend the
ITA and Regulations  announced by the Minister of Finance  (Canada) prior to the
date hereof. This description is not exhaustive of all possible Canadian federal
income tax  consequences  and,  except fo the Tax Proposals,  does not take into
account or anticipate any changes in law,  whether by legislative,  governmental
or judicial  action,  nor does it take into  account  provincial  or foreign tax
considerations  which may differ  significantly from those discussed herein. The
following is a general  discussion only and is not intended to be, nor should it
be construed to be, legal or tax advice to any holder or  prospective  holder of
the Company's Shares. Shareholders should consult their own attorney, accountant
or tax adviser concerning the tax consequences of an investment in Shares of the
Company.

DIVIDENDS

Dividends paid on the Company's  Shares to a US-Resident  holder will be subject
to withholding  tax. The Canada-US  Income Tax Convention  (1980) (the "Treaty")
provides that the normal 25% withholding tax rate is reduced to 15% on dividends
paid on shares of a Canadian  corporation  (such as the Company) to residents of
the United States,  and also provides for a further reduction of this rate to 5%
where the  beneficial  owner of the dividends is a  corporation  resident in the
United States owning at least 10% of the voting shares of the company paying
the dividend.

CAPITAL GAINS

As the Shares of the  Company are not  presently  listed on a  prescribed  stock
exchange in Canada,  a US Resident  holder will be taxable  under the ITA on the
disposition  thereof,  unless an exemption from such tax is available  under the
Treaty.

No tax under the ITA will be payable on a capital gain realized on Shares of the
Company  disposed of by a US Resident  holder by reason of the Treaty unless the
value of such  Shares is derived  principally  from real  property  situated  in
Canada,  or the US Resident holder is an individual who was a resident of Canada
for one hundred  twenty  months  during any period of twenty  consecutive  years
preceding  the sale of the Shares and was resident of Canada at some time during
the ten years  immediately  preceding  the sale of the Shares and the Shares (or
property for which the Shares were  substituted  in a tax  deferred  transaction
under the ITA) were owned by the individual holder at the time he ceased to be a
resident of Canada.  However, in such a case, certain  transitional relief under
the Treaty may be available.

<PAGE>44


ITEM 8         SELECTED FINANCIAL DATA

The  selected  consolidated  financial  data  presented  below for the five year
period  ended  February  28,  1999 is derived  from the  Company's  consolidated
financial  statements which were examined by the Company's  independent auditor.
The  information  set  forth  below  should  be read  in  conjunction  with  the
Consolidated  Financial  Statements  of the  Company  (including  related  notes
thereto) and  "Management's  Discussion and Analysis of Financial  Condition and
Results of Operations". The data is presented in Canadian dollars.









                          Selected Consolidated Financial Data (1)(2)
                          ------------------------------------
                                (Stated in Canadian Dollars)

                              Fiscal Year Ended February 28 (29)
                              -----------------------------
<TABLE>
<S>                               <C>           <C>                <C>           <C>           <C>


                                     1999            1998              1997          1996           1995
                                  ----------     ----------       -------------  ------------   -----------
Revenue                            265,715       1,274,385          38,328,435    46,344,583     51,124,355
Direct Costs                           Nil (3)     814,465          34,036,369    43,211,488     42,442,935
Operating Expenses                 873,159         749,800           9,857,275    13,725,476     13,076,500
Income (Loss) From Operations     (607,444)       (289,880)         (5,565,209)  (10,592,381)    (4,395,080)
Amortization                        28,457           7,167           9,325,803    12,989,345      9,800,075
Administrative Expenses          1,651,589       2,297,322           7,422,714     7,540,661      6,385,470
Net Income (Loss)               (2,429,137)     24,535,877         (40,698,248)  (48,540,250)   (24,379,072)
Income (Loss) per Share               (.04)            .50                (.99)        (2.78)         (1.94)
Total Assets                       328,932       1,180,851 (4)       9,769,215    35,011,844     52,705,531
Long-Term Debt                         Nil         722,932                 Nil     8,888,196      9,371,901
Cash Dividends per Common
 Share                                 Nil             Nil                 Nil           Nil            Nil
</TABLE>


1.   The audited financial  information set forth in this table was prepared and
     is presented in accordance with generally-accepted accounting principles in
     Canada.

2.   See ITEM 9 - Management's  Discussion  and Analysis of Financial  Condition
     and Results of  Operations  and ITEM 9 - United States  Generally  Accepted
     Accounting Principles Reconciliation.

3.   Direct  costs  were nil as there was a change in  accounting  procedure  to
     record all costs as selling and/or general and administrative costs.

4.   Assets were restated for the period ending  February 28, 1998.  Assets were
     previously reported as $3,555,166.

Since June 1, 1970, the  government of Canada has permitted a floating  exchange
rate to  determine  the value of the  Canadian  dollar as compared to the United
States  dollar.  For the past  fiscal  years  ended  February  28 (or  29),  the
following  exchange  rates were in effect for  Canadian  dollars  exchanged  for
United States dollars, expressed in terms of Canadian dollars (based on the noon
buying  rates in New York City,  for cable  transfers  in Canadian  dollars,  as
certified for customs purposes by the Federal Reserve Bank of New York):

<PAGE>45
<TABLE>
<S>                             <C>             <C>                <C>
Year                            Average           Low-High           Year End/Period End
----                            -------           --------           -------------------
1994                            1.3071         1.2428 - 1.3546              1.3522
1995                            1.3782         1.3410 - 1.4238              1.3937
1996                            1.3670         1.3285 - 1.4178              1.3728
1997                            1.3244         1.3939 - 1.3486              1.3679
1998                            1.48296        1.5845 - 1.4037              1.5358
Period ending
February 28, 1999               1.50832        1.5465 - 1.4820              1.5087
</TABLE>


ITEM 9     MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION  AND
           RESULTS OF OPERATIONS (All numbers in Canadian Dollars unless
           otherwise stated)

RESULTS OF OPERATIONS

FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998

Revenues for the year ended  February 28, 1999 ("Fiscal  1999") of $265,715 were
down by $1.1 million,  a decrease of 86.3% from the revenues of  $1,274,385  for
the year ended February 28, 1998 ("Fiscal  1998").  For the 1999 and 1998 fiscal
years,  the only  source  of  operating  revenue  came  from the Call  Center in
Indiana.  The  monthly  revenues  increased  to $18,500 per month from the cable
customers at this facility. This is up from approximately $14,000 per month last
year,  an increase of 32%. This business is still running at a loss which is the
reason it was purchased so inexpensively.  The Call Center has positioned itself
to take on  more  business  form  its  existing  clients  early  in 1999  and is
projected  to reach  break  even by June,  1999.  There is ample room for growth
given a large potential  market, as well as the expandability of the Call Center
location.  The Call  Center can be expanded to handle  35-40  operators  and can
potentially generate as much as $350,000-$500,000 a month in revenue.  There are
significant  fixed costs that can be  leveraged  as new business is brought into
the Call Center.  The process of integrating  the eCommerce  clientbase with the
Call Center is almost complete. This should provide a significant revenue stream
for the Call Center as well as additional transaction processing revenue for the
recently acquired eCommerce business.

There were no additional  material revenues earned in Fiscal 1999 as compared to
certain legal settlements  recognized in Fiscal 1998. In Fiscal 1998 the Company
settled with TeleHub for US $450,000, with Bell Canada for CDN$100,000, and with
BCTel for CDN$17,500.

<PAGE>46


Direct costs in Fiscal 1999 were $0, compared to direct costs of $0.8 million in
Fiscal 1998, a decrease of $0.8  million.  This  decrease was due to a change in
accounting  procedures,  classifying  all expenses as selling and/or general and
administrative  costs.  This  included  expenses that fell under direct costs in
Fiscal 1998.  Gross profit for Fiscal 1999  decreased  57% from $0.46 million in
Fiscal 1998 to $0.27 million in 1999. Gross margins for the Call Center business
are approximately 45% of revenues.

Amortization  charges  comprise the  amortization  of capital  assets,  acquired
customer base and other assets.  Amortization charges for Fiscal 1999 of $28,457
have  increased  400% from $7,167 in the  previous  year.  This is the result of
capital expenditures for computers, printers and related technology for the Call
Center.

For the Fiscal 1999, the Company recognized a loss of $2.43 million or $0.04 per
Share,  compared  to a gain of $24.5  million  or $0.50 per share for the Fiscal
1998.  The gain in Fiscal  1998 is the  result of the sale of the long  distance
assets in 1997 and the gain on  forgiveness  of debt taken in 1998, and not from
operations  which was  running  at a loss of  approximately  $16,000/month.  For
Fiscal 1999, the Call Center had reduced its operating loss to $13,000/month and
is expected to reach a break even poin by June, 1999.

The Company's cash position has decreased during the year from $1,064,908 at the
end of  Fiscal  1998 to  $114,402  at the end of  Fiscal  1999,  a  decrease  of
$950,506.  This can be attributed to a net loss for the year of  $2,429,137.  In
addition,  $1,463,559  was raised through the issuance of equity in Fiscal 1999.
These monies were used to finance working capital  requirements and retire debt.
An investment of $393,097 in VirtualSellers.com, Inc. was written off as an loss
but the  investment  loss is expected to be reversed in the year ended  February
28,  2000  given  the  closing  of the  acquisition  of all  of the  assets  and
undertaking of VirtualSellers' business as an ongoing concern.

FISCAL YEAR 1998 COMPARED TO FISCAL YEAR 1997

Revenues for Fiscal 1998 of $1.27  million were down by $37 million,  a decrease
of 96.6% from the revenues of $38.3 million for the year ended February 28, 1997
("Fiscal 1997").  In Fiscal 1998, the only source of operating revenue came from
two months of revenue  generated by the Call Center.  The monthly  revenues from
the five customers at the Call Center were approximately $14,000- $18,000/month.
The  business  was  running at a loss which is the  reason it was  purchased  so
inexpensively.

The remainder of the revenue realized in Fiscal 1998 came from legal settlements
and tax and government refunds. The Company settled with TeleHub for US$450,000,
with Bell Canada for CDN$100,000, and with BCTel for CDN$17,500.

Direct costs in Fiscal 1998 were $0.81 million,  compared to direct costs of $34
million in Fiscal 1997, a decrease of $33.2 million or 97.6%.  Direct costs were
64% of revenue  for Fiscal  1998  compared  to 89% in the prior  year.  This 25%
decrease is a result of  replacing  the  residential  customer  base with higher
margin business  customer base. Gross profits for Fiscal 1998 decreased 89% from

<PAGE>47


$4.3 million in Fiscal 1997 to $0.46  million in Fiscal 1998.  Gross profit as a
percentage of revenue  increased  from 11% in Fiscal 1997 to 36% in Fiscal 1998.
Operating  expenses  decreased  by $9.15  million or 93% from $9.8  million  for
Fiscal 1997 to $0.75  million for Fiscal  1998.  During the year  administrative
expenses decreased by 69.6% from $7.4 million to $2.25 million.

