SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                              --------------------

                                   FORM 10-KSB

(Mark One)
|X|      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
         OF 1934


                    For the fiscal year ended April 30, 2000

                                       OR

|_|      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

             For the transition period from __________ to __________

                         Commission file number 0-21913

                            GROUP LONG DISTANCE, INC.
                 (Name of Small Business Issuer in Its Charter)
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                           Florida                                                              65-0213198
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(State or Other Jurisdiction of Incorporation or Organization)                     (I.R.S. Employer Identification No.)
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                       6600 N. Andrews Avenue, Suite 140,
                            Fort Lauderdale, FL 33309
                    (Address of Principal Executive Offices)

                                 (954) 771-9696
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(g) of the Exchange Act:

                                                           Name of Each Exchange
     Title of Each Class                                    on Which Registered
     -------------------                                    -------------------
 Common Stock, no par value                                     Pink Sheets


     Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for past 90 days. Yes |X| No |_|

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

     Revenues for the fiscal year ended April 30, 2000 were $13,736,337.

     The aggregate market value of voting stock held by non-affiliates as of
April 30, 2000 was $1,556,260.

     The number of shares of Common Stock, no par value, outstanding as of April
30, 2000 was 3,500,402.

     Transitional Small Business Disclosure Format (check one.):
Yes |_|       No |X|



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                                TABLE OF CONTENTS

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Item 1.     Description of Business..........................................................................     1
            Sale of Customer Base............................................................................     1
            Agreement and Plan of Merger.....................................................................     1
            The Company......................................................................................     1
            Marketing and Sales..............................................................................     2
            Services and Products............................................................................     3
            Acquisitions.....................................................................................     3
            Industry Background and Government Regulation....................................................     4
            Competition......................................................................................     5
            Employees........................................................................................     6

Item 2.     Description of Property..........................................................................     6

Item 3.     Legal Proceedings................................................................................     6

Item 4.     Submission of Matters to a Vote of Securities Holders............................................     7

Item 5.     Market for Common Equity and Related Stockholder Matters.........................................     7

Item 6.     Management's Discussion and Analysis.............................................................     8
            Overview.........................................................................................     8
            Acquisitions.....................................................................................     9
            Results of Operations............................................................................     9
            Liquidity and Capital Resources..................................................................    11
            Effects of Inflation.............................................................................    12
            Recent Accounting Pronouncements.................................................................    12
            Factors That Could Affect Operating Results......................................................    13

Item 7.     Financial Statements.............................................................................    14

Item 8.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............    14

Item 9.     Directors and Executive Officers, Promoters and Control Persons; Compliance with
               Section 16(a) of the Exchange Act.............................................................    15

Item 10.    Executive Compensation...........................................................................    16

Item 11.    Security Ownership of Certain Beneficial Owners and Management...................................    20

Item 12.    Certain Relationships and Related Transactions...................................................    20

Item 13.    Exhibits, List and Reports on Form 8-K...........................................................    21

Signature Page...............................................................................................    24

Report of Independent Public Accountants.....................................................................   F-1

Financial Statements.........................................................................................   F-6
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This Annual Report on Form 10-KSB contains forward-looking statements.
Additional written and oral forward-looking statements may be made by the
Company from time to time in Securities and Exchange Commission ("SEC") filings
and otherwise. The Company cautions readers that results predicted by
forward-looking statements, including, without limitation, those relating to the
Company's future business prospects, revenues, working capital, liquidity,
capital needs, interest costs, and income are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
indicated in the forward-looking statements due to risks and factors identified
from time to time in the Company's filings with the SEC including those
discussed in this Report.

                                     PART I

Item 1. Description of Business

Sale of Customer Base

     The Company entered into an Asset Purchase Agreement with a wholly
owned subsidiary of Coyote Network Systems, Inc ("Coyote") on April 30, 2000.
Pursuant to the Asset Purchase Agreement, the Company sold to a wholly owned
subsidiary of Coyote, a customer base which included certain of the Company's
customers under a series of related sites. The purchase price for this
transaction was $1 million, payable $50,000 in cash and a note of $950,000 due
at April 30, 2002 at an annual interest rate of 8%. Interest is payable monthly.
The Note is secured by the assets sold. In addition, the Company entered into a
Service Agreement with the wholly owned subsidiary of Coyote.

Agreement and Plan of Merger

     On May 1, 2000, the Company executed an Agreement and Plan of Merger with
Coyote. The Agreement and Plan of Merger contemplates a merger between a
wholly-owned subsidiary of Coyote and the Company. On July 31, 2000, a First
Amendment to the Agreement and Plan of Merger was executed. As a result of the
transactions, among other things, Coyote would acquire all of the assets and
business of the Company, and the Company's shareholders would receive a number
of shares of Coyote Common Stock determined pursuant to a formula. Provided the
merger closes, it is anticipated that the Company's shareholders will receive
not less than 562,500 shares of Coyote Common Stock, nor more than 1,218,750
shares of Coyote Common Stock. The formula is based on the price of the Coyote
Common Stock during each of the five trading days immediately prior to closing.
If the price of the Coyote Common Stock closes at less than $4 per share during
each of the five trading days immediately prior to closing, then either party,
in its discretion, may terminate the Agreement and Plan of Merger.

     The closing of the merger is subject to a number of conditions, including
without limitation the completion of due diligence, the receipt of all requisite
regulatory approvals, and the receipt of approval of the Company's shareholders.
It is anticipated that the closing would occur before the end of the calendar
year 2000.

     On May 3, 2000 the Company filed a Form 8-K with the Securities Exchange
Commission in connection with the Agreement and Plan of Merger between Coyote
and the Company.


The Company

     Group Long Distance, Inc. (the "Company") is a non-facilities-based
reseller of long distance telecommunications services to small and medium-sized
commercial customers and residential subscribers. The Company utilizes special
network service contracts through major national long-distance
telecommunications carriers to provide its customers with products and services
which include basic "1 plus" and "800" long distance services. The Company was
incorporated under the laws of Florida in September 1995 by ITC Integrated
System, Inc. ("ITC"), an unaffiliated third party, under the name Second ITC
Corporation ("Second ITC") as the successor to the business of Group Long
Distance, Inc. ("GLD"), which was incorporated under the laws of Florida in July
1990. In November 1995, GLD was merged into Second ITC and Second ITC
simultaneously changed its name to Group Long Distance, Inc. Unless otherwise
indicated, all references to the Company include GLD, the Company's predecessor,
and the Company's wholly owned subsidiaries. These subsidiaries include Eastern
Telecommunications Incorporated, Gulf Communications Services and
Adventures-in-Telecom.

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     For the fiscal years ended April 30, 2000, 1999 and 1998, the Company's
annual revenues were $13.7 million, $22.8 million, $54.3 million, respectively.
The Company's revenues for the fiscal years ended April 30, 2000 and 1999 are
solely derived from calls routed through TALK.com, Inc. ("TALK"), formerly
Tel-Save, Inc., a nationwide provider of telecommunications services. Revenues
derived from TALK represented 96% of total revenues for the fiscal year ended
April 30, 1998.

     As a non-facilities based reseller of long distance telecommunications
services, the Company utilizes service contracts to provide its customers with
switched, dedicated and private line services to long distance
telecommunications networks. The Company does not own or operate any primary
transmission facilities. All of the Company's products and services are
currently provided for by long distance carriers and regional and local
telephone companies. The Company has entered into agreements with TALK to
purchase long distance telephone service at discounted bulk rates. The Company
then resells these discounted services to customers, at rates lower than rates
the Company's customers are able to obtain for themselves due to small call
volume. The Company then provisions the customer onto the carriers' networks,
which provide the actual transmission service. The Company does not own or lease
any telephone equipment at the customer's premises, nor does it provide
telephone cabling or installation services. The customer still maintains its own
existing telephone numbers, and all changes in service are done by the local or
interexchange carriers. The customers incur no expense in making the decision to
switch to the service of the Company.

     For the Year ended April 30, 1999, based on a settlement agreement ("TALK
Agreement") with TALK dated December 8, 1999, the Company agreed to pay $1.1
million to resolve the volume shortfall charge for all fiscal periods through
August 1999. The $1.1 million was payable, 50% immediately and the balance over
an 18 month period. As part of the TALK Agreement, TALK agreed to release
approximately $2.9 million dollars of cash, after payment of the initial
$550,000, to the Company that was held under a lockbox arrangement, and release
all receivables that were secured pursuant to the Partition Agreement, and that
all future minimum monthly volume commitments were waived by TALK. In addition,
the TALK Agreement provides for an extension of the current carrier agreement
until the later of August 31, 2002, and the date that all obligations to TALK
have been satisfied in full, and the exchange of mutual releases. The Company's
agreements with TALK had provided that the Company maintained certain monthly
revenues (as defined in the agreements) to the carrier for services provided
under the agreements during stated periods. For the fiscal year ended April 30,
2000 the Company had an exposure for a monthly commitment of $3,000,000 for such
revenues through August 1999 (aggregate commitment of $12,000,000) and for
fiscal year ended April 30, 1999, the Company had an exposure for a monthly
commitment for such revenues of $3,000,000 (aggregate commitment of
$36,000,000). For the fiscal year ended April 30, 1998, the Company had an
exposure for a aggregated annual commitment for such revenues of $18,600,000.

     The Company's customers had historically have been located principally in
the Southeastern United States. As a result of its marketing efforts and
acquisitions, however, the Company was able to expand its geographical market to
include all of the United States, except Alaska. The Company historically
targeted customers whose telecommunications usage needs generally do not qualify
for major carriers' volume discounts or for the level of support services made
available to higher volume users.

Marketing and Sales

     The Company formerly marketed its services and products through two
distinct channels of distribution: independent telemarketing and independent
agents. Historically, the Company has also utilized field service personnel, and
distributors in its marketing efforts, and has sold certain of its
telecommunications services on a wholesale basis to smaller resellers.

     As a result of the economic efficiencies afforded by using independent
telemarketers, the Company had significantly increased its use of telemarketers
during the fiscal 1998 year. In June 1997, the Company began a telemarketing
campaign to promote its long distance services to small and medium sized
businesses throughout the United States. The telemarketing campaign was
curtailed at the end of October 1997. During the first quarter of the fiscal
year ending April 30, 1999, the Company entered into a new marketing campaign to
sign up customers using independent agents, aligned with affinity based
marketing programs. This campaign was discontinued during the second quarter of
the fiscal year ending April 30, 1999. The Company is no longer conducting, nor
does it have any plans to conduct any marketing campaigns to attract new
customers, since the Company has determined that it is currently unable to both


                                       2
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procure new customers, and achieve positive earnings after amortization of
acquisition costs for these new customers. This is due to the competitive
advantage held by facilities based carriers and Internet marketing enterprises.
Many of these services and products are marketed by companies, which are well
established, have reputations for success in the development and sale of
services and products and have significantly greater financial, marketing,
distribution, personnel and other resources than the Company. These resources
permit such companies to implement extensive advertising and promotional
campaigns, both generally and in response to efforts by additional competitors
to enter into new markets and introduce new services and products. Certain of
these competitors, including AT&T, MCI/WorldCom and Sprint, dominate the
industry and have the financial resources to enable them to withstand
substantial price competition which has continued to increase.

Services and Products

     The Company's principal services which have historically accounted for all
of the Company's revenues, are its basic "1 plus" and "800" long distance
services that the Company currently provides in forty-nine states.

     The Company had applied to various state regulatory authorities for
permission to offer local or intrastate telecommunication services. To date, the
Company has not entered into any interconnection agreements with any Local
Exchange Carrier to resell local service in any state. The Company has no
current intentions to provide local service in any state.

     The Company had historically experienced delays in provisioning (activating
new customers) by its carriers. In an effort to improve provisioning
efficiencies, beginning in the fourth quarter of its 1997 fiscal year, new
customers of domestic switched, basic "1 plus" and "800" services have been
provisioned through TALK's own nationwide telecommunications network, One Better
Net ("TALK's OBN"). This network enables the Company to provide the quality of
AT&T (now Lucent Technologies, Inc.) switches and AT&T-provided transmission
facilities and billing services.

     In a further effort to improve efficiencies, the Company had commenced "LEC
billing" arrangements with the Regional Bell Operating Companies and local
exchange carriers ("LEC") during the second quarter of fiscal year 1998. These
LEC billing arrangements have improved billing efficiencies, increased
collections and assisted in lowering customer attrition, however, there can be
no assurance that such billing efficiencies, improved collections or customer
retention will continue in the future.

Acquisitions

     The Company operates in a highly fragmented segment of the
telecommunications industry and historically expanded its operations through the
acquisition of customer bases. The Company has no plans, agreements,
commitments, understandings or arrangements with respect to any acquisition. For
the three-year fiscal periods ended April 30, 2000, the Company had made the
following acquisitions:

     In August 1997, the Company acquired Eastern Telecommunications
Incorporated ("ETI") which consisted of a customer base with monthly revenues
exceeding $100,000 and two warrants to purchase 1,347,000 shares of TALK common
stock, at $4.08 per share (the "Warrants"). The $8.313 million purchase price
for ETI consisted of two $3.5 million notes, and the assumption of approximately
$1.2 million of certain of ETI's liabilities and the payment of closing costs in
the amount of $113,000. On August 11, 1997, the Company exercised one of the
Warrants and purchased 600,000 shares of common stock of TALK at the aggregate
exercise price of $2,448,000. In October 1997, the Company exercised the
remaining Warrant for $747,000 and sold the TALK common stock for approximately
$26.6 million with a gain on sale of approximately $13.4 million.

