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                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                  AMENDMENT 3

                                 FORM 10-KSB/A

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

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

               [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

         FOR THE TRANSITION PERIOD FROM .............. TO ..............
             COMMISSION FILE NUMBER:...........000-25641............

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                       TELTRAN INTERNATIONAL GROUP, LTD.
              (EXACT NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

             DELAWARE                                        11-3172507
   (STATE OR OTHER JURISDICTION                           (I.R.S. EMPLOYER
  OF INCORPORATION OR ORGANIZATION)                       IDENTIFICATION NO.)

                 ONE PENN PLAZA, SUITE 4430, NEW YORK, NY 10119
             (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)   (ZIP CODE)

                    ISSUER'S TELEPHONE NUMBER (212) 643-1600

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

                         COMMON STOCK, $.001 PAR VALUE
                                (TITLE OF CLASS)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.


Yes __  No X


     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained herein, and no disclosure will be contained, to
the best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. / /

 Issuer's revenues for the year ended December 31, 1999 were $1,041,815.


     The number of shares outstanding of the issuer's common stock is 20,587,515
as of September 30, 2000.


                   DOCUMENTS INCORPORATED BY REFERENCE: None.

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<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.


      Generally this amendment has been made to reflect the restated audited
financial statements opined on by our new auditors. Except where otherwise
indicated no attempt has been made to update the other information in the
report. Information has been or will be modified in subsequent reports.


GENERAL

     In July 1983, we were incorporated in Utah as Spectratek Incorporated and
we subsequently incorporated as Teltran International Group Ltd in Delaware on
October 6, 1997. In 1993 we formed a wholly owned subsidiary, Teltran
International, Inc. and we use Teltran International to engage in our
international telecommunications business. Since 1998 our primary business is
acting as a seller of telecommunications time. In 1999 we began operating an
Internet portal. Recently we have acquired entities in the United Kingdom, which
are engaged in or were commencing to engage in providing equipment services for
Internet providers. Prior to 1998 we were engaged in attempts to develop our
business and did not receive any significant revenues. References to "we," "us,"
or "our" include Teltran International as well.

TELECOMMUNICATIONS INDUSTRY BACKGROUND

     During the last fifteen years, international telecommunications has changed
dramatically. Deregulation has resulted in the end of monopolies and a
proliferation of competitors. In addition, international agreements among most
industrial nations have opened telecommunication markets to competition and
foreign ownership. At the same time technology has changed adding to the overall
efficiency of telecommunication services and increasing both call volume
capacity and the quality of sound. These factors have also combined to reduce
costs significantly. With the advent of new technology came the development of
new methods of completing calls and reducing costs. One of the most prominent
methods to achieve this is called re-filing, which is the routing of calls from
country A to country B for termination in country C. Because of the above
mentioned changes, the rates charged callers using re-filed calls among the
three countries is less than the rate they would otherwise pay for a connection
directly between country A and country C.

     Re-filing is typically achieved through a series of resale arrangements
among carriers often involving the wholesale purchase of services on a
per-minute basis by one long distance provider from another. A single
international call may pass through the facilities of several long distance
carriers and resellers before being terminated to a local telephone user by a
carrier in the country of termination. Re-filing has caused the emergence of
alternative international providers that rely on transmission services acquired
on a wholesale basis from other long distance providers. These international
providers include entities whose business is purely to act as a reseller.

     The advent and proliferation of Internet Protocol, the computer language
protocol used to transmit data over the Internet and managed networks, has added
to the options available for the delivery of international telephone service.
Internet telephony uses Internet Protocol and voice messaging equipment, or
gateways, to receive voice messages, convert them into digital data packets,
transmit them over the Internet at high speeds and retranslate them back into
voice messages with digital clarity at the call receiver's end. The Internet
telephony industry began in 1995, when experienced Internet users began to
transfer voice messages from one personal computer to another. Subsequently,
software was introduced which allowed personal computer users to place
international calls via the Internet to other personal computer users for the
price of a local call. Initially, the growth of Internet telephony was
constrained due to the poor sound quality of the calls and

<PAGE>

because calls were mainly limited to those placed from one personal computer to
another. However, as the industry has grown, substantial improvements have been
made. New software has substantially reduced delays and improved voice quality.
The use of private networks or Intranets to transmit calls as an alternative
to the public Internet also helped to alleviate capacity problems. Developments
in hardware, software and networks are expected to continue to improve the
quality and viability of Internet telephony.

     Internet telephony provides customers with substantial savings compared to
conventional long distance calls. The total cost of an Internet telephone call
is based only on the local calls to and from the gateways of the respective
Internet providers. As a result the call bypasses the international settlements
process, which requires using the more expensive transoceanic fiber networks of
traditional carriers.

                                    HISTORY

     Initially we intended to concentrate our efforts on establishing and
operating a global messaging business. By pursuing that strategy we intended to
provide our customers with a universal mailbox and a platform that was capable
of generating multimedia broadcasts of messages and documents received by the
client. In other words, the messages could be faxed or otherwise delivered to
various locations within an enterprise. As an adjunct to our global messaging
service we also intended to provide enhanced fax services including fax
broadcasting. We postponed our efforts to provide global messaging services
because of our inability at the time to obtain financing for equipment and due
to the new telecommunications opportunities presented by Internet telephony. We
derived insignificant revenues from the provision of global messaging services
for clients through April 1998. After April 1998, we focused our efforts on
exploiting opportunities in Internet telephony and derived revenues providing
services as a re-file hub for and affiliate of OzEmail Interline Pty, Limited.
OzEmail Interline Pty Limited was a subsidiary of OzEmail Limited, a wholly
owned Australian subsidiary of MCI WorldCom, Inc. On November 30, 1999, ITXC
Corp purchased the intellectual property and contractual rights associated with
the operations of the Internet telephony business of OzEmail Interline Pty
Limited. We are currently operating our Internet telephony business through the
ITXC network. We also are in the process of establishing our own systems for
traffic between different countries. We have also acquired telecommunications
companies in the United Kingdom.

FACTORS THAT AFFECT THE TELECOMMUNICATIONS INDUSTRY

     There is a chance technological changes in the telecommunications industry
will make our business obsolete. We cannot guarantee that research and
developments by others will not render our operations noncompetitive or
obsolete. Our business strategy is subject to the risks inherent in the
marketing of new services using new technologies and approaches in a rapidly
evolving commercial environment. We cannot assure that unforeseen problems will
not develop with these technologies or applications, or that we will be able to
successfully address the technological challenges we encounter by entering into
alternative arrangements for generating revenues.

     Our success in the international telecommunications business may depend on
factors beyond our control including the influence of domestic and foreign
governments on our industry. We believe we will generate a substantial portion
of our revenues by providing international telecommunications services to our
customers on a wholesale basis. The international nature of our operations
involves particular risks. These include changes in foreign government
regulations and telecommunications standards, dependence on foreign partners,
tariffs, taxes and other trade barriers, economic downturns and political
instability in foreign countries. Our business could also be adversely affected
by a reversal in the current trend toward deregulation, or upon a change in the
business affairs of ITXC Corp. In addition, our business is subject to various
U.S. and foreign laws, regulations, agency actions and court decisions. Our U.S.
international telecommunications services are subject to regulation by the FCC.
The FCC requires international carriers to obtain authorizations under Section
214 of the Communications Act of 1934 prior to purchasing or leasing
international

<PAGE>

facilities, or providing international service to the public. We have obtained
the necessary licensure to conduct our business. We may be adversely affected by
regulations of foreign governments as we seek to establish local affiliates
outside of the United States. Foreign regulations may also affect affiliates
that complete calls on behalf of our clients.

     There are several factors unique to the telecommunications industry that
may negatively influence our operating results, including revenues, costs and
margins. Our revenues, costs and expenses may fluctuate in the future as a
result of numerous factors. Our revenues in any given period can vary due to
factors including call volume fluctuations, particularly in regions with
relatively high per minute rates; the addition or loss of major customers,
whether through competition, merger, consolidation or otherwise; financial
difficulties of major customers; and pricing pressure resulting from increased
competition. Technical difficulties or failures of portions of the ITXC system
or other providers may impact our ability to provide service to our customers by
preventing us from delivering call traffic. Additionally, technical difficulties
with the network may cause loss.

                               INTERNET TELEPHONY

INTERNET TELEPHONY DESCRIPTION

     Internet telephony is the use of the worldwide Internet system to transmit
telephone, fax and other communications between two countries. This process
consists of receiving a call or transmission, usually through a local carrier,
to a switch and/or gateway, which contain software, which converts the voice
input from the transmission to digital data, which is then routed to another
country over the Internet. The basic equipment, which converts the transmission
and routed is called a gateway. The Internet call is directed to a receiving
country. A gateway in the receiving country performs the reverse process
converting the digital data from the Internet to a voice format. This in turn is
transmitted through local telephone providers to the ultimate destination.

     The heart of any Internet telephony system is the gateway. There are
several providers of gateways, including Lucent, Cisco, Clarent and VocalTec.
OzEmail utilized their own gateways, which contained proprietary software. Each
gateway, depending on the manufacturer, is capable of handling twenty-four or
more simultaneous calls. The gateway is also used for billing, rating and
verification purposes in conjunction with a gatekeeper or other external billing
package.

     The typical structure of a call placed through the Internet telephony
system is as follows:

          o a person originates a domestic telephone call to a facility
          containing gateways;

          o the call is converted into a digital form and delivered to the
          Internet through the gateway and is routed to the country of
          destination;

          o the Internet transmission connects to a gateway in a foreign country
          where it is converted to analog and connected to foreign domestic
          local telephone network; and

          o the call is received by the person to which it was directed as a
          normal telephone call.

INTERNET TELEPHONY SYSTEM

     OzEmail, before its sale to ITXC, operated and ITXC operates an Internet
telephony network. The network consists of a consortium of companies in various
countries that act as affiliates of the network for the transmission and receipt
of service worldwide. All systems use gateways located in various parts of the
world tied together by a network for the transmission, routing and connection of
voice, data and fax communications through the Internet. The network may also
utilize other conventional systems to organize and complete calls. OzEmail used
its own proprietary gateways. Each affiliate primarily furnishes origination
services in its

<PAGE>

area of affiliation but also furnishes termination service in its territory
enabling affiliates in other countries to route calls into its territory for
termination through the local affiliate over conventional public switched
telephone networks. The local affiliate receives a termination fee for the
completion. Each affiliate markets the service in its territory offering
origination-calling services through the network. Each local affiliate is
required to pay a fee to the network for all international services of the
affiliate's customers routed through the network.

     If no affiliate has been appointed in the country of destination, the call
will be routed through an affiliate acting as a re-file provider in a third
country for the least expensive routing.

TELTRAN RELATIONS WITH INTERNET TELEPHONY NETWORKS


     In 1998 we were appointed as a re-file hub for OzEmail in the United States
for calls terminating in countries without OzEmail affiliates. As a re-file hub,
we received calls for the OzEmail system and directed them through the least
expensive routing to countries, which had no OzEmail Internet termination. We
derived approximately $535,000 in revenues from this activity in 1998 but
revenues in 1999 were not material. The decline resulted from the utilization by
OzEmail of a related party as a re-file hub and to a lesser extent from an
increase in affiliates.


     In October 1998 we were appointed a non-exclusive OzEmail affiliate in the
United States. This designation enabled us to sell international voice telephone
availability through the OzEmail Internet system utilizing OzEmail technology
and protocols to clients in the United States. In this capacity, we sought to
wholesale Internet telephony capacity from North America to other locations
around the world within the OzEmail network.

     In the first quarter of 1999, we entered into agreements to provide call
connection services from the United States to the Netherlands Antilles and South
Africa. Prior to June 1999, we did not derive significant revenues from our
affiliate operations. It took us, or our clients, a substantial period of time
to complete testing, obtain compatible equipment and software and to complete
arrangements with local telephone companies. In June 1999 we began service to
Netherlands Antilles and South Africa for two clients. Through February 2000 we
have completed calls totaling over 4.1 million minutes.

     Generally OzEmail only permitted one affiliate in a country. By November
1999 we obtained affiliate status in the United Kingdom and Ireland through our
ChannelNet subsidiary. We have executed contracts to provide service to an
affiliate in Pakistan. This service has not begun due to, among other things,
local government requirements. Subject to final agreements, we had received
permission to become an affiliate in other countries. In November 1999 OzEmail
disposed of its Internet telephony business to ITXC. ITXC Corporation is a
provider of Internet-based voice and fax services located in Princeton, New
Jersey, whose shares are listed on the NASDAQ National Market under the symbol
"ITXC." It has been operating an Internet telephony network for more than the
last two years, and reported revenues of over $25,000,000 in 1999. Public
filings by ITXC indicate that, in the fall of 1999, ITXC completed its initial
public offering and received over $70,000,000 in proceeds.

     After the transfer of OzEmail's Internet telephony business to ITXC, we
entered into a new arrangement with ITXC superceding our past arrangements. We
believe the new arrangement will have substantial benefits as ITXC imposes fewer
restrictions upon its affiliates than OzEmail did. For example, unlike OzEmail,
ITXC does not limit the number of affiliates in any country. We are now free to
become an affiliate in as many countries as we may desire. ITXC also does not
require the use of proprietary gateways. We may use any commercial gateway as
long as there exists a similar gateway in the receiving country. Finally, ITXC
will provide the gateway for calls, originating in a country in which we are an
affiliate that terminate within the ITXC network. We are required to provide
gateways for traffic, which terminates outside of the ITXC network. We are also
free to purchase gateways from third parties and establish our own network
between any two countries.

     By establishing gateways, either as an ITXC affiliate or directly, in other
countries and sending calls through our own network for specific countries, we
would have the ability to receive revenues from both ends of a call. In most
instances we

<PAGE>

contemplate entering into arrangements with a local partner to implement foreign
arrangements.

ITXC/OZEMAIL AGREEMENTS

     Our OzEmail affiliate agreements were in effect replaced by an agreement we
signed with ITXC on November 23, 1999. Under the WWExchange Network Services
agreement signed with ITXC, each company will provide termination services for
calls from Internet telephony or public switched telephone networks. ITXC, at
its own cost, will provide Teltran with five E-1 gateways. The contract runs
through May 19, 2002, but may be terminated on 60 days' notice. The relationship
established by the agreement is non-exclusive, and either company may provide
termination services for other parties. We are authorized to originate calls
that will terminate to worldwide destinations over the ITXC Internet telephony
network and terminate calls that originate from the ITXC network. In effect,
Teltran can become both a vendor (affiliate) and customer for ITXC. The gateways
that we operate in the United States and abroad will transmit calls over the
Internet worldwide through ITXC's or our own interconnected systems. As an
affiliate or vendor for ITXC we must purchase the necessary gateways to provide
that service. ITXC will purchase and install for us, as its customer, the
gateways needed to originate calls that will terminate within the ITXC network.
Affiliates in the ITXC system are also obligated to provide termination services
to other ITXC affiliates in other countries, over ITXC's interconnected systems.
Affiliates providing termination services charge originating affiliates a fee
based on the rate the terminating affiliate has negotiated with the local
carrier to terminate the call in the jurisdiction of its affiliation. ITXC
collects the fees from the originating affiliate and, after deducting a service
charge or mark up, remits the fee to the terminating affiliate.