Amortization  charges  comprised the  amortization of capital  assets,  acquired
customer base and other assets.  Amortization  charges for Fiscal 1998 of $7,167
have decreased  99.9% from $9.3 million in the previous  year.  This decrease is
due to the sell off of the long  distance  assets in Fiscal 1997 and  relatively
few assets purchased in Fiscal 1998.

For Fiscal 1998,  the Company  recognized  a gain of $24.5  million or $0.50 per
share,  compared to a loss of $40.7  million or $0.99 per share for Fiscal 1997.
This gain is the result of the sale of the long  distance  assets in Fiscal 1997
and  the  gain on  forgiveness  of debt  taken  in  Fiscal  1998,  and not  from
operations which ran at a loss of approximately $14,000/month.

The Company's cash position increased from $179,770 at the end of Fiscal 1997 to
$1,064,908  at the end of Fiscal 1998.  During  Fiscal 1998,  $9.75  million was
received from the sale of assets and subsidiaries. A net use of $2.2 million was
generated by different  financing vehicles including the issuance of convertible
debentures and common shares. Operations posted a net use of funds totaling $4.2
million  including  $24.5  million  in net  income,  a use of $28.7  million  on
forgiveness  of debt and  $1.56  million  generated  by the loss on the  TeleHub
settlement.  For further information see Footnote 4 of the Notes to Consolidated
Financial Statements.

FISCAL YEAR 1997 COMPARED TO FISCAL YEAR 1996

Revenues for Fiscal 1997 of $38.3 were down from revenues of $46.3 million by $8
million,  a decrease of 17.3%,  for the year ended  February  28, 1996  ("Fiscal
1996").  The Company's  long distance  business that was shut down in the fourth
quarter of Fiscal 1997 was expected to be made profitable by the  implementation
of the BSCAP software  (billing and network platform  software system) which was
to have been installed and made operational by TeleHub by November 1, 1996. As a
result of TeleHub's  breach of the September 6, 1996 Agreement,  the Company had
no choice but to shut down substantial aspects of its business.  This shut down,
combined with the turn around efforts deployed  throughout the fiscal year, have
caused the identified operational improvements.

Direct costs of $34 million  decreased by $9.2  million  from $43.2  million,  a
decrease of 21.3%. Direct costs were 89% of revenue for the Fiscal 1997 compared
to 93% in the prior year.  This 4% decrease was a result of replacing  primarily
what was a  residential  customer  base with a higher  margin  traffic  business
customer  base.  Gross profit  increased 36% from $3.1 million in Fiscal 1996 to
$4.3 million in Fiscal 1997.  Gross profit as a percentage of revenue  increased
from 6.7% in Fiscal 1996 to 11% in Fiscal 1997.  Operating expenses decreased by
$3,868,000  or 28% from $13.7 million for Fiscal 1996 to $9.8 million for Fiscal
1997.  During  the year,  administrative  expenses  decreased  by 1.6% from $7.5
million to $7.4 million.

<PAGE>48


Amortization  charges  comprised the  amortization of capital  assets,  acquired
customer  base and other assets.  Amortization  charges for 1997 of $9.3 million
represented a 28% decrease from $12.9 million in the previous year. $3.8 million
of this  decrease  in  amortization  was due to lower  amortization  of deferred
advertising  and media  research  costs.  There was a $2.2  million  increase in
amortization  of acquired  customer  base costs and a $2.6  million  increase in
amortization of finance  charges,  but a decreas in the  amortization of capital
assets.  The  acquired  customer  base costs have been  written off this year to
their realized value when sold to Primus.

For Fiscal  1997,  the  Company  incurred  a loss of $40.7  million or $0.99 per
share,  compared to a loss of $48.5  million or $2.78 per share for Fiscal 1996.
This dollar loss was 16% lower and 64% less per share than in the previous  year
and resulted from the Company's cost cutting  measures and additional  shares of
stock issued.

The Company's cash position increased during the year from $37,850 at the end of
Fiscal 1996 to $179,770 at the end of Fiscal  1997.  During the year  $3,102,500
was  received  in cash upon the  exercise  of  employee  and  director  options;
$2,495,647  in common  shares were issued for  settlement  of debt;  $33,446 for
employee   compensation;   $246,667  for  finders'  fees;   $1,144,446  for  the
acquisition of ITI;  $590,147 for the acquisition of the cellular  license;  and
$2,799,542 for the conversion of preferred shares.  For further  information see
Footnotes 4 and 10 of the Notes to Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

During Fiscal 1999, the Company used monies previously generated by the issuance
of equity to provide working  capital.  Working capital  requirements  consisted
mainly  of rent,  legal and  accounting  costs and  employee  compensation.  The
Company  expended  money for due  diligence,  legal and  accounting  expenses in
connection with several  acquisitions  (Tricor,  Campbell and  Telemetrix)  that
ultimately  did not proceed to fruition.  The  acquisition of the Call Center on
January  1, 1998 was  transacted  for a  US$105,00  note  payable in one year or
convertible  into Shares at a price of US$0.10  per Share on or before  December
31,  1998.  The holder of the note  converted  the full  principal  and interest
amount of the note into  Shares In March,  1998 the  Company  closed its private
placement, with a maximum offering limit of US$4,000,000, with subscriptions for
US$850,000.  Funds  generated  by this  offering  were used for  operations  and
potential  acquisitions.  In January 1999,  the Company  commenced a convertible
note offering of up to  US$4,000,000  in order to raise working  capital for the
Call Center and  eCommerce  business.  As at the end of Fiscal 1999,  there were
subscriptions  of  approximately  $480,000  for this  offering and as at May 15,
1999, the Company  received  subscriptions  of $725,000.  In March 1999,  Suncom
settled with an affiliate of AT&T the rights to use the  trademark and tradename
of "Suncom".  The Company  received a cash payment of US$975,000 in exchange for
the rights to use the name "Suncom".

For the balance of the 1999 calendar year, the Company  anticipates  significant
working capital  requirements  above the usual working  capital  requirements of

<PAGE>49


rent, salaries and legal and accounting services. The Company anticipates making
investments of up to  US$1,500,000  in capital  equipment to provide the network
infrastructure  required for the growth of the eCommerce  business.  The Company
also  anticipates that CallDirect will also need working capital as it grows its
catalog and eCommerce  business.  While there will be recognizable  economies of
scale in bringing the Call Center support to the facility in  Indianapolis,  the
Call Center business will require approximately  $300,000 to reestablish itself.
As mentioned, the Call Center is expected to reach the break even point in June,
1999, and will not require any  significant  working  capital  investments.  The
Company  continues to look for  acquisition  candidates  within the scope of its
business plan. Ideally,  potential candidates will be under-performin businesses
that fit into the  transaction  processing/customer  service  business model and
that can be acquired for notes payable or Shares.  This will limit the amount of
cash needed  allowing  almost all available  funds to be used by the Company for
continuing  operations.  This follows the model used for the  acquisition of the
Company's Call Center.  Additional working capital requirements for acquisitions
and/or  operations  will  be  met  by  further  financing  through  the  current
convertible note offering and future offerings until the Company can establish a
profitable track record.

Historically over the past three years, a significant component of the Company's
operating  losses  resulted from the  Company's  acquisition  of facilities  and
equipment at a rapid rate in anticipation of increasing demand for services. The
effect of this planned expansion at a rate that at times has exceeded  immediate
demand for services has contributed to the losses from operations. Since much of
the equipment was acquired under long-term lease arrangements, such acquisitions
have had and will  continue  to have an  effect  on  profit  margins  until  the
equipment is fully paid.

YEAR 2000 DISCLOSURE

The year 2000 poses  potential  problems  to computer  programs  which have been
written  using  two  digits  rather  than four to define  the  applicable  year.
Computer  programs  of  the  Company,  its  suppliers  or  customers  that  have
date-sensitive  software may recognize a date using "00" as the year 1900 rather
than the year 2000.  This could  result in system  failures  or  miscalculations
causing  disruptions of operations  including,  among other things,  a temporary
inability to process  transactions,  send invoices,  or engage in similar normal
business activities.

The Company is working to resolve the  potential  impact of the year 2000 caused
by support vendors such as banks, credit card companies,  credit card processing
facilities,   and  telephone  companies.  The  Company  has  not  completed  its
assessment,  but currently believes that costs of addressing this issue will not
have a material adverse impact on the its financial  position.  However,  if the
Company and third  parties upon which it relies are unable to address this issue
in a timely manner, it could result in a material financial risk to the Company.
In order to assure  that this does not occur,  the  Company  plans to devote all
resources  required  to resolve  any  significant  year 2000  issues in a timely
manner.  It should be noted that all of the  aforementioned  third party vendors
are large  organizations  and have a plan for  addressing  year 2000 problems in
place. They have devoted  substantial  resources to this as it has the potential
to dramatically impact their business.

<PAGE>50



Year 2000 and the Call Center

With  reference to the Call  Center's  telephone  system (which was purchased in
August 1998) and computer system,  the Company has received  written  assurances
from their respective suppliers that they are all year 2000 compliant.  The most
significant  risk  that has been  identified  by the  Company  is the  potential
disruption  in  telephone  service if regional or  national  telephone  carriers
experience year 2000 incompatibility problems. If the Call Center is deprived of
access to  telephone  service  for a  significant  period of time,  the  Company
expects that it may lose  approximately one to four percent of its daily revenue
from Call Center  operations.  The Company is in the process of  contacting  its
clients and advising them of this potential problem,  so as to minimize the risk
of jeopardizing its existing client contracts.

The Company  has also  identified  disruption  in credit  card  processing  as a
potential  risk. As this could impact on cash flow from Call Center  operations,
the Company is contacting it clients with the view to determining how they would
like the Company to handle late  payments/disconnects  if credit card processing
is  delayed.  In view of the efforts  being made by  financial  institutions  to
counter this risk, the Company believes that this is a relatively small risk.

Year 2000 and eCommerce

VirtualSellers  has  installed  or  migrated to year 2000  compatible  products.
VirtualSellers has fixed all applications  including hardware,  system software,
application  software,  voice mail,  telephone  systems  and billing  platforms.
Testing has been performed at two levels.  First,  the individual  elements that
make up the system were tested to ensure each functions  correctly.  Second, the
total  information  technology  environment  has been  tested to ensure that all
interfaces  work properly  including  applications  from outside our environment
that feed data and dates to the systems.