     Proceeds from the sale of the TALK shares were used to retire the aggregate
principal amount of $7,000,000 in notes (plus accrued interest) due in
connection with the ETI acquisition, together with certain related closing
costs. The balance of the proceeds from the sale of the TALK shares was used to
pay down debt and accounts payable owed to TALK, including payment of the
balance of the loan outstanding to TALK in connection with the July 1996
acquisition of all of the common stock of Adventures-in-Telecom ("AIT") and
marketing expenses incurred in connection with the Company's telemarketing
efforts during the first half of fiscal year 1998.

                                       3
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Industry Background and Government Regulation

     The Company's telecommunications services are subject to government
regulation. Federal law regulates domestic interstate and international
telecommunications, and state law regulates telecommunications that originate
and terminate within the same state.

     The telecommunications industry's structure has until recently been formed
by a 1982 court decree (the "Consent Decree") between AT&T and the United States
Department of Justice which required the divestiture by AT&T of its Bell
operating companies and divided the country into 201 Local Areas and Transport
Areas ("LATAs"). The 22 Bell operating companies, which were combined into seven
Regional Bell Operating Companies ("RBOCs"), were allowed to provide local
telephone service, local access service to long distance carriers and service
within LATAs ("intraLATA service"). However, the right to provide service
between LATAs ("InterLATA service") was restricted to AT&T and other long
distance carriers.

     To encourage competition in the long distance market, the Consent Decree
and certain FCC regulations require most RBOCs and other local exchange carriers
("LECs") to provide access to local exchange services that is "equal in type,
quality and price" to that provided to AT&T and with the opportunity to be
selected by customers as their preferred long distance carrier. These "equal
access" provisions are intended to prevent preferential treatment of AT&T by
LECs and, with other regulatory, judicial and technological factors, have helped
smaller companies to become competitive alternatives to AT&T, MCI/WorldCom
("MCI") and Sprint Corporation ("Sprint") for long distance services. Recently,
Bell Atlantic, a RBOC, has received permission from the FCC to begin offering
long distance service in the New York area.

     The long distance industry has been significantly altered by two regulatory
enactments. First, in October 1995, the FCC terminated AT&T's previous price cap
regulations regarding service to residences and small businesses and now allows
AT&T to file effective rate schedules on one day's notice, thereby limiting
competitors' previous ability to protest such tariffs. These changes give AT&T
increased flexibility that may permit it to compete more effectively with
smaller long distance service providers, such as the Company, particularly in
regard to the small business customers which compose the vast majority of the
Company's customer base. Second, on February 8, 1996, the President signed the
Telecommunications Act of 1996, designed to introduce more competition into U.S.
telecommunications markets. This Act increases the potential for competition in
both the long distance services market, by removing the prohibitions against
RBOCs providing long distance services, and in the local services market by
requiring LECs to permit interconnection to their networks, thus allowing long
distance and regional carriers to compete in local markets. Due to these
changes, the Company may be forced to compete with both RBOCs and long distance
carriers to a greater degree than in the past.

     In the wake of widespread adverse publicity, federal and state regulatory
authorities have introduced more stringent rules governing changes in long
distance telecommunication service providers. These new rules are a result of
increased consumer complaints throughout the industry regarding "slamming" (the
unauthorized switching of a customer's preselected telecommunication provider)
and "cramming" (the unauthorized billing of additional telecommunication
services not requested by the customer). In addition, both the Senate and
Congress have passed legislation that would significantly increase the penalties
and fines that are levied against telephone service providers for "slamming" and
"cramming." Such rules may inhibit the ability of the Company to grow its
business. The Company may be required to submit to more vigorous screening of
customers before switching their long distance service, which may make customers
less likely to change carriers.

     The telephone service providers themselves are taking action against those
resellers of their services whom knowingly and intentionally perpetrate these
illegal actions. Several states are requiring that each carrier assign to an
individual reseller its own Carrier Identification Code ("CIC") thereby making
the reseller rather than the long distance carrier responsible for any illegal
changes in service provider. Most local exchange carriers, through which any
changes in service must be initiated, have actively pushed a preferred
presubscribed interexchange carrier ("PIC") freeze on all changes of a long
distance carrier. This PIC freeze would now require the consumer to directly
contact and authorize the local exchange carrier to change its distance carrier
before any switch in carrier is made.

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     Any changes in the regulations may have detrimental effect on the Company's
ability to attract new customers, since these new PIC freeze regulations have
the effect of locking customers into their existing long distance service
provider.

     Federal Regulation. International non-dominant carriers must maintain
tariffs on file with the FCC. The tariffs of non-dominant carriers, such as the
Company, are presumed lawful and are seldom contested, although those tariffs
and the rates and charges they specify are subject to FCC review.

     In October 1996, the FCC adopted an order that required nondominant,
interstate, interexchange carriers, such as the Company, to withdraw their
tariffs, insofar as such tariffs apply to interstate services (the "Detariffing
Order"). Recently, the United States Court of Appeals for the District of
Columbia Circuit granted motions for stay of the Detariffing Order, pending
judicial review. According to an FCC Public Notice, the result of this stay is
that the tariffing rules in place prior to the effectiveness of the Detariffing
Order are in effect, and nondominant carriers providing interstate, domestic
interexchange services continue to be required to file tariffs pursuant to the
FCC's Rules.

     Among domestic local carriers, only the current LECs are presently
classified by the FCC as dominant carriers for the provision of interstate
access services. This means that the FCC regulates many of the LECs' rates,
charges and services to a larger degree than the Company's. The FCC's regulation
of LECs is expected to decrease over time, especially given the 1996
Telecommunications Act. The FCC has proposed that RBOCs that provide
out-of-region long distance services be regulated as non-dominant carriers.

     RBOC entry into the long distance market may mean that the Company will be
faced with new competition from well-entrenched, well-capitalized and marketable
companies, that consumers have had prior dealings with for local access service.
This may allow these RBOCs due to their name recognition and established service
practices to have a significant advantage in their ability to attract long
distance customers and to offer long distance service as an adjunct to local
service access.

     However, the entry of a RBOC into the long distance telecommunication
market is dependent on the RBOC fully opening its local exchange market to
outside competitors and primarily the long distance carriers. To date no RBOC
has been successful in its bid to offer long distance service as long as they
fail to satisfactorily open their local exchange market. This situation may
change in the near future and the Company will be faced with further competition
for customers.

     State Regulation. The intrastate long distance operations of the Company
are also subject to various state law and regulations, including prior
certification, notification and registration requirements. The vast majority of
states require the Company to apply for certification to provide intrastate
telecommunications services, or at least to register or be found exempt from
regulation, before commencing intrastate services. Most states also require the
Company to file and maintain detailed tariffs listing their rates for intrastate
service. Many states also impose various reporting requirements and/or require
prior approval for transfers of control of certified carriers, assignment of
carrier assets, including customer bases, carrier stock offerings and incurrence
by carriers of significant debt obligations. Certificates of authority can
generally be conditioned, modified, canceled, terminated or revoked by state
regulatory authorities for failure to comply with state law and/or the rules,
regulations and policies of the state regulatory authorities. Fines and other
penalties may also be imposed for such violations.

     The Company provides interstate and international long distance service in
all or some portions of 49 states for which the Company has filed a tariff with
the FCC. The Company is authorized, pursuant to state regulations,
certifications, tariffs or notifications or on an unregulated basis, to provide
intrastate service to all of the United States, except Alaska.

Competition

     The Company faces intense competition in the marketing and sale of its
services and products. Many of these services and products are marketed by
companies, which are well established, have reputations for success in the
development and sale of services and products and have significantly greater
financial, marketing, distribution, personnel and other resources than the
Company. This competition is increased as a result of the fact that the Company


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has not engaged in any marketing activities since the second quarter of fiscal
year 1999, and has no plans or arrangements to engage in any marketing
activities. These resources permit such companies to implement extensive
advertising and promotional campaigns, both generally and in response to efforts
by additional competitors to enter into new markets and introduce new services
and products. This is due to the competitive advantage held by facilities based
carriers and Internet marketing enterprises. Certain of these competitors,
including AT&T, MCI/WorldCom and Sprint, dominate the industry and have the
financial resources to enable them to withstand substantial price competition
which has continued to increase. These and other large telephone companies have
also entered or have announced their intention to enter into the prepaid phone
card and Internet segments of the telecommunications industry. The markets for
telecommunications services and products are also characterized by rapidly
changing technology and evolving industry standards, often resulting in product
obsolescence or short product life cycles. The proliferation of new
telecommunications technologies, including personal communication services,
cellular telephone services and products and prepaid phone cards employing
alternative "smart" card technologies, may reduce demand for traditional
land-line long distance telephone services generally and the Company's services
in particular. The Company's success will depend on the Company's ability to
anticipate and respond to these and other factors affecting the industry,
including changes in customer preferences, business and demographic trends,
unfavorable general economic conditions and discount pricing strategies by
competitors.

     Regulatory changes may also result in significantly increased competition.
In October 1995, the FCC terminated AT&T's designation as a dominant carrier,
which made it easier for AT&T to compete directly with the Company for low
volume commercial long distance customers. Also, the 1996 Telecommunications Act
is designed to introduce increased competition in domestic telecommunications
markets by facilitating the entry of any entity (including cable television
companies and utilities) into both the long distance and local
telecommunications markets. Consequently, this act increases the potential for
increased competition by permitting long distance and regional carriers in local
markets and the well-capitalized RBOCs and local exchange carriers in long
distance markets.

     Bell Atlantic, a RBOC, has received permission from the FCC and is offering
long distance service in the New York area.


Employees

     In October 1997, the Company outsourced its back office operations, which
included collections, customer service and provisioning, reducing its workforce.
As of April 30, 2000, the Company employed three full-time employees.

Item 2. Description of Property

     The Company's offices were relocated on November 22, 1999 to 6600 N.
Andrews Avenue, Suite 140, Fort Lauderdale, Florida, which comprises 910 square
feet and are leased by the Company under an extension to six-month sub-lease
that expires in September 2000. The Company pays rent of approximately $2,000
per month. Previously, the Company was located at 1451 W. Cypress Creek Road,
Suite 200, Fort Lauderdale, Florida comprising of 7,950 square feet and paid
rent of approximately $8,000 per month.

     The Company believes its existing facility is adequate to meet current
needs and it does not anticipate any difficulty in negotiating renewals as
leases expire or in finding other satisfactory space if existing facilities
become unavailable.

Item 3. Legal Proceedings

     The Company is from time to time the subject of complaints or litigation in
the ordinary course of its business. Except as disclosed, the Company believes
that such lawsuits, claims and other legal matters to which it has become
subject are not material to the Company's financial condition or results of
operations, but an existing or future lawsuit or claim resulting in an
unfavorable outcome to the Company could have a material adverse effect on the
Company's financial condition and results of operations.

                                       6
<PAGE>

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

     On March 14, 2000 an Annual Meeting of the Shareholders of the Company was
held to vote on two proposals; Proposal One was to elect two (2) class 3
directors of the Company to serve until the annual meeting of shareholders in
2002 and until their respective successors are duly elected and qualified and
Proposal Two was to elect Grant Thornton LLP as the independent public
accountants of the Company for the Fiscal Year ending April 30, 2000.

     The Meeting approved Proposal One for Stanley Gottlieb as director of the
Company; 2,199,876 Votes for, 531,845 Votes Withheld and Jack Kanfer as director
of the Company; 2,201,076 Votes for, 530,645 Votes Withheld.

     The Class 1 directors, Messrs. Glenn Koach and John Tomlinson, will
continue in office until the 2001 Annual Meeting of Shareholders; the Class 2
director, Mr. Edward Harwood, will continue in office until the 2002 Annual
Meeting of Shareholders; and the Class 3 directors, Messrs. Stanley Gottlieb and
Jack Kanfer will continue in office until the 2003 Annual Meeting of
Shareholders.

     The Meeting approved Proposal Two to elect Grant Thornton LLP as the
independent public accountants of the Company; 2,282,776 Votes for, 43,000 Votes
Against, 0 Abstain.

     No further matters came before the Annual Meeting.



                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters

     Price Range of Common Stock. Since December 2, 1999, the Common Stock has
traded on a limited basis on the pink sheets and previously on the OTC Bulletin
Board from December 2, 1998 until December 1, 1999, under the symbol "GLDI." The
Company was taken off the OTC Bulletin Board for failing to fulfill all of its
reporting requirements pursuant to the Exchange Act of 1934, as amended. The
Company subsequently filed all its outstanding Quarterly Reports for the first
and second quarters of fiscal year 2000 and held an Annual Shareholders Meeting
on March 14, 2000. The Company was delisted from the Nasdaq SmallCap Market and
the Boston Stock Exchange ("BSE") on December 2, 1998. Since March 31, 1997, the
date the following shares first traded on the Nasdaq SmallCap Market, the Common
Stock were quoted on the Nasdaq SmallCap Market under the symbols "GLDI" and
"GLDIW," respectively, and on the BSE under the symbols "GPL" and "GPLW,"
respectively. Prior to March 31, 1997, the Common Stock traded on a limited
basis on the OTC Bulletin Board, under the symbol "GLDT" and prior to that date,
the redeemable warrants did not trade. The redeemable warrants expired on March
24, 2000.