EQUIPMENT

     ITXC requires its affiliates to obtain a sufficient number of gateways to
provide their services and to test them over a period of several weeks to
determine the quality of service to the particular destination. We had
previously purchased twelve gateways for an aggregate cost of $108,000 to
service our existing United States clients at present levels through our OzEmail
affiliates. We have replaced our OzEmail gateways with both ITXC-owned and
Teltran-owned equipment. This process has been completed prior to February 2000.
ITXC replaced, without cost to us, the equipment that will be used in
terminating traffic with ITXC affiliates. We may receive additional gateways
from ITXC at no cost as long as these gateways are used exclusively for sending
calls over the ITXC network. These gateways belong to IXTC and must be returned
to IXTC once we cease service. We also may purchase additional gateways outright
for our own use. In any event, if the volume of calls we handle from our
contracts grows to projected levels, or we initiate call services under
additional contracts, we will need to purchase additional gateways. New gateways
presently cost approximately $9,000 to $17,000 per 24-port unit, depending on
the configuration required by our customers or local telecom regulation. We
presently house all of our gateways at a technical facility operated by an
unaffiliated party located close to our offices in New York City and Manchester,
UK.

     We have determined to establish our own network center and for that purpose
are obtaining the equipment necessary for that purpose. We are in the process of
purchasing or leasing equipment, including the lease of a switch from Cisco. We
estimate the network center will be operational by June 30, 2000. It will be
located at the New York co-location facility or technical center in New York
City utilized by the Company. Once the network center is operational the Company
will be able to enter into direct arrangements to provide voice Internet
services directly to other countries without utilizing the services of ITXC. It
may also enable the Company to provide other telecommunication services
including fax broadcasting. As a result of our purchases through Cisco, Cisco
has advised us that we may participate in various programs, which provide
customers with various levels of programs established by Cisco, which provide us
with various levels of marketing and technical support depending on the amount
of purchase.

<PAGE>

OTHER TELECOMMUNICATION ARRANGEMENTS

     Teltran regards itself as a telecommunications company and may enter into
arrangements for the resale of telecommunications time not involving the ITXC
network. Future arrangements may involve entirely different providers or a
combination of ITXC and other providers. We have established our own network
facility at our existing co-location site in New York City. This enables us to
use our own network for Internet telephony, and other telecommunications
services.

     Through April 15, 2000 the Company has advanced $224,770 to and has an
understanding to acquire a start-up venture SaveOnCalling.com LLC engaged in the
marketing of casual access long distance services, better known as "10-10-
dial-around." Dial-around is a telecommunications service that allows consumers
to select alternative long distance providers by entering the particular
provider's carrier identification code (CIC) prior to dialing a long distance
telephone call. Charges for these calls generally appear on the caller's regular
telephone bill.

GOVERNMENT REGULATION

     We are licensed as an international reseller under Section 214 of the
Federal Communication Act. This regulation does not impose significant
restrictions on our daily operations. We however, are also affected by foreign
regulators or foreign government-owned telephone systems. We, or our affiliates
may be required to obtain permission in connection with our client contracts. We
will also be subject to foreign regulation if we are able to establish
affiliates in foreign countries. For example, some foreign countries may limit
the origination or termination of calls to and from their jurisdictions. The
United Kingdom regulates the award of premium-rate telephone services.

MARKETING/CUSTOMERS

     During 1998 our principal customer was OzEmail under the re-file
arrangement. During 1998 we received approximately 79.3% of our revenues from
OzEmail. We did not derive significant re-file revenues from OzEmail in 1999. We
are not dependent upon OzEmail or its successor ITXC as a customer. We derived
17.1% of our revenues in 1998 from Telecom 2000 for providing it with domestic
long distance capacity. This arrangement has terminated. No customer accounted
for more than 5% of our revenues in 1999.

     We market our service through our United States and United Kingdom
executive officers and employees, one of whom is the vice president of sales and
marketing. We have also entered into non-exclusive arrangements with agents who
will receive a commission from the revenues generated by any of our customers
introduced by an agent.

COMPETITION

     Currently, we compete with numerous other long distance resellers and
providers. We believe our significant competition will be independent resellers
and providers including providers of competing Internet voice telephony systems.
Other competitors may include large telephone carriers like AT&T, MCI/WorldCom
and Sprint, as well as other providers of international long distance services
like STAR Telecommunications, Inc., and corporate alliances that provide
wholesale carrier services, like "Global One." In addition, we have a
non-exclusive affiliate arrangement with ITXC; therefore ITXC is free to appoint
other affiliates, which may result in our facing substantial competition from
within the ITXC system. Many of our competitors are likely to be significantly
larger and have substantially greater market presence, as well as greater
financial, technical, operational, marketing and other resources and experience
than we do. We compete for customers in the telecommunications markets primarily
based on price and, to a lesser extent, the type and quality of service offered.
Increased competition could force us to reduce our prices and profit margins if
our competitors are able to procure rates or enter into service agreements that
are comparable to or better than those we obtain, or are able to offer other
incentives to existing and potential customers.

<PAGE>

EMPLOYEES

     As of April 15, 2000 we had a total of forty-nine employees all of whom
were full time. Of these we had nine full-time employees in New York, eight of
whom are engaged in executive and technical functions and one of whom is a
clerical employee. We have an additional 40 full time employees in the United
Kingdom as a result of our United Kingdom acquisitions. We also utilize
consultants.

TECHNICAL FACILITIES

     We have an oral arrangement with an unaffiliated party by which our
technical equipment is housed and maintained at this party's co-location
facility in New York City located on the same block as our headquarters. All
equipment, connections and telephone lines between us and our customers and
overseas providers are presently located at this facility. Prior to establishing
our own network operation center at this location, we utilized the owner's
equipment to effect these connections.

     We have recently entered into a lease in Miami, Florida where we intend to
keep additional equipment.

OMNICOM

     In May 1999 we acquired all the shares of Omni Communications, Inc. Since
it was formed in May 1994, "Omnicom" has been an authorized agent of UniDial
Communications located in New York City. Omnicom had nominal assets and minimal
annual revenues. UniDial is a telecommunications reseller. Resellers buy
wholesale services from major carriers like IXC, Sprint, Internet Service
Networks and local Bell companies to provide a spectrum of services to
customers. We believe that the acquisition of OmniCom complements our line of
telecommunications products and will accelerate our entry into the area of
switched and dedicated phone services. These include 1+ outbound and toll free
inbound calls, networking, frame relay, wireless phones and service, Internet
access, debit cards, billing software, multi-media conferencing and network
marketing services. We also plan to feature UniDial services on our website,
http://www.teltran.com, in order to attract more small to mid-size businesses to
our retail marketplace. Omnicom was acquired for 126,788 shares of our common
stock. Even though the principal shareholder of Omnicom was also an officer of
Teltran, we believe the acquisition was made on arm's length terms. Omnicom
presently utilizes our offices.

UNITED KINGDOM OPERATIONS

     We have determined to form a new United Kingdom subsidiary to hold, manage
and coordinate all our United Kingdom subsidiaries. As of March 16, 2000, we had
three subsidiaries, ChannelNet, Ltd., Internet Protocols, Ltd. and our recently
formed Teltran Web Factory Ltd.

CHANNELNET

     We acquired all of the outstanding shares of ChannelNet Ltd. common stock
on August 16, 1999, effective as of June 1, 1999, from an unaffiliated third
party in an arm's length transaction. ChannelNet was incorporated in May 1999
under the laws of England and Wales and is located in Manchester in the United
Kingdom. ChannelNet provides premium rate telecommunications services to
customers in the United Kingdom. Premium rate services are the United Kingdom
equivalent of "900" number services in the United States. The dominant services
are or will be provided primarily for Tarot card readings, voice messages,
charitable solicitations and other non-adult services. At the time of
acquisition, ChannelNet had insubstantial assets and liabilities. A primary
reason for the acquisition was ChannelNet's potential as an affiliate of the
OzEmail network. ChannelNet was the affiliate of OzEmail in the United Kingdom
and Ireland and had received indication that it would be appointed an affiliate
in additional countries. We entered into an agreement with the former
stockholder of ChannelNet to purchase telecommunications equipment that is
necessary for the operation of the ChannelNet business. Under that arrangement
we will use the equipment in our operation of the ChannelNet business but will
not

<PAGE>

acquire title to it until we complete making payments of approximately $535,000
in the aggregate by February 2001.


      In consideration of our acquisition of the ChannelNet stock, we issued to
the former shareholder of ChannelNet 94,500 shares of our common stock and we
may be obligated to issue additional shares based upon earnings generated by the
acquired ChannelNet business operations during the period of September 1999
through February 2001. In addition, we entered into an employment agreement with
the key employee of ChannelNet for the operation of the ChannelNet business.
This agreement provides in part that we will issue to that individual shares of
our common stock based on the future earnings of the ChannelNet business.


     ChannelNet has entered into an agreement with Norweb Telecom Limited, a
national telecommunications network operator in the United Kingdom, indicating
the intent of the parties to work together to develop opportunities in Internet
telephony. As a result of this relationship, traffic can originate in the United
Kingdom and Ireland for worldwide distribution over Teltran's Internet telephony
network. Furthermore, traffic originating in other parts of the world can also
be terminated in the U.K. Teltran and Norweb are exploring additional ways to
take joint advantage of their geographic reach, technical expertise and
distribution capabilities to offer additional services and to reach additional
customers. In connection with this agreement, Norweb and ChannelNet entered into
an agreement on November 23, 1999. Under the latest agreement with Norweb,
ChannelNet will provide telecommunications services to Norweb, enabling Norweb,
in turn, to provide Voice-over-Internet Protocol services to a customer.
Services under this agreement have not commenced.

     We have an understanding with DappaNet plc evidencing the intent of each
party to work together for a two-year period. DappaNet is a United Kingdom-based
company engaged in hosting and design services and e-commerce activities, among
other things. DappaNet has provided advice to our joint venture,
RecordsToGo.com, and is providing advisory services in connection with our
United Kingdom subsidiaries.

INTERNET PROTOCOLS LTD.

     In December 1999, we acquired Internet Protocols Ltd. Internet Protocols
Ltd., which is based in the United Kingdom, commenced operations in 1999 as a
provider of equipment and services to Internet service providers. Internet
Protocols Ltd. provides Internet access services and installs wiring permitting
customers to connect their computers to the Internet or to communicate with
other computers so that the customer of the Internet provider can "dial up" and
obtain access to the provider. Its primary activity is seeking revenue-sharing
arrangements it can enter into with its customers for providing the use of
equipment to access the Internet.

     Internet Protocol entered into an arrangement with Global 1 pursuant to
which Global 1 will provide network information to facilitate access to the
internet for Internet Protocol customers. Global 1 has also agreed to resell
co-location facilities in the London Switch. Internet Protocols will also market
Global 1 internet provider service. We believe the rates provided by Global 1 to
Internet Protocol are favorable and that relationship will be beneficial to us
because it has the potential to result in additional revenues to us.

WEB FACTORY

     On March 15, 2000, our newly formed United Kingdom subsidiary, Teltran Web
Factory Ltd., acquired all the assets of the network business conducted by The
Web Factory Ltd., a U.K. affiliate of Datatec, a South African corporation. We
also acquired certain financial software developed by the seller but not yet
commercially sold. The network assets, consists of equipment, including switches
and servers, various customer contracts and the brand name in the United Kingdom
"The Web Factory." The purchase price is (pound)3,000,000 (approximately
$4,800,000) of which we paid (pound)750,000 (approximately $1,200,000). The
balance is due in installments payable through December 31, 2000. The payment of
our indebtedness is secured by the acquired assets. The Company intends to
continue the operations formerly conducted by The Web Factory Ltd. We are
exploring ways to integrate the operations of this subsidiary and Internet
Protocols.

<PAGE>

ANTRA/RECORDSTOGO.COM

     In April 1999, we exchanged 2,000,000 of our shares for 2,000,000 shares of
Antra Holding Group Inc. As a result of the transaction Antra may be deemed a
principal stockholder of Teltran. Antra is a company engaged through
subsidiaries in the music business and whose stock is publicly traded. We made
the exchange because we intended to enter into ventures with Antra and because
we thought that their stock was of comparable value. To protect each party, the
parties agreed that there would be an adjustment in the number of shares owned
by an entity if there was a disparity in the relative market value of the two
entities on January 1, 2000. As a result of this adjustment, we received an
additional 800,000 shares of Antra's common stock.

     With Antra, we have formed a corporation to establish a website for the
sale of music recordings. The board of directors of this corporation consists of
two members, one nominated by each of Teltran and Antra. Both the website and
the joint venture corporation are named Recordstogo.com. We and Antra have each
contributed at least $75,000 to the joint venture and each now owns 49% of the
joint venture corporation's stock. Each of us have provided services to the
venture, which will be reimbursed from the funds of the joint venture. We and
Antra are each obligated, if requested upon unanimous decision of the board of
directors, to contribute an additional $175,000 to this venture. We and Antra
may also make additional voluntary contributions to the joint venture from time
to time. The remaining two (2%) percent of the shares are owned by one of the
joint venture's suppliers who is not affiliated with either Teltran or Antra.

     Recordstogo.com, Inc. has entered into two agreements with distributors of
music recordings for the distribution of records owned by these entities over
the internet and through the website. The records in each case are not being
currently marketed by their original producer or distributor. The
Recordstogo.com website (http://www.recordstogo.com/) has been designed and
completed and may be viewed on the Internet. Recordstogo.com, Inc. has retained
an agency to further develop the joint venture's marketing strategy and has been
actively seeking relationships with a variety of different businesses that can
provide content for or direct potential customers to the Recordstogo.com
website. The joint venture corporation is also in the process of completing the
appropriate databases and fulfillment capabilities at the warehouse of one of
its suppliers. The joint venture commenced commercial operations in May 2000.

INTERNET PORTAL

     Because it presented an opportunity that could be accomplished
inexpensively, in February 1999 we instituted a web portal. A portal is a
website which enables the user to access various other web sites without
multiple steps, therefore saving the user time. We believe that maintaining an
Internet portal will assist us in establishing a presence as an Internet service
provider. While maintaining a website is not related to our Internet telephony
business, we believe creating an Internet environment will enhance the brand
recognition of the "Teltran" name and could potentially establish us as a
well-regarded Internet brand. Our Internet portal contains direct links to many
commercial sites. We have affiliate arrangements with retailers under which we
will receive a percentage of revenues generated by consumers accessing the site
through our portal.

     Teltran now offers unlimited Internet access service for retail customers
via the www.Teltran.com web portal.

     We also expect Recordstogo.com, to increase our revenues through the sale
of records, advertisements and music merchandise and to also attract more
traffic to our web portal through cross-linking.

     As part of its portal Teltran inaugurated "Chat-over-IP" with LANSource
Technologies on an informal basis, LANSource is now a subsidiary of 3Com
Corporation. The "Chat-over-IP" website (http://chatoverip.com) offers an
opportunity for people interested in technological and business issues relating
to "XoIP" services (e.g., Voice-over-Internet Protocol and Fax-over-Internet
Protocol). Vendors to the XoIP industry contribute to or sponsor the site. Past
sponsors include Microsoft, 3Com, Cisco, Hewlett-Packard, Cardiff Software,
Brooktrout and

<PAGE>
Dialogic. Teltran has no other relationship with either LANSource or 3Com. The
chatoverip.com website derives revenues from sponsorships and may also derive
revenues from banner advertising on the site and paid listings in the site's
directory of vendors. Chatoverip.com did not have revenues in 1999.

SEASONALITY

     Our Internet telephony business is not subject to seasonal variations in
volume of calls. However, our Internet portal experienced a decline in traffic
during the summer of 1999, as compared to the preceding months. Management
believes that the decline is due largely to the increased amount of time many
Internet users spend outdoors during the warmer weather.

ITEM 2. DESCRIPTION OF PROPERTY.


      Generally this amendment has been made to reflect the restated audited
financial statements opined on by our new auditors. Except where otherwise
indicated no attempt has been made to update the other information in the
report. Information has been or will be modified in subsequent reports.


     Our executive offices are located at One Penn Plaza, New York, New York
10119, where, under a new lease, we occupy approximately 4,800 square feet
through March 31, 2010. The annual base rental for this space is approximately
$220,000. Teltran will be responsible for utilities and other charges.