VirtualSellers'  business  facility  has battery  back-up  for 12 hours,  but is
otherwise at the same risk of power and  telephone  disruption as are most other
businesses.   If  power  and  telephone   services  are  disrupted   nationwide,
VirtualSellers'  customers will be unable to send Internet  orders until service
is restored.  It is  anticipated  that while some sales may be lost as a result,
most will merely be postponed since  VirtualSellers'  competitors will likely be
similarly affected. On the other hand, if power and telephone service disruption
is  localized,  there is  greater  potential  for lost  sales,  since  potential
customers may in that case place orders with competitors in a non-affected area.
The financial  impact of disruption to such service,  if any, is not expected to
become  material  unless  service is disrupted for more than three to five days.
Clients  will be advised in  advance of this risk and as a result,  the  Company
does not foresee any significant loss of clients.

Disruption  in credit card  processing  also poses some  potential  risk. If the
operation of credit card systems is interrupted,  VirtualSellers can hold orders
for batch  processing  and set up an automated  message  explaining any delay in
order-processing to persons placing orders. If the delay is significant, persons
placing orders will be contacted to discuss alternative forms of payment, and to

<PAGE>51


verify  whether  they wish to keep  credit card orders  pending  restoration  of
credit card processing  services.  It i anticipated that the financial impact to
VirtualSellers  will  only  become  material  if  credit  card  connections  are
disrupted for more than ten days. VirtualSellers will be informing its customers
of these potential issues.

UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES RECONCILIATION

The Company's  financial  statements  are prepared in  accordance  with Canadian
generally accepted accounting  principles ("Canadian GAAP"), which do not differ
materially  from United States  generally  accepted  accounting  principles ("US
GAAP") with respect to  accounting  policies and  disclosures  in the  Company's
financial statements except as follows:

     Under US GAAP,  advertising and media research costs, employee education
     advances and foreign exchange gains and losses deferred under Canadian GAAP
     would be expensed. In addition,  shares to be issued for settlement of debt
     would be classified as long-term liabilities until the shares are issued.

Giving  effect to these  differences  under US GAAP,  the  Company's  net income
(loss)  net income  (loss)  per share for the years  ended  February  28,  1999,
February  29,  1998 and  February  28,  1997 were ($2.4  million)  or ($0.04 per
share), $24.5 million or $.50 per share and ($40.4 million) or ($.98 per share),
respectively.

Total assets,  determined in accordance  with US GAAP at February 28, 1999, 1998
and 1997 were $328,932, $1.18 million and $9.76 million, respectively.  Under US
GAAP an audit report on the  Company's  financial  statements  would  include an
explanation  regarding the Company's ability to continue as a going concern. See
Footnote 12 to the Consolidated  Financial Statements for additional information
concerning reconciliation of the Company's financial statements.

CERTAIN FINANCINGS

REVIEW OF PAST FINANCINGS

On February 28, 1992 the Company issued and sold by way of private  placement US
$1,000  face  amount of  non-transferable  subordinated  debentures  (the  "1995
Debentures")  in an amount  totaling US $6.0 million.  The 1995  Debentures were
unsecured,  bore  interest at the rate of 10% per annum and were due on February
28, 1995. The 1995 Debentures were  convertible into Shares at the option of the
purchaser  at a price of US $10.00 per Share from March 1, 1992 to February  28,
1993, US $10.50 per share from March 1, 1993 to February 28, 1994, and US $11.00
per Share from March l, 1994 to February 28, 1995.  The Company had the right to
force conversion of the 1995 Debentures at any time after the first  anniversary

<PAGE>52


at the  conversion  price in effect at that time if, at that time, the Shares of
the  Company  had  traded  at a  price  equal  to or  greater  than  100% of the
conversion  price in effect  at that  time for a period  of  twenty  consecutive
calendar days.

As an  inducement  to the purchase of the 1995  Debentures,  the Company  issued
60,000 Shares at a deemed price of US $10.00 per Share to the  purchasers of the
debentures  on a pro rata  basis.  The Shares  issued as an  inducement  and the
Shares  issued on  conversion  of the 1995  Debentures  were  subject  to resale
restrictions under applicable securities laws and may only be traded through the
facilities of the Vancouver  Stock  Exchange.  The 1995  Debentures  were issued
pursuant to a Trust  Indenture  dated as of May 31, 1990,  as amended by a First
Supplemental Trust Indenture dated February 11, 1992, and as amended by a Second
Supplemental  Trust  Indenture  dated February 28, 1993 (the "Trust  Indenture")
with Montreal  Trust  Company of Canada as the trustee.  The Company also issued
19,600  Shares at a deemed  price of US $10.00  per  Share as  Finders'  Fees in
connection with the issuance and sale of the 1995 Debentures.

On February 26, 1993 and March 1, 1993 the Company  issued  515,000  Shares at a
deemed  price of US $10.00 per Share and 80,949  Shares at a deemed  price of US
$10.50  per  Share  respectively  to  convert  all of the 1995  Debentures.  The
conversion  of debt to equity  reduced  interest  expense  for fiscal 1994 by US
$600,000.

On July 31,  1992,  the Company  issued and sold by way of private  placement US
$1,000  face  amount  of   convertible   subordinated   debentures   (the  "1997
Debentures")  in an amount  totaling US $5.0  million to certain  United  States
mutual funds.  The 1997 Debentures were unsecured,  bore interest at the rate of
10% per  annum  and were due on  August  15,  1997.  The  1997  Debentures  were
convertible  into Shares at the option of the holder at a price of US $12.50 per
Share.  The Company had the right to force  conversion o the 1997  Debentures at
any time after July 15, 1994 at a conversion price of US $12.50 per Share if, at
that time,  the Shares have  traded at a price equal to or greater  than 110% of
the  conversion  price for a period of twenty  consecutive  calendar  days.  Any
Shares issued on conversion of the debentures are subject to resale restrictions
under  applicable  securities laws and may only be traded through the facilities
of the Vancouver Stock Exchange. The 1997 Debentures were issued pursuant to the
Trust Indenture,  as amended by a Third  Supplemental Trust Indenture dated July
15, 1992.  The Company also issued  36,600 Shares at a deemed price of US $12.50
per share as finders' fees in connection  with the issuance and sale of the 1997
Debentures.  All of the  outstanding  1997  Debentures  have been  redeemed upon
issuance of US $11.3 million convertible debentures (see below).

On February 21, 1994, the Company issued 1,222,465 Shares due to the exercise of
1,071,400  special  warrants  by which the  Company  raised  $14,999,600  before
commissions of $899,976.

In  September,  1995,  the Company  issued and sold by way of private  placement
21,500  preferred  shares (the "Preferred  Shares") at a deemed price of US $100
per Preferred  Share in an amount  totaling US $2,150,000.  A fee of US $215,000
was paid to an unaffiliated third party for placement of the Preferred Shares.


<PAGE>53


The  Preferred  Shares,  valued for  purposes  of  conversion  at US $100.00 per
Preferred Share,  were convertible into Shares at a price per Share equal to the
lower of (i) the product of .70  multiplied  by the "Average  Stock Price before
Notice" per Share and (ii) the product of .70  multiplied by the "Average  Stock
Price before Subscription" per Share,  subject to certain adjustments.  "Average
Stock Price before  Notice" and "Average Stock Price before  Subscription"  mean
the  average  daily  closing  bid  prices  for Shares for the period of five (5)
consecutive trading days,  respectively,  immediately  preceding the date of the
notice  of  conversion  of the  Shares  and  immediately  preceding  the date of
subscription for the Shares.

During the period of November, 1995 through January, 1996 all of the outstanding
Preferred  Shares were  converted into a total of 2,799,542  Shares.  The Shares
issued on conversion of the Preferred Shares are subject to resale  restrictions
under applicable securities laws.

On April 4, 1996,  the Company  issued and sold by way of private  placement  US
$1,000 unsecured,  non-transferable  debentures (the "Fourth Series  Convertible
Debentures") in the aggregate  principal  amount of US  $11,300,000.  The Fourth
Series Convertible Debentures (i) mature on April 4, 1998; (ii) bear interest at
the  rate of 11.5%  per  annum  payable  quarterly;  (iii)  are  redeemable  and
purchasable by the Company at any time at par plus accrued and unpaid  interest;
and (iv) are convertible  into Shares of the Company at the option of the holder
thereof or by the  Company  if certain  conditions  are met.  The Fourth  Series
Convertible  Debentures were issued pursuant to the Trust Indenture,  as amended
by a Fourth  Supplemental  Indenture  dated as of April  4,  1996  (the  "Fourth
Supplemental Indenture").

The Fourth Series  Convertible  Debentures  are  convertible  into Shares at the
option of the holder at US $2.00 per Share,  subject to certain  adjustments set
forth in the Fourth Supplemental  Indenture.  The Company had the right to force
conversion of the Fourth Series Convertible  Debentures at a conversion price of
US $2.00 per Share if, at that time,  the Shares have traded at a price equal to
or  greater  than 150% of the  conversion  price  for a period  of  twenty  (20)
consecutive days.

On May 31, 1996, the Company received US $11.3 million on issuance of debentures
bearing  interest at 11.5% per annum,  repayable on May 31, 1998 and convertible
into  Shares of the  Company  at the option of the holder at a price of US $2.00
per Share. Part of the proceeds were used to redeem the 1997 series  convertible
debentures.  The Company also issued 4,235 Shares to the debenture holders as an
inducement  fee and 541,666  common  shares to a third  party as a finders  fee.
During 1997, US $750,000 in  convertible  debentures  were converted for 375,000
Shares.
As part of a US  $4,000,000  offering of  convertible  debentures  (subsequently
closed in March 1998 at US $850,000),  the Company  received US $500,000 between
November 20, 1997 and February 28, 1998. The debentures  bear interest at 9% per
annum,  are  repayable  on or before  the date  which is nine  months  after the
offering is completed and were  convertible into Shares of the Company at a rate
of US $.10 per Share at any time after March 12, 1998.  Subsequent  to year end,
the Company  received a further US $50,00 and the offering  was closed.  All the

<PAGE>54


debenture  holders  exchanged their  debentures,  and 8,500,000 Shares have been
issued. There was no interest paid or accrued on these debentures.

The  Company  issued  a US  $105,000  promissory  note  in  conjunction  with an
acquisition of assets for the Call Center.  The note was  non-interest  bearing,
secured by the assets  purchased,  repayable on December 31, 1998 or convertible
into Shares at a rate of US $1.0 per share on December 31,  1998.  The holder of
the note  exchanged  the full  principal  and  interest  amount of the note into
Shares.

CURRENT FINANCINGS

In January  1999,  the Company  commenced an offering of up to US  $4,000,000 of
convertible  debentures.  By May 15, 1999, the Company had received  $725,000 in
subscriptions. The debentures bear interest at 9% per annum, are repayable on or
before a date to be  determined  to be  twelve  months  after  the  offering  is
completed and are convertible  into Shares at a rate of US$0.10 per Share at any
time after the close of the offerings.