     The following sets forth, for the periods indicated, high and low per share
bid information for the Common Stock reported on the Nasdaq SmallCap Market and
the OTC Bulletin Board. Such high and low bid information reflect inter-dealer
quotas without retail, mark-up, mark down or commissions and may not represent
actual transactions:
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<CAPTION>

                                                                                       For the period
                                                                                          beginning
                                                                                       May 1, 1999 and
                                                                                      Ending April 30,
                                                                                            2000
                                                                                            ----
                                                                                      High         Low
                                                                                      ----         ---
<S>                                                                                     <C>       <C>
           First Quarter..........................................................      $0.75     $0.156
           Second Quarter.........................................................      0.250      0.063
           Third Quarter..........................................................      0.850      0.020
           Fourth Quarter.........................................................      0.900      0.370
</TABLE>

                                       7

<PAGE>
<TABLE>
<CAPTION>

                                                                                       For the period
                                                                                          beginning
                                                                                       May 1, 1998 and
                                                                                      Ending April 30,
                                                                                            1999
                                                                                            ----
                                                                                      High         Low
                                                                                      ----         ---
<S>                                                                                    <C>        <C>
           First Quarter..........................................................     $3.000     $1.000
           Second Quarter.........................................................      2.250      0.531
           Third Quarter..........................................................      1.250      0.500
           Fourth Quarter.........................................................      1.125      0.437
</TABLE>

     Dividend Information. The Company has not paid any cash dividends to date
and does not anticipate or contemplate paying dividends in the foreseeable
future. It is the present intention of management to utilize all available funds
for the development of the Company's business.

     Approximate Number of Security Holders. As of April 30, 2000, the Company
had approximately 120 registered holders of record of the Common Stock.

Item 6. Management's Discussion and Analysis

     The following discussion and analysis of significant factors affecting the
Company's operating results and liquidity and capital resources should be read
in conjunction with the accompanying financial statements and related notes.

Overview

     Group Long Distance, Inc. (the "Company") is a long distance
telecommunications provider. The Company utilizes special network service
contracts through major national long distance telecommunications carriers to
provide its customers with products and services which include basic "1 plus"
and "800" long distance services. As a nonfacilities based reseller of long
distance telecommunication services, the Company utilizes service contracts to
provide its customers with switched, dedicated and private line services to
various long distance telecommunications networks such as TALK. The Company is
dependent on TALK and numerous regional and local telephone companies to provide
its services and products. The Company's revenues for fiscal year ended April
30, 2000 and 1999 are solely derived from calls routed through TALK. Revenues
derived from TALK represented 96% of total revenues for the fiscal years ended
April 30, 1998.

     On December 8, 1999, the Company entered into the TALK Agreement. See Item
1. "Description of Business - The Company", above. Pursuant to the TALK
Agreement TALK agreed to release approximately $2.9 million dollars of cash to
the Company that was held under a lockbox arrangement, and release all
receivables that were secured pursuant to the Partition Agreement, and that all
future minimum monthly volume commitments were waived by TALK. In addition, the
TALK Agreement provides for an extension of the current carrier agreement until
the later of August 31, 2002, and the date that all obligations to TALK have
been satisfied in full, and the exchange of mutual releases.

     The Company is no longer conducting and has no plans to conduct any
marketing campaigns to attract new customers, since the Company has determined
that it is currently unable to both procure new customers, and achieve positive
earnings after amortization of acquisition costs for these new customers. This
is due to the competitive advantage held by facilities based carriers and
Internet marketing enterprises. Many of these services and products are marketed
by companies, which are well established, have reputations for success in the
development and sale of services and products and have significantly greater
financial, marketing, distribution, personnel and other resources than the
Company. These resources permit such companies to implement extensive
advertising and promotional campaigns, both generally and in response to efforts
by additional competitors to enter into new markets and introduce new services
and products. Certain of these competitors, including AT&T, MCI/WorldCom and
Sprint, dominate the industry and have the financial resources to enable them to
withstand substantial price competition which has continued to increase.

                                       8
<PAGE>

     The Company's operating results are significantly affected by customer
attrition rates, particularly since the Company is no longer marketing its
services. The Company believes that a high level of customer attrition in the
industry is primarily a result of national advertising campaigns, telemarketing
programs and customer incentives provided by major competitors, as well as the
termination of service for non-payment.

Acquisitions

     The Company had historically grown its business, in part, by increasing its
business through acquisition. The Company has no plans, intentions or
arrangements to enter into any acquisitions.

     In August 1997, the Company acquired Eastern Telecommunications
Incorporated which consisted of a customer base with monthly revenues exceeding
$100,000 and two warrants to purchase 1,347,000 shares of TALK (formerly
Tel-Save, Inc.), at $4.08 per share ("the Warrants"). The $8.313 million
purchase price for ETI consisted of two $3.5 million notes, and the assumption
of approximately $1.2 million of certain of ETI's liabilities and the payment of
closing costs in the amount of $113,000. On August 11, 1997, the Company
exercised one of the Warrants and purchased 600,000 shares of common stock of
TALK at the aggregate exercise price of $2,448,000. In October 1997, the Company
exercised the remaining Warrant and sold the common stock for approximately
$26.6 million with a gain on sale of approximately $13.4 million.

     Proceeds from the sale of the TALK shares were used to retire the aggregate
principal amount of $7,000,000 in notes (plus accrued interest) due in
connection with the ETI acquisition, together with certain related closing
costs. The balance of the proceeds from the sale of the TALK shares was used to
pay down debt and accounts payable owed to TALK, including payment of the
balance of the loan outstanding to TALK in connection with the July 1996
acquisition of all of the common stock of Adventures-in-Telecom and marketing
expenses incurred in connection with the Company's telemarketing efforts during
the first half of fiscal year 1998.

Sale of Customer Base and Agreement and Plan of Merger

     On or about April 30, 2000, the Company executed various agreements with
Coyote and a wholly owned subsidiary of Coyote. See Item 1. "Description of
Business", above.

     As a result of the sale of a customer base pursuant to the Asset Purchase
Agreement, the Company's revenues will be lower in the fiscal year ended April
30, 2001 and thereafter.

Results of Operations

     The following table sets forth for the periods indicated the percentages of
total sales represented by certain items reflected in the Company's consolidated
statements of operations:
<TABLE>
<CAPTION>
                                                                                Year Ended April 30,
                                                                                --------------------
                                                                              2000                1999
                                                                              ----                ----
<S>                                                                             <C>                 <C>
         Sales..........................................................       100%                100%
         Cost of sales..................................................        38                  52
         Gross profit...................................................        62                  48
         Selling, general and administrative expense....................        14                  15
         Depreciation and amortization expense..........................         *                   5
         Volume Shortfall Charge........................................        --                   5
         Income from operations.........................................        48                  24
         Gain on sale of customer base..................................         7                  --
         Interest expense, net..........................................         *                   *
         Income before income taxes.....................................        55                  24
         Income taxes...................................................         6                   8
         Net Income ....................................................        49                  16
</TABLE>
         * Less than 1 percent.

                                       9
<PAGE>


     Comparison of Fiscal Year Ended April 30, 2000 to Fiscal Year Ended
April 30, 1999

     Sales. The Company's sales were $13,736,337 for the fiscal year ended April
30, 2000, compared to $22,837,340 for the fiscal year ended April 30, 1999, a
decrease of $9,101,003 or approximately 40%. Sales for the fiscal year ended
April 30, 2000 includes deferred revenue being recognized as income in the
current fiscal year ended April 30, 2000 of $3,012,244 as a result of the TALK
Agreement. The decrease in sales was a result of ceasing all marketing
activities and normal attrition of the customer base. Management believes that
the attrition of the customer base is normal for the industry. The Company has
determined that it is currently difficult to both procure new customers and
achieve positive earnings after amortization of acquisition costs for these new
customers. This is due to the competitive advantage held by facilities based
carriers and Internet marketing enterprises. Because the Company is not
currently marketing its products and services, and after taking into account the
sale of a customer base, the Company's revenues are likely to continue to
decline. The Company anticipates this trend to continue through the rest of the
fiscal year ending April 30, 2001, and thereafter. During the fiscal year ended
April 30, 2000 the Company had revenues from this customer base of approximately
$1.7 million and approximately $3.8 million for the fiscal year ended April 30,
1999.

     Cost of Sales. Cost of sales were $5,230,837 for the fiscal year ended
April 30, 2000, compared to $11,834,036 for the fiscal year ended April 30,
1999, a decrease of $6,603,199 or approximately 56%. As a percentage of sales,
cost of sales was approximately 38% and 52% for the fiscal year ended April 30,
2000 and April 30, 1999, respectively. The decrease in cost of sales between
comparative periods was due to the decrease in revenues as a result of customer
attrition. The decrease in cost of sales as a percentage of sales in the current
fiscal year is primarily as a result of the effect of the recognition of the
deferred revenue in the current quarter without a corresponding charge, the
Company being able to better negotiate its buy rate from its carrier as a result
of the TALK Agreement and a change in the mix of customer base from the fiscal
year ended April 30, 1999. As a percentage of sales after adjusting for deferred
revenues, cost of sales was approximately 49% and 52% for the fiscal year ended
April 30, 2000 and April 30, 1999, respectively. Cost of sales are expected to
further decline for the fiscal year ended April 30, 2001, and thereafter, as a
result of the sale of a customer base. During the fiscal year ended April 30,
2000 the Company had cost of sales from this customer base of approximately $1.2
million and approximately $2.7 million for the fiscal year ended April 30, 1999.

     Gross Profit. Gross profit was $8,505,500 for the fiscal year ended April
30, 2000 compared to $11,003,304 for the fiscal year ended April 30, 1999, a
decrease of $2,497,804 or approximately 22%. As a percentage of sales, gross
profit was 62% and 48% for the fiscal year ended April 30, 2000 and April 30,
1999, respectively. The increase in gross profit percentages in the fiscal year
ended April 30, 2000 was primarily as a result of the effect of the recognition
of the deferred revenue in the current quarter without a corresponding charge, a
lower buy rate from the carrier and improved margins on, and a change in the mix
of customer base from the fiscal ended April 30, 1999. Gross Profit, after
adjusting for the effect of the recognition of the deferred revenues of
$3,012,244 was $ 5,493,256 for the fiscal year April 30, 2000, a decrease
compared to the previous fiscal year of $ 5,510,048 or 50%. As a percentage of
sales after adjusting for deferred revenues, gross margin was approximately 51%
and 48% for the fiscal year ended April 30, 2000 and April 30, 1999,
respectively.

     Selling, General and Administrative Expense. Selling, general and
administrative expenses ("SG&A") were $1,961,578 for the fiscal year ended April
30, 2000 compared to $3,463,625 for the fiscal year ended April 30, 1999, a
decrease of $1,502,047 or approximately 43%. This decrease in SG&A was due to
the reduced sales volumes, lower bad debt expense, and a significant reduction
in operating expenses as compared to the year ended April 30, 1999. As a
percentage of sales, SG&A for the fiscal year ended April 30, 2000 and 1999 was
approximately 14% and 15%, respectively. This decrease was due to a reduction in
costs as a result of lower sales and significantly reduced operating expenses.

                                       10
<PAGE>

SG&A expenses for the fiscal year ended April 30, 2000 included two Severance
Packages totaling $310,000 for Messrs. Dunne, former President and Chief
Executive Officer of the Company, and Russo, former Chief Financial Officer of
the Company.

     Depreciation and Amortization Expense. Depreciation and amortization
expense was $15,368 for the fiscal year ended April 30, 2000 compared to
$1,019,087 for the fiscal year ended April 30, 1999, a decrease of $1,003,719 or
approximately 98%. The significant reduction in depreciation and amortization
for the fiscal year ended April 30, 2000 was attributable to the customer
acquisition costs having been fully amortized as of April 30, 1999. This
amortization was primarily a result of the acquisition of the AIT customer base.
As a percentage of sales, depreciation and amortization expense was less than 1%
and approximately 5% for the fiscal year ended April 30, 2000 and April 30,
1999, respectively.

     Volume Shortfall Charge. There was no volume shortfall charge for the year
ended April 30, 2000. The volume shortfall charge for the fiscal year ended
April 30, 1999 of $1.1 million resulted from the Settlement set forth in the
TALK Agreement.

     Gain on Sale of Customer Base. There was a gain on sale of a customer base
of $1 million for the fiscal year ended April 30, 2000. The gain on sale of the
customer base for the fiscal year ended April 30, 2000 resulted from the Company
entering into an Asset Purchase Agreement with a wholly owned subsidiary of
Coyote. See Item 1. "Description of Business - Sale of Customer Base," above.
Under the Agreement the Company sold a customer base, which includes certain of
the Company's customers under a series of related sites. The acquisition costs
for this customer base had already been written off in full and therefore the
entire sale price was recorded as a gain in the fiscal year ended April 30,
2000. Outside direct costs on this transaction were deemed to be immaterial.

     Interest Income (expense), Net. Interest income (net) for the fiscal year
ended April 30, 2000 was $3,825 compared to an interest expense of $83,094 for
the fiscal year ended April 30, 1999. The interest income for the fiscal year
ended April 30, 2000 was interest earned as a result of a positive cash balance,
offset by interest paid on income taxes due for the year ended April 30, 1999.
The interest expense for the fiscal year ended April 30,1999 was primarily due
to interest paid on a Note payable to WorldCom under a settlement agreement.
This Note was subsequently settled during the fiscal 1999 year.

     Income Taxes. Income tax expense of $867,511 was provided for the fiscal
year ended April 30, 2000 compared to $1,769,900 for the year ended April 30,
1999. The decrease in the income tax expense for the year ended April 30, 2000
was a result of realization of tax effects caused by a reduction in the
valuation allowance due to the sale of a customer base.

     Net Income. The Company had a net income of $6,664,868, or net income of
$1.90 per share, for the fiscal year ended April 30, 2000, as compared to net
income of $3,567,598, or $1.02 per share, for the year ended April 30, 1999. The
net income for the fiscal year ended April 30, 2000 was after taking into
account the gain on sale of customer base of $1,000,000 and deferred revenue
being recognized as income in the current fiscal year ended April 30, 2000 of
$3,012,244 as a result of the TALK Agreement. The net income for the fiscal year
ended April 30, 1999 was affected by the volume shortfall charge of $1,100,000.