     ChannelNet occupies an office at Enterprise House, 15 Whitworth Street
West, in Manchester, U.K. The former stockholder of ChannelNet, which is
obtaining an assignment of the lease for the premises to ChannelNet, leases the
facility.

     Internet Protocols Ltd. has a 10-year lease, commencing in early 2000, for
the space where it will house its equipment. The lease covers 1050 square feet
at the London Switch, a facilities-management center. Internet Protocols Ltd.
will have 80 racks for equipment of which it presently contemplates utilizing
four to five racks. Internet Protocols Ltd. is permitted to provide any space it
will not use to its customers for a fee. Internet Protocols Ltd. also maintains
equipment at other locations, either with companies that provide it with
services or under various short-term leases.

     Teltran leases approximately 800 square feet in a co-location facility in
Miami, Florida for $6,000.00 per month in base rent. This space is used
exclusively for operating telecommunications equipment and providing
telecommunications services. The lease runs for 3 years, from March 1, 2000
through February 28, 2003. The lease may be extended for an additional 3-year
period, at Teltran's option.

     See "Equipment" and "U.K. Subsidiaries," in "Item 1. Description of
Business," for a description of equipment.

ITEM 3. LEGAL PROCEEDINGS.


      Generally this amendment has been made to reflect the restated audited
financial statements opined on by our new auditors. Except where otherwise
indicated no attempt has been made to update the other information in the
report. Information has been or will be modified in subsequent reports.


     In June 1999 an action was commenced against us in the United States
District Court for the Southern District of New York entitled: Silverman et. al.
v. Spectratek, Inc. et. al. The plaintiffs included, Steven Silverman, Joseph P.
Mallon and Scott Broadbent. The defendants included Spectratek, Inc., one of our
predecessors, and Byron Lerner, our chief executive officer.

     The plaintiffs claim that Spectratek issued and caused to be issued
misleading statements concerning the status of various contracts Spectratek was
prepared to enter into. As a result of these statements, the plaintiffs
purchased 156,000 shares of Spectratek's stock and suffered damages of an
unspecified amount. Teltran denies all liability since it had actually entered
into arrangements that were not consummated due to its inability to obtain
equipment at the time. We do not believe we have any liability to the plaintiffs
and will vigorously defend this action. We made a motion to dismiss this action,
which was granted in October 1999. The plaintiffs have filed an amended
complaint, which, we again moved to dismiss. This motion was denied in April
2000.

      We are not aware of any other lawsuits, or pending lawsuits, to which we
are party or to which our property is subject. However, in an unrelated matter,
a corporation has made a claim for $304,000 representing amounts advanced on our
behalf to a potential reseller of telecommunications time to us. This amount was
to be held in escrow until commencement of the contract between ourselves and
the
<PAGE>

reseller by an agent appointed by the potential reseller. The contract was
aborted and the escrow agent failed to return the escrow funds. The claimant has
requested the payment of the amount advanced with interest and alternately a
participation in revenues that, it believed arose from the relationship with the
reseller.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.


      Generally this amendment has been made to reflect the restated audited
financial statements opined on by our new auditors. Except where otherwise
indicated no attempt has been made to update the other information in the
report. Information has been or will be modified in subsequent reports.


     None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.


      Generally this amendment has been made to reflect the restated audited
financial statements opined on by our new auditors. Except where otherwise
indicated no attempt has been made to update the other information in the
report. Information has been or will be modified in subsequent reports.


     Quotations for our common stock are listed in the "pink sheets" maintained
by the National Quotation Bureau. Prior to April 19, 2000 the stock was traded
on the OTC Bulletin Board but was removed because we are still in the process of
handling comments of the Securities & Exchange Commission to our initial
filings. We had applied to the American Stock Exchange and then to the NASDAQ
National Market both of which applications were rejected. The NASDAQ application
was rejected recently because our stock price declined during the period our
stock was being removed from the bulletin board. We intend to reapply to the OTC
Bulletin Board and then to the NASDAQ. We must appoint at least three
independent directors to serve an audit and compensation committee of the board.
No assurance can be provided that our stock will be accepted for re-listing on
the bulletin board for trading on NASDAQ. On June 19, 2000 the high bid price
for our common stock in the "pink sheets" was $1.90 and the low asked price was
$1.80 on that date.

     Set forth below are the high and low closing bid quotations for our common
stock for the periods indicated as reflected on the OTC Bulletin Board. The
quotations reflect interdealer prices without retail mark-up, markdown or
commissions, and may not reflect actual transactions.

PERIOD                                                            HIGH      LOW
--------------------------------------------------------------   ------    -----

December 31, 1999.............................................   $11.50    $6.00
September 30, 1999............................................    16.50     6.31
June 30, 1999.................................................     9.69     1.75
March 31, 1999................................................     2.60      .60
December 31, 1998.............................................     1.19      .43
September 30, 1998............................................     1.00      .75
June 30, 1998.................................................     2.94     1.88
March 31, 1998................................................     3.13      .43
December 31, 1997.............................................      .13      .13
September 30, 1997............................................      .18      .11
June 30, 1997.................................................      .33      .22
March 31, 1997................................................      .65      .40

     As of April 11, 2000, there were approximately 293 record holders of our
common stock, although we believe that there are more than thirty-five hundred
beneficial owners of our common stock.

DIVIDEND POLICY

     We plan to retain most future earnings for use in our business.
Nevertheless we have adopted a semiannual dividend policy commencing in 1999 to
make a cash or stock distribution to holders of record as of a date to be
selected in March and September of each year. We have declared a 5% stock
dividend to holders of record on March 31, 2000 to be distributed April 14,
2000. Payment of dividends is within the discretion of our board of directors
and cash dividends will depend, among other factors, upon our earnings,
financial condition and capital requirements.

<PAGE>

RECENT SECURITIES TRANSACTIONS

     The following sets forth information relating to all of our unregistered
securities sold by us since December 31, 1995. All share numbers have been
adjusted retroactively to reflect a 1 for 20 reverse stock split on December 31,
1997.

     On May 1, 1996, we issued an aggregate of 500,000 shares of common stock to
the stockholders of Teltran International in exchange for all of the outstanding
capital stock of Teltran International. A total of nine shareholders received
these securities. Of these, three were officers or directors of Teltran
International and the other six were accredited, institutional investors, all of
which Teltran believes are non-United States persons.

     In June 1996 we issued 158,333 shares of our common stock in accordance
with Regulation 504 of the Securities Act of 1933 for approximately $950,000.

     In September 1998 we issued 250,000 shares each to an affiliate of Byron
Lerner and to another officer and director in satisfaction of indebtedness of
$100,000. We believe the issuance of these shares is exempt from the
registration requirements under Section 4(2) of the Securities Act.

     In May 1998 we issued 6,000,000 shares of our common stock to twenty
unaffiliated entities, which collectively had the right to participate in our
future earnings under agreement. These investors acquired the shares for
investment. We believe the issuance of these shares is exempt from the
registration requirements under Section 4(2) of the Securities Act.


     In August 1998 and February 1999 we issued convertible notes in the
aggregate principal amount of $847,700 to several foreign investors in a
transaction exempt under Rule 504. We obtained proceeds of $300,000 in the
August 1998 offering and $550,000 in February 1999 offering. In connection with
the transaction we issued warrants exercisable at $1.25 per share in August to
purchase 30,000 shares of common stock. In February 1999 we issued warrants
exercisable at $.625 per share to purchase an aggregate of 137,500 shares of
common stock. All of the notes have been converted and the corresponding shares
issued. All of these warrants have been exercised prior to April 8, 1999. We
received gross proceeds of approximately $975,000 from the sale of notes and
exercise of warrants.


     In April 1999 we issued 2,000,000 shares of common stock to Antra Holding
Group Inc. in exchange for 2,000,000 shares of that corporation's shares.
Teltran believes that the transaction was exempt from the registration
requirements of the Securities Act under Section 4(2).


      As of May 1999 we acquired all the shares of Omni Communications Inc. This
company is an authorized agent of UniDial Communications, which operates as an
independent network of telecommunications resellers. We issued 115,000
pre-divided shares of our common stock to the sellers, of which James Tubbs
received 100,000 shares during 2000. Mr. Tubbs is an officer and director of our
company. Teltran believes the issuance of these shares is exempt from the
registration requirements of the Securities Act of 1933 under Section 4(2). We
have been advised that the only issuance of this company's shares were to the
three sellers, all of whom were accredited investors.


     In August 1999 Teltran issued 94,500 shares of common stock to the sole
stockholder of ChannelNet, Ltd., effective as of June 1, 1999. Teltran believes
the issuance of these shares is exempt from the registration requirements of the
Securities Act under Section 4(2). Prior to this acquisition by us, ChannelNet
in 1999 issued its shares to its sole stockholder in an offshore transaction. No
other ChannelNet shares were issued.


     Teltran issued an aggregate of 3,307,500 options between December 1998 and
May 1999, all under Teltran's stock plans. All of these options were issued to
officers, directors, employees and consultants to Teltran all of whom were
familiar with Teltran's operation. Of the options Teltran issued 1,300,946
options in December 1998 with the balance issued between January and May 1999.

      In December 1999 the board of directors granted to Byron Lerner options to
purchase 400,000 shares, at an exercise price of $4.00 per share, as
compensation. The options are exercisable over a period of ten years. These
options have previously been recinded in the year ended December 31, 1999.


<PAGE>


      In June 1999 Teltran issued a total of 316,499 shares of its common stock
in connection with a private placement of its securities. An additional 776,529
warrants to purchase our common stock at $6.00 per share were issued to finders.
The purchasers of the shares were accredited investors and Teltran believes this
transaction is exempt from the registration requirements of the Securities Act
under Section 4(2).


     In December 1999, Teltran sold 625,000 shares for $8.00 per share and
issued warrants to purchase 2,600,000 shares at prices ranging from $8.00 to
$10.25 per share. Some of the persons who acquired shares and warrants in the
June 1999 transactions acquired additional shares and warrants. If the market
price of Teltran's shares approximately 60 days after a registration statement
covering the shares issuable upon exercise of the warrants is less than the
stated exercise price, the actual exercise price of these warrants will be
reduced. In March 2000, the holders of these shares agreed to eliminate one of
the reset provisions of their subscription agreements in exchange for a
reduction of the purchase price specified in the warrants to $6.625 per share
and an additional 208,331 shares of our common stock. The Company believes that
this transaction was exempt from the registration requirements of the Securities
Act under Section 4(2).


      In December 1999, the Company issued 37,500 shares to Dolores Miller, the
spouse of Martin Miller. Martin Miller is a former director of the Company,
having resigned in January 2000. Mr. Miller denies beneficial ownership of the
shares owned by Ms. Miller.

     As of December 18, 1999, Teltran acquired all of the issued and outstanding
shares of Internet Protocols Ltd., a company engaged in rendering services to
Internet service providers and others. Internet Protocols Ltd. enters into
arrangements in accordance with which it shares revenue or charges a fee for use
of its equipment. Teltran issued 1,481,556 shares in connection with the
acquisition.


     At the time of the acquisition, Teltran issued an additional 83,886 shares
in escrow, which may be used to satisfy approximately $550,000 of indebtedness
of Internet Protocols Ltd. to its former stockholder. The Company believes that
the shares were issued under an exemption from the registration requirements of
the Securities Act under Section 4(2). See "Item 12. Certain Relationships and
Related Transactions--Certain Recent Securities Transactions."

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.


      Generally this amendment has been made to reflect the restated audited
financial statements opined on by our new auditors. Except where otherwise
indicated no attempt has been made to update the other information in the
report. Information has been or will be modified in subsequent reports.


     You should read the following discussion and analysis in conjunction with
the financial statements and related notes contained elsewhere in this report.

FORWARD-LOOKING STATEMENTS

     Some of the statements contained in this report may constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
various known and unknown risks and uncertainties and Teltran cautions you that
any forward-looking information provided by or on behalf of Teltran is not a
guarantee of future performance. Our actual results could differ from those
anticipated by the forward-looking statements due to a number of factors, some
of which are beyond Teltran's control, including:

          o the volatile and competitive nature of the telecommunications and
          Internet industry;

          o changes in domestic and foreign economic and market conditions;

          o the effect of federal, state and foreign regulation on Teltran's
          business in general and on the telecommunications and Internet
          industries;

          o changes in technology;

          o reduced telecommunication rates;

<PAGE>

          o delays of third parties in commencing service; and

          o the impact of recent and future acquisitions on Teltran's business
          and financial condition.

     Teltran does not undertake any obligation beyond the requirements of the
federal securities laws to publicly update any forward-looking statement to
reflect events or circumstances after the date on which any statement is made or
to reflect the occurrence of unanticipated events.

PLAN OF OPERATIONS

     During 2000 our plan of operation is to:

          o enter into and implement arrangements to provide wholesale customers
          throughout the world with Internet telephony. We are negotiating
          arrangements, which, if implemented, would require us to expend money
          for equipment purchases and the payment of various fees.

          *o seek to enter into arrangements to provide Internet telephony in
          additional countries that will enable us to participate in revenues on
          both ends of a call.

          o establish a network facility and expand the services offered
          including "Fax Over IP" and direct voice over IP to different
          countries.

          *o develop marketing strategies with Norweb, a national telecom
          network operator in the UK, and utilize our alliance with them to
          expand our Internet telephony network.

          o enhance our portal by providing additional related business
          services. These including offering banner ads, sponsorship agreements
          and other types of advertising. We will also seek to develop
          additional sales affiliate arrangements on our portal and continue to
          run live Internet.

          o jointly operate RecordsToGo.com, for the sale of music. The venture
          has entered into arrangements for the sale of records through the
          Internet.

          o integrate Internet Protocols Ltd., Teltran Web Factory, Ltd. our
          newly acquired subsidiaries in the United Kingdom with our recently
          created holding company.

          *o promote and market our new Internet service provider service
          through our web portal, www.Teltran.com. The service will be
          competitively priced and will offer unlimited Internet access, free
          e-mail and free home pages to all users.

          o expand our sales staff for our UniDial services to solicit
          commercial accounts. UniDial operates as an independent network of
          telecommunications resellers. UniDial services will also be marketed
          to individuals via our www.Teltran.com web portal.

          o hire new employees as needed because of increased activity.

          o continue to augment other aspects of our telecommunications
          business.

     We cannot assure you that we will be able to successfully implement our
plan.

 * The foregoing was based upon our good faith plans at the date of original
filing of the report. Since that date many of the forecasted items are no longer
considered as part of our plans, either for lack of capital, change in economic
evaluation or other reasons.

RESULTS OF OPERATIONS

     Prior to April 1998 we were essentially a start-up venture. During 1998
most of our revenues were derived from acting as an OzEmail re-file hub in the
United

<PAGE>

States. During 1999 these revenues were fully replaced by our successful efforts
in promoting our Teltran Internet telephony service as well as establishing
businesses for our web portal. Therefore comparisons between 1998 and 1999 will
be of limited value.

  Comparison of the Years Ended December 31, 1999 and December 31, 1998


      During the year ended December 31, 1999, the Company had revenues of
$1,041,815 compared to revenues of $535,197 in 1998. The increase was due in
significant part to Internet telephony revenues and revenue from ChannelNet, our
United Kingdom subsidiary. The latter revenues consisted primarily of premium
rate services. The revenues in the fourth quarter 1999 were affected by the
interruption of services of our internet telephone resulting from transition of
Internet telephony operations from the OzEmail network to the IXTC network. The
transition was delayed by the fear of Y2K problems.