ITEM 10        DIRECTORS AND OFFICERS

The  following  table sets  forth the names,  municipalities  of  residence  and
principal occupations of the directors and officers of the Company.

<TABLE>
<S>                      <C>                                             <C>

Name, Office Held,       Principal                                         Director                  Share Ownership As of
Place of Residence       Occupation                                        Since                         May 1, 1992 (2)
--------------------    ----------------------------------------------   ------------------          -------------------------
Dennis Sinclair,         Director and President of the Company since       December 6, 1996                 4,250,000
President, CEO and       December 6, 1996.  Senior Equity analyst for
Director                 for H.J. Meyers & Company, Inc. from 8/95-
Chicago, Illinois        12/96; Investment Banker for Newport West
                         Securities from 1/94 - 8/95; Vice President
                         of Business Development for Validyne
                         Engineering from 8/93-10/94; Consultant with
                         Dennis Sinclair & Associates from 1988-1993

Raymond Mol,             Director and COO of Company since 11/96.          November 1996                      700,000
Director                 Promoter of Call Director Enterprises from
Surrey, BC               1/96-10/96.  Founding Partner, CFO and Director
                         of Lifestart Learning Systems from 6/93-8/95.

Mel Baille,              Principal in Baille and Associates Consulting     November 1996                       450,000
Director                 from 12/96-present.  VP of Marketing and Sales
West Vancouver,          Westel Telecommunications from 12/95-12/96. VP
BC                       Sales Western Canada, Unitel Communications Inc.
                         from 1991-1995.

<PAGE>55



Name, Office Held,       Principal                                         Director                  Share Ownership As of
Place of Residence       Occupation                                          Since                       May 1, 1992 (2)
--------------------    ----------------------------------------------   ------------------          -------------------------

Cary Berman (1)          Secretary and VP Corporate Development for the        N/A                            1,150,000
Secretary and VP         Company since May 1997.  Owner of Lube at Work
Corporate Development    from January 1995 to May 1997.  Health Care
Chicago, IL              Consultant for Blue Cross and Blue Shield in
                         1994.

</TABLE>
(1)  Mr. Sinclair is married to Mr. Berman's mother.

(2)  Unless otherwise indicated,  the Company believes that all persons named in
     the table have sole voting and investment  power with respect to the common
     shares beneficially owned by them.

ITEM 11        COMPENSATION OF DIRECTORS AND OFFICERS
(All numbers in Canadian dollars unless otherwise noted)

The following  table sets forth  remuneration  received by each of the Company's
officers and directors in the fiscal years ended  February 28, 1999 and February
28, 1998:


SUMMARY  COMPENSATION  TABLE

<TABLE>
<S>                   <C>       <C>       <C>     <C>        <C>          <C>          <C>     <C>


                                                                  Long Term         Pay-
                                  Annual Compensation          Compensation(1)      outs
                              ---------------------------- ----------------------- -------

                                                              Securities
                                                     Other       Under    Restricted
                                                    Annual     Options/    Shares or    LTIP    All Other
 Name and Principal                                 Compen-      SAR's    Restricted    Pay-     Compen-
      Position         Year     Salary    Bonus    sation(2)    Granted   Share Units   outs     sation
--------------------  -------  --------- -------- ----------- ----------- ----------- -------- -----------

Dr. Dennis Sinclair     1999    $210,000    N/A       N/A          Nil         N/A         N/A      Nil
President,              1998    $210,000    N/A       N/A          Nil         N/A         N/A      $425,000(3)
CEO and Director
--------------------  -------  --------- -------- ----------- ----------- ----------- -------- -----------

Cary Berman            1999     $75,000    N/A        N/A          Nil         N/A         N/A      $ 93,500(4)
Corporate Secretary    1998     $75,000    N/A        N/A          Nil         N/A         N/A      $  6,000(4)
and VP Corporate
Dev.
--------------------  -------  --------- -------- ----------- ----------- ----------- -------- -----------

Raymond Mol(5)         1999      N/A       N/A       N/A          Nil         N/A         N/A      N/A
Director Former COO    1998     $30,000    N/A       N/A          Nil         N/A         N/A      $  32,000(6)



Mel Baillie            1999      N/A       N/A       N/A          Nil         N/A         N/A      N/A
Director               1998      N/A       N/A       N/A          Nil         N/A         N/A      $10,000(7)

--------------------  -------  --------- -------- ----------- ----------- ----------- -------- -----------
</TABLE>
(1)  The Corporation has not granted any restricted  shares or restricted  share
     units, stock appreciation rights or long term incentive plan payouts to the
     named officers and directors during the fiscal years indicated.
(2)  The  value of  perquisites  and other  personal  benefits,  securities  and
     property for the named  officers and directors  that do not exceed the less
     of  $50,000  or 10% of the  total of the  annual  salary  and  bonus is not
     reported herein.
(3)  Dr. Dennis Sinclair received  2,500,000 common shares valued at $425,000 as
     part of his compensation as President CEO and director for the period ended
     February 28, 1998.

<PAGE>56


(4)  Cary Berman received  150,000 common shares valued at $6,000 as part of his
     compensation as Vice-President,  CFO and Corporate Secretary for the period
     ended February 28, 1998 and 900,000 common shares valued at $93,000 for the
     period ended February 28, 1999.
(5)  Mr. Mol resigned as COO on June 30, 1997.
(6)  Mr. Mol received  800,000  common  shares  valued at $32,000 as part of his
     compensation as COO and director.
(7)  Mr. Baillie received 200,000 common shares valued at $10,000 as part of his
     compensation as director.


Option Grants During the Most Recently Completed Financial Year

There are no options or grants issued for the period ended February 28, 1999.

Aggregated Option Exercises During Most Recently Completed Year and Financial
Year-End Option Values

There are no  outstanding  grants or options as of the year ended  February  28,
1999.

Option Repricings


During the fiscal year ended February 28, 1999,  there were no options that were
repriced.


TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS

As a term of the employment contracts between the Company and each of Dr. Dennis
Sinclair,  Michael  Gilley and Raymond Mol,  each of these members of management
were  entitled  to receive in  addition to their  normal  compensation,  a fixed
percentage  of the gross revenue  generated by any  significant  transaction  in
relation to the  Company  and its  subsidiaries.  Certain  agreements  and prior
transactions  have  created an  entitlement  for those  three (3)  employees  of
$280,000,  which  entitlement was disclosed to and approved by creditors and the
Court in the CCAA Proceeding. The obligations to these employees were met by the
Company under the CCAA Proceeding.

As a  cost-saving  measure,  Messrs.  Gilley and Mol  resigned  from the Company
effective July 22, 1997 and June 30, 1997, respectively,  and agreed to continue
to provide  services to the Company pursuant to consultant  agreements.  Both of
the  consultant  agreements  have since  expired.  Dr. Dennis  Sinclair and Cary
Berman  continue as employees of the Company under  employment  agreements.  The
monthly compensation received by each employee (or the consulting company) is as
follows:

        Dr. Dennis Sinclair         $17,500
        Cary Berman                 $ 7,500

The employment  agreements  with each of Dr. Dennis Sinclair and Mr. Cary Berman
provide  that in the event that the board of directors  directs Dr.  Sinclair or
Mr.  Berman  to  negotiate  the terms of a  transfer,  sale,  merger,  takeover,
acquisition,   reorganization  or  consolidation  of  the  Company  (or  all  or

<PAGE>57


substantially all of the assets of the Company or the Company's shares) (each, a
"Transaction"),  then Dr.  Sinclair  or Mr.  Berman,  as the case may be,  is to
receive a bonus of 1.5% of the monetary value of such Transaction, upon approval
of the Transaction by the Board of Directors of the Company.  The bonus is to be
paid in common shares based on the then average trading price  immediately prior
to the announcement of such Transaction.

COMPOSITION OF COMPENSATION COMMITTEE

The Board of Directors maintains a Compensation Committee consisting of at least
two  directors,  each  of  whom  shall  not be  employees  of the  Company.  The
Compensation  Committee  is  currently  composed of Mr.  Raymond Mol and Mr. Mel
Baille.  The  Committee  will make  recommendations  to the  Board of  Directors
concerning the salaries of all executive officers. In addition, the Compensation
Committee  determines  the  amounts of any grants of equity  securities  and the
individuals to whom awards should be made.

COMPOSITION OF AUDIT COMMITTEE

The Board of Directors  maintains  an Audit  Committee.  The Audit  Committee is
composed of Messrs.  Sinclair and Mol. The function of the Audit Committee is to
review and  approve  the scope of audit  procedures  employed  by the  Company's
independent  auditors, to review the results of the auditor's  examination,  the
scope of audits, the auditor's opinions on the adequacy of internal controls and
quality of financial  reporting,  and the  Company's  accounting  and  reporting
principles,  policies  and  practices,  as  well  as the  Company's  accounting,
financial and operating controls.  The Audit Committee also reports to the Board
of  Directors  with  respect to such  matters and  recommends  the  selection of
independent auditors.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Company's executive  compensation  program is designed to provide incentives
 for the enhancement of shareholder value, the successful  implementation of the
 Company's  business plans and improvements in personal  performance.  The total
 compensation program is comprised of two components:  base salary and long term
 incentive  by way of stock.  An  executive's  base salary is  determined  by an
 assessment  of  his  or  her  performance  and   consideration  of  competitive
 compensation  levels  for  comparable  public  companies  In  order to link the
 interests  of the  executives  with the  interests of the  shareholders  and to
 encourage the  executives to promote the long term interests of the Company and
 its  shareholders,  the Company  issues  fully paid and  non-assessable  common
 shares as a portion  of their  compensation.  The  granting  of shares  must be
 approved by the  Company's  Board of Directors.  The Board of Directors  places
 relatively  greater  emphasis  on  the  long  term  incentive  component  of an
 executive's total compensation package

President and CEO's Compensation

Dr. Dennis  Sinclair has been granted a level of compensation  appropriate  with
his past experience and performance with the Company. Included in this valuation

<PAGE>58


is Dr. Sinclair's  success in taking the Company though the CCAA process and its
relisting on the NASD exchange.  During the fiscal year ended February 28, 1999,
Dr. Sinclair was paid US$210,000 per year plus 2,500,000 shares of common stock.
As of May 1, 1999, Dr. Sinclair will receive a increase in base salary US$80,000
per year plus 1,500,000 shares of common stock.


ITEM 12        OPTIONS TO PURCHASE SECURITIES

There were no  outstanding  options  granted to  officers  or  directors  of the
Company as at February 28, 1999. As part of the CCAA Proceeding, the Company has
issued 13,000,000 warrants to former creditors. Each warrant entitles the holder
thereof the acquire one Share without further consideration. The warrants expire
two years after issuance.  As at February 28, 1999,  8,183,337  Shares have been
issued to creditors pursuant to the exercise of such warrants.