Liquidity and Capital Resources

     The Company's primary cash requirements have historically been to fund the
acquisition of customer bases and increased levels of accounts receivable, which
have required substantial working capital. The Company had historically
satisfied its working capital requirements principally through cash flow from
operations (including advances from TALK) and borrowings from institutions and
carriers. Currently the Company has positive cash flow and cash resources to
meet current levels of expenditure.

     At April 30, 2000, the Company had a working capital surplus of $1,131,488,
as compared to working capital deficit of $4,377,357 at April 30, 1999. The
working capital surplus for the fiscal year was largely due to cash on hand as a
result of the release of all funds related to the TALK Agreement. The working
capital deficit during the fiscal year ended April 30, 1999 was largely due to
the deferred revenue of approximately $3 million, which included funds, held by


                                       11
<PAGE>

TALK under a lockbox arrangement for which repayment was uncertain. The
uncertainty related to a volume shortfall charge based on monthly minimum volume
commitments as at April 30, 1999, which was resolved by the TALK Agreement. The
deferred revenue was recognized in the third quarter of the fiscal year ending
April 30, 2000.

     Net cash provided by operating activities was $1,695,401 for the fiscal
year ended April 30, 2000 as compared to cash provided by operating activities
of $1,280,607 for the fiscal year ended April 30, 1999. The cash provided by
operating activities for the fiscal year ended April 30, 2000 is primarily
attributable to net income from operating activities, a reversal of deferred
revenue and offset by a decrease in volume shortfall charge payable and income
taxes payable. For the fiscal year ended April 30, 1999, the cash provided by
operating activities is primarily attributable to net income from operating
activities, a decrease in accounts receivables and offset by a decrease in
accounts payable as a result of repayment of debt.

     Net cash provided by investing activities was $41,920 for the fiscal year
ended April 30, 2000, as compared to no cash provided by investing activities
for the fiscal year ended April 30, 1999. The cash provided by investing
activities was the result of the sale of a customer base and the receipt of a
payment in terms of the sale agreement.

     No cash was used in financing activities for the fiscal year ended April
30, 2000 as compared to $1,081,623 for the fiscal year ended April 30, 1999. For
the fiscal year ended April 30, 1999 the cash used in financing activities was
primarily attributable to paying down debt and accounts payable owed to TALK,
including payment of the balance of the loan outstanding to TALK in connection
with the July 1996 acquisition of all of the common stock of AIT and marketing
expenses incurred in connection with the Company's telemarketing efforts during
the 1998 fiscal year. At April 30, 2000, the Company had cash of $2,240,267.

     The Company's gross accounts receivable decreased by $1,027,678 during the
fiscal year ended April 30, 2000 to $651,783 from $1,679,461 during the prior
period. Accounts receivable were 10% of total assets at April 30, 2000, compared
to 71% of total assets at April 30, 1999. The Company's allowance for doubtful
accounts decreased by approximately $129,000, to $259,000 compared to $388,000
in the prior period.

     Total current liabilities decreased during the fiscal year ended April 30,
2000 by $4,542,909 to $1,635,010 from $6,177,919 as compared to the fiscal year
ended April 30, 1999. The decrease was a result of the recognition of deferred
revenues in the current fiscal year ended April 30, 2000, and lower income taxes
payable.

     At April 30, 2000, the Company's allowance for doubtful accounts was
approximately $259,000 as compared to approximately $388,000 at April 30, 1999,
which the Company believes is currently adequate for the size and nature of its
receivables. Nevertheless, delays in collection or uncollectibility of accounts
receivable could have a adverse effect on the Company's liquidity and working
capital position and could require the Company to continually increase its
allowance for doubtful accounts. Bad debt expense accounted for 5% of the
Company's adjusted revenues before deferred revenues for the fiscal year ended
April 30, 2000 and 6% of the Company's revenues for the fiscal year ended April
30, 1999.

Effects of Inflation

     The Company does not believe that inflation has had a significant impact on
its operations for the fiscal year ended April 30, 2000.

Recent Accounting Pronouncements

     In June 1998 the FASB issued statement of Financial Accounting Standards
(FAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities."
FAS No. 133 establishes standards for accounting and reporting for derivative
instruments, and conforms the requirements for treatment of different types of
hedging activities, and was amended by FAS No. 138. This statement is effective
for all fiscal years beginning after June 15, 2000. Management does not expect
this standard to have a significant impact on the Company's operations.


                                       12
<PAGE>

Factors That Could Affect Operating Results

     This Annual Report on Form 10-KSB contains forward-looking statements.
Additional written and oral forward-looking statements may be made by the
Company from time to time in Securities and Exchange Commission ("SEC") filings
and otherwise. The Company cautions readers that results predicted by forward-
looking statements, including, without limitation, those relating to the
Company's future business prospects, revenues, working capital, liquidity,
capital needs, interest costs, and income are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
indicated in the forward-looking statements, due to the following factors, among
other risks and factors identified from time to time in the Company's filings
with the SEC:

    o    The Company has entered into an Agreement and Plan of Merger with
         Coyote. See Item 1. "Description of Business - Agreement and Plan of
         Merger," above. No assurances can be given that the merger will, in
         fact, be closed or the timing of such closing.

    o    The Company has sold a customer base. See Item 1. "Description of
         Business - Sale of Customer Base," above. As a result, the Company's
         revenues and gross profit will be lower in the year ended April 30,
         2001 and thereafter. During the fiscal year ended April 30, 2000 the
         Company had revenues from this customer base of approximately $1.7
         million and million and approximately $3.8 million for the fiscal year
         ended April 30, 1999.

    o    The Company's operations are based upon an agreement with a TALK a
         long-distance carrier who provides access to phone lines and
         transmission facilities. The Company is dependent upon such carrier for
         such services, and there is a reasonable possibility that there could
         be equipment failures or other service interruptions that could
         materially affect the Company. Such delays could result in postponed or
         possibly lost sales, which could adversely affect the Company's results
         from operations.

    o    All of the Company's revenues are derived from calls routed through
         TALK, a nationwide telecommunications provider for fiscal years April
         30 2000 and 1999. Such revenues represented 96% of total revenues for
         the year ended April 30, 1998. Poor performance by TALK could have
         material adverse affect on the Company's operating results.

    o    The Company's operating results are significantly affected by customer
         attrition rates. Customers are not obligated to purchase any minimum
         usage and may discontinue service without penalty at any time. The
         Company is not currently marketing its products or services.

    o    The Company is not currently marketing its products and services and
         therefore, the Company's revenues are likely to continue to decline.
         This is due to the competitive advantage held by facilities based
         carriers and Internet marketing enterprises. Also, the Company has
         determined that it is currently difficult to both procure new customers
         and achieve positive earnings after amortization of acquisition costs
         for these new customers.

    o    The Company faces intense competition in the sale of its services and
         products. Many of these services and products are marketed by companies
         that are well established and have significantly greater financial
         resources than the Company. The Company is not engaging in any
         marketing activities due to the Company having determined that it is
         currently difficult to both procure new customers and achieve positive
         earnings after amortization of acquisition costs for these new
         customers. Because the reseller segment of the telecommunications
         industry has no substantial barriers to entry, competition from smaller
         resellers in the Company's target markets is also expected to continue
         to increase significantly. Recent regulatory changes may also result in
         significantly increased competition.

o        The Company is subject to federal and state regulation. Failure to
         comply with applicable laws, regulations and licensing requirements
         could result in civil penalties, including substantial fines, and
         certificates of authority may be conditioned, modified, canceled,
         terminated or revoked, any of which could have a material adverse
         effect on the Company.

o        As a result of increased federal and state regulations governing the
         telemarketing of telecommunication services. These regulations
         addressed the issues of "slamming" (the unauthorized switching of a
         customer's preselected telecommunications provider) and "cramming" (the
         unauthorized billing of additional telecommunication services not
         requested by the customer) as they affect consumers and require far
         more stringent rules before switching a customers service to the
         Company's network. See "Industry Background and Government Regulation."

                                       13

<PAGE>

o        RBOC entry into the long distance market may mean that the Company will
         be faced with new competition from well-entrenched, well-capitalized
         and marketable companies, that consumers have had prior dealings with
         for local access service. This may allow these RBOCs due to their name
         recognition and established service practices to have a significant
         advantage in their ability to attract long distance customers and to
         offer long distance service as an adjunct to local service access.

Item 7. Financial Statements

     The consolidated financial statements of the Company are filed as part of
this Form 10-KSB are set forth on pages F-2 to F-18. The report of Grant
Thornton LLP, independent certified public accountants, dated July 14, 2000
(except for Note K, as to which date is July 31, 2000).

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

     None.

















                                       14
<PAGE>

                                    PART III

Item 9.  Directors and Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act

     Glenn S. Koach, 44, a former Director was appointed President on October
13, 1999. Mr. Koach was appointed as the Company's Executive Vice President on
August 1, 1999 and a Director on September 11, 1999. Mr. Koach succeeded Mr.
Russo as a Class 1 Director upon Mr. Russo's resignation. Mr. Koach is a
Certified Public Accountant and had been a Principal and Investment Manager of
Riverside Capital Advisors, an investment company based in South Florida. Mr.
Koach has served as Chairman of the Board of Metro Airlines from 1994 to 1997,
and is also President of Harvard Corporation, a private real estate investment
company.

     Sam D. Hitner, 42, On November 18, 1999, Mr. Hitner was appointed Chief
Financial Officer by the Board of Directors of the Company. Mr. Hitner had been
the Acting Chief Financial Officer since September 11, 1999 having assumed the
responsibilities of Mr. Russo in such capacity and previously was the Controller
of the Company since August 1995. He has been the Company Secretary since
October 1997. From November 1994 to August 1995, Mr. Hitner was employed with
John L. Tomlinson C.P.A., P.A., as a tax consultant.

     Stanley A. Gottlieb, 69, has been a Class 3 Director of the Company since
December 1997. Since 1966, Mr. Gottlieb is an Attorney, and prior to his
retirement in December 1997, held various positions at The Hearst Corporation,
most recently as Vice President-Taxes, and continues to act as Senior Tax
consultant to The Hearst Corporation.

     Edward Harwood, 73, has been a Class 2 Director of the Company since
September 1995. Mr. Harwood retired in 1989. For the 19 years prior to his
retirement, Mr. Harwood held various executive positions with Gould Electronics
Corporation, a computer manufacturing company.

     Jack Kanfer, 63, has been a Class 3 Director of the Company since December
21, 1999. Mr. Kanfer succeeded Mr. Dunne as a Director, upon his resignation.
Since 1987, Mr. Kanfer has been CEO and Director of Telecom Consulting Group and
B&D Telecom Corp., both privately held telecommunication companies located in
Pompano Beach, Florida. From 1976 to 1987 Mr. Kanfer was a consultant
specializing in turnarounds, mergers and acquisitions. Prior to 1976, Mr. Kanfer
was a Senior Vice President of SCA Services a New York Stock Exchange listed
company that was acquired by Waste Management.

     John L. Tomlinson, 51, was appointed Chairman of the Board on October 13,
1999 upon Mr. Dunne's resignation and has been a Class 1 Director of the Company
since November 1995. In May 1999, Mr. Tomlinson was appointed as a Vice
President of the Company. Mr. Tomlinson is a Certified Public Accountant and has
been in private practice since 1990. Mr. Tomlinson also serves as a director of
Gateway American Bank of Florida.

     There are no family relationships between any of the Officers and Directors
of the Company.


                          COMPLIANCE WITH SECTION 16(a)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10 percent of
any registered class of the Company's equity securities, to file with the
Securities and Exchange Commission (the "SEC") reports of ownership of the
Common Stock of the Company. Reporting persons are required by SEC regulation to
furnish the Company with copies of all such reports that they file. The Company
believes that all of its directors and executive officers are delinquent in
filing certain reports. In August, 2000, Messrs. Koach, Hitner, Gottlieb,
Harwood, Kanfer and Tomlinson, filed various Forms 3 and 4. At this time the
Company believes that all of its director and executive officers have filed all
required reports.

                                       15
<PAGE>

Item 10. Executive Compensation

     The following table sets forth the compensation awarded or paid to, or
earned by, the Company's President and Chief Executive Officer during the fiscal
years ended April 30, 2000, 1999 and 1998. No other executive officer of the
Company currently or formerly serving as an executive officer received a total
salary and bonus of $100,000 for the fiscal year ended April 30, 2000.
Accordingly, no information is reported for such persons.
<TABLE>
<CAPTION>

                           Summary Compensation Table

----------------------------------------- ------ ---------------------------------------- ----------------------------
      Name and Principal Position         Fiscal           Annual Compensation              Long Term Compensation
                                          Year
                                                 ----------- ------------ --------------- ----------- ----------------
                                                 Salary ($)   Bonus ($)       Other         Awards        Payouts
                                                                              Annual
                                                                           Compensation
                                                                               ($)
                                                                                          ----------- ----------------
                                                                                          Securities     All Other
                                                                                          Underlying   Compensation
                                                                                           Options          ($)
                                                                                             (#)
----------------------------------------- ------ ----------- ------------ --------------- ----------- ----------------
<S>                                       <C>      <C>           <C>           <C>        <C>               <C>
Glenn S. Koach                            2000     $103,952      $15,000       $4,112(1)  500,000(2)        $1,212(3)
    President and Chief Executive         1999           --           --           --          --               --
    Officer                               1998           --           --           --          --               --
----------------------------------------- ------ ----------- ------------ --------------- ----------- ----------------
Sam D. Hitner                             2000      $81,315       $7,500       $3,320(4)   25,000(5)          $687(3)
    Chief Financial Officer
----------------------------------------- ------ ----------- ------------ --------------- ----------- ----------------
Gerald M. Dunne, Jr. (6)                  2000     $269,686      $27,000      $31,285(7)       --               --
   Former Chairman, Chief Executive       1999     $165,000      $36,000      $17,801(7)       --(8)        $4,500(9)
   Officer and President                  1998     $150,000     $255,000      $21,296(7)       --           $4,500(9)
----------------------------------------- ------ ----------- ------------ --------------- ----------- ----------------
Peter J. Russo (10)                       2000     $165,847       $6,000       $4,287(11)      --               --
   Former Chief Financial Officer         1999     $100,000      $18,000      $10,043(11)      --(8)        $3,000(9)
                                          1998      $85,000      $70,000       $9,132(11)      --           $2,550(9)
----------------------------------------- ------ ----------- ------------ --------------- ----------- ----------------
</TABLE>

----------
(1)    In October 1999 Mr. Koach was appointed President and Chief Executive
       Officer of the Company and its subsidiaries. For Mr. Koach. - Fiscal 2000
       amount includes auto expenses of $3,500 and medical expense coverage of
       $612.