      Our gross profits increased in 1999 to $392,441 from $290,365 in 1998. An
increase of $390,790 in revenue was generated from the acquisition of a
subsidiary in the U.K. During this period, however, our gross profit margin in
our domestic operations has declined from 54% to 12%. The decline in gross
profits margin arose because of the higher cost of communications in 1999
compared to 1998 as well as reduced rates we are able to charge our clients in
countries we provided Internet telephony services in 1999.

      During 1999 our selling, general and administrative expenses increased to
$4,102,727 from $685,662 in 1998. The expenses increased due to the acquisition
of our UK subsidiaries by $593,422. However, the primary increase is a result of
options granted in 1999 to our employees by approximately $1.3 million dollars.
Professional fees had a increase of over $600,000 due to the costs in connection
with our new regulatory obligations as a reporting company and in connection
with our acquisitions. We increased rent expense by over $100,000. This increase
was in connection with the end of our sub-lease at the end of 1998 and the
increase in rent from the new building management. An increase in travel and
entertainment by approximately $60,000 and an increase in new business
development of approximately $90,000 is a result of our efforts to service
existing business an to seek additional business.

      Additional expenses were incurred in 1999 amounted to approximately
$4,678,000. We incurred an impairment expense of approximately $4.4 million
dollars which is a result of the impairment charges to the Antra investment and
the investment in Omnicom. In addition amortization and depreciation expense
increased by approximately $250,000. This increase is primarily from the
amortization of the goodwill from the purchase of the UK subsidiary.

      We incurred a loss on operations of $8,389,575 in 1999 compared to a loss
of $418,380 in 1998 as a result of the foregoing. We had net loss of $8,738,481
in 1999 compared to a net loss of $449,339 in 1998. Our net loss in 1999
reflects the foregoing.


CORRECTION TO PUBLIC ANNOUNCED RESULTS

     In March 2000 we announced that our 1999 year end revenues were $5,671,887
and our loss for 1999 was $371,764. We then determined our 1999 revenues were
$2,453,189 and our 1999 loss was $2,239,920. As a result we found our 1999 nine-
month revenues and loss of $2,815,908 and $157,923 respectively was $2,019,774
and $638,211.

     A substantial part of the overstatement in the announcement for year-end
results related to the treatment of gross billing of telecommunication services
provided by Channelnet in financial information, which we believed was
acceptable to our auditors. The services of Channelnet are billed directly by
the British Telephone Company to the retail customer. Ultimately, Channelnet
receives this amount less charges of the telephone company and the network
provider. Initially, the entire amount billed to the customers account was
treated as gross revenues with the payments deducted. This treatment had no
effect on our net income. We determined to treat as revenue only the amount
remitted to us by the telephone company. This resulted in reduction of
approximately $2,400,000 in revenues.

     The auditors also made adjustments finding that an account receivable was
included in the financial information provided by our subsidiary and their

<PAGE>

independent accounting firm was overstated causing a reduction of revenues and
income of approximately $1,200,000. We also reserved an additional amount
against collection of $400,000 of this receivable. At the same time we reduced
our nine- month revenue and income by approximately $794,000 with respect to
this same receivable.

     In June 2000 we announced that our 1999-year end revenues were $2,453,189
and our loss for 1999 was $2,099,370. We then determined our 1999 revenues were
$1,041,189 and our 1999 loss was $8,638,481.

     A substantial part of the discrepancy in the results related to expenses of
approximately $1.3 million dollars for options granted and the expense of
approximately $4.4 million dollars to record impairment losses on recent
acquisitions. This resulted in increased expenses of approximately $5,700,000.

LIQUIDITY


      We had working capital of approximately $2.8 million dollars as of
December 31, 1999 compared to a working capital deficiency of approximately
$281,000 as of December 31, 1998. We have financed our operations primarily out
of private financing. Since December 31, 1998 we received gross proceeds of over
$6,4000,000 from such financing. In December 1998 we received proceeds of
$650,000 from the sale of convertible notes and exercise of warrants. All the
notes have been converted into equity. As a result of that financing we have
been able to repay and terminate our factoring arrangement. In June 1999 we
completed a private placement of shares of common stock and received
approximately $1,156,000. We completed an additional private placement in
November and December 1999 and received approximately $4,525,000. Upon
effectiveness of our registration statement on Form SB-2 and in the absence of
adverse changes, these purchasers may pay us another $400,000 for additional
shares.


     The Company anticipates substantial capital and other expenditures during
the year 2000. The Company will require additional funds for equipment in
connection with the establishment of a network center in New York. It estimates
it will incur equipment costs of over $500,000 in connection with this
operation. It believes leasing arrangements may satisfy a portion of such cost.
While ITXC may provide additional equipment without charge for calls originating
over the IXTC network, the Company may have to purchase additional equipment to
complete calls. If it initiates additional types of telecommunications services
or establishes joint ventures in foreign countries, it may be required to obtain
additional equipment. The Company is required to make additional payments of
$3,600,000 in completing the purchase of Web Factory assets, funding its United
Kingdom operations, funding up to an additional $65,000 for Recordstogo and
$500,000 for officer salaries. If the Company cannot finance these costs from
operations it will be required to obtain additional financing. It is presently
exploring ways to obtain such additional financing. There is no assurance we
will be able to obtain funding on terms favorable to us if at all. If the
Company cannot obtain additional financing, it may have to curtail some
additional activities.

CHANGES IN CAPITAL AND ACCUMULATED DEFICIT


      Additional paid-in capital increased by approximately $27,000,000 during
1999. Of which, $14,024,518 is primarily due to the stock issued in connection
with our recent acquisition of IPL. An additional $3,998,000 was added to
paid-in capital with respect to the shares we issued to Antra in April 1999 in
exchange for an equivalent amount of our shares. We had originally valued the
Antra shares at $2.00 per share or an aggregate of $4,000,000. We subsequently
wrote off the value of the investment. This was in recognition of the
non-liquidity, impairment, thin market and restriction on sale of these shares.
Reference is made Footnote 9 of the Company's financial statements included in
this report.

      Additional entries were made to additional paid-in capital to reflect
amounts allocated for the issuance of additional shares: $728,653 for shares
issued upon conversion of notes; $424,289 for shares issued upon the exercise of
options and warrants; and $5,974,301 for other shares, including shares issued
in the private placements in June and November 1999. During 1999 two stock
dividends were issued totaling 1,260,000 shares. The


<PAGE>

entry recorded reflects the par value of the stock issued through common stock
and additional paid-in capital. This entry had no effect on stockholder equity.


      There were entries that were made to additional paid-in capital that did
not effect the issuance of shares. These entries increased paid-in capital by
$1,949,198. This included $184,808 to reflect conversion preference and finance
costs on debentures, $1,267,410 related to employee options, and $496,980
related to stock to be issued for our acquisitions.

      Our stockholders equity (deficit) changed from a deficit of $2,254,495 in
1999 to equity of $17,905,980 in 2000 despite a net loss of $8,638,481. This
significant increase in equity was substantially attributable to the
acquisitions over the past year as well as private placement funding.


YEAR 2000 DISCLOSURE

     Prior to the year 2000 many businesses and institutions reviewed and
modified their computer systems to ensure they accurately process transactions
relating to the Year 2000 and beyond. This effort was necessary because many
existing computer systems and microprocessors with date functions, including
those in non-information technology equipment and systems, use only two digits
to identify a year in the date field and assume that the first two digits of the
year are always "19." Consequently, on January 1, 2000, some computers that were
not Year 2000 compliant read the year as 1900. Computer systems that calculate,
compare or sort using the incorrect date may malfunction causing disruption of
operations, including a temporary inability to process transactions, send
invoices or engage in other normal business activities. Our failure to address
potential Year 2000 malfunctions in our computer and non-information technology
equipment and systems could have resulted in our suffering business
interruptions, financial loss, and harm to our reputation and legal liability.
We nevertheless experienced no potential liabilities or stoppages in our
business as a result of the new millennium. Because of the fear of the possible
consequences of an Y2K problem, the implementation of our operations into the
ITXC network was delayed in late 1999.

ITEM 7. FINANCIAL STATEMENTS.

     See the financial statements beginning on Page F-1, filed as part of this
report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

     None.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT.


      Generally this amendment has been made to reflect the restated audited
financial statements opined on by our new auditors. Except where otherwise
indicated no attempt has been made to update the other information in the
report. Information has been or will be modified in subsequent reports.


     Our directors and executive officers are:

NAME                       AGE   POSITION
-------------------------  ---   -----------------------------------------------

Byron R. Lerner..........  55    President, Chief Executive Officer and Director
James E. Tubbs...........  39    Executive Vice President, Chief Operating
                                   Officer and Director
Peter Biagioli...........  39    Vice President of Sales and Marketing
Mitchell Hershkowitz.....  31    Vice President of Operations
Michael Neville..........  44    Vice President--UK Operations
James Supple.............  35    Chief Financial Officer

<PAGE>

     Byron R. Lerner has been chief executive officer and president of Teltran
since June 1997 and one of our directors since May 1996. Mr. Lerner was
Teltran's chief financial officer between May 1996 and June 1997. Between 1993
and 1995, Mr. Lerner was president of International GlobalCom, a firm he founded
which engaged in the resale of domestic and international long distance phone
time. This firm is no longer engaged in the resale of telephone time but is in
existence and used as a vehicle for Mr. Lerner's personal transactions. From
1990 to 1993 Mr. Lerner was president of L&S Communications, a reseller of
domestic and international long distance telephone time. Mr. Lerner believes
this firm has been liquidated.

     James E. Tubbs has been our executive vice president and a director since
May 1996. Between 1994 and 1995, Mr. Tubbs was president of OmniCom, a reseller
of UniDial services; OmniCom is now a subsidiary of Teltran. From 1984 through
May 1996 he was employed as an executive in various entities controlled by Brent
Musburger, the sports broadcaster. Simultaneously Mr. Tubbs was employed in
various capacities as an executive in sports and entertainment matters by the
networks, which engaged Mr. Musburger.

     Peter Biagioli has been employed by us since 1997 as an officer and has
been our vice president of sales and marketing since February 2000. From
February 1988 to January 1997 Mr. Biagioli was vice president of worldwide
commercial development for the Manifest Division of TNT Express Worldwide.
During the period November 1982 to January 1988 he was employed by Avis Rent A
Car System Inc. and was a regional sales manager for the New York metropolitan
market.

     Mitchell Hershkowitz has been our vice president of operations since April
1999. From October 1997 through April 1999, Mr. Hershkowitz's title was director
of operations. From October 1994 through October 1997, he was regional sales
director for OmniCom.

     Michael Neville has been our vice president of United Kingdom operations
since February 2000. He is presently acting as a consultant on a part-time basis
and providing services to others as a consultant. From July 1998 to January
2000, he was director of business development and wholesale services for Norweb.
From August 1997 to May 1998, Mr. Neville was managing director of OzEmail
Interline Pty., a joint venture between Metro Holdings and OzEmail Ltd. From
1989 to 1997, Mr. Neville held various positions with Cable and Wireless
Communications; most recently his title was general manager--international
partner services.

     James Supple has been employed by us since July 1999 and since January 2000
has been our chief financial officer. From 1994 to June, 1999 Mr. Supple was
financial controller of Schiavetti, Geisler, Corgan, Soscia, DeVito, Gabriele
and Nicholson a law firm located in the city of New York. From 1991 to 1994 Mr.
Supple held various positions in the law firm of Gordon Altman Butowski Weitzen
Shalov and Wein serving as assistant director of finance from 1992 through 1994.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

     Forms 3, 4 and 5 have not yet been filed by any officer, director or
beneficial owner of more than 10 percent of our common stock. Teltran had no
securities registered under the Exchange Act prior to its last fiscal year and
therefore no such reporting person was required to file reports under Section
16(a) of the Exchange Act in prior years. All reports for officers and directors
will be filed by June 10, 2000. Teltran will encourage beneficial owners of more
than 10% of Teltran's common stock to file their reports by the same date.

ITEM 10. EXECUTIVE COMPENSATION.


      Generally this amendment has been made to reflect the restated audited
financial statements opined on by our new auditors. Except where otherwise
indicated no attempt has been made to update the other information in the
report. Information has been or will be modified in subsequent reports.


     We have retroactively adjusted the share and price per share information in
this section to reflect the five percent stock dividends to holders of record on
June 3, 1999 and September 1, 1999.

     Our chief executive officer and two additional highest paid officers
received the compensation listed below during the fiscal years ended December
31, 1997, 1998 and 1999.

<PAGE>

                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>

                                                                    LONG TERM COMPENSATION AWARDS
                                                               ---------------------------------------
                                                                                       SECURITIES
NAME AND PRINCIPAL POSITION                                    YEAR     SALARY      UNDERLYING OPTIONS
------------------------------------------------------------   ----    --------     ------------------
<S>                                                            <C>     <C>          <C>
Byron E. Lerner
  President and Chief Executive Officer.....................   1999    $159,375     551,250
    Does not include 400,000 options which were recinded       1998      88,000     496,127 shares
    effective in the year ended December 31, 1999 and treated  1997      37,500     --
    as if they were not issued.

James Tubbs
  Executive Vice President and Chief Operating Officer......   1999    $161,000     551,250
                                                               1998      35,000     496,127 shares
                                                               1997      66,000     --

Peter Biagioli..............................................   1999    $124,466     132,300 shares
                                                               1998      41,477     132,300
                                                               1997      90,000     --
</TABLE>


     All of our directors hold office until the next annual meeting of
stockholders and the election and qualification of their successors. The board
of directors annually elects executive officers to hold office until the first
meeting of the board following the next annual meeting of stockholders and until
their successors are chosen and qualified.

1998 STOCK OPTION PLAN

     We have adopted our 1998 Stock Option Plan for our officers, employees and
consultants and for those of any of our subsidiaries. The option plan authorizes
the grant of options to purchase 3,307,500 shares of our common stock, after
giving effect to our stock dividends. Options to purchase all 3,307,500 shares
have been granted.

     The board of directors administers the option plan. In general, the board,
or a committee of the board, is empowered to select the persons to whom options
would be granted and to determine, subject to the terms of the option plan, the
number, the exercise period and other provisions of the options. The options
granted under the option plan are exercisable in however many installments as
may be provided in the grant.

     Options granted to employees may either qualify as incentive stock options
under the Internal Revenue Code or be non-qualified options. The board may
determine the exercise price provided that, in the case of qualified options,
the price may not be less than 100% of the fair market value of our common stock
at the date of grant. In the case of qualified options granted to holders of 10%
of or more the voting power of our stock, the price may not be less than 110% of
the fair market value of our common stock at the date of grant. The aggregate
fair market value, determined at the time the option is granted, of stock with
respect to which qualified options become exercisable for the first time in any
year cannot exceed $100,000.

     The options are evidenced by a written agreement containing the above terms
and other terms and conditions consistent with the option plan as the board of
directors may impose. Each option, unless sooner terminated, shall expire no
later than ten years or, in the case of qualified options granted to holders of
10% or more of the voting power of our stock, five years from the date of the
grant, as the board of directors may determine. The board of directors has the
right to amend, suspend or terminate the option plan at any time, provided,
however, that unless ratified by our stockholders no amendment or change in the
option plan will be effective for limited matters including increase in the
total number of shares which may be issued under the option plan or extending
the term of the option plan.

<PAGE>

                       OPTIONS GRANTED IN LAST FISCAL YEAR


                           NUMBER OF SHARES
                              UNDERLYING
                             OPTION GRANT    EXERCISE PRICE    EXPIRATION DATE
                             ------------    ---------------   ----------------
Byron Lerner...............       275,625        $ 0.54        January 31, 2009
  Does not include 400,00         275,625          3.63        May 8, 2009
  options which were
  recinded effective in
  the year ended December
  31, 1999 and treated
  as if they were not
  issued.