ITEM 13        INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Except  as set  forth  below,  none  of the  insiders  of the  Company,  nor any
associate or affiliate of said persons, has had any material interest, direct or
indirect,  in any  transaction  since the  commencement  of the  Company's  last
financial year, or in any proposed transaction, which has materially affected or
would materially affect the Company or any of its subsidiaries.

Dr. Dennis Sinclair,  the President,  Chief Executive  Officer and a director of
the Company is a principal and the sole  shareholder of Concept 10  Incorporated
(the  "Agent"),  who is acting as the Agent with  respect to an  offering by the
Company of up to $4,000,000 of convertible notes (the  "Offering").  In exchange
for acting as the Agent for the Offering, Concept 10 Incorporated will receive a
cash commission equal to seven and one-half percent (7.5%) of the gross proceeds
received from the Offering.

See  ITEM  11 -  Termination  of  Employment,  Change  in  Responsibilities  and
Employment   Contracts  with  respect  to  terms  of  the  insiders   employment
agreements.


PART II

ITEM 14        DESCRIPTION OF SECURITIES TO BE REGISTERED

Not applicable

<PAGE>59


PART III

ITEM 15        DEFAULTS UPON SENIOR SECURITIES

The Company  defaulted  in the payment of  principal  and interest on all of its
debenture  obligations,  which  was  one  of  the  reasons  the  Company  sought
protection  from its  creditors  under  the CCAA  Proceeding.  Under the Plan of
Reorganization the debenture holders will receive between CDN$.10 and CDN$.25 on
the dollar and as detailed in the Summary of the Reorganization  Plan in Exhibit
1.1.

ITEM 16 CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES
Not applicable.


PART IV

ITEM 17        FINANCIAL STATEMENTS

Not applicable. See ITEM 18 - Financial Statements.


ITEM 18        FINANCIAL STATEMENTS
(All numbers are Canadian Dollars unless otherwise noted)

Consolidated Balance Sheets of the Company as of February 28, 1999, February 28,
1998,  and February 28,  1997,  together  with the  Consolidated  Statements  of
Operations  and  Deficit,  and Changes in Financial  Position  and  Consolidated
Schedules of Operating Expenses and Administrative  Expenses for the years ended
February 28, 1999,  February 28, 1998 and February 28, 1997  reported on by KPMG
Peat Marwick Thorne Chartered Accountants.

These financial  statements are expressed in Canadian  dollars and were prepared
in accordance with Canadian generally-accepted  accounting principles, which are
substantially   the  same  as  United   States   generally-accepted   accounting
principles.    For   a   reconciliation   of   Canadian   with   United   States
generally-accepted   accounting  principles,   see  Note  12  to  the  Company's
Consolidated Financial Statements. For a history of the exchange rates in effect
between the Canadian dollar and the United States dollar,  see ITEM 8 - Selected
Financial Data.


ITEM 19     FINANCIAL  STATEMENTS AND EXHIBITS All Audited  Statements are
            in Canadian Dollars and presented on a consolidated basis.

Audited Consolidated Financials - Fiscal Year Ending February 28, 1999




<PAGE>60






                                         SIGNATURE

        Pursuant to the  requirements  of Section 12 of the Securities  Exchange
Act of 1934, the registrant  certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused  this Annual  Report to be signed on its
behalf by the undersigned, hereunto duly authorized.

 Dated: May 28, 1999                          SUNCOM Telecommunications, Inc.

                                               By:/s/ Dr. DENNIS SINCLAIR
                                                  ----------------------------
                                                      Dr. Dennis Sinclair
                                                      Chief Executive Officer

<PAGE>61


               Auditors Report to the Shareholders                      63

               Balance Sheet                                            65

               Statements of Operations and Deficit                     66

               Statement of Changes in Financial Position               67

               Notes to Financial Statements                            68

               Schedule of Administrative Expenses                      81



<PAGE>62




                      Consolidated Financial Statements of


                         SUNCOM TELECOMMUNICATIONS INC.
                         (Expressed in Canadian dollars)





                  Years ended February 28, 1999, 1998 and 1997





<PAGE>63


Auditors' Report to the Shareholders



We have audited the  consolidated  balance  sheets of Suncom  Telecommunications
Inc.  as at  February  28,  1999  and 1998 and the  consolidated  statements  of
operations  and deficit and changes in  financial  position  for the years ended
February  28,  1999,  1998  and  1997.   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
in Canada.  Those standards  require that we plan and perform an audit to obtain
reasonable  assurance  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.

In our opinion,  these consolidated  financial statements present fairly, in all
material respects, the financial position of the Company as at February 28, 1999
and 1998 and the  results of its  operations  and the  changes in its  financial
position for the years ended February 28, 1999, 1998 and 1997 in accordance with
generally accepted accounting principles in Canada.

Significant  differences  between Canadian and United States generally  accepted
accounting  principles  are quantified and explained in note 12 to the financial
statements.


"KPMG"

Chartered Accountants

Vancouver, Canada

March 10, 1999



<PAGE>64



COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING DIFFERENCE



In the United States,  reporting  standards for auditors require the addition of
an explanatory  paragraph  (following the opinion  paragraph) when the financial
statements are affected by conditions and events that cast substantial  doubt on
the Company's ability to continue as a going concern, such as those described in
note 1 to the financial  statements.  Our report to the shareholders dated March
10, 1999, is expressed in accordance with Canadian reporting  standards which do
not permit a reference to such events and  conditions  in the  auditors'  report
when these are adequately disclosed in the financial statements.


"KPMG"


Chartered Accountants

Vancouver, Canada

March 10, 1999





<PAGE>65


  SUNCOM TELECOMMUNICATIONS INC.
  Consolidated Balance Sheets
  (Expressed in Canadian dollars)

  As at February 28, 1999 and 1998

<TABLE>
<S>                                                         <C>              <C>
                                                                1999              1998
--------------------------------------------------------- ----------------- -----------------


  Assets

  Current assets:
    Cash and cash equivalents                              $      114,402     $    1,064,908
    Accounts receivable (note 14)                                  45,095             25,282
    Prepaid expenses and advances (note 6)                         21,756             15,357
                                                            ------------         ----------
                                                                  181,253          1,105,547


Investment (note 7)                                                     1                  -

Capital assets (note 8)                                           147,678            157,957

Restricted cash held in trust (note 3)                          1,519,656          2,291,662
Less trust accounts payable and accrued liabilities             1,519,656          2,374,315
                                                                        -            (82,653)
                                                            -------------         ----------
                                                            $     328,932     $    1,180,851
                                                            =============          =========

Liabilities and Deficiency in Assets


Current liabilities:
    Accounts payable and accrued liabilities               $      261,258     $      147,599
    Current portion of long-term debt                             412,020            150,150
                                                            -------------           --------
                                                                  673,278            297,749


Employee obligations (note 10(c))                                       -            434,000

Long-term debt (note 9)                                                 -            722,932

Shareholders' deficiency in assets:
    Share capital (note 10)                                    12,176,977          9,818,356
    Deficit                                                   (12,521,323)       (10,092,186)
                                                            --------------       ------------
                                                                 (344,346)          (273,830)


Future operations (note 1)
Contingencies (notes 3, 4, 5 and 13)
                                                           $      328,932     $    1,180,851
                                                            =============      ==============
</TABLE>

  See accompanying notes to consolidated financial statements.

  On behalf of the Board:

  "Dennis Sinclair                     "Raymond Mol"
---------------------                  --------------
   Director                              Director


<PAGE>66



  SUNCOM TELECOMMUNICATIONS INC.
  Consolidated Statements of Operations and Deficit
  (Expressed in Canadian dollars)
<TABLE>
<S>                                            <C>             <C>              <C>

                                                     Years ended February 28,
                                                1999             1998            1997
--------------------------------------------- ---------------- --------------- ----------------

  Revenue                                      $   265,715      $    1,274,385   $   38,328,435

  Costs and expenses:
    Direct costs                                         -             814,465        34,036,369
      Selling, general and administrative
      expenses (schedule)                        2,524,748           3,047,122        17,279,989
    Depreciation and amortization                   28,457               7,167         9,325,803
                                               -----------       -------------   ---------------
                                                 2,553,205           3,868,754        60,642,161
                                               -----------       -------------   ---------------


Loss before other income (expense)               2,287,490           2,594,369        22,313,726

Other income (expense):
    Foreign exchange gains (losses)                 65,542               6,143          (261,167)
    Miscellaneous                                   85,076             126,818           173,921
    Loss on sale of capital assets                  (8,766)                  -                -
    Write-down of investment (note 7)             (283,499)                  -                -
    Gain on forgiveness of debt (note 3)                 -          25,672,726                -
    Gain on sale of CNC and CNT (note 5)                 -           3,010,000                -
    Income tax interest and penalties                    -            (125,021)               -
    Loss on settlement of lawsuit                        -          (1,560,420)               -
      Loss on settlement of class action lawsuit         -                   -       (3,312,000)
    Write-down of assets held for resale (note 4)        -                   -      (15,207,861)
    Gain on sale of subsidiaries                         -                   -          663,783
    Lawsuit expenses                                     -                   -         (441,198)
                                            --------------     ---------------   ---------------
                                                 (141,647)          27,130,246       (18,384,522)

Net income (loss) for the year                 (2,429,137)          24,535,877       (40,698,248)

Deficit, beginning of year                    (10,092,186)         (34,628,063)     (111,464,815)

  Reduction of common share stated capital
  (note-10(d))                                          -                    -       117,535,000

Deficit, end of year                         $(12,521,323)      $  (10,092,186)    $ (34,628,063)
                                            --------------       --------------    --------------

Net income (loss)  per common share
 (note 2(f)                                  $      (0.04)      $         0.50      $      (0.99)
                                             =============     ================    ==============

See accompanying notes to consolidated financial statements.