(2)    On November 18, 1999 the Company's Board of Directors granted to Mr.
       Koach 500,000 options to purchase shares of the Company's Common Stock.
       100,000 options may be exercised at a price of $.20 per share, 100,000
       options may be exercised at a price of $.40 per share, 100,000 options
       may be exercised at a price of $.60 per share, 100,000 options may be
       exercised at a price of $.80 per share and 100,000 options may be
       exercised at a price of $1.00 per share. All options expire on November
       18, 2004.

(3)    In January 2000, the Company commenced its SIMPLE IRA plan. The amount
       reported represents the Company's matching contribution for the fiscal
       year ended April 30, 2000.

(4)    On September 11, 1999 Mr. Hitner was appointed Chief Financial Officer of
       the Company. For Mr. Hitner. - Fiscal 2000 amount includes medical
       expense coverage of $3,320.

(5)    Mr. Hitner has been granted 25,000 stock options under the Company's 1996
       Stock Option Plan to purchase shares of the Company's Common Stock.
       10,000 options may be exercised at a price of $.20 per share (that were
       repriced on December 22, 1999, from 1.375 per share), 8,750 options may
       be exercised at a price of $.40 per share (that were repriced on December
       22, 1999, from 1.375 per share) and 6,250 options may be exercised at a
       price of $0.50 per share. All options expire on December 22, 2004.

                                       16
<PAGE>

(6)    On October 13, 1999, Mr. Gerald M. Dunne, Jr. ("Dunne") resigned as
       President, Chief Executive Officer and a Director of the Company and each
       of its subsidiaries. In connection with Dunne's resignation, on October
       13, 1999, the Company and Dunne entered into a Separation Agreement
       pursuant to which the Company agreed to pay Dunne severance pay of
       $190,000, less all applicable employment withholding taxes. The remaining
       $133,000 was paid by the Company during the current fiscal year ended
       April 30, 2000 in such amounts, to such parties, at such dates and upon
       the satisfaction of certain conditions as set forth in the Separation
       Agreement. The $190,000 severance pay has been included in the above
       table under salary for the year ended April 30, 2000.

(7)    For Mr. Dunne, Jr. - Fiscal 2000 amount includes auto expenses of $24,846
       and medical expense coverage of $6439; Fiscal 1999 amount includes auto
       expenses of $11,982 and medical expense coverage of $5,819; Fiscal 1998
       amount includes auto expenses of $17,123 and medical expense coverage of
       $4,173.

(8)   On July 2, 1998 the Company's Board of Directors granted 75,000 options
      and 30,000 options to purchase shares of Common Stock at $1.375 a share to
      Mr. Dunne and Mr. Russo, respectively. These options have both
      subsequently terminated.

      On October 9, 1998 the Company's Board of Directors granted 125,000
      options and 50,000 options to purchase shares of Common Stock at $0.50 a
      share to Mr. Dunne and Mr. Russo, respectively. These options have both
      subsequently terminated.

(9)   In April 1997, the Company commenced its 401(k) plan. The amount reported
      represents the Company's matching contribution for the fiscal year ended
      April 30, 1999. The plan was terminated in March 1999.

(10)  On September 11, 1999, Mr. Peter J. Russo ("Russo") resigned as Chief
      Financial Officer and a Director of the Company and it subsidiaries In
      connection with Russo's resignation, on September 11, 1999 the Company and
      Russo entered into a Separation Agreement pursuant to which the Company
      agreed to pay to Russo severance pay of $120,000, $60,000 of which was
      paid on September 11, 1999 and $60,000 payable in $10,000 monthly payments
      in connection with the Separation Agreement. As at April 30, 2000, the
      Company had paid all monies pursuant to the Separation Agreement. The
      $120,000 severance pay has been included in the above table under salary
      for the year ended April 30, 2000.

(11)  For Mr. Russo - Fiscal 2000 amount includes auto expenses of $2,383 and
      medical expense coverage of $1,904; Fiscal 1999 amount includes auto
      expenses of $4,800 and medical expense coverage of $5,243;Fiscal 1998
      amount includes auto expenses of $4,800 and medical expense coverage of
      $4,032;

Employment Agreements

      In November 1999, the Company and Mr. Koach entered into a one-year
employment agreement providing for his employment as the Company's President and
Chief Executive Officer with an annual base salary of $150,000 per year. The
agreement shall be automatically renewed for one-year periods, unless either
party to the agreement gives written notice to the other party not less than
ninety (90) days prior to the expiration of such period. The agreement provides
for a bonus based on the Company's performance, profitability, positive cash
flow and other factors as may be determined by the Option and Compensation
Committee of the Board of Directors. The agreement provides that in the event of
termination for cause, Mr. Koach shall not be entitled to receive any further
installments of base salary or other compensation, including severance payments.
In the event of termination without cause, Mr. Koach will receive a severance
payment equal to three months of his then annual base salary. The agreement also
includes a three-month agreement not to compete commencing on the date of
termination.

     In February 2000, the Company and Mr. Hitner entered into a one-year
employment agreement providing for his employment as the Company's Chief
Financial Officer with an annual base salary of $85,000 per year. The agreement
shall be automatically renewed for one-year periods, unless either party to the
agreement gives written notice to the other party not less than ninety days (90)


                                       17
<PAGE>

prior to the expiration of such period. The agreement provides for a bonus based
on the Company's performance, profitability, positive cash flow and other
factors as may be determined by the President of the Company. Mr. Hitner shall
also be entitled to stock options in accordance with the Company's 1996 Stock
Option. The agreement provides that in the event of termination for cause, Mr.
Hitner shall not be entitled to receive any further installments of base salary
or other compensation, including severance payments. In the event of termination
without cause, Mr. Hitner will receive a severance payment equal to six months
of his then annual base salary and all benefits. The agreement also includes a
six-month agreement not to compete commencing on the date of termination.

     The following table provides certain information regarding the stock
options granted during the year ended April 30, 2000 to certain of the Company's
executive officers and former executive officers named in the Summary
Compensation Table.

<TABLE>
<CAPTION>
             Option Grants For the Fiscal Year Ended April 30, 2000

---------------------------------- --------------------- ------------------ ------------------- --------------------
              Name                      Number of           % of Total         Exercise of        Expiration Date
                                        Securities        Options Granted       Base Price
                                    Underlying Options      to Employees         $/Share
                                      Granted (#)(1)       in Fiscal Year
---------------------------------- --------------------- ------------------ ------------------- --------------------
<S>                                    <C>                      <C>                 <C>           <C>
Glenn S. Koach                         500,000(1)               100%                  --           11/18/2004
President and Chief Executive
Officer
---------------------------------- --------------------- ------------------ ------------------- --------------------
Sam D. Hitner                               --                   --                   --                   --
Chief Financial Officer
---------------------------------- --------------------- ------------------ ------------------- --------------------
Gerald M. Dunne, Jr.                        --(2)                --                   --                   --
Former Chairman, Chief Executive
Officer and President
---------------------------------- --------------------- ------------------ ------------------- --------------------
Peter J. Russo                              --(2)                --                   --                   --
Former Chief Financial Officer
---------------------------------- --------------------- ------------------ ------------------- --------------------
</TABLE>

(1)  On November 18, 1999 the Company's Board of Directors granted to Mr. Koach
     500,000 options to purchase shares of the Company's Common Stock. 100,000
     options may be exercised at a price of $.20 per share, 100,000 options may
     be exercised at a price of $.40 per share, 100,000 shares of Common Stock
     at an exercise price of $.60 per share, 100,000 options may be exercised at
     a price of $.80 per share and 100,000 options may be exercised at a price
     of $1.00 per share. All options expire on November 18, 2004.


 (2) These two executive officers named in the above table, have terminated
     their employment with the Company, and all options have expired.


                                       18
<PAGE>
<TABLE>
<CAPTION>

     The following table sets forth certain information for the executive
officers and former executive officers named in the Summary Compensation Table
with respect to the exercise of options to purchase Common Stock during the
fiscal year ended April 30, 2000 and the number and value of securities
underlying unexercised options held by these former executive officers as of
April 30, 2000.


                  Aggregated Option Exercises In the Year Ended
                April 30, 2000 and Fiscal Year-End Option Values

-------------------------------- ----------------- --------------- ------------------------ ------------------------
             Name                     Shares       Value Realized         Number of           Value of Unexercised
                                   Acquired on                      Securities Underlying     In-the-Money Options
                                   Exercise (#)                      Unexercised Options       at April 30, 2000
                                                                   Held at April 30, 2000   Exercisable/Unexercisable
                                                                   Exercisable/Unexercisable
-------------------------------- ----------------- --------------- ------------------------ ------------------------
<S>                                  <C>               <C>           <C>     <C>                       <C>
Glenn S. Koach                            --              --         500,000/0 (1)                     $0/$0
President and Chief Executive
Officer
-------------------------------- ----------------- --------------- ------------------------ ------------------------
Sam D. Hitner                             --              --          25,000/0 (2)                     $0/$0
Chief Financial Officer
-------------------------------- ----------------- --------------- ------------------------ ------------------------
Gerald M. Dunne, Jr.                      --              --               0/0 (3)                     $0/$0
Former Chairman, Chief
Executive Officer and
President
-------------------------------- ----------------- --------------- ------------------------ ------------------------
Peter J. Russo                            --              --               0/0 (3)                     $0/$0
Former Chief Financial Officer
-------------------------------- ----------------- --------------- ------------------------ ------------------------
</TABLE>

(1)   On November 18, 1999 the Company's Board of Directors granted to Mr. Koach
      500,000 options to purchase shares of the Company's Common Stock. 100,000
      options may be exercised at a price of $.20 per share, 100,000 options may
      be exercised at a price of $.40 per share, 100,000 options may be
      exercised at a price of $.60 per share, 100,000 options may be exercised
      at a price of $.80 per share and 100,000 options may be exercised at a
      price of $1.00 per share. All options expire on November 18, 2004.

(2)   Mr. Hitner has been granted 25,000 stock options under the Company's 1996
      Stock Option Plan to purchase shares of the Company's Common Stock. 10,000
      options may be exercised at a price of $.20 per share (that were repriced
      on December 22, 1999, from 1.375 per share), 8,750 options may be
      exercised at a price of $.40 per share (that were repriced on December 22,
      1999, from 1.375 per share) and 6,250 options may be exercised at a price
      of $0.50 per share. All options expire on December 22, 2004.

(3)   These two executive officers named in the above table, have terminated
      their employment with the Company, and all options have expired.




                                       19
<PAGE>
<TABLE>
<CAPTION>
Item 11. Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth information, known to the Company with
respect to the beneficial ownership of its Common Stock as of April 30, 2000 for
(i) each person who is known to the Company to own beneficially more than 5% of
the Company's Common Stock, (ii) each of the Company's directors, (iii) each of
the Company's executive officers and (iv) all directors and executive officers
as a group.

--------------------------------------------------------------------------- --------------------- ------------------
                                   Name                                       Number of Shares      Percentage of
                                                                                Beneficially        Total Voting
                                                                                   Owned             Shares (1)
--------------------------------------------------------------------------- --------------------- ------------------
<S>                                                                    <C>       <C>                     <C>
Mr. Glenn S. Koach, President and Chief Executive Officer and Director (2)       540,966(3)              13.1%
Mr. Sam D. Hitner, Chief Financial Officer and Secretary (4)                      29,000(5)               0.7%
Mr. John L. Tomlinson, Chairman of the Board, Vice President and Director         39,066(7)               0.9%
Mr. Edward Harwood, Director                                                      99,668(7)               2.4%
Mr. Stanley A. Gottlieb, Director                                                 32,000(7)               0.8%
Mr. Jack Kanfer, Director                                                         39,000(7)               0.9%
Mr. Gerald M. Dunne, Jr., Former Chairman, President and Chief Executive         229,182(8)               5.6%
Mr. Peter J. Russo, Former Chief Financial Officer)                                4,000(9)               0.1%
All directors and executive officers as a group (8 persons)                   1,012,882(10)              24.5%
--------------------------------------------------------------------------- --------------------- ------------------
</TABLE>
----------
(1)   Beneficial ownership is determined in accordance with the rules of the
      Securities and Exchange Commission and generally includes voting or
      investment power with respect to securities. Except as indicated by
      footnote, the persons named in the table above have sole voting and
      investment power with respect to all shares of common stock shown as
      beneficially owned by them. The number of shares of Common Stock
      outstanding used in calculating the percentage for each listed person
      includes the shares of Common Stock underlying the options held by such
      person that are exercisable within 60 days of the date hereof, but
      excludes shares of Common Stock underlying options held by any other
      person.

(2)   Became President and Chief Executive Officer on October 13, 1999.

(3)   On November 18, 1999 the Company's Board of Directors granted to Mr.
      Koach 500,000 options to purchase shares of the Company's Common Stock.
      100,000 options may be exercised at a price of $.20 per share, 100,000
      options may be exercised at a price of $.40 per share, 100,000 options
      may be exercised at a price of $.60 per share, 100,000 options may be
      exercised at a price of $.80 per share and 100,000 options may be
      exercised at a price of $1.00 per share. All options expire on November
      18, 2004.