James Tubbs................       275,625        $ 0.54        January 31, 2009
                                  275,625          3.63        May 8, 2009

Peter Biagioli.............        22,050        $ 0.54        January 31, 2009
                                  110,250          3.63        May 8, 2009


               AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
                          FISCAL YEAR END OPTION VALUES

     The table below provides information concerning stock option exercises
during the fiscal year ended December 31, 1999 and the value of unexercised
options at the end of that fiscal year. All of the unexercised options were in
the money on this date.

                                                       NUMBER OF     VALUE OF
                                                         SHARES     UNEXERCISED
                          SHARES                       UNDERLYING  IN-THE-MONEY
                        ACQUIRED ON                    UNEXERCISED  OPTIONS AT
NAME                     EXERCISE     VALUE REALIZED     OPTIONS    END OF YEAR
-------------------     -----------  ----------------  ----------- -------------

Byron Lerner..........    281,758       $2,285,416        765,617    $3,768,137
James Tubbs...........     35,000       $  294,700      1,012,375    $5,717,171
Peter Biagioli........     35,000       $  294,700        229,600    $1,252,202
  Does not include
  400,00 options
  which were recinded
  effective in the
  year ended December
  31, 1999 and treated
  as if they were not
  issued.


     The value of the in-the-money options is based on the market price of our
common stock on December 31, 1999, which was $7.56 based on the average of high
and low sales on the OTC Bulletin Board that day. All of the options were in the
money.


     On January 31, 1999 we issued options to purchase an additional 904,049
shares of common stock at $.54 per share exercisable immediately. Of these
options 275,625 were issued to each of Messrs. Lerner and Tubbs and Martin
Miller, then one of our directors. In May 1999 we granted options to purchase an
additional 1,186,550 shares of our common stock at $3.63 per share. Of these,
options to purchase 275,625 shares were issued to each of Byron Lerner, James
Tubbs and Martin Miller. All the options granted in 1999 vested immediately.

      On December 20, 1999 the board of directors awarded Byron Lerner an
additional option to purchase 400,000 shares of common stock at $4.00 per share.
These options were subsequently recinded effective in the year ended December
31, 1999. On February 1, 2000 the board of directors awarded Byron Lerner and
James Tubbs options to purchase 890,500 and 717,933 shares of our common stock,
respectively. The exercise price of the options is $8.00 per share until August
2, 2000 and $1.00 thereafter. These options, as amended, vest as to one-half
(1/2) of the shares subject to the Option on the date of issuance. An additional
one-half of the shares vest on January 1, 2001. If, however, an optionee's
employment is terminated as a result of a change of control, then the shares
subject to the option immediately vest and the exercise price of the option is
reduced to ten cents per share. The total number of shares is subject to the
option increase by an amount equal to the difference between 9.9% of the
outstanding shares and the shares subject to the option (including exercised
shares). The options are exercisable until February 1, 2010.

     In December 1999 we issued a total of 706,758 shares of our common stock
subject to existing options. The purchasers issued non-interest bearing notes
totaling $326,727 as consideration for the exercise price under the options for
the shares. The notes are due July 1, 2000 or earlier if the shares are sold.
Mr. Byron Lerner acquired 281,758 shares of common stock upon exercise of
options and has delivered a note for $107,743 representing the unpaid exercise
price and Mr. James Tubbs has acquired 35,000 shares and delivered his note for
$11,905 representing the unpaid exercise price. Martin Miller, who was then a
director, acquired 250,000 shares and issued his note for $127,550.


<PAGE>

EMPLOYMENT AGREEMENTS

     We have entered into an employment agreement with Byron Lerner to serve as
our president and chief executive officer. The agreement is for a term of 37
months commencing March 1, 1999 and unless notice of non-renewal is given at the
end of first thirteen months or any later year, the term of the agreement is
extended for an additional year period. Mr. Lerner received a base annual salary
of $150,000 until August 1999 when the salary increased to $180,000. As amended,
starting on February 1, 2000, the salary increased to $250,000. After that, the
salary increases at the rate of ten percent per annum. The agreement provides
for a bonus pool, which shall be equal to 15% of net income as defined in the
agreement of which Mr. Lerner will receive forty percent (40%) of the pool. Mr.
James Tubbs, Teltran's executive vice president and chief operating officer, has
entered into an identical agreement, as amended, with us.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.


      Generally this amendment has been made to reflect the restated audited
financial statements opined on by our new auditors. Except where otherwise
indicated no attempt has been made to update the other information in the
report. Information has been or will be modified in subsequent reports.


     The following table sets forth, as of March 15, 2000, information
concerning the beneficial ownership of our common stock.

          o each person who beneficially owns more than five percent of our
          outstanding common stock,

          o each of our directors,

          o each of the executive officers named in the summary compensation
          table,

          o all our directors and executive officers as a group and

     Share ownership includes both shares beneficially owned and shares a
person has the right to acquire under any option or warrant which is presently
exercisable or which may be exercised within sixty days. These include 765,617
options in case of Byron Lerner, 1,012,375 options in case of James Tubbs,
229,600 options in the case of Peter Biagioli and 2,694,242 options for all
officers and directors as a group.

          (1) Balmore S.A. owns 328,309 issued and outstanding shares, or
          approximately 2.1%, of our common stock. The bulk of Balmore's
          apparent ownership is in the form of warrants. Under an agreement with
          Teltran, Balmore is not allowed to exercise warrants if its total
          ownership of shares at any time would exceed 4.99% of Teltran's
          outstanding shares. Therefore, despite what appears to be Balmore's
          ownership of over nineteen percent (19%) of Teltran's common stock,
          Balmore is actually a holder of less than 5%. Teltran has been advised
          that Balmore S.A has changed its name from Balmore Funds S.A.

          (2) Antra Holding Group, Inc., a principal stockholder listed below,
          is a corporation whose stock is publicly traded. We are a principal
          stockholder of Antra Holding Group, Inc., having a beneficial interest
          in 2,800,000 or 22.7% of its outstanding shares.


                                                       SHARES        PERCENT OF
                                                    BENEFICIALLY        SHARES
IDENTITY OF STOCKHOLDER OR GROUP                       OWNED         OUTSTANDING
-------------------------------------------------   -------------    -----------
Byron Lerner.....................................     1,348,000           6.3%
James Tubbs......................................     1,444,188           8.0%
Peter Biagioli...................................       263,600           1.5%
Balmore S.A, C.B (1).............................     3,312,429          19.3%
  Trident Chambers,
  P.O. Box 146
  Road Town Tortola
  British Virgin Islands
Antra Holding Group Inc (2)......................     2,205,000          12.9%
  1515 Locust Street,
  Philadelphia, PA 19102
All Officers and Directors (6 persons)...........     3,742,438          18.9%


<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


      Generally this amendment has been made to reflect the restated audited
financial statements opined on by our new auditors. Except where otherwise
indicated no attempt has been made to update the other information in the
report. Information has been or will be modified in subsequent reports.


     Information in this section is retroactively adjusted to reflect the five
percent stock dividend to holders of record on June 3, 1999 and September 1,
1999.

     During and prior to 1998 an affiliate of Byron Lerner and James Tubbs each
advanced $50,000 to us. In 1998 all these advances were converted into 551,250
shares of our common stock. All these advances were interest free. Mr. Lerner
has advanced approximately an additional $13,000 to us in 1998 and received an
additional 71,662 shares of common stock.

     In April 1999, we and Antra Holding Group Inc. exchanged shares of each
other's stock. We received 2,000,000 shares of Antra's common stock and Antra
owns 2,205,000 shares of our common stock. Antra is a public company engaged
through subsidiaries in the music business. As a result of the transaction Antra
may be deemed a principal stockholder of Teltran. We have entered into an
agreement with Antra, which requires an adjustment in the shares delivered in
connection with the above-described exchange. If on the first business day of
the year 2000 either Antra's shares or our shares are trading less than 20%
below the market price of the other party's shares, the party whose shares are
trading lower must issue additional shares to the other party. As a result of
this adjustment we received an additional 800,000 shares of Antra's common
stock.

     We formed a joint venture corporation with a subsidiary of Antra to market
records with Antra through a website to be established on the Internet using our
portal. We and Antra each own 49% of the outstanding shares of this corporation
with an unrelated third party owning 2% of the outstanding shares. We each will
be equally responsible for funding and share equally in losses and profits. This
venture initially will market records owned by independent third parties through
the Internet. See "Item 1.
Description of Business."

     As of May 1999 we acquired all the shares of Omni Communications Inc. This
company is an authorized agent of UniDial Communications. We issued 126,788
shares of our common stock to the sellers, of which James Tubbs received 110,250
shares. Mr. Tubbs is an officer and director of Teltran. We did not obtain a
fairness opinion.

     A portion of the space leased by us is occupied by entity, a corporation in
which two of our officers have an equity interest. These entities are paying us
an aggregate of $48,000 per annum for the use of the facilities. We believe the
terms are fair and are equal to what we would have received from an independent
third party.

          (1) Mr. Matityahu Kaniel, a citizen of Israel, is the beneficial owner
          of all the shares of Balmore S.A., CB.

          (2) Joseph M. Marrone is President of Antra Holding Group Inc. and
          owner of approximately 15.4% of the outstanding shares. Antra Holding
          Group Inc. is a publicly traded company and its shares are widely
          held.

CERTAIN RECENT SECURITIES TRANSACTIONS

     On August 16, 1999, in exchange for 94,500 shares of our common stock, we
acquired all of the outstanding shares of ChannelNet Ltd. common stock,
effective June 1, 1999. ChannelNet has been providing premium-rate
telecommunications services to customers in the United Kingdom as well as being
an OzEmail affiliate in the United Kingdom and Ireland. Byron Lerner and James
Tubbs, officers and directors of Teltran, became directors of ChannelNet.


     In June 1999 we issued a total of 316,499 shares of common stock in
connection with a private placement of our securities. Five investors acquired
326,024 shares at $3.81 per share. If the price of our common stock is selling
below specified levels after the offering, we may have to issue additional
shares to these investors. The purchasers of 286,650 of the shares are required
to purchase an


<PAGE>

additional number of shares after this registration statement is declared
effective provided that there is no material change adversely effecting Teltran.
An additional 6,300 shares were issued to a finder and an additional 815,355
warrants to purchase our common stock at $5.71 per share were issued to finders.
In November 1999, Teltran sold an additional 625,000 shares for $8.00 per share
and issued warrants to purchase 2,600,000 shares at prices ranging from $8.00 to
$10.25 per share. If the market price of Teltran's shares approximately 60 days
after a registration statement covering the shares issuable upon exercise of the
warrants is less than the stated exercise price, the actual exercise price of
these warrants will be reduced.

     In April 1999 we agreed to issue options to purchase shares of our common
stock to Corrie Ltd. and Craighouse Ltd. if their assistance proved successful
in obtaining international communication arrangements. These options, if issued,
may entitle the holder or holders to purchase an aggregate maximum of 450,000
shares of common stock. While the conditions for these options have not
occurred, we believe there is a strong possibility that these options will be
issued. Neither of these entities or their principals is related to Teltran.


      In December 1999, the Company issued 37,500 shares to Dolores Miller, the
spouse of Martin Miller. Martin Miller is a former director of the Company,
having resigned in January 2000. Mr. Miller denies beneficial ownership of the
shares owned by Ms. Miller.


     As of December 18, 1999, Teltran acquired all of the issued and outstanding
shares of Internet Protocols Ltd., a company engaged in rendering services to
Internet service providers and others. Internet Protocols Ltd. enters into
arrangements under which it shares revenue or charges a fee for use of its
equipment. Teltran issued 1,481,566 shares in connection with the acquisition.
We have also purchased shares of Internet Protocols Ltd. directly from this
subsidiary company for approximately $3,000,000 payable in installments through
August 2000. The ultimate purchase price for the shares acquired from the former
shareholders may be increased or decreased depending upon the valuation of
Internet Protocols Ltd. in November 2000. One-half of the shares issued to the
former shareholders were deposited in escrow covering indemnification and
possible downward revaluation. At the time of the acquisition, Teltran issued an
additional 83,886 shares in escrow, which may be used to satisfy approximately
$550,000 of indebtedness of Internet Protocols Ltd. to several of its former
stockholders. The price was determined by negotiation. The total amount payable
by us for Internet Protocols before any adjustments was approximately
$18,200,000 ((pound)10,800,000). This includes approximately $3,000,000 payable
to Internet Protocols, pursuant to acquisition agreement with former
shareholders of Internet Protocols. We shall nevertheless remain responsible for
funding the operating of this subsidiary. All references to dollar amount are
based on exchange rates at the time of the transactions. The number of shares
may be adjusted in certain circumstances based on a decline in the market price
of the Company's shares.

<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

     (a) Index To Exhibits.

EXHIBIT
  NO.        DESCRIPTION
-------      -------------------------------------------------------------------

 3.1     --  Certificate of Incorporation (a)

 3.2     --  Certificate of Ownership and Merger of Spectratek Incorporation by
             Teltran International Group, Ltd.(a)

 3.3     --  Amendment to Certificate of Incorporation (a)

 4.      --  By-Laws(b)

10.1     --  1998 Stock Option Plan (a)

10.2     --  Employment Agreement between Byron Lerner and Registrant (a)

10.2(a)  --  Employment Agreement between James Tubbs and Registrant (b)

10.2(b)  --  Amendment 1 dated as of January 31, 2000 to the Employment
             Agreement between Byron Lerner and Registrant *

10.2(c)  --  Amendment 1 dated as of January 31, 2000 to the Employment
             Agreement between James Tubbs and Registrant *

10.3     --  USA Interconnectivity and Support Agreement dated October 12, 1999
             (a)

10.4     --  USA Intellectual Property License Agreement dated October 12, 1999
             between OzEmail and Registrant (a)

10.5     --  Telecommunication Services Agreement dated October 15, 1998
             between OzEmail and Registrant (a)

10.6     --  Extension and Modification of OzEmail Agreement (e)

10.7     --  Subscription Agreement dated June 10, 1999 (c)

10.8     --  Memorandum Agreement between Registrant and Antra Holdings Group
             Inc.(c)

10.9     --  (i) Exchange Agreement dated as of July 15, 1999 between Barclay
             Brydon Limited and Teltran International Group,Ltd., as amended by
             the Closing Memorandum dated August 16, 1999(d) (ii) Memorandum of
             Closing between and among Barclay Brydon Limited and Teltran
             International Group, Ltd., dated August 16, 1999(d)

10.10    --  Restated and Amended Stockholders' Agreement dated January 24, 2000
             amending and restating the Agreement dated as of September 30, 1999
             among Teltran International Group, Ltd., Antra Group Holdings,
             Inc., and Recordstogo.com Inc. *

10.11    --  Telecommunications Services Agreement between Teltran
             International, Inc. and Pacific Gateway Exchange (f)

<PAGE>

10.12    --  Telecommunications Services Agreement between Teltran
             International, Inc. and North American Gateway, Inc.(f)

10.13    --  Exchange Agreement among Teltran International Group, Ltd. and the
             Sellers named on Schedule A.(f)

10.14    --  Deferred Equipment Purchase Agreement, dated August 16, 1999,
             between Barclay Brydon Limited and Teltran International Group,
             Ltd. (g)

10.15    --  ChannelNet Limited Service Provider Agreement with Norweb Telecom
             Limited, dated November 23, 1999 (g)

10.16    --  Acquisition Agreement made as of December 18, 1999, by and among
             Teltran International Group, Ltd. and Internet Protocols Limited
             and the Shareholders of Internet Protocols Limited. (h) (a)
             Exhibits to Internet Protocols Limited Acquisition Agreement*

10.17    --  Office Lease, One Penn Plaza, New York. *

10.18    --  Commercial Lease Agreement , made and effective February 4, 2000 by
             and between TELEVISIONES COMMUNICATIONS, CORP. and Teltran
             International Group, Ltd., for collocation facility in Miami,
             Florida. *

10.19    --  WWExchange Network Services Agreement by & between Teltran
             International, Inc. & ITXC Corp. (i)

10.20    --  Stock Option Agreement, made as of February 1, 2000 between Teltran
             International Group, Inc. and Bryon R. Lerner. (i)

10.20a   --  Corrected and restated option of Mr. Lerner (k)

10.21    --  Stock Option Agreement, made as of February 1, 2000 between Teltran
             International Group, Inc. and James Tubbs. (i)

10.21a   --  Corrected and restated option of Mr. Tubbs (k)

10.22    --  Form of Promissory Note, dated December 9, 1999, used in connection
             with the exercise of stock options. (i)

10.23    --  Agreement for Sale and Purchase of Part of the Business of the Web
             Factory Limited among Web Factory Limited, Castlegate 133 Limited,
             Teltran International Group Limited and Datatec Limited dated
             March 15, 2000. (j)

21.1     --  Subsidiary List *

27       --  Financial Data Schedule*



<PAGE>

------------------
  * Filed herewith.