<PAGE>67


                         SUNCOM TELECOMMUNICATIONS INC.
            Consolidated Statements of Changes in Financial Position
                         (Expressed in Canadian dollars)


                                                      Years ended February 28,

                                                     1999            1998           1997
---------------------------------------------- --------------- -------------- ------------------

  Cash provided by (used in):

  Operations:
    Net income (loss) for the year               $  (2,429,137) $   24,535,877  $  (40,698,248)
    Items not involving cash:
         Write-down of investment                      283,499               -               -
         Depreciation and amortization                  28,457           7,167       9,325,803
         Loss on sale of capital assets                  8,766               -               -
        Gain on forgiveness of debt                          -     (25,672,726)              -
        Loss on settlement of TeleHub lawsuit                -       1,560,420               -
         Gain on sale of CNC and CNT                         -      (3,010,000)              -
         Amortization of deferred foreign exchange
          loss                                               -               -         261,167
         Gain on sale of ITI and BTC                         -               -        (663,783)
         Write-down of assets held for resale                -               -       15,207,861
    Change in non-cash operating working capital:
        Accounts receivable                            (19,813)        (25,282)       4,780,681
        Prepaid expenses and advances                   (6,399)      1,263,668       (1,756,083)
        Accounts payable and accrued liabilities       113,659      (2,901,724)      (6,824,661)
        Unearned revenue and tenant inducements              -               -         (230,115)
                                                  -------------    ------------   --------------
                                                    (2,020,968)     (4,242,600)     (20,597,378)

Financing:
      Issuance of common shares                      2,358,621         527,910       28,102,576
      2000 convertible debentures issued               412,020               -               -
      1999 convertible debentures issued               499,000         722,932               -
      1999 convertible debentures repaid            (1,221,932)              -               -
      Notes issued (repaid)                           (150,150)        150,150               -
      Employee obligations                            (434,000)        434,000               -
      Shares to be issued                                    -      (4,010,468)     (3,692,790)
      1998 series convertible debentures issued              -               -      15,512,330
      1998 series convertible debentures repaid              -               -      (6,933,000)
      1998 series convertible debentures converted           -               -      (1,021,905)
      Demand loans repaid                                    -               -      (5,814,363)
      Bank indebtedness of U.S. subsidiaries at
       disposal date                                         -               -       1,758,355
      Capital lease payments                                 -               -      (1,134,285)
      Interest portion of lease payments                     -               -          362,141
                                                  ------------     ------------  --------------
                                                     1,463,559      (2,175,476)     27,139,059
Investments:
      Investment                                      (283,500)              -               -
    Acquisition of capital assets                      (26,944)       (165,124)        (68,425)
    Restricted cash held in trust                      (82,653)     (2,291,662)              -
    Proceeds on sale of subsidiaries                         -       3,010,000               -
    Proceeds on sale of assets                               -       6,750,000               -
    Deferred financing costs                                 -               -      (6,290,306)
    Licence and acquired customer base                       -               -         (41,030)
                                                  ------------     ------------   -------------
                                                      (393,097)      7,303,214       (6,399,761)
                                                  ------------     ------------   -------------

Increase (decrease) in cash and cash equivalents      (950,506)        885,138          141,920

Cash and cash equivalents, beginning of year         1,064,908         179,770           37,850
                                                  ------------    ------------   --------------
Cash and cash equivalents, end of year            $    114,402     $ 1,064,908    $     179,770
                                                  ============    ============    ==============
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>68



  SUNCOM TELECOMMUNICATIONS INC.
  Notes to Consolidated Financial Statements
  (Expressed in Canadian dollars)

  Years ended February 28, 1999, 1998 and 1997






    1.                                     Future operations:

    These  consolidated  financial  statements  have  been  prepared  on a going
    concern basis which assumes the  realization  of assets and  liquidation  of
    liabilities  in the normal  course of business.  The Company  incurred a net
    loss for the year ended  February 28, 1999 in the amount of  $2,363,681  and
    has a working  capital  deficiency  of $416,569 at February  28,  1999.  The
    application  of the going  concern  concept  and the  Company's  ability  to
    recover its  investment  and capital  assets are  dependent on the Company's
    ability to raise additional  capital through the issuance of shares,  on its
    ability to obtain debt  financing  and on its ability to acquire  additional
    profitable  operating  call  centers.  Management  believes the Company will
    raise  additional  capital  through the  issuance of shares and  convertible
    debentures  to meet its  obligations  as they become  payable and to acquire
    additional operating assets.



    2. Significant accounting policies:

        (a)    Basis of presentation:

These  consolidated  financial  statements have been prepared in accordance with
generally accepted accounting  principles in Canada. Except as disclosed in note
12,  these  principles  do not  differ  materially  from  accounting  principles
generally accepted in the United States.

These consolidated  financial statements include the accounts of the Company and
its wholly-owned  subsidiaries.  All  subsidiaries  were acquired from unrelated
parties and have been accounted for using the purchase method.

        Their  results of  operations  have been  included  from the  respective
effective  dates of  acquisition.  All  significant  intercompany  balances  and
transactions have been eliminated.

<TABLE>
<S>                                                     <C>

Canadian subsidiaries                                   United States subsidiaries
-----------------------------------------              ------------------------------------

Cam-Net Communications Inc. ("CNC") **                 Cam-Net Inc.

Cam-Net Telecommunications Inc. ("CNT")**              Cam-Net Holdings Inc.

Canadian-American Communications Inc.                  Cam-Net Systems Inc.

Canadian Northstar Transmission Systems Ltd.           Northstar Transmission Systems Inc.

Preferred Telemanagement Inc. ("PTI")                  Northstar Telesolutions Inc.

Direct Advantage Inc.
</TABLE>



**   Both of these Canadian  subsidiaries  were sold on April 30, 1997 (note 5).
     The  results  of  operations  to  the  sale  date  are  included  in  these
     consolidated financial statements.

        (b) Cash and cash equivalents:

        Cash and cash  equivalents  includes  short-term  instruments  which, on
acquisition, have a remaining term to maturity of three months or less.


<PAGE>69


  SUNCOM TELECOMMUNICATIONS INC.
  Notes to Consolidated Financial Statements, page 2
  (Expressed in Canadian dollars)

  Years ended February 28, 1999, 1998 and 1997

    2.     Significant accounting policies (continued):

        (c)    Capital assets:

        Capital assets are recorded at cost.  Depreciation is recorded using the
straight-line method over the following estimated useful lives:


                Office equipment                  5 years


No depreciation is recorded on capital assets not yet put in use.

        (d)    Revenue recognition:

        The Company recognizes revenue from its call center based on monthly per
customer charges for standard services.

        (e)    Foreign exchange:

Balance sheet items  denominated in United States  dollars are  translated  into
Canadian  dollars at exchange  rates  prevailing  at the balance  sheet date for
monetary  items and at  exchange  rates in effect  at the  transaction  date for
non-monetary  items.  Statement of operations  items are translated at actual or
average rates  prevailing  during the year.  Gains and losses on  translation of
long-term  monetary  items are deferred and amortized over the remaining life of
the  items.  Gains and  losses on  translation  of  current  monetary  items are
included in operations as incurred.

        (f) Net income (loss) per common share:

        Basic net  income  (loss)  per  common  share is  computed  based on the
weighted average number of common shares outstanding during the year, which were
are follows:


               1999                            65,748,339
               1998                            48,619,799
               1997                            41,084,545
Fully diluted  earnings per share for 1998 is $0.40.  Fully diluted earnings per
share has not been  presented for 1999 and 1997 as this would have the effect of
reducing the loss per share.

<PAGE>70



  SUNCOM TELECOMMUNICATIONS INC.
  Notes to Consolidated Financial Statements, page 3
  (Expressed in Canadian dollars)

  Years ended February 28, 1999, 1998 and 1997

    2.     Significant accounting policies (continued):

       (g) Use of estimates:

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the reported  amounts of the assets and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported  amounts of revenues and expenses during the reporting  period.  In
these consolidated financial statements,  significant areas requiring the use of
management  estimates  relate  to the  determination  of the  recoverability  of
accounts  receivable and capital assets and the related income statement amounts
for bad debt expense and  depreciation  and  amortization.  Actual results could
differ from those estimates.

        (h)    Financial instruments:

The fair values of cash and cash equivalents,  accounts receivable, advances and
accounts payable and accrued liabilities  approximates their carrying values due
to the short  term  nature of these  amounts.  The fair  value of the  Company's
long-term debt which includes  debentures  and notes payable,  approximates  its
carrying value as these instruments have been recently issued at market interest
rates.


    3. Reorganization plan:

On January 14,  1997,  the Company and its Canadian  subsidiaries  filed for and
received protection under the Company Creditors'  Arrangements Act ("CCAA").  On
July 4, 1997, the Company  submitted a  Reorganization  Plan (the "Plan") to its
secured and unsecured  creditors.  Secured and unsecured  creditors approved the
Plan on August 8, 1997. Details of the Plan are as follows:

     $6,550,772  of the  $6,750,000  received on the asset sale as  disclosed in
     note 4 and approximately  $3,070,000  received on the sale of the Company's
     subsidiaries  CNC and CNT as  disclosed  in note 5 were  paid  into a trust
     account.  $1,000,000  of the  $6,550,772  received  on the  sale of  assets
     represents a conditional  payment;  ; Secured  creditors  with  outstanding
     claims of  approximately  $5,400,000 were paid  $3,222,724 in cash,  issued
     1,000,000  shares (note 10(b)) and were issued a share purchase  warrant to
     acquire  1,000,000 shares in the Company at $1 per share. In addition,  the
     Company  agreed  with one  secured  creditor  on a further  $500,000  as an
     outstanding claim which will only be settled from contingent  consideration
     which may be earned on the sale of CNC and CNT (note 5);

     Crown claims,  which consist  primarily of income,  sales or capital taxes,
     were to be  settled  outside  the Plan and  approximately  $580,000  of the
     proceeds  paid into the trust  account was  segregated to pay for potential
     Crown  claims.  To February  28,  1999,  $196,533  have been paid for Crown
     claims;


<PAGE>71


  SUNCOM TELECOMMUNICATIONS INC.
  Notes to Consolidated Financial Statements, page 4
  (Expressed in Canadian dollars)

  Years ended February 28, 1999, 1998 and 1997


    3.     Reorganization plan (continued):

          $200,000 of the proceeds paid into the trust account was segregated to
          pay  for   creditor   claims   after  the  Company  and  its  Canadian
          subsidiaries  entered CCAA  protection.  Subsequent to the approval of
          the Plan,  a further  $150,000  was  approved by the courts to pay for
          additional  post CCAA claims.  To February 28, 1999,  $349,979 in post
          CCAA claims have been paid;

          $280,000 of the proceeds paid into the trust account was segregated to
          pay for employee  and  consulting  commissions  relating to the assets
          sale as  disclosed  in note 4 and the sale of CNC and CNT as disclosed
          in note 5. At February 28, 1999,  all  commissions  have been paid and
          the amount paid was $280,715;

          $300,000 of the proceeds paid into the trust account was segregated to
          pay for  legal,  monitor  and audit  costs and  $35,000  for  employee
          severance.  Subsequent  to the  approval  of the  Plan,  approximately
          $352,000 has been  approved by the courts as  additional  payments for
          legal and monitor  expenses.  To February 28, 1999,  $652,220 had been
          paid for legal,  monitor  and audit  costs and  $32,925  for  employee
          severance;

          $300,000 of the proceeds  paid into the trust  account was paid to the
          Company  for  working  capital  purposes  on the  condition  that  the
          $300,000  is  repayable  to the  trust  account  out  of  any  further
          recoveries  from  outstanding  litigation and thus may be available to
          unsecured  creditors to the extent of future  recoveries.  During 1998
          and 1999,  $317,500 was repaid to the trust  account  from  recoveries
          from litigation; and

          Unsecured   creditors  with   outstanding   claims  of   approximately
          $31,000,000  were to share in the funds remaining in the trust account
          based on a formula which allocated a portion of the remaining funds to
          the Company's  creditors and a portion to the Company's  subsidiaries'
          creditors. To February 28, 1999, unsecured creditor claims aggregating
          $3,184,150 have been paid. In addition,  13,000,000  shares were to be
          issued to the  unsecured  creditors  based on the same formula used to
          allocate the remaining cash in the trust account (note 10(c)).