(4)   Became Chief Financial Officer on September 11, 1999.

(5)   Includes 25,000 currently exercisable options to purchase shares of the
      Company's Common Stock. 10,000 options may be exercised at a price of $.20
      per share (that were repriced on December 22, 1999, from 1.375 per share),
      8,750 options may be exercised at a price of $.40 per share (that were
      repriced on December 22, 1999, from 1.375 per share) and 6,250 options may
      be exercised at a price of $0.50 per share. All options expire on December
      22, 2004.

(6)   On October 13, 1999, Mr. Tomlinson, Vice-President and a Director of the
      Company, was appointed as Chairman of the Board upon the resignation of
      Mr. Dunne.

(7)   Includes options exercisable one year after grant date of November 18,
      1999 to purchase 20,000 shares of Common Stock at an exercise price of
      $.20 per share and 5,000 shares of Common Stock at an exercise price of
      $.40 per share, all expiring on November 18, 2004.

(8)   Served as President and Chief Executive Officer, Director and Chairman of
      the Board until October 13, 1999.

(9)   Served as Chief Financial Officer and Director of the Company, until
      September 11, 1999.

(10)  Includes an aggregate of currently exercisable options to purchase 525,000
      shares of common stock. Also included was options to purchase 100,000
      shares of Common Stock with an exercise date of November 18, 2000.

Item 12. Certain Relationships and Related Transactions

     In September 1995, the Company issued a promissory note to John L.
Tomlinson, Chairman of the Board of directors and a Vice President of the
Company, and Philip C. Cezeaux, an unaffiliated third party, in the aggregate
principal amount of $100,000. The interest rate on the promissory note adjusted
semi-annually based on the prime rate plus 2% and principal and interest was
payable in equal monthly installments of $2,600 until September 1999. The
promissory note was repaid in full in February 1999. As an inducement for the
loan, the Company issued options in September 1995 to Messrs. Tomlinson and

                                       20
<PAGE>

Cezeaux to purchase 47,635 shares of Common Stock at a price of $3.15 per share.
These options expired on September 30, 1997, and 16,700 shares were exercised in
September 1997.

     For the year ended April 30, 2000 and 1999, Mr. Tomlinson also performed
taxation services for the Company. John L. Tomlinson CPA, PA was paid for these
services approximately $17,000 and $19,000 for the year ending April 30, 2000
and 1999, respectively.

On September 11, 1999, Mr. Peter J. Russo ("Russo") resigned as Chief Financial
Officer and a Director of the Company and it subsidiaries. On September 11, 1999
the Company entered into a Consulting Agreement with Torbay Management Services,
Inc., ("Torbay") a corporation controlled by Russo, pursuant to which Torbay
would provide consulting services to the Company. Torbay would receive a monthly
consulting fee of $6,000 for the four-month term of the agreement. The Company
could extend the term for an additional two months, resulting in an additional
$6,000 in monthly consulting fees. The Company could offset payments due to
Torbay by any amount received by Russo by an acquirer of the Company that are in
excess of the amount due to Russo under the Separation Agreement. As at April
30, 2000, the Company had paid Torbay $24,000 in consulting fees. The Consulting
Agreement was not extended after the expiration of the initial four-month term.


Item 13. Exhibits, List and Reports on Form 8-K

       (a) Exhibits

Exhibit
Number         Description Of Exhibits
------         -----------------------

   3.1   --    Amended and Restated Articles of Incorporation of Registrant.
               (Filed as an Exhibit to Amendment No. 1 to the Company's
               Registration Statement on Form SB-2 (No. 333-17681) filed March
               3, 1996 and incorporated herein by reference.)

   3.2   --    Amended and Restated By-laws of Registrant. (Filed as an Exhibit
               to Amendment No. 1 to the ComRegistration Statement on Form SB-2
               (No. 333-17681) filed March 3, 1996 and incorporated herein by
               reference.)

   4.1   --    Form of Representative's Warrant Agreement including Form of
               Representative's Warrant Certificates. (Filed as an Exhibit to
               Amendment No. 1 to the Company's Registration Statement on Form
               SB-2 (No. 333-17681) filed March 3, 1996 and incorporated herein
               by reference.)

   4.2   --    Form of Redeemable Warrant Agreement including Form of Warrant
               Certificate. (Filed as an Exhibit to Amendment No. 1 to the
               Company's Registration Statement on Form SB-2 (No. 333-17681)
               filed March 3, 1996 and incorporated herein by reference.)

   4.3   --    Form of Common Stock Certificate. (Filed as an Exhibit to the
               Company's Annual Report on Form 10-KSB for the year ended April
               30, 1998 and incorporated herein by reference.)

  10.11  --    Second Amendment and Renewal of Lease between Registrant and
               Gateway Investments Corporation regarding 1451 West Cypress Creek
               Road, Fort Lauderdale, Florida dated February 5, 1996. (Filed as
               an Exhibit to the Company's Registration Statement on Form SB-2
               (No. 333-17681) filed December 12, 1996 and incorporated herein
               by reference.)

  10.16  --    Purchase Agreement and Plan of Exchange between Registrant and
               Adventures-in-Telecom. Inc. dated July 3, 1996. (Filed as an
               Exhibit to the Company's report on Form 10-KSB dated August 12,
               1996 and incorporated herein by reference.)

  10.17  --    Loan Agreement between Registrant and TALK dated July 11,
               1996. (Filed as an Exhibit to the Comreport on Form 10-KSB dated
               August 12, 1996 and incorporated herein by reference.)

  10.18  --    Consent and Amendment between TALK, and Registrant dated December
               2, 1996. (Filed as an Exhibit to the Company's Registration
               Statement on Form SB-2 (No. 333-17681) filed December 12, 1996
               and incorporated herein by reference.)


                                       21
<PAGE>
Exhibit
Number         Description Of Exhibits
------         -----------------------


  10.19  --    Consent and Amendment between TALK and the Registrant dated
               January 31, 1997. (Filed as an Exhibit to the Company's Annual
               Report on Form 10-KSB for the year ended April 30, 1998 and
               incorporated herein by reference.)

  10.20  --    Agreement between TALK and the Registrant, dated February 28,
               1997. (Filed as an Exhibit to the Company's Annual Report on Form
               10-KSB for the year ended April 30, 1998 and incorporated herein
               by reference.)

  10.23  --    Employment Agreement of Gerald M. Dunne, Jr. with Registrant.
               (Filed as an Exhibit to Amendment No. 2 to the Company's
               Registration Statement on Form SB-2 (No. 333-17681) filed March
               21, 1997 and incorporated herein by reference.)

  10.24  --    1996 Stock Option Plan. (Filed as an Exhibit to Amendment No. 1
               to the Company's Registration Statement on Form SB-2 (No.
               333-17681) filed March 3, 1996 and incorporated herein by
               reference.)

  10.25  --    Stock Purchase Agreement dated as of August 11, 1997 between
               the Registrant and the selling shareholders of Eastern
               Telecommunication Incorporated, together with all exhibits
               thereto. (Filed as an Exhibit to the Company's Annual Report on
               Form 10-KSB for the year ended April 30, 1998 and incorporated
               herein by reference.)

  10.26  --    Separation Agreement between Peter J. Russo with Registrant.
               (Filed as an Exhibit to the Company's Annual Report on Form
               10-KSB for the year ended April 30, 1999 and incorporated herein
               by reference.)

  10.27  --    Consulting Agreement between Torbay Management Services, Inc.,
               with Registrant. (Filed as an Exhibit to the Company's Annual
               Report on Form 10-KSB for the year ended April 30, 1999 and
               incorporated herein by reference.)

  10.28  --    Separation Agreement between Gerald M. Dunne, Jr. with
               Registrant. (Filed as an Exhibit to the Company's Annual Report
               on Form 10-KSB for the year ended April 30, 1999 and incorporated
               herein by reference.)

  10.29  --    Employment Agreement of Glenn S. Koach with Registrant. (Filed as
               an Exhibit to the Company's Annual Report on Form 10-KSB for the
               year ended April 30, 1999 and incorporated herein by reference.)


                                       22
<PAGE>

Exhibit
Number         Description Of Exhibits
------         -----------------------


  10.30  --    Sublease Agreement between ADMINASSISTANCE with the Registrant
               dated November 4, 1999. (Filed as an Exhibit to the Company's
               Annual Report on Form 10-KSB for the year ended April 30, 1999
               and incorporated herein by reference.)

  10.31  --    Letter of Intent between COYOTE and the Company dated March
               28, 2000. (Filed as an Exhibit to Form 8-K on March 31, 2000 and
               incorporated herein by reference.)

  10.32  --    Agreement and Plan of Merger between Coyote and the Company
               dated May 1, 2000. (Filed as an Exhibit to Form 8-K on April 30,
               2000 and incorporated herein by reference.)

  10.33  --    Asset Purchase Agreement between INET Interactive Network
               Systems, Inc., and the Company dated April 30, 2000. (Filed as an
               Exhibit to Form 8-K on April 30, 2000 and incorporated herein by
               reference.)

  10.34  --    First Amendment to Agreement and Plan of Merger between Coyote
               and the Company dated July 31, 2000. (Filed as an Exhibit to the
               Company's Annual Report on Form 10-KSB for the year ended April
               30, 2000.)

  21.1   --    Subsidiaries of Registrant.

  27.1   --    Financial Data Schedule.



(b) Reports on Form 8-K

     On March 31, 2000 the Company filed a Form 8-K with the Securities Exchange
Commission in connection with the Coyote Letter of Intent to acquire the
Company.

     On May 3, 2000 the Company filed a Form 8-K with the Securities Exchange
Commission in connection with the Agreement and Plan of Merger between Coyote
and the Company.


                                       23
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 2nd day of
August 2000.

                                             GROUP LONG DISTANCE, INC.


                                             By: /s/ GLENN S. KOACH
                                             ----------------------
                                                     Glenn S. Koach

     Pursuant to the requirements of the Securities Exchange Act of 1945, this
Report has been signed by the following persons on behalf of the registrant in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>

                    Signature                                  Title                               Date
                    ---------                                  -----                               ----
<S>                                         <C>                                                     <C>
       /s/ GLENN S. KOACH                   President and Chief Executive Officer            August 2, 2000
-------------------------------------
            Glenn S. Koach                  (Principal Executive Officer)

        /s/ SAM D. HITNER                   Chief Financial Officer                          August 2, 2000
-------------------------------------
              Sam D. Hitner                 (Principal Financial Officer)

     /s/ JOHN L. TOMLINSON                  Chairman of the Board and Vice President         August 2, 2000
-------------------------------------
           John L. Tomlinson

      /s/ EDWARD HARWOOD                    Director                                         August 2, 2000
-------------------------------------
             Edward Harwood

      /s/ STANLEY GOTTLIEB                  Director                                         August 2, 2000
-------------------------------------
            Stanley Gottlieb

      /s/ JACK KANFER                       Director                                         August 2, 2000
-------------------------------------
             Jack Kanfer
</TABLE>

                                       24

<PAGE>

                  FINANCIAL STATEMENTS AND REPORT
                     OF INDEPENDENT CERTIFIED
                        PUBLIC ACCOUNTANTS

                     GROUP LONG DISTANCE, INC.
                         AND SUBSIDIARIES

                      April 30, 2000 and 1999


<PAGE>



                               TABLE OF CONTENTS





REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                     F-1

CONSOLIDATED BALANCE SHEETS                                            F-2

CONSOLIDATED STATEMENTS OF OPERATIONS                                  F-3

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)               F-4

CONSOLIDATED STATEMENTS OF CASH FLOWS                                  F-5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                             F-6


<PAGE>

                         REPORT OF INDEPENDENT CERTIFIED
                               PUBLIC ACCOUNTANTS


Board of Directors and Shareholders
Group Long Distance, Inc.

We have audited the accompanying consolidated balance sheets of Group Long
Distance, Inc. and Subsidiaries as of April 30, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Group Long
Distance, Inc. as of April 30, 2000 and 1999, and the consolidated results of
their operations and their consolidated cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States.


/s/ GRANT THORNTON LLP


Fort Lauderdale, Florida
July 14, 2000 (except for Note K, as to
  which the date is July 31, 2000)



                                       F-1


<PAGE>
<TABLE>
<CAPTION>

                   Group Long Distance, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS

                                    April 30,


                                     ASSETS

                                                                                       2000            1999
                                                                                   ------------    -----------
<S>                                                                                <C>             <C>
Current assets
    Cash                                                                           $  2,240,267    $    502,946
    Accounts receivable less allowance for doubtful
      accounts of $259,000 and $388,000 at April 30,
      2000 and 1999, respectively                                                       392,783       1,291,461
    Prepaid expenses and other current assets                                            36,000           6,155
    Deferred tax asset - current                                                         97,448              --
                                                                                   ------------    ------------

              Total current assets                                                    2,766,498       1,800,562
                                                                                   ------------    ------------

Property and equipment, net                                                               5,879          13,168
Note receivable                                                                         950,000              --
Deferred tax asset                                                                      213,312              --
                                                                                   ------------    ------------

              Total assets                                                         $  3,935,689    $  1,813,730
                                                                                   ============    ============


                                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


Current liabilities
    Accounts payable                                                               $    595,334    $    476,084
    Volume shortfall charge payable, net                                                397,222         407,738
    Deferred revenue                                                                         --       3,012,244
    Income taxes payable                                                                539,824       1,769,900
    Accrued expenses and other liabilities                                              102,630         511,953
                                                                                   ------------    ------------

              Total current liabilities                                               1,635,010       6,177,919
                                                                                   ------------    ------------

Stockholders' equity (deficit)
Preferred stock, no par value, 2,000,000 shares
  authorized; no shares issued and outstanding                                               --              --
Common stock, no par value, 12,000,000 shares
  authorized; 3,500,402 shares issued and
  outstanding as of April 30, 2000 and 1999                                                  --              --
Additional paid-in capital                                                            5,913,988       5,913,988
Accumulated deficit                                                                  (3,613,309)    (10,278,177)
                                                                                   ------------    ------------

              Total stockholders' equity (deficit)                                    2,300,679      (4,364,189)
                                                                                   ------------    ------------

              Total liabilities and stockholders' equity (deficit)                 $  3,935,689    $  1,813,730
                                                                                   ============    ============

</TABLE>

The accompanying notes are an integral part of these statements.