 (a) Previously filed with the Company's Form 10-SB on March 24, 1999.

 (b) Filed with the Company's Amendment 1 to its Form 10-SB.

 (c) Filed with the Company's Amendment 1 to its Form SB-2.

 (d) Filed with the Company's Form 8-K, dated August 16, 1999.

 (e) Filed with the Company's Amendment 2 to its Form SB-2.

 (f) Filed with the Company's Amendment 3 to its Form SB-2.

 (g) Filed with the Company's Amendment 4 to its Form SB-2.

 (h) Filed with the Company's Current Report on Form 8-K on January 3, 2000 with
     additional exhibits thereto filed herewith.

 (i) Filed with Company's Annual Report for 1999 on Form 10K SB.

 (j) Filed with the Company's Current Report on Form 8-K for March 15, 2000.


 (k) Filed with the Company's Amendment 1 to its Annual Report for 1999 on Form
     10KSB/A

     (b) Reports on Form 8-K.

     No new reports on Form 8-K were filed during the last quarter of the period
covered by this report. However, an amendment containing financial statements
was filed on October 19, 1999 with respect to the Form 8-K originally filed on
August 31, 1999. Additionally, a Form 8-K was filed on January 3, 2000, with
respect to an acquisition that occurred on December 18, 1999. An amendment
containing financial statements was filed on March 2, 2000 with respect to this
Form 8-K.

<PAGE>

                                   SIGNATURES

     IN ACCORDANCE WITH SECTION 13 OR 15(D) OF THE EXCHANGE ACT, THE REGISTRANT
CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED.



Date: February 21, 2001


                                          TELTRAN INTERNATIONAL GROUP, LTD.

                                          By:        /s/ BYRON R. LERNER
                                              ----------------------------------
                                                       Byron R. Lerner
                                                         President

     IN ACCORDANCE WITH THE EXCHANGE ACT, THIS REPORT HAS BEEN SIGNED BELOW BY
THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON
THE DATES INDICATED.


Date: February 21, 2001



                                                    /s/ BYRON R. LERNER
                                         ---------------------------------------
                                                      Byron R. Lerner
                                          President, Chief Executive Officer
                                              Chief Financial Officer and
                                                         Director


Date: February 21, 2001


                                                    /s/ JAMES E. TUBBS
                                         ---------------------------------------
                                                      James E. Tubbs
                                             Executive Vice President, Chief
                                                        Operating
                                                   Officer and Director


Date:


                                         ---------------------------------------

<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS






Independent Auditors' Reports                                            F-1-F-2

Consolidated Balance Sheet                                                   F-3

Consolidated Statements of Operations                                        F-4

Consolidated Statements of Stockholders' Equity                              F-5

Consolidated Statements of Cash Flows                                    F-6-F-7

Notes to Consolidated Financial Statements                              F-8-F-18

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Teltran International Group, Ltd. and Subsidiaries

We have audited the consolidated statements of operations,  stockholders' equity
(deficit) and cash flows of Teltran  International  Group, Ltd. and Subsidiaries
for the year ended December 31, 1998. These  consolidated  financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated results of their operations,
changes in  stockholders'  equity  (deficit),  and their cash flows for the year
ended December 31, 1998 of Teltran International Group, Ltd. and Subsidiaries in
conformity with accounting principles generally accepted in the United States of
America.

                                           /s/ Liebman Goldberg & Drogin LLP


Garden City, New York
March 10, 2000



                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Teltran International Group, Ltd. and Subsidiaries

We have audited the consolidated  balance sheet of Teltran  International Group,
Ltd.  and  Subsidiaries  as of December  31,  1999 and the related  consolidated
statements of operations,  stockholders' equity (deficit) and cash flows for the
year then ended. These consolidated  financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,   in  all  material   respects,   the  financial   position  of  Teltran
International  Group,  Ltd.  and  Subsidiaries  as of December  31, 1999 and the
consolidated  results  of their  operations,  changes  in  stockholders'  equity
(deficit)  and  their  cash  flows for the year then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

                                        /s/ Rothstein, Kass & Company, P.C.


Roseland, New Jersey
November 14, 2000, except for Note 17
  which is as of January 31, 2001



                                      F-2
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                     ASSETS
                                                                   December 31,
                                                                      1999
                                                                   ------------
Current assets
Cash                                                              $ 3,807,368
  Accounts receivable                                               1,023,054
  Prepaid expenses and other current assets                           241,490
                                                                  -----------
   Total current assets                                             5,071,912
                                                                  -----------
Property and equipment, net                                           619,845
                                                                  -----------
Other assets
  Security deposit                                                     50,704
  Goodwill, net                                                    13,716,867
  Intangibles, net                                                    450,200
  Due from related parties                                            225,365
  Investment                                                           50,000
                                                                  -----------
                                                                   14,493,136
                                                                  -----------
                                                                  $20,184,893
                                                                  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Current portion of long-term debt                               $   149,027
  Accounts payable                                                    262,859
  Accrued expenses and other liabilities                            1,791,120
  Due to related party                                                104,721
  Corporation tax payable                                              15,472
                                                                  -----------
    Total current liabilities                                       2,323,199
                                                                  -----------
Long-term liabilities
  Long-term debt                                                       24,815
  Other long term liabilities                                          30,899
                                                                  -----------
                                                                       55,714
                                                                  -----------
Stockholders' equity
  Preferred stock, $.001 par value, 5,000,000 shares
     authorized and none issued and outstanding
  Common stock, $.001 par value, 50,000,000 shares
     authorized and 16,305,983 issued and
     outstanding                                                       16,306
  Additional paid-in capital                                       29,100,058
  Notes receivable, stockholders                                     (326,727)
  Accumulated other comprehensive income                                9,319
  Accumulated deficit                                             (10,992,976)
                                                                  -----------
    Total stockholders' equity                                     17,805,980
                                                                  -----------
                                                                  $20,184,893
                                                                  ===========

          See accompanying notes to consolidated financial statements


                                      F-3
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                        For the Years
                                                      Ended December 31,
                                                     1999            1998
                                                ------------    ------------
Revenues                                        $  1,041,815    $    535,197

Cost of revenues                                     649,374         244,832
                                                ------------    ------------
Gross profit                                         392,441         290,365

Operating expenses
  Selling, general and administrative              4,102,727         685,662
  Provision for impairment                         4,396,981
  Depreciation and amortization                      282,308          24,083
                                                ------------    ------------
                                                   8,782,016         709,745

Loss from operations                              (8,389,575)       (419,380)
                                                ------------    ------------
Other expenses
  Interest                                           225,870          29,959
  Loss from joint venture                            104,653
                                                ------------    ------------
                                                     330,523          29,959
                                                ------------    ------------
Loss before income taxes                          (8,720,098)       (449,339)

Income taxes                                          18,383
                                                ------------    ------------
Net loss                                        $ (8,738,481)   $   (449,339)
                                                ============    ============

Basic and diluted loss per common share         $      (0.75)   $      (0.06)
                                                ============    ============
Weighted average number of common shares
  used in computing basic and diluted loss
  per common share                                11,678,746       6,929,082
                                                ============    ============


          See accompanying notes to consolidated financial statements


                                      F-4
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF STOCHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>

                                                                                                                      Comprehensive
                                                                              Accumulated                                  Loss
                                                     Additional     Notes        Other                                    For the
                                  Common Stock        Paid-in    Receivable, Comprehensive Accumulated                 Years Ended
                                Shares     Amount     Capital   Stockholders    Income       Deficit       Total       December 31,
                              -----------------------------------------------------------------------------------------------------
<S>                              <C>      <C>       <C>          <C>           <C>      <C>             <C>            <C>
Balances, January 1, 1998        915,637  $   916  $ 1,501,928   $      --     $   --   $ (1,805,156)   $ (302,312)$           --
Issuance of stock in
  connection with joint
  venture termination          6,000,000    6,000      284,000                                             290,000
Conversion of debt               281,658      281      116,931                                             117,212
Issuance of stock as payment
  of stockholders' loans         500,000      500       99,500                                             100,000
Net loss                                                                                    (449,339)     (449,339)      (449,339)
                              -------------------------------------------------------------------------------------    ----------
Balances, December 31, 1998    7,697,295    7,697    2,002,359                            (2,254,495)     (244,439)    $ (449,339)
Conversion of debt             1,835,033    1,835      728,653                                             730,488     ==========
Stock issued in connection
  with acquisitions            1,659,942    1,660   14,024,518                                           14,026,178
Stock issued in exchange for
  investment in
  Antra Holding Group, Inc.    2,000,000    2,000    3,998,000                                           4,000,000
Stock issued in connection
  with private placements        941,499      942    5,679,027                                           5,679,969
Stock issued for services         37,500       38      295,274                                             295,312
Common stock dividends         1,260,456    1,260       (1,260)
Excercise of stock options
  and warrants                   874,258      874      424,289    (326,727)                                 98,436
Debt conversion pereference                            137,500                                             137,500
Stock warrants issued in
  connection with debt
  financing                                             47,308                                              47,308
Stock options granted to
  employees                                          1,267,410                                           1,267,410
Common stock to be issued
  related to acquisition                               496,980                                             496,980
Cumulative translation
  adjustment                                                                    9,319                        9,319         9,319
Net loss                                                                                  (8,738,481)   (8,738,481)   (8,738,481)
                              -------------------------------------------------------------------------------------  -----------
Balances, December 31, 1999   16,305,983  $16,306  $29,100,058   $(326,727)    $9,319   $(10,992,976)   $17,805,980  $(8,729,162)
                              =====================================================================================  ===========
</TABLE>


          See accompanying notes to consolidated financial statements


                                      F-5
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                            For the Years
                                                          Ended December 31,
                                                      -------------------------
                                                          1999          1998
                                                      -----------   ------------


Cash flows from operating activities
  Net loss                                           $(8,738,481)   $  (449,339)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation and amortization                        282,301         24,083
    Provision for impairment                           4,396,981
    Compensation expense related to options            1,267,410
    Non-cash interest expense related to
      convertible notes                                  204,605
    Consulting expense related to stock issued           295,312
    Loss from joint venture                              104,653
    Changes in operating assets and liabilities:
      Accounts receivable                               (896,775)       (94,296)
      Prepaid expenses and other current assets          218,718
      Deferred financing costs                                          (55,875)
      Cash repayments to factor                               --         65,193
      Accounts payable and accrued expenses            1,093,674         69,112
                                                     -----------    -----------
Net cash used in operating activities                 (2,209,038)      (441,122)
                                                     -----------    -----------
Cash flows from investing activities
  Purchases of property and equipment                   (165,882)
  Investment in joint venture                            (75,000)
  Payments for security deposit                          (50,704)
  Loans to related parties                              (185,837)
  Net cash received in acquisitions                      101,978
                                                     -----------    -----------
Net cash used in investing activities                 (1,286,275)            --
                                                     -----------    -----------
Cash flows from financing activities
  Repayment of notes payable                                           (250,000)
  Proceeds from loans from stockholders and others        48,738        102,865
  Proceeds from convertible debt                         550,000        300,000
  Proceeds from issuance of common stock
   and exercise of warrants                            5,778,405
  Issuance of stock for notes payable                                   290,000
                                                     -----------    -----------
Net cash provided by financing activities              6,377,143        442,865
                                                     -----------    -----------
Effect of exchange rate changes on cash                    9,319
                                                     -----------    -----------
Net increase in cash                                   3,801,979          1,743

Cash, beginning of year                                    5,389          3,646
                                                     -----------    -----------
Cash, end of year                                    $ 3,807,368    $     5,389
                                                     ===========    ===========


          See accompanying notes to consolidated financial statements


                                      F-6
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


                                                             For the Years
                                                           Ended December 31,
                                                          1999          1998
                                                       -----------   -----------
Supplemental disclosure of cash flow information,
  Cash paid during the year for income taxes           $    18,383   $        --
                                                       ===========   ===========
Supplementary schedule of non-cash investing
  and financing activities
  Common stock issued in connection with acquisitions  $14,026,178   $        --
                                                       ===========   ===========
  Conversion of debt into common stock                 $   730,488   $   117,212
                                                       ===========   ===========
  Convertible notes                                    $   326,727   $        --
                                                       ===========   ===========
  Common stock issued in exchange for investment in
    Antra Holding Group, Inc.                          $ 4,000,000   $        --
                                                       ===========   ===========
  Common stock to be issued related to acquisition     $   496,980   $        --
                                                       ===========   ===========

          See accompanying notes to consolidated financial statements


                                      F-7
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 1 -    Nature of Operations

            Teltran  International  Group,  Ltd.  (the  "Company")  is primarily
            engaged  in  acting  as a seller of  telecommunication  time  routed
            through the internet.  During 1999,  the Company began  operating an
            internet  portal and  acquired  two  entities in the United  Kingdom
            which are  engaged  in  providing  premium  rate  telecommunications
            services and providing  equipment  and services to internet  service
            providers.

NOTE 2 -    Summary of Significant Accounting Polices

            Principals of Consolidation

            The consolidated  financial  statements  include the accounts of the
            Company and its wholly-owned subsidiaries. Intercompany balances and
            transactions have been eliminated in consolidation.

            Business  combinations  which  have  been  accounted  for  under the
            purchase  method of accounting  include the results of operations of
            the acquired  business from the date of  acquisition.  Net assets of
            the companies  acquired are recorded at their fair value at the date
            of acquisition. Any consideration in excess of the fair value of the
            net assets  acquired is allocated to goodwill and amortized over its
            estimated useful life.

            Restatement of Financial Statements (in thousands)


            The 1999  consolidated  financial  statements  have been restated to
            reflect the proper  treatment of various  transactions.  The primary
            differences  are  detailed as follows.  The  Company  corrected  the
            valuation of the 1999 acquisitions, which resulted in an increase to
            goodwill  of  approximately  $14,400.  An  impairment  charge to the
            goodwill and a certain  investment  was  recorded for  approximately
            $4,397  (see  Note 5 and Note 6).  The  adjustments  resulted  in an
            increase  in  amortization  of  goodwill  of   approximately   $275.
            Additionally,   the  Company  recorded  a  compensation   charge  of
            approximately  $1,267 related to employee  stock options  granted at
            exercise prices below the market price at the date of the grant (see
            Note 14). A  consulting  charge of  approximately  $295 was recorded
            relative to common stock issued for  services.  Finally,  additional
            interest expense resulting from debt discount  orginating  primarily
            from warrants issued in connection with debt was recorded.


            Fair Value of Financial Instruments

            The fair  value  of the  Company's  assets  and  liabilities,  which
            qualify  as  financial  instruments  under  Statement  of  Financial
            Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value
            of  Financial   Instruments,"   approximates  the  carrying  amounts
            presented in the consolidated balance sheet.