<PAGE>72



  SUNCOM TELECOMMUNICATIONS INC.
  Notes to Consolidated Financial Statements, page 5
  (Expressed in Canadian dollars)

  Years ended February 28, 1999, 1998 and 1997




    3.     Reorganization plan (continued):

    Actual  receipts  and  expenditures  of the trust  account  from the date of
inception to February 28, 1999 and 1998 are as follows:

<TABLE>
<S>                                            <C>                    <C>

                                                        1999                   1998
---------------------------------------------- ---------------------- --------------------

Receipts:
    Proceeds from sale of assets                      $           -       $  6,550,772
    Proceeds from the sale of CNC and CNT                         -          3,070,000
    Interest revenue                                         57,935             78,565
    Lawsuit recoveries                                      217,500            100,000
    Miscellaneous revenue                                     1,693              2,125

                                                            277,128          9,801,462
                                                     --------------       -------------

Expenditures:
    Secured creditor payments                                    -           3,222,724
    Unsecured creditor payments                            591,372           2,892,778
    Crown claims                                           196,533                   -
    Legal, monitor and audit costs                          72,215             580,005
    Commissions                                                  -             280,715
    Working capital                                              -             300,000
    Post filing claims                                     164,428             185,551
    Severance costs                                              -              32,925
    Other                                                   24,586              15,102
                                                    --------------         ------------
                                                         1,049,134           7,509,800
                                                    --------------         ------------

Restricted cash held in trust                             (772,006)          2,291,662

Restricted cash held in trust, beginning                 2,291,662                   -
                                                    --------------        ------------
Restricted cash held in trust, closing                $  1,519,656        $  2,291,662
                                                    ==============        =============
</TABLE>


The remaining  restricted  cash held in trust,  if any, will be  distributed  to
unsecured creditors once the following matters are settled:

     The $1,000,000  conditional  payment received on the asset sale (note 4) is
     currently  in  dispute.  The  purchaser  is claiming  that the  conditional
     payment should be returned to the  purchaser.  The Company is claiming that
     the conditional payment should be released and available to settle creditor
     claims.  The outcome of this dispute is  currently  not  determinable;  and

     Crown claims for various taxes are currently in negotiation.



<PAGE>73


  SUNCOM TELECOMMUNICATIONS INC.
  Notes to Consolidated Financial Statements, page 6
  (Expressed in Canadian dollars)

  Years ended February 28, 1999, 1998 and 1997



    3.     Reorganization plan (continued):

     During the year ended February 28, 1998,  the Company  recognized a gain on
     forgiveness of debt of approximately $25,700,000 representing total secured
     and unsecured debt of approximately $34,200,000 less the $6,100,000 paid to
     secured and unsecured  creditors  from the trust account to date and less a
     further  estimated  payment of $2,400,000.  To the extent that there is not
     enough  cash  in the  trust  fund  to pay the  estimated  $2,400,000  after
     settlement  of  Crown  claims  and the  conditional  payment  dispute,  the
     difference will represent additional gain on forgiveness of debt which will
     be  recognized  at that  time.  During the year ended  February  28,  1999,
     approximately  $900,000  of the  $2,400,000  was repaid from the trust fund
     leaving  a balance  of  approximately  $1,500,000  in  restricted  accounts
     payable.

    4. Sale of assets:

     On April 7, 1997, the Company sold its accounts receivable,  capital assets
     including  leased assets,  licences and acquired  customer base for cash of
     $6,750,000.  These  assets  sold  represented  all  of  the  Company's  and
     subsidiaries' significant operating assets.

    As at February 28, 1997, the following  write-down of assets was required to
reflect the difference between the proceeds received  subsequent to year end and
the net book values of the assets sold:



Proceeds received on April 7, 1997                           $    6,750,000
Less carrying value of assets sold at February 28, 1997:
    Accounts receivable                                            3,947,599
    Prepaid expenses and advances                                      1,790
    Capital assets                                                 8,259,086
    Licence and acquired customer base                             6,087,834
    Deferred costs                                                 3,661,552
                                                             ---------------
                                                                  21,957,861
                                                             ----------------
Write-down recorded at February 28, 1997                     $    15,207,861
                                                             ===============


Of the $6,750,000  received,  $1,000,000 is a conditional payment to protect the
purchaser against incorrect representations or warranties by the Company and its
subsidiaries  in relation to the  accounts  receivable  and customer  base.  The
contingent  payment  was to be  released  150 days  after  April 8,  1997 if the
purchaser  made no claim against the  hold-back.  The purchaser is disputing the
entire  amount of the  hold-back,  whereas the Company  believes  the  hold-back
should be released. The outcome of this contingency is not determinable.


<PAGE>74

  SUNCOM TELECOMMUNICATIONS INC.
  Notes to Consolidated Financial Statements, page 7
  (Expressed in Canadian dollars)

  Years ended February 28, 1999, 1998 and 1997


  5. Disposal of CNC and CNT:

On April 30,  1997,  the  Company  sold the  common  shares of its  wholly-owned
subsidiary, CNC, including CNC's wholly-owned subsidiary, CNT, for cash proceeds
of $3,070,000.  After  deducting  commissions  paid on the sale of $60,000,  the
Company  realized  a gain  on the  sale  of  $3,010,000.  Additional  contingent
consideration  will be receivable to the extent of 15% of CNC's consolidated net
income for each fiscal year of CNC  commencing  36 months  after April 30, 1997.
Contingent consideration will be recorded when the amounts are determinable. The
first $500,000 of contingent consideration received will be payable to a secured
creditor as disclosed in note 3. Any additional amounts will be available to the
Company and will not be available for CCAA creditors.

  6. Prepaid expenses and advances:


                                                       1999              1998
                                                  ------------      -----------

Prepaid expenses                                  $    5,049        $    3,442
Deposits                                              16,707            11,915
                                                  ----------       -----------
                                                   $  21,756         $  15,357
                                                  ==========       ===========

    7.     Investment:


    In 1999, the Company  commenced  negotiations  for a license  agreement with
Internet  Presence  Coordinators,  Inc.  ("IPC")  (d.b.a.  Virtual  Sellers.com)
whereby the Company  would acquire the right to operate the business and use the
assets of IPC in return for a royalty of 1% of net revenues and 3,000,000 common
shares of the Company if certain pro forma revenue and expense  projections  are
met.

    Under a preliminary agreement which is currently under  renegotiations,  the
Company had committed to raise U.S. $2,000,000 to fund the business,  but if the
Company did not raise the U.S. $2,000,000,  the Company had the option to cancel
the  license  agreement  and IPC would  have had to repay two times all  amounts
advanced.  To February 28, 1999,  $170,000 (CDN.  $283,500) has been advanced to
IPC to fund the business.

    The Company has  written  down the amounts  advanced to IPC to $1 to reflect
the uncertain collectibility of the amounts advanced.


<PAGE>75


  SUNCOM TELECOMMUNICATIONS INC.
  Notes to Consolidated Financial Statements, page 8
  (Expressed in Canadian dollars)

  Years ended February 28, 1999, 1998 and 1997



  8. Capital assets:


                                                                           1999

                                                       Accumulated     Net book
                                         Cost          depreciation      value
                                     ----------      --------------  -----------
Office equipment                     $  179,839       $  32,161       $  147,678


                                                                           1998

                                                        Accumulated     Net book
                                         Cost           depreciation     value
                                     ----------      --------------  -----------

Office equipment                     $  165,124       $   7,167       $  157,957




    On December 11, 1997, the Company acquired office equipment,  billing center
customer  contracts and certain licenses  relating to a call center operating in
Indianapolis for U.S. $105,000.  The purchase price has been allocated to office
equipment in the amount of CDN. $150,150.



    9. Long-term debt:


                                                   1999            1998

2000 series convertible debentures             $  412,020      $        -

1999 series convertible debentures                      -         722,932

Note payable                                            -         150,150
                                               ----------      ----------
                                                  412,020         873,082
Less current portion                              412,020         150,150
                                               ----------      ----------
                                               $        -      $  722,932
                                               ==========      ==========



2000 series convertible debentures:

As part of a U.S.  $4,000,000  offering of convertible  debentures,  the Company
received U.S. $272,500 (CDN. $412,020) between January 19, 1999 and February 28,
1999. The debentures bear interest at 8% per annum, are repayable on January 15,
2000 and are  convertible  into  common  shares of the Company at a rate of U.S.
$0.18 per share.  The Company has not determined nor separated the liability and
equity  components of the  convertible  debentures due to the short-term life of
the debenture.

<PAGE>76


 SUNCOM TELECOMMUNICATIONS INC.
 Notes to Consolidated Financial Statements, page 9
 (Expressed in Canadian dollars)

 Years ended February 28, 1999, 1998 and 1997

 9. Long-term debt (continued):

 1999 series convertible debentures:

As  part  of a U.S.  $4,000,000  (subsequently  closed  in  March  1998  at U.S.
$850,000) offering of convertible debentures, the Company received U.S. $500,000
(CDN.  $722,932) between November 20, 1997 and February 28, 1998. The debentures
bear  interest  at 9% per  annum,  are  repayable  on or  before  a  date  to be
determined  to be nine months after this public  offering is  completed  and are
convertible  into common shares of the Company at a rate of U.S. $0.10 per share
at any time after March 12, 1998. In fiscal 1999, the Company received a further
U.S.  $250,000  (CDN.  $499,000) and the offering was closed.  All the debenture
holders  have  subsequently  exchanged  their  debentures  for common  stock and
8,500,000 shares have been subsequently  issued.  The Company has not determined
nor separated the liability and equity components of the convertible  debentures
due to the subsequent conversion of all the debentures to common shares.

 Note payable:

The  Company  issued  a  U.S.  $105,000  (CDN.   $150,150)  promissory  note  in
conjunction  with an  acquisition of assets as disclosed in note 8. The note was
non-interest bearing, secured by the assets purchased, repayable on December 31,
1998 or  convertible  into common shares of the Company at a rate of U.S.  $0.10
per share on December 31, 1998.  The note was  converted  into common  shares on
December 31, 1998.