                                       F-2

<PAGE>
<TABLE>
<CAPTION>

                   Group Long Distance, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                          For the Years Ended April 30,


                                                   2000           1999
                                               ------------   -------------
<S>                                            <C>            <C>
Sales                                          $ 13,736,337   $ 22,837,340
Cost of sales                                     5,230,837     11,834,036
                                               ------------   ------------

               Gross profit                       8,505,500     11,003,304

Selling, general and administrative expenses      1,961,578      3,463,625
Depreciation and amortization                        15,368      1,019,087
Volume shortfall charge                                  --      1,100,000
                                               ------------   ------------

               Income from operations             6,528,554      5,420,592

Gain on sale of customer base                     1,000,000             --
Interest income (expense), net                        3,825        (83,094)
                                               ------------   ------------

               Income before income taxes         7,532,379      5,337,498

Income tax                                          867,511      1,769,900
                                               ------------   ------------

               Net income                      $  6,664,868   $  3,567,598
                                               ============   ============

Net income per common share - basic            $       1.90   $       1.02
                                               ============   ============

Net income per common share - diluted          $       1.87   $       1.00
                                               ============   ============
</TABLE>
The accompanying notes are an integral part of these statements.

                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                   Group Long Distance, Inc. and Subsidiaries

            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

                   For the Years Ended April 30, 2000 and 1999



                                                                                               Total
                              Shares of                       Additional                    Stockholders'
                                Common          Common         Paid-in     Accumulated         Equity
                                Stock            Stock         Capital        Deficit         (Deficit)

<S>                            <C>          <C>             <C>            <C>             <C>
Balance, April 30, 1997        3,462,354    $          --   $  5,848,819   $ (4,212,445)   $  1,636,374

Exercise of stock options         40,429               --         65,169             --          65,169

Net loss                              --               --             --     (9,633,330)     (9,633,330)
                            ------------    -------------   ------------   ------------    ------------

Balance, April 30, 1998        3,502,783               --      5,913,988    (13,845,775)     (7,931,787)

Return of stock                   (2,381)              --             --             --              --

Net income                            --               --             --      3,567,598       3,567,598
                            ------------    -------------   ------------   ------------    ------------

Balance, April 30, 1999        3,500,402               --      5,913,988    (10,278,177)     (4,364,189)

Net income                            --               --             --      6,664,868       6,664,868
                            ------------    -------------   ------------   ------------    ------------

Balance, April 30, 2000        3,500,402    $          --   $  5,913,988   $ (3,613,309)   $  2,300,679
                            ============    =============   ============   ============    ============
</TABLE>

The accompanying notes are an integral part of this statement.

                                       F-4

<PAGE>
<TABLE>
<CAPTION>

                   Group Long Distance, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                          For the Years Ended April 30,


                                                                                       2000            1999
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>
Cash flows from operating activities
     Net income                                                                    $  6,664,868    $  3,567,598
     Adjustments to reconcile net income to net cash provided
       by operating activities
         Depreciation and amortization                                                   15,368       1,019,087
         Provision for bad debts                                                        129,038       1,389,352
         Gain on sale of customer base                                               (1,000,000)             --
         Forgiveness of debt                                                                 --        (433,484)
         Changes in assets and liabilities
              Decrease in accounts receivable                                           769,641       5,797,785
              (Increase) decrease in prepaid expenses and other
                current assets                                                          (29,845)         92,555
              Increase in deferred tax asset                                           (310,760)             --
              (Decrease) increase in volume shortfall charge payable                    (10,516)        407,738
              Increase (decrease) in accounts payable                                   119,250     (15,221,521)
              Decrease in accrued expenses and other liabilities                       (409,323)       (120,647)
              (Decrease) increase in deferred billing revenue                        (3,012,244)      3,012,244
              (Decrease) increase in income taxes payable                            (1,230,076)      1,769,900
                                                                                   ------------    ------------

                  Net cash provided by operating activities                           1,695,401       1,280,607
                                                                                   ------------    ------------

Cash flows from investing activities
     Acquisitions of property and equipment                                              (8,080)             --
     Receipt on sale of customer base                                                    50,000              --
                                                                                   ------------    ------------

                  Net cash provided by investing activities                              41,920              --
                                                                                   ------------    ------------

Cash flows from financing activities
     Net payments under line of credit agreement                                             --         (87,044)
     Principal repayments of long-term debt                                                  --        (994,579)
                                                                                   ------------    ------------

                  Net cash used in financing activities                                      --      (1,081,623)
                                                                                   ------------    ------------

Net increase in cash                                                                  1,737,321         198,984

Cash at beginning of year                                                               502,946         303,962
                                                                                   ------------    ------------

Cash at end of year                                                                $  2,240,267    $    502,946
                                                                                   ============    ============

Supplemental disclosure of cash flow information:
    Cash paid during the year for:
         Taxes                                                                     $  2,477,288    $         --
         Interest                                                                  $     54,236    $     95,578

</TABLE>

The accompanying notes are an integral part of these statements.

                                       F-5

<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             April 30, 2000 and 1999


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Nature of Operations
     --------------------

     The Company is a non-facility based reseller of long distance
     telecommunication services. The Company utilizes service contracts to
     provide its customers with switched, dedicated and private line services
     through its long distance telecommunications carrier TALK.com, Inc. (herein
     referred to as TALK) (formerly Tel-Save, Inc.)

     Principles of Consolidation
     ---------------------------

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

     Cash and Cash Equivalents
     -------------------------

     The Company considers all highly liquid investments with maturities of
     three months or less, when purchased, to be cash equivalents.

     Property and Equipment
     ----------------------

     Additions and major renewals to property and equipment are recorded at
     cost. The Company provides for depreciation using the straight-line method
     over an estimated useful life of five years for office equipment, furniture
     and fixtures and leasehold improvements. Total accumulated depreciation was
     $129,246 and $113,877 at April 30, 2000 and 1999, respectively.

     Customer Acquisition Costs
     --------------------------

     Customer acquisition costs represent the net cost of purchased customer
     accounts, which, historically, were generally amortized over five years
     utilizing an accelerated method. The Company's amortization method and life
     are based on estimated attrition rates and attempt to match these costs
     with the corresponding revenues. Accumulated amortization was $7,607,743 at
     April 30, 1999, and the customer acquisition costs have been fully
     amortized as of April 30, 1999.

                                                                     (continued)

                                      F-6
<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Customer Acquisition Costs - Continued
     --------------------------

     In December 1996, as a result of higher than expected customer attrition,
     the Company accelerated the amortization costs of the AIT customer base
     over a three year period. Fiscal 1999 was the final year of amortization
     for these customer acquisition costs. The amortization expense for the year
     ended April 30, 1999 was $937,484.

     Employee Benefit Plan
     ---------------------

     Effective January 1, 2000, the Company adopted the simple IRA plan. The
     Company made matching contributions of $2,192, equal to a limit of 3% of
     the participant's salary for the year ended April 30, 2000.

     Income Taxes
     ------------

     Deferred income taxes have been provided for elements of income and
     expense, which are recognized for financial reporting purposes in periods
     different than such items are recognized for income tax purposes. The
     Company accounts for deferred taxes utilizing the liability method, which
     applies the enacted statutory rates in effect at the balance sheet date to
     differences between the book and tax basis of assets and liabilities. The
     resulting deferred tax liabilities and assets are adjusted to reflect
     changes in tax laws. A valuation allowance is provided against deferred
     income tax assets to the extent of the likelihood that the deferred tax
     asset may not be realized.

     Deferred Revenues
     -----------------

     As of April 30, 1999, deferred revenue includes the funds collected from
     its customers and held by the Company's long distance telecommunications
     carrier. The funds were being held by the carrier as a result of the
     Company's failure to satisfy the volume purchase commitment in the contract
     with the carrier for which collectibility was uncertain.

     On December 8, 1999, the Company entered into a settlement and amended
     agreement with its carrier TALK that resolved the Company's violation of
     the purchase commitment. The agreement includes a payment to TALK of $1.1
     million, the release of receivables and the release of $2.9 million dollars
     of cash to the Company, the resolution of the shortfall charge, an
     extension of its carrier agreement and the exchange of releases. As a
     result, the Company recognized the related revenue in the amount of
     $3,012,244 in the year ended April 30, 2000 without a corresponding cost of
     sales.

                                                                     (continued)

                                      F-7
<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Earnings Per Share
     ------------------

     Basic earnings per common share are based on the weighted average number of
     common shares outstanding. Diluted earnings per common share are based on
     the assumption that all dilutive potential common shares and dilutive stock
     options were converted at the beginning of the year. The total number of
     such weighted average shares was 3,500,402 and 3,502,463 for the years
     ended April 30, 2000 and 1999, respectively. Stock options and warrants are
     considered common stock equivalents unless their inclusion would be
     antidilutive.

     The following table illustrates the reconciliation of the income and
     weighted average number of shares of the basic and diluted earnings per
     share computations:
<TABLE>
<CAPTION>

                                 Year Ended April 30, 2000                     Year Ended April 30, 1999
                                 -------------------------                     -------------------------
                                           Weighted                                      Weighted
                                            Average       Per Share                       Average      Per Share
                          Net Income         Shares         Amount      Net Income        Shares         Amount
                          ----------         ------         ------      ----------        ------         ------
<S>                      <C>              <C>          <C>             <C>              <C>          <C>
        Basic EPS        $ 6,664,868      3,500,402    $       1.90    $ 3,567,598      3,502,463    $      1.02

        Diluted EPS      $ 6,664,868      3,559,911    $       1.87    $ 3,567,598      3,584,327    $      1.00
</TABLE>

     Included in diluted shares are common stock equivalents relating to options
     of 59,509 and 81,864 for 2000 and 1999, respectively. Options to purchase
     438,250 shares of common stock at prices ranging from $0.40 to $1.00, which
     were outstanding at April 30, 2000 and options to purchase 465,000 shares
     of common stock at prices ranging from $1.38 to $5.06, which were
     outstanding during 1999, were not included in the computation of diluted
     EPS because the options' exercise prices were greater than the annual
     average market price of the common shares. The options for the year ended
     April 30, 2000 were granted in 1999 and 2000 and are exercisable primarily
     over the next five years.

     Use of Estimates
     ----------------

     In preparing financial statements in conformity with generally accepted
     accounting principles, management is required to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     the disclosure of contingent assets and liabilities at the date of the
     financial statements and revenues and expenses during the reporting period.
     Actual results could differ from those estimates.




                                                                     (continued)
                                      F-8

<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Fair Value of Financial Instruments
     -----------------------------------

     Statement of Financial Accounting Standards No. 107, "Disclosures About
     Fair Value of Financial Instruments," requires disclosure of estimated fair
     values of financial instruments. These estimated fair values are to be
     disclosed whether or not they are recognized in the balance sheet, provided
     it is practical to estimate such values. The Company estimates that the
     fair value of its financial instruments approximates the carrying value of
     its financial instruments at April 30, 2000 and 1999.

     Stock Options
     -------------

     Options granted under the Company's Stock Option Plans are accounted for
     under APB 25, "Accounting for Stock Issued to Employees," and related
     interpretations. Financial Accounting Standards No. 123, "Accounting for
     Stock-Based Compensation" requires additional proforma disclosures for
     companies, such as Group Long Distance, Inc. that continue to account for
     employee stock options under the intrinsic value method specified in APB 25
     (see Note G).

     Segment Reporting
     -----------------

     The Company has one single reporting segment. The Company's revenues are
     derived from customers located in the United States and all the Company's
     long-lived assets are located in the United States.

     Recently Issued Pronouncement
     -----------------------------

     In June 1998, the FASB issued Statement of Financial Accounting Standards
     (FAS) No. 133, "Accounting for Derivative Instruments and Hedging
     Activities" which was amended by FASB No. 138. FAS No. 133 establishes
     standards for accounting and reporting for derivative instruments, and
     conforms the requirements for treatment of different types of hedging
     activities. These statements are effective for all fiscal years beginning
     after June 15, 2000. Management does not expect these standards to have a
     significant impact on the Company's operations.



                                                                     (continued)

                                      F-9
<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999


NOTE B - CONCENTRATIONS OF RISK

     Financial instruments that potentially subject the Company to
     concentrations of credit risk consist of accounts receivable, which are due
     from small, and medium size businesses. The Company continually evaluates
     the creditworthiness of its customers; however, it generally does not
     require collateral.

     The Company's revenues are derived from calls routed through TALK network
     switching equipment utilizing AT&T transmission facilities. The use of the
     equipment and transmission facilities are afforded through the Partition
     Agreement the Company has with TALK. TALK may suspend services or terminate
     the agreement upon the occurrence of any event of default by the Company.
     Such revenues represented 100% of total revenues in fiscal 2000 and 1999.

NOTE C - LINE OF CREDIT

     In 1999, the Company repaid a line of credit of $87,044 and did not renew
     the line of credit agreement.