            Property and Equipment

            Property and equipment,  is stated at cost. Depreciation is provided
            by the  straight-line  method over the estimated useful lives of the
            assets as follows:

                                                                  Estimated
                     Asset                                       Useful Lives

                     Computer equipment                             3 Years
                     Furnitures and fixtures                        4 Years
                     Machinery and equipment                      3-5 Years


                                      F-8
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 2 -    Summary of Significant Accounting Polices (continued)

            Investment

            Investment  for  which  the  Company  does not have the  ability  to
            exercise significant  influence and for which there is not a readily
            determinable market value are accounted for under the cost method of
            accounting.  Dividends  and other  distributions  of  earnings  from
            investee  accounted for under the cost method,  if any, are included
            in income when  declared.  The Company  periodically  evaluates  the
            carrying value of its investment accounted for under the cost method
            and as of December  31,  1999 such  investment  was  included at the
            lower of cost or estimated net realizable value.

            Impairment of Long-Lived Assets

            The Company periodically assesses the recoverability of the carrying
            amounts of  long-lived  assets,  including  goodwill and  intangible
            assets. A loss is recognized when expected  undiscounted future cash
            flows are less than the carrying amount of the asset. The impairment
            loss is the  difference  by which the  carrying  amount of the asset
            exceeds its fair value.

            Joint Venture

            The Company has an  investment  in a joint venture that is accounted
            for under the equity  method of  accounting  as the  Company has the
            ability to exercise  significant  influence  over the investee,  but
            less than a controlling  voting  interest.  Under the equity method,
            the Company's  share of the investee's  earnings or loss is included
            in consolidated operating results. If the Company's share of the net
            losses of the investment are greater than investment account and the
            Company is obligated to fund the losses, a liability is recorded.

            Revenue Recognition

            Telecommunication  revenues from services are  recognized and billed
            as services are performed.

            Stock-Based Compensation

            The  Company  follows  SFAS No.  123,  "Accounting  for  Stock-Based
            Compensation."  The  provisions  of SFAS No. 123 allow  companies to
            either  expense  the  estimated  fair  value of stock  options or to
            continue  to follow  the  intrinsic  value  method  set forth in APB
            Opinion 25,  "Accounting  for Stock Issued to Employees"  ("ABP 25")
            but disclose the pro forma effect on net income  (loss) had the fair
            value of the  options  been  expensed.  The  Company  has elected to
            continue  to  apply  APB  25 in  accounting  for  its  stock  option
            incentive plans.

            Goodwill and Intangible Assets

            Goodwill  relates to purchase  transactions  and is  amortized  on a
            straight-line basis over 5 years.  Intangible assets,  which consist
            of telephone line rights,  are being  amortized over their estimated
            useful or economic lives using the  straight-line  method based upon
            the lengths of each individual contract.

            Income Taxes

            The Company  compiles with SFAS 109,  "Accounting for Income Taxes",
            which  requires  an  asset  and  liability   approach  to  financial
            accounting  and  reporting  for income  taxes.  Deferred  income tax
            assets and  liabilities  are  computed for  differences  between the
            financial  statement  and tax bases of assets and  liabilities  that
            will  result in  future  taxable  or  deductible  amounts,  based on
            enacted  tax laws and rates  applicable  to the periods in which the
            differences  are  expected  to  affect  taxable  income.   Valuation
            allowances are established,  when necessary,  to reduce deferred tax
            assets to the amount expected to be realized.


                                      F-9
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 2 -    Summary of Significant Accounting Polices (continued)

            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 assets and
            liabilities  and disclosure of contingent  assets and liabilities at
            the date of the consolidated  financial  statements and the reported
            amounts of revenues and expenses during the reporting period. Actual
            results could differ from those estimates.

            Foreign Currency Translation

            Assets  and  liabilities  of  the  Company's   wholly-owned  foreign
            subsidiaries are translated into U.S.  dollars at year-end  exchange
            rates,  and revenues and expenses are  translated  at average  rates
            prevailing during the year. Translation  adjustments are included as
            a component of stockholders' equity (deficit).

            Net Loss Per Common Share

            The  Company  calculates  net loss per share as required by SFAS No.
            128,  "Earnings per Share." SFAS No. 128 replaced the calculation of
            primary  and fully  diluted  earnings  per share  with the basic and
            diluted earnings per share.  Basic and diluted earnings per share is
            the same in both  1999 and 1998 as the  effect of the  common  stock
            equivalents of common stock options,  warrants and convertible  debt
            are antidilutive.

            Advertising Costs

            Advertising  costs are expensed as incurred  and were  approximately
            $163,000 in 1999 and nil in 1998.

            Recent Pronouncements

            In March 2000,  the  Financial  Accounting  Standards  Board  (FASB)
            issued  FASB   Interpretation   No.  44,   "Accounting  for  Certain
            Transactions   involving  Stock   Compensation"  ("FIN  44"),  which
            contains rules designed to clarify the application of APB 25. FIN 44
            will be  effective  on July 1, 2000 and the Company will adopt it at
            that time. The Company  believes the anticipated  impact of adoption
            of FIN 44  will  not be  material  to  the  earnings  and  financial
            position of the Company.

            In December  1999, the  Securities  and Exchange  Commission  issued
            Staff  Accounting  Bulletin 101,  "Revenue  Recognition in Financial
            Statements"   ("SAB  101").   SAB  101  provides   guidance  on  the
            recognition,  presentation  and  disclosure of revenues in financial
            statements and requires adoption no later than the fourth quarter of
            2000. The Company is currently  evaluating the impact of SAB 101 and
            its related  interpretations to determine the effect it will have on
            the  Company's   consolidated  financial  position  and  results  of
            operations.

NOTE 3 -    Accounts Receivable

            At December 31, 1999, the Company has a receivable of  approximately
            $726,000  and a  payable  of  approximately  the  same  amount.  The
            customer is in litigation with the vendor and is thus not willing to
            pay the receivable. The Company has not reserved for this receivable
            due to the fact that if not  collected,  the  corresponding  payable
            would not be due.


                                      F-10
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 4 -    Liquidity


            The Company has  sustained  losses since  inception and for the year
            ended  December 31, 1999 has incurred a net loss of  $8,738,481.  In
            addition,  the  Company has yet to realize  positive  cash flow from
            operations. The Company intends to raise future capital through debt
            and  equity  financing  and  through  the sales of its three  United
            Kingdom  subsidiaries  (see Note 17).  The Company  then  intends to
            focus on developing its domestic  product line and customer base and
            secure telecommunication licenses internationally.


            There can be no  assurance  that the Company  will be able to obtain
            sufficient debt or equity  financing on favorable  terms, if at all.
            If the Company is unable to secure  additional  financing and attain
            future profitable operations,  its ability to implement its strategy
            will be impaired and its financial condition,  results of operations
            and cash flows are likely to be materially adversely affected.

NOTE 5 -    Purchase Transactions

            In May 1999, the Company  acquired all of the outstanding  shares of
            Omnicom of New York Inc.,  a  telecommunications  reseller,  from an
            individual who is an officer and director of the Company for 115,000
            shares of common stock valued at $4.32 per share,  which were issued
            during 2000.  The Company has  allocated the excess  purchase  price
            over the fair  value  of net  assets  acquired  to  goodwill,  which
            amounted to $538,654 and is being amortized on a straight-line basis
            over a period of five  years.  Subsequent  to the  acquisition,  the
            Company  charged  $446,981 of the  original  goodwill to  impairment
            based upon managements'  assessment of the future  undiscounted cash
            flows of the investment.

            In August 1999, the Company  acquired all of the outstanding  shares
            of  ChannelNet  Ltd., a provider of premium  rate  telecommunication
            services  to  customers  in the United  Kingdom,  by issuing  94,500
            shares of common stock valued at $4.86 per share subject to purchase
            price  adjustments  through February 2001. The Company has allocated
            the excess purchase price over the fair value of net assets acquired
            to goodwill,  which amounted to $443,611 and is being amortized on a
            straight-line basis over a period of five years.

            In December 1999, the Company acquired all of the outstanding shares
            of Internet  Protocols  Ltd.  (IPL),  a Company  providing  internet
            access  services to customers in the United  Kingdom,  for 1,565,442
            shares of common stock valued at $8.67 per share and a commitment to
            fund IPL for  approximately  $3,000,000  in cash.  The  Company  has
            allocated  the  excess  purchase  price  over the fair  value of net
            assets  acquired to goodwill,  which amounted to $13,419,531  and is
            being amortized on a straight-line basis over a period of five years
            (see Note 17).

            The operations of the above  acquisitions  prior to the  acquisition
            date were insignificant.

NOTE 6 -    Investment

            In April 1999, the Company issued  2,000,000  shares of common stock
            to acquire an investment of 2,000,000 shares in Antra Holding Group,
            Inc., a music  company with whom the Company  shares  ownership in a
            joint venture (see Note 8). This  transaction was recorded under the
            cost method of  accounting.  Based upon the Company's  assessment of
            this investment,  an impairment charge of $3,950,000 was recorded to
            reduce the investment to $50,000.

            Pursuant to the investment agreement,  the parties agreed that there
            would be an  adjustment in the number of shares owned by each entity
            if there was a disparity  in the  relative  market  value of the two
            entities on January 1, 2000.  As a result,  the Company  received an
            additional 800,000 shares of Antra's common stock.


                                      F-11
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 7 -    Property and Equipment

            Property and  equipment is summarized  below:

                                                                        Total

              Computer equipment                                   $ 1,347,888
              Furnitures and fixtures                                    8,805
              Machinery and equipment                                  157,078
                                                                   -----------
                                                                     1,513,771
              Less accumulated depreciation                           (893,926)
                                                                   -----------
                                                                   $   619,845
                                                                   ===========

            At  December   31,  1999,   computer   equipment   and   accumulated
            depreciation  includes  $43,310  and  $9,768,  respectively,   under
            capital leases.

NOTE 8 -    Investment in Joint Venture

            During  the year ended  December  31,  1999,  the  Company  invested
            $75,000 as their  initial  investment  in a joint venture with Antra
            Holdings  Group,  Inc.  ("Antra").   The  joint  venture,  known  as
            Recordstogo.Com  ("the  Venture")  will be  utilized as a vehicle to
            sell records belonging to an unaffiliated third party. Revenues will
            be  generated  from  numerous  sources  that are  part of the  joint
            venture  website.  These include hard to find records,  memorabilia,
            old record albums,  music downloads in MP3 and other formats.  As of
            December 31, 1999, the Company's share of the joint venture loss was
            $104,653.  The  excess of the  Company's  share of the loss over its
            initial  investment  of $75,000 is recorded  as a  liability  to the
            Company,  since  the  Company  is  committed  to  provide  up  to an
            additional   $75,000  of  working  capital  to  the  joint  venture.
            Currently,  the Venture is not  operating  and the Company and Antra
            are evaluating the future plans for the Venture.

NOTE 9 -    Convertible Debentures Payable

            In  August  1998,  the  Company   issued   $300,000  of  convertible
            debentures  which bear interest at 10% per annum and were due August
            14,  1999.  The  debentures  were  convertible  into  shares  of the
            Company's  stock at $1.25 or 76% of the lowest  closing bid price 30
            trading days preceding the conversion date, which was  approximately
            $.50. In January 1999,  the Company  issued  $550,000 of convertible
            debentures which bear interest at 10% per annum and were convertible
            into the Company's common stock at $.50 per share.  During the years
            ended   December  31,  1999  and  1998,   $730,488   and   $117,212,
            respectively,  of debentures  were converted to 2,116,691  shares of
            common stock. In connection with the transaction, the Company issued
            30,000  warrants to purchase  30,000 shares of common stock at $1.25
            per share.  Financing costs of these  transactions were deferred and
            amortized up to the conversion  date. In addition,  $184,808 of debt
            discount originating from debt conversion  preferences and the value
            of attached warrants was amortized up to the conversion date.


                                      F-12
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 10 -   Long-Term Debt

            Long-term debt consists of the following:

                    Non interest bearing note to non-
                     related party; paid in March 31,
                     2000                                           $ 50,000

                    Agency note  payable  bearing  interest
                     at prime plus 2% per annum, 10.5% at
                     December 31, 1999, payable on demand             47,818

                    Mortgage note payable in
                     monthly installments of $1,056
                     including interest at 9.125%
                     per annum through August 2002                    29,879

                    Equipment lease payable in
                     monthly installments of $1,500
                     including interest at 13.26%
                     per annum through April 2002                     21,091

                    Other                                             25,054
                                                                   ---------
                                                                     173,842
                    Less current portion                            (149,027)
                                                                   ---------
                                                                   $  24,815
                                                                   =========

              Aggregate  future required  minimum payments of long-term debt are
              as follows:

                      Year ending December 31,
                                2000                            $ 149,027
                                2001                               16,625
                                2002                                8,190
                                                                ---------
                                                                $ 173,842
                                                                =========


                                      F-13
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 11 -   Stockholders' Equity (Deficit)

            In November 1997, the Company entered into a joint venture agreement
            with a group of unrelated foreign investors which provided for their
            participation  of  future  profits  of the  Company  in  return  for
            cancellation  of  indebtedness.  In May 1998,  the Company issued an
            aggregate of 6,000,000 shares to these investors in consideration of
            the termination of the joint venture.

            During the period  August 1998 to  December  31,  1999,  the Company
            issued  2,116,691  shares of its common stock upon the conversion of
            $730,488 and  $117,212 of  convertible  debentures  (see Note 9). In
            connection with this transaction,  the Company issued 167,500 shares
            valued at $98,436, net of expenses,  when warrants issued as part of
            the  convertible  debenture  transaction  were  exercised  at prices
            ranging from $0.625 to $1.25.

            The Company  issued 500,000 shares of its common stock to an officer
            and a related party as repayment of $100,000 advanced to the Company
            during 1998.

            In April 1999, the Company issued  2,000,000  shares of common stock
            to purchase an investment in Antra Holding Group, Inc. (see Note 6).

            In  April  1999,  the  Company  declared  a  5%  stock  dividend  to
            shareholders  of record on June 1, 1999 and  issued  585,000  common
            shares on June 15,  1999.  In August,  1999 the  Company  declared a
            second 5% stock dividend to  shareholders  of record on September 1,
            1999 and issued 675,456 common shares on October 15, 1999.

            In June  1999,  the  Company  issued  316,499  shares  in a  private
            placement  transaction,   the  net  proceeds  to  the  Company  were
            $1,154,969.  The Company issued  1,025,000  warrants to purchase one
            share of the Company's common stock at a price ranging from $4 to $6
            per share.  In November 1999, the Company issued 625,000 shares in a
            private placement transaction,  the net proceeds to the Company were
            $4,525,000  (See Note 17). With each share purchased in this private
            placement,  the  purchaser  received  four  warrants to purchase one
            share of the  Company's  common stock at a price  ranging from $8 to
            $10.25  per  share.  The  actual  price of these  warrants  could be
            reduced if the market  price of the  Company's  common stock is less
            than the  stated  exercise  price  approximately  60 days  after the
            filing of the  registration  statement  covering the shares issuable
            upon exercise of the warrants.

            In  August  1999,  the  Company,  as  part  of  the  acquisition  of
            ChannelNet  Ltd.  issued  94,500  shares  of  common  stock  to  the
            shareholders of ChannelNet Ltd. (see Note 5).

            In  December  1999,  the  Company,  as  part of the  acquisition  of
            Internet Protocols Ltd., issued 1,565,442 shares of its common stock
            to the shareholders of Internet  Protocol Ltd. in exchange for their
            stock in Internet Protocols Ltd. (See Note 5).