 10. Share capital:

        (a)    Authorized:

         200,000,000 common shares without par value

         150,000,000 class A preference shares without par value

         150,000,000 class B preference shares without par value



<PAGE>77

  SUNCOM TELECOMMUNICATIONS INC.
  Notes to Consolidated Financial Statements, page 10
  (Expressed in Canadian dollars)

  Years ended February 28, 1999, 1998 and 1997


    10.    Share capital (continued):

        (b) Issued and outstanding common shares:

<TABLE>
<S>                                                              <C>               <C>
                                                                    Number
                                                                  of shares          Amount
                                                                 ------------     -----------

Balance, February 29, 1996                                        25,448,602      $ 98,722,870

Shares issued during the year:
    For cash on the exercise of employee and director options      8,686,018        11,984,886
    For cash on the exercise of warrants                             200,000           274,000
    For settlement of debt                                         6,107,994         9,485,974
    For employees' compensation                                       34,797            34,797
      For inducement fee relating to 1998 series
        convertible debentures                                     4,351,194         4,622,208
      For finders' fee relating to 1998 series
         convertible debentures                                      692,130           750,903
    Conversion of 1998 series convertible debentures                 375,000         1,021,905
    Acquisition of Integrated Telemanagement Inc.                     97,466                 -
    Conversion of preferred shares                                    30,761            35,375
      Less share issue costs                                               -          (107,472)
    Reduction of common share stated capital (note 10(d)                   -      (117,535,000)
                                                                 -----------      ------------
Balance, February 28, 1997                                        46,023,962         9,290,446

Shares issued during the year:
    For settlement of debt                                         1,000,000           28,000
    For employees' and directors' compensation                     5,566,000          316,396
    For services received                                          1,310,811          183,514
                                                                  ----------     ------------
Balance, February 28, 1998                                        53,900,773        9,818,356

Shares issued during the year:
    For employees' and directors' compensation                     5,463,000          977,929
    Conversion of 1999 series convertible debentures               8,500,000        1,221,932
    Exercise of CCAA warrants (note 10(c))                         8,183,337                -
    Conversion of notes payable                                    1,050,000          158,760

Balance, February 28, 1999                                        77,097,110    $  12,176,977
                                                                  ==========       ==========
</TABLE>



Shares issued as  consideration  on the  acquisition  of customer base have been
recorded based on the value specified in the purchase agreements,  which was not
greater than the market  value of the shares at the date of  issuance.  Where no
price is specified in the purchase  agreement,  shares issued have been recorded
based on the market value of the shares at the date of issuance.  Shares  issued
for  directors  and employee  compensation  and for services  received have been
recorded at the market value of the shares at date of issuance.

        (c) Commitments to issue common shares:

The Company has committed to issue 13,000,000 shares to former creditors under a
reorganization  plan as disclosed in note 3. As at February 28, 1999,  8,183,337
shares have been issued to creditors leaving an outstanding  commitment to issue
4,816,663 shares.


<PAGE>78



  SUNCOM TELECOMMUNICATIONS INC.
  Notes to Consolidated Financial Statements, page 11
  (Expressed in Canadian dollars)
  Years ended February 28, 1999, 1998 and 1997



    10.    Share capital (continued):

        (d) Reduction of common share stated capital:

        On August 22, 1996,  the  shareholders  of the Company  passed a special
resolution  to reduce  the  stated  capital of the  Company's  common  shares by
$117,535,000.

    11. Income taxes:

    The Company's wholly-owned subsidiary,  PTI, has non-capital income tax loss
carryforwards  of  approximately  $7,000,000  expiring  over a four year  period
commencing in 2001.

    12.   Reconciliation  of  Canadian  to  United  States  generally   accepted
accounting principles ("GAAP"):

    These  financial  statements are prepared in accordance  with Canadian GAAP,
which do not differ  materially  from U.S.  GAAP with respect to the  accounting
policies and disclosures in these financial statements, except as follows:

        (a) Statement of operations, total assets and deficiency in assets:

Under U.S. GAAP,  foreign exchange gains and losses deferred under Canadian GAAP
would be expensed. In addition, shares to be issued for settlement of debt would
be classified as long-term liabilities until the shares are issued.

        The effect of the  differences  on loss,  total assets and deficiency in
assets are as follows:

<TABLE>
<S>                                                            <C>              <C>            <C>
                                                                1999            1998            1997
                                                            -------------- --------------  ---------------

 Net income (loss), as determined in
  accordance with Canadian GAA                              $  (2,429,137)  $  24,535,877   $  (40,698,248)
Deferred foreign exchange loss                                          -               -          261,167
                                                            --------------  --------------  ---------------
 Net income (loss), as determined in accordance
  with U.S. GAAP                                            $  (2,429,137)  $  24,535,877   $  (40,437,081)
                                                            ==============  ==============  ===============

Net income (loss) per share - U.S. GAAP                     $       (0.04)  $        0.50    $       (0.98)
                                                            ==============  ==============   ==============

                                                                 1999             1998
                                                            --------------   --------------

 Total assets, as determined in accordance with
   Canadian GAAP and U.S. GAAP                               $    328,932    $  1,180,851
                                                             =============   ==============

                                                                 1999             1998
                                                              ------------   --------------

Shareholders' deficiency in assets, as determined in
 accordance with Canadian and U.S. GAAP                      $   (344,346)   $   (273,830)
                                                             =============   =============
</TABLE>

<PAGE>78


 SUNCOM TELECOMMUNICATIONS INC.
 Notes to Consolidated Financial Statements, page 12
 (Expressed in Canadian dollars)

 Years ended February 28, 1999, 1998 and 1997


    12.   Reconciliation  of  Canadian  to  United  States  generally   accepted
accounting principles ("GAAP") (continued):

        (b) Statement of changes in financial position:

        Under U.S.  GAAP,  the  statement  of changes in  financial  position is
presented as a statement of cash flows.

        Under a cash flow presentation  non-cash transactions would not be shown
in the  statement  but would be disclosed  separately in a note to the financial
statements.

        In respect of these financial statements,  the Company had the following
material non-cash transactions:


                                           1999           1998           1997
                                        ------------   ----------   -----------
Issuance of shares for:
    Employee and director compensation  $   977,929    $  316,396   $     34,797
      Conversion of debentures and
       notes payable                      1,380,692             -      1,057,640
    Settlement of debt                            -        28,000      9,485,974
    Inducement fee                                -             -      4,622,208
    Finders' fee                                  -             -        750,903
    Services received                             -       183,514              -
                                        -----------   -------------- -----------
                                       $  2,358,621    $  527,910    $15,951,522

The above amounts would be subtracted from the related  balances in the Canadian
GAAP statements of changes in financial  position for funds provided by and used
in financing activities with corresponding reductions in the related balance for
funds used in investing activities, with the exception of the settlement of debt
and  employee  compensation  transactions,  which  would  affect  funds used for
operations.  Under U.S. GAAP,  interest and income taxes paid would be disclosed
supplementally  to the cash flow  statement.  Interest of $19,976  (1998 - $nil;
1997 - $1,991,870) was paid in the year. No income taxes were paid in the years
presented.

(c)    Income taxes:

In February 1992, the Financial  Accounting Standards Board issued Statement No.
109,  "Accounting  for  Income  Taxes".  Statement  109 has  changed  the method
companies  use to account for income taxes from the deferred  method to an asset
and  liability  method.  The  application  of this  statement  would  not have a
material  effect on the Company's  financial  statements.  In addition,  certain
disclosure  requirements  of this statement are not included in these  financial
statements.



<PAGE>80



 SUNCOM TELECOMMUNICATIONS INC.
 Notes to Consolidated Financial Statements, page 13
 (Expressed in Canadian dollars)

 Years ended February 28, 1999, 1998 and 1997


    12.   Reconciliation  of  Canadian  to  United  States  generally   accepted
accounting principles ("GAAP") (continued):

        (d) Income statement classification:

     Under U.S.  GAAP,  no  subtotals  would be  presented  in the  consolidated
     statements of operations  immediately  after costs and expenses.  All items
     disclosed as other income  (expense)  except for the gain on  settlement of
     debt would be included in income from operations. The gain on settlement of
     debt in 1998 would be disclosed as an extraordinary item.

    13. Uncertainty due to the Year 2000 Issue:

The Year 2000 Issue  arises  because  many  computerized  systems use two digits
rather than four to identify a year.  Date-sensitive  systems may  recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed.  In addition,  similar  problems may arise in some
systems  which use certain  dates in 1999 to  represent  something  other than a
date. The effect of the Year 2000 Issue may be experienced  before, on, or after
January 1, 2000,  and, if not addressed,  the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's  ability to conduct  normal  business  operations.  It is not
possible  to be certain  that all aspects of the Year 2000 Issue  affecting  the
Company, including those related to the efforts of customers, suppliers or other
third parties, will be fully resolved.


    14. Related party transactions:

Included  in  accounts  receivable  is  $26,136  due from  Concept  10  Inc.,  a
wholly-owned subsidiary of the Company's President and Director.

<PAGE>81



SUNCOM TELECOMMUNICATIONS INC.
Consolidated Schedule of Selling, general and Administrative Expenses
(Expressed in Canadian dollars)


                                                    Years ended February 28,
<TABLE>
<S>                                            <C>           <C>                <C>

                                                   1999           1998              1997
                                              -------------- --------------     --------------

Wages and benefits                            $  1,031,776     $  1,230,890     $    5,983,043
Marketing and advertising                          357,350           13,501            690,602
Accounting and legal                               320,806          664,453          1,069,798
Office and sundry                                  191,591          532,097            447,128
Rent, utilities and property taxes                 148,706           69,062            726,582
Travel and promotion                               142,352          106,319            396,780
Insurance                                           98,988          210,943            261,193
Consulting fees                                     63,519          176,721            664,734
Telephone                                           49,750           18,021            512,651
Bad debts                                           34,557                -          1,368,702
Bank charges and interest                           22,510            1,779            144,758
Printing                                            19,023            1,982            148,217
Billing system fees                                 17,738            1,311                  -
Automobile                                          16,297            4,063             63,297
Equipment rental                                     7,875            3,346             54,924
Subscriptions and dues                               1,088                -             18,339
Licences, taxes and dues                               530                -            246,850
Commissions                                            292           12,461            251,087
Professional development                                 -              173             21,760
Credit service                                           -                -             55,261
Debenture and demand loan interest                       -                -          1,991,870
Financing charges                                        -                -          1,910,532
Listing and filing fees                                  -                -             55,410
Repairs and maintenance                                  -                -            177,805
Transfer agent                                           -                -             18,666
                                               ------------     ------------     -------------

                                               $  2,524,748    $  3,047,122     $   17,279,989
                                               ============     ============     =============

</TABLE>