            The Company  issued 874,258 shares of its common stock in connection
            with the  exercise of stock  options and  warrants  for  proceeds of
            $98,436 and notes  receivable  of $326,727  from  various  officers,
            stockholders and employees.

            The Company  increased  additional  paid-in capital for the value of
            the  115,000  common  shares  to be issued  in  connection  with the
            purchase  of Omnicom of New York Inc.  (see Note 5) in the amount of
            $496,980. These shares were issued in 2000.


                                      F-14
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 12 -   Related Party

            The Company incurs fees from an entity in which an officer of one of
            the Company's  subsidiaries is an owner. For the year ended December
            31, 1999, the Company was charged fees of approximately $53,000 from
            this  entity  for which it has a payable  at  December  31,  1999 of
            $53,192.  In addition,  the Company has advanced this entity $86,015
            for which it has a receivable.

NOTE 13 -   Commitments and contingencies

            Legal Proceedings

            The Company and its subsidiaries  are subject to legal  proceedings,
            claims and  litigation  arising in the ordinary  course of business.
            The Company's  management does not expect that the ultimate costs to
            resolve  these  matters will have a material  adverse  effect on the
            Company's consolidated financial position,  results of operations or
            cash flows.

            Lease Obligations

            The  Company  has  various  lease  agreements  for office  space and
            computer equipment expiring through April 30, 2010.

            Approximate  future  minimum  rental  payments at December 31, 1999,
            under  agreements  classified  as  operating  leases,  exclusive  of
            minimum sublease rentals are as follows:

                   Year ending December 31,
                             2000                                  $ 534,000
                             2001                                    648,000
                             2002                                    460,000
                             2003                                    251,000
                             2004                                    241,000
                             Thereafter                            1,311,000
                                                                  ----------
                                                                  $3,445,000
                                                                  ==========

            As of December 31, 1999,  future  minimum  rental  payments due from
            tenants under sub-leases of office space aggregated $48,000.

            Rent  expense  for the years  ended  December  31, 1999 and 1998 was
            approximately $159,000 and $49,000, respectively.

            Employment Agreements

            The  Company  entered  into  employment  agreements  with two of its
            executive officers. The agreements provided for a base annual salary
            of  $150,000  until  August  1, 1999 when the  salary  increased  to
            $180,000.  On February 1, 2000, the agreements  were further amended
            to increase  the annual base  salary to  $250,000.  Every year after
            March 31, 2001, the base salary  increases by an amount equal to ten
            percent of the prior year's base salary. The agreements also provide
            for a bonus pool, which is equal to 15% of net income, as defined in
            the agreement,  of which each executive will receive 40% of the pool
            (see Note 17).


                                      F-15
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 14 -   Stock Options and Warrants

            In 1998, the Company's Board of Directors approved an employee stock
            option  plan  ("the 1998  Plan")  authorizing  the  Company to grant
            options to purchase  3,307,500 shares of its common stock.  Pursuant
            to the 1998 Plan, the Company can grant  incentive stock options and
            non-qualified   stock  options  to  certain   employees,   officers,
            directors and other persons.

            Options information is summarized as follows:

                                                                Weighted Average
              Non-Qualified Stock Options             Shares     Exercise Price
              ---------------------------           ---------    --------------
              Granted                               1,300,946    $    1.535
              Exercised                                    --
                                                   ----------    ----------
              Outstanding - December 31, 1998       1,300,946    $    1.535
              Exercised                              (706,758)   $   (0.468)
              Granted                               2,006,554    $    2.234
                                                   ----------    ----------
              Outstanding - December 31, 1999       2,600,742    $    1.597
                                                   ==========    ==========
              Exercisable - December 31, 1999       2,323,922    $    2.383
                                                   ==========    ==========

<TABLE>
<CAPTION>


                                 Options Outstanding                      Options Exercisable
                   ---------------------------------------------    ------------------------------
                                       Weighted       Weighted          Number           Weighted
                   Outstanding at       Average        Average      Exercisable at       Average
Range of            December 31,       Remaining      Exercise        December 31,       Exercise
Exercise                1999             Term           Price            1999              Price
-----------        --------------     -----------     ---------     ---------------      ---------

<S>                  <C>                 <C>          <C>               <C>              <C>
$  .34 - .54           860,717           9.10         $    0.47           798,884        $   0.48

$ 1.59 - 2.72          461,210           8.94         $    2.04           307,473        $   1.72

$ 3.62 - 4.54        1,278,815           9.33         $    3.76         1,217,565        $   3.72

</TABLE>

            The Company  applies APB No. 25 in accounting for the 1998 Plan and,
            accordingly,  has recognized  compensation expense of $1,267,410 for
            the year ended December 31, 1999 based on the intrinsic value method
            of valuing stock options.

            If, under SFAS 123, the Company determined  compensation costs based
            on the fair value at the grant date for its stock options,  net loss
            and basic and diluted  loss per common share would have been reduced
            to the pro forma amounts below for the year ended December 31, 1999:


                   Net loss, as reported               $ (8,738,481)
                   Net loss, pro forma                  (13,460,302)
                   Basic and diluted loss per
                    common share, as reported                  (.75)
                   Basic and diluted loss per
                    common share, as reported                 (1.15)



                                      F-16
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 14 -   Stock Options and Warrants (continued)

            The fair  value of each  option  grant is  estimated  on the date of
            grant  using  the  Black-Scholes   option  pricing  model  with  the
            following weighted average assumptions:

                                                                    1999

                        Risk-free interest rate                     6.0%
                        Expected dividend yield                       -
                        Expected life                             10 years
                        Expected volatility                         65.67

            The Company,  as part of sales of common  stock and debt  financing,
            has issued  warrants to purchase the  Company's  common  stock.  The
            following   summarizes  the  information   relating  to  outstanding
            warrants and activity during 1999 and 1998:

                                                                Weighted Average
Warrants                                        Shares           Exercise Price
------------------------------               -----------        ----------------

Granted                                          30,000              $ 1.25
Exercised                                            --                  --
                                             ----------              ------
Outstanding - December 31, 1998                  30,000                1.25
Granted                                       3,762,500               7.398
Exercised                                      (167,500)              0.737
                                             ----------              ------
Outstanding - December 31, 1999               3,625,000              $7.655
                                             ==========              ======
Exercisable - December 31, 1999               3,625,000              $7.655
                                             ==========              ======


NOTE 15 -   Income Taxes

            At  December  31,  1999,   the  Company  has  net   operating   loss
            carryforwards  ("NOL's") of  approximately  $4,500,000  which expire
            between  2008  and  2019.  The  Tax  Reform  Act  of  1986  contains
            provisions that may severely limit the NOL's available to be used in
            any given year in the event of significant changes in ownership.

            At December 31, 1999, the Company's  deferred  income tax assets are
            comprised of the tax benefits  associated  with the Company's  NOL's
            and basis  differences  based on the  statutory  tax rates in effect
            fully offset by valuation allowances.

            The statutory federal income tax rate differs from the effective tax
            rate due primarily to the change in the deferred tax asset valuation
            allowance.


                                      F-17
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 16 -   Segment Information

            The  Company  adopted  the  Financial   Accounting  Standards  Board
            Statement No. 131,  "Disclosures About Segments of an Enterprise and
            Related  Information,"  which  establishes  standards  for reporting
            information about a company's  operating  segments.  The Company has
            divided its  operations  into two  geographic  reportable  segments:
            United States and United Kingdom.  The reporting segments follow the
            same  accounting  policies  used  for  the  company's   consolidated
            financial  statements  and  described in the summary of  significant
            accounting policies.  Management  evaluates a segment's  performance
            based upon income or loss from operations. There are no intersegment
            sales.   During  1998,  all  operations   were  included  under  one
            geographical reportable segment.

            Operating  segment  information for the year ended December 31, 1999
            is summarized as follows (in thousands):


As of and for the year
   ended December 31, 1999
                                         United       United
                                         States       Kingdom    Consolidated
Revenues                                 $   649      $  393       $ 1,042
                                         =================================
Operating loss                           $ 8,004      $  266       $ 8,290
                                         =================================
Interest expense                         $   225      $    1       $   226
                                         =================================
Depreciation and amortization            $   281      $    1       $   281
                                         =================================
Total assets                             $17,421      $2,764       $20,185
                                         =================================
Capital expenditures                     $   167      $   --       $   167
                                         =================================



                                      F-18
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 17 -   Subsequent Events

            In January 2000, the Company  received an additional  800,000 shares
            of Antra's common stock bringing the Company's holdings to 2,800,000
            shares (see Note 6).

            During  January and February  2000,  the Company  issued  71,662 and
            410,000  shares,  respectively,  of common  stock to  employees  who
            exercised  their stock  options.  The employees  who received  these
            shares  gave  promissory  notes  to the  Company  in the  amount  of
            $453,059.

            In February  2000,  the Company  granted  approximately  1.6 million
            options  to two  officers/shareholders  to  purchase  shares  of the
            Company's  common  stock at $8.00  until  August  1,  2000  when the
            exercise  price  became  $1.00.  Subject  to certain  criteria,  the
            options  can  become  exercisable  at $.10  and  vest  over a graded
            period.  The  number of options  granted  under  this  agreement  is
            adjusted as new shares and common stock options are issued  pursuant
            to the agreement.

            In  February  2000,  the  Company  granted an  employee an option to
            purchase  40,000 shares of the Company's  common stock for $4.00 per
            share which expires in February 2005.

            In March  2000,  the Company  issued  208,331  additional  shares of
            common stock to the November 1999 private placement  investors.  The
            Company  originally  sold 625,000 shares at $8.00 per share. A price
            adjustment to $6.00 per share required the issuance of the shares to
            maintain the original private placement price of $5,000,000 pursuant
            to the agreements.

            In March 2000, the Company acquired all of the assets of the network
            business  conducted  by the Web  Factory,  Ltd.,  a  United  Kingdom
            affiliate of Datatec Ltd. (a South African Company). The acquisition
            included financial software, customer contracts and network/computer
            assets for a purchase price of approximately $4,800,000. The Company
            made a payment of  approximately  $1,200,000 and is obligated to pay
            an  additional  $1,200,000  April  30,  2000,  August  31,  2000 and
            December 31, 2000.  The  additional  payments  have not been paid in
            full.

            In March 2000, the Company  declared a 5% stock dividend  payable in
            April 2000 to stockholders of record March 31, 2000.

            In April 2000,  the Company  received loans of $50,000 each from two
            officer/shareholders.  The  loans  were  repaid  in  May  2000  with
            interest at 10% per annum.

            In May 2000, the Company  received a short-term  convertible loan of
            $300,000 from a non-related  party.  The loan matures and payment of
            principal and 7% interest per annum is due in October 2000. The loan
            is currently in default.

            In May  2000,  the  Company  received  a loan of  $1,117,602  from a
            related party. For additional  consideration of $2,500,  the Company
            issued 5 year warrants to the lender to purchase  250,000  shares of
            common stock at $1.10 per share.  The loan,  which  remains  unpaid,
            matured on November 25, 2000 and bears  interest at 9.5%. per annum.
            The loan is secured by all the shares of the Company's  wholly owned
            subsidiaries,  Web Factory,  Ltd. and Antra Holdings Group, Inc. and
            was used to pay the second installment of the Web Factory note.

            In May 2000, the Company purchased 66.67% of  SavonCalling.com,  LLC
            for an initial  amount of $202,000,  requiring  future  funding.  In
            October  2000,  the  agreement  was amended to reduce the  Company's
            ownership  interest to 20%. Pursuant to this amendment,  the Company
            issued  450,000  shares of its common stock and 450,000  warrants to
            purchase  its  common  stock at an  exercise  price of $.50 for five
            years.  The  acquisition is accounted for under the equity method of
            accounting.

            In June 2000,  the Company  issued  1,617,643  additional  shares of
            common  stock  to  the  November  private  placement  investors.  An
            additional price adjustment to $2.04 per share required the issuance
            of the shares to maintain the original  private  placement  price of
            $5,000,000 pursuant to the agreements.


                                      F-19
<PAGE>

               TELTRAN INTERNATIONAL GROUP, LTD. AND SUBSIDIARIES

NOTE 17 -   Subsequent Events (continued)

            In July 2000,  250,000  shares of the  Company's  common  stock were
            issued  to the  President  and  CEO of the  Company  for  personally
            guaranteeing a credit facility on behalf of the Company. The Company
            recorded  compensation  expense of  $287,500  in  relation  to these
            shares.

            In July 2000, the Company issued $480,000 of convertible  debentures
            due January 2, 2001 to non-related  parties.  The debentures  accrue
            interest at 8% and are convertible  pursuant to terms of agreements.
            In addition,  the debt holders received  192,000,  96,000 and 96,000
            warrants  to  purchase  common  stock at $2.00,  $2.50 and $3.00 per
            share, respectively.

            In August  2000,  the  Company  received a loan of  $100,000  from a
            related  party,  which bears  interest at 10% and is due in November
            2000. The loan is currently in default.

            In October 2000, the Company issued $250,000  convertible  debenture
            notes to a  non-related  party.  The notes accrue  interest at prime
            plus 1% and are due on  demand.  The  notes are  convertible  to the
            Company's  common stock at $0.50 per share.  In  addition,  the debt
            holder  received  50,000  warrants to purchase the Company's  common
            stock at an exercise price of $0.375. These warrants are exercisable
            on or before November 9, 2005.

            In  October  2000,  the  Company  borrowed  300,000  pounds  from  a
            non-related  party  which  bears  interest at 4% per annum above the
            base rate of Royal Bank of Scotland and is due on March 1, 2001. The
            note is secured by a stock pledge and escrow agreement.

            In October 2000, the Company acquired the marketing and sales rights
            to the  MidPoint(R)  Internet  software for 2,800,000  shares of the
            Company's common stock and a warrant to purchase 6,000,000 shares of
            common stock for $0.125 per share.  In addition,  the Company  shall
            pay the licensor royalties as defined in the agreement.

            In December  2000,  the  Company  granted  1,565,000  options to its
            employees to purchase  shares of the Company's  common stock at $.08
            per share.

            During  2001,  the  Company   modified  the  employment   agreements
            maintained with two of their officers to provide severance  payments
            upon termination without cause and disability (Note 13).

            In January 2001,  the Company  signed a letter of intent to sell its
            wholly-owned  subsidiary  ChannelNet  Ltd.  to a third  party for an
            undetermined  amount pursuant to a sale  agreement.  The parties are
            currently negotiating the terms of the transaction.


            In January  2001,  the Company  entered into  negotiations  with the
            former  shareholders  of IPL for an  agreement  whereby  the Company
            would  receive a return  of  approximately  1,200,000  shares of its
            common  stock as an  adjustment  to the purchase  price.  On May 31,
            2001,  if the value of the  Company's  remaining  shares held by the
            former IPL shareholders is less than 2,000,000 British Sterling, the
            Company would have to issue additional shares to equal to that value
            up to an additional 300,000 shares.

            In January 2001, the Company  entered into an agreement to sell 100%
            of the  outstanding  stock of Web Factory and certain assets of IPL.
            Consideration  for the sale  consists of  approximately  $350,000 in
            cash,  preferred  stock  with  a  stated  value  of  $7,350,000  for
            corporate law purposes of a private  company  recently  formed.  The
            stated value is not  necessarily  reflective  of actual  value.  The
            acquirer  is liable for the  indebtedness  of the Web Factory in the
            amount of  $2,500,000,  which was  guaranteed  by the  Company.  The
            Company agreed to pay a finders fee to certain parties.


            Pursuant to an earn out provision in connection with the purchase of
            ChannelNet  Ltd. the Company is obligated to issue 781,811 shares of
            its common stock valued at  approximately  $1,100,000  to the former
            shareholder of ChannelNet Ltd.