NOTE D - INCOME TAXES

     The Company accounts for income taxes in accordance with Statement of
     Financial Accounting Standards No. 109, "Accounting for Income Taxes" which
     requires the use of the "liability method" of accounting for income taxes.
     Accordingly, deferred tax liabilities and assets are determined based on
     the difference between the financial statement and tax bases of assets and
     liabilities, using statutory federal income tax rates in effect for the
     year.

     The provision for income taxes consists of the following at April 30,:
<TABLE>
<CAPTION>

                                                         2000                1999
                                                   ---------------     ---------------
<S>                                                <C>                 <C>
                           Current
                               Federal             $     1,001,750     $     1,502,600
                               State                       176,521             267,300

                           Deferred
                               Federal                    (280,783)                 --
                               State                       (29,977)                 --
                                                   ---------------     ---------------

                                                   $       867,511     $     1,769,900
                                                   ===============     ===============
</TABLE>
                                                                     (continued)

                                      F-10


<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999



NOTE D - INCOME TAXES - Continued

     The expense for income taxes differs from the amount of income tax
     determined by applying the applicable statutory federal income tax rates to
     pretax income as a result of the following differences at April 30, 2000
     and 1999:
<TABLE>
<CAPTION>

                                                                             2000               1999
                                                                       ---------------    ----------------
<S>                                                                    <C>                <C>
           Expense for income taxes, at 34%                            $     2,561,000    $      1,814,700
           Increase (decrease) in tax resulting from:
                Change in valuation allowance                               (1,791,900)                 --
                Nondeductible items                                             43,052               3,800
                Nontaxable gain on forgiveness of debt                              --            (147,400)
                State taxes, net of federal tax benefit                         96,734             178,200
                Utilization of net operating loss                                   --             (60,900)
                Other                                                          (41,375)            (18,500)
                                                                       ---------------    ----------------

                                                                       $       867,511    $      1,769,900
                                                                       ===============    ================
</TABLE>

     Deferred tax assets are comprised of the following at April 30, 2000 and
     1999.

<TABLE>
<CAPTION>
                                                                             2000               1999
                                                                       ---------------    ----------------
<S>                                                                    <C>                <C>
          Allowance for doubtful accounts                              $        97,448    $        145,900
          Customer acquisition costs                                           213,312           1,799,100
          Net operating loss                                                    28,800              28,800
                                                                       ---------------    ----------------
              Deferred tax assets                                              339,560           1,973,800
          Less valuation allowance                                              28,800           1,973,800
                                                                       ---------------    ----------------

                                                                       $       310,760    $             --
                                                                       ===============    ================
</TABLE>

     The valuation allowance decreased $1,945,000 in 2000. This was primarily
     the result of the sale of a customer base (see Note J). For tax purposes,
     the tax basis in the asset sold was approximately $3,900,000 and for book
     purposes its basis was zero.

     At April 30, 2000, the Company had net operating loss carryforwards for
     federal tax purposes of $76,631, expiring April 30, 2011. This net
     operating loss relates to the separate return limitation year ("SRLY")
     provisions which apply to this net operating loss of a subsidiary.


                                                                     (continued)

                                      F-11

<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999


NOTE E - LEASES

     As of April 30, 1999, the Company leased one office facility under a
     noncancellable-operating lease, which expired in March 2000. In November
     1999, the Company subleased this space and subleased a new office facility
     under a noncancellable-operating lease, which expired June 30, 2000. The
     Company obtained an extension through September 30, 2000. Rent expense for
     the years ended April 30, 2000 and 1999 totaled approximately $57,000 and
     $98,000.

     Approximate future minimum lease payments applicable to the noncancellable
     operating lease is as follows:

<TABLE>
<CAPTION>
                                  Year Ending April 30,
                                  ---------------------
<S>                                       <C>                    <C>
                                          2001                   $       9,000
</TABLE>

NOTE F - COMMITMENTS AND CONTINGENCIES

     In November 1999, the Company and the Company's President and Chief
     Executive Officer entered into a one-year employment agreement providing a
     base salary of $150,000 and a bonus based on the Company's performance,
     profitability, and positive cash flow. The agreement shall be automatically
     renewed for one-year periods unless written notice to the contrary is given
     by either party. In addition, he was granted options to purchase 500,000
     shares of Common Stock at various exercise prices, all equal or above the
     fair market value of the Common Stock on the date of grant.

     In February 2000, the Company and the Chief Financial Officer entered into
     a one-year employment agreement providing a base salary of $85,000 and a
     bonus based on the Company's performance, profitability, and positive cash
     flow. The agreement shall be automatically renewed for one-year periods
     unless written notice to the contrary is given by either party.

     The Company's network service agreement with TALK contains provisions for
     guaranteed monthly volume and network usage, which is the basis for
     determining volume discounts and other special billing features. The
     Company had failed to meet this commitment resulting in a volume shortfall
     charge. In December 1999, the Company settled this charge for $1,100,000
     (see Note A). Of the aggregate amount of $1,100,000, $550,000 was payable
     on the settlement date and the balance to be payable in eighteen equal
     monthly installments. As of April 30, 2000, a balance of approximately
     $400,000 is remaining.

                                                                     (continued)


                                      F-12
<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999


NOTE F - COMMITMENTS AND CONTINGENCIES - Continued

     There is no volume and network usage commitment for the fiscal year ending
     April 30, 2000. The Partition Agreement between the Company and TALK
     terminates the later of August 31, 2002 or the date that all obligations of
     the Company to TALK have been satisfied in full.

     Pursuant to the Plan and Agreement of Merger dated November 14, 1995 (the
     "Plan"), Group Long Distance, Inc., a Florida corporation ("GLD"), was
     merged (the "Merger") into Second ITC and Second ITC changed its name to
     Group Long Distance, Inc. The Plan stated that the shareholders of GLD
     would own 94% of the outstanding shares of Second ITC and the existing
     shareholders of Second ITC would own the remaining 6% of the shares
     outstanding. Because the founders of GLD held certain founding shares (the
     "Founders' Shares") in Second ITC, there was a partial dilution of the
     interests received by the shareholders of GLD in the Merger from 94% to
     87.5% (the "Dilution").

     While the Merger was approved by the Board of Directors and a majority of
     the shareholders of the Company that were shareholders of GLD (the
     predecessor) at the time of the Merger and a majority of the then current
     shareholders of the Company, shareholders affected by the Dilution may have
     a cause of action against the Company. There can be no assurance that a
     shareholder may not seek legal remedy against the Company or the individual
     founders, notwithstanding the foregoing approvals. In the event any such
     action is brought, the Company's results of operations or cash flow for a
     particular quarterly or annual period could be materially affected by
     protracted litigation or an unfavorable outcome.

     In connection with the foregoing matter, pursuant to an indemnification
     agreement, the Company and each of the founders, jointly and severally,
     have agreed to indemnify the underwriters to the offering (see Note H), and
     each of the founders has agreed to indemnify the Company, for any and all
     losses, claims, damages, expenses or liabilities (including reasonable
     legal fees and expenses) as a result of any claim arising out of or based
     upon the failure to disclose the issuance of the shares to the founders. In
     the event and as a result of any such claim, the Company is required to
     issue additional shares of Common Stock; the founders have agreed to
     deliver an equal number of shares of Common Stock to the Company for
     cancellation.

NOTE G - STOCK OPTIONS

     The Company's 1996 Employees' Stock Option Plan provides for granting of
     options of not more than 950,000 shares of common stock. The Option and
     Compensation Committee has the sole discretion to determine to whom options
     will be granted and the terms and conditions of such options.

                                                                     (continued)


                                      F-13
<PAGE>

                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999


NOTE G - STOCK OPTIONS - Continued

     Prior to April 30, 1996, the Company accounted for such options under APB
     Opinion 25 and related Interpretations. The Company accounts for
     non-qualified options issued to non-employees, under SFAS 123, Accounting
     for Stock Based Compensation.

     The exercise price of all options granted by the Company equals the market
     price at the date of grant. No compensation expense has been recognized.

     On July 2, 1998, the Board of Directors approved and ratified the repricing
     of certain unexercised employee stock options granted under the Company's
     1996 Stock Option Plan. As a result, options granted to purchase 420,000
     shares of the Company's common stock were repriced from $5.0625 to $1.375
     per share. In addition, options granted to purchase 14,000 shares of the
     Company's common stock were repriced from $3.875 to $1.375. On April 29,
     1999, 346,000, of the 420,000, were repriced to the original exercise price
     of $5.0625 and the 14,000 options were priced to the original exercise
     price of $3.875.

     On July 2, 1998, the Company's Board of Directors granted 148,000 options
     to purchase shares of common stock to various directors, officers and
     employees at $1.375 a share. On April 29, 1999, the directors and officers
     relinquished 135,000 of these options.

     On October 9, 1998, the Company's Board of Directors approved and ratified
     an increase of 350,000 in the number of options available for grant under
     the terms of the Stock Option Plan.

     On October 9, 1998, the Company's Board of Directors granted 247,000
     options to purchase shares of common stock to various directors, officers
     and employees at $0.50 a share. On April 29, 1999, the directors and
     officers relinquished 225,000 of these options.

     On November 18, 1999, the Company granted to the President and Chief
     Executive Officer currently exercisable options to purchase 100,000 shares
     of common stock at $0.20 per share, 100,000 shares of common stock at $0.40
     per share, 100,000 shares of common stock at $0.60 per share, 100,000
     shares of common stock at $0.80 per share, and 100,000 shares of common
     stock at $1.00 per share. All of these options expire on November 18, 2004.

                                                                     (continued)
                                      F-14

<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999


NOTE G - STOCK OPTIONS - Continued

     On November 18, 1999, the Company granted to each Director, excluding the
     President and Chief Executive Officer (a total of four individuals),
     options, exercisable one year after the grant date, to purchase 20,000
     shares of common stock at an exercise price of $0.20 per share and 5,000
     shares of common stock at an exercise price of $0.40 per share. All of
     these options expire on November 18, 2004.

     On December 22, 1999, the Company's Option and Compensation Committee of
     the Board of Directors approved the repricing of options previously granted
     to various employees. These employees' 20,500 options previously granted at
     $1.38 are now exercisable as follows: (1) 11,750 options at $0.20 and (2)
     8,750 options at $0.40. These options expire on December 22, 2004.

     Had compensation cost for the Employees' Stock Option Plan's options issued
     to employees been determined based on the fair value of the options at the
     grant dates consistent with the method of SFAS 123, the Company's net
     income and income per share would have been changed to the pro forma
     amounts indicated below.

<TABLE>
<CAPTION>
                                                                             2000               1999
                                                                       ---------------    ----------------
<S>                                                                    <C>                <C>
                  Net income
                      As reported                                      $     6,664,868    $      3,567,598
                      Pro forma                                        $     6,565,297    $      2,659,694

                  Basic income per share
                      As reported                                      $          1.90    $           1.02
                      Pro forma                                        $          1.87    $            .76

                  Diluted income per share
                      As reported                                      $          1.87    $           1.00
                      Pro forma                                        $          1.84    $            .74
</TABLE>

     The above pro forma disclosures may not be representative of the effects on
     reported net income for future years as options vest over several years and
     the Company may continue to grant options to employees.

                                                                     (continued)

                                      F-15
<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999


NOTE G - STOCK OPTIONS - Continued

     The fair value of each option grant is estimated on the date of grant using
     the binomial option-pricing model with the following weighted-average
     assumptions used for grants in 2000 and 1999, respectively: dividend yield
     of 0.0 percent for all years; expected volatility of 221.52 % and 268.29 %,
     and 129.78 %; risk-free interest rate ranging from 4.51% to 6.54%, and
     4.51% to 5.49%; and expected holding periods ranging up to 4 and 5 years.

     A summary of the status of the Company's fixed stock options as of April
     30, 2000 and 1999, and changes during the years ending on those dates is as
     follows:
<TABLE>
<CAPTION>

                                                         2000                                 1999
                                          ---------------------------------     --------------------------------
                                                                Weighted -                           Weighted -
                                                                 Average                              Average
                                               Shares        Exercise Price           Shares      Exercise Price
                                               ------        --------------           ------      --------------
<S>                                             <C>             <C>                   <C>           <C>
         Outstanding at beginning of
           year                                 487,000         $    4.15             449,707       $     5.02
         Granted                                626,750              0.53             395,000              .83
         Exercised                                    -                                     -
         Expired                                      -                                     -
         Forfeited                              483,750              4.17             357,707             1.20
                                          -------------                         -------------

         Outstanding at end of year             630,000              0.53             487,000             4.15
                                                                                =============

         Options exercisable at end
           of year                                                530,000             458,906
         Weighted-average fair value
           of options granted during
           the year                                             $    0.15       $        0.54
</TABLE>

     The following information applies to options outstanding at April 30, 2000.
<TABLE>
<CAPTION>

                                                 Options Outstanding                      Options Exercisable
                          --------------------------------------------------    --------------------------------
                                             Weighted -
                                              Average           Weighted -                          Weighted -
           Range of                          Remaining           Average                             Average
       Exercise Prices         Shares    Contractual Life     Exercise Price          Shares      Exercise Price
       ---------------    ------------   -----------------   ---------------     -------------   ---------------
<S>       <C>   <C>          <C>                <C>             <C>                  <C>            <C>
          $0.20-0.50         330,000            4.53            $    0.29            230,000        $    0.81
          $0.60-1.00         300,000            4.55            $    0.80            300,000        $    0.80
</TABLE>



                                                                     (continued)
                                      F-16


<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999



NOTE H - EQUITY

     In March 1997, the Company completed an underwritten public offering of its
     common stock and warrants. The Company sold 1,250,000 shares and warrants
     to purchase 1,437,500 shares at an exercise price of $5.40 per share (the
     "Redeemable Warrants"). The Company realized proceeds of $3,895,455, net of
     underwriter's discount and out of pocket expenses. In connection with the
     offering, the underwriter was granted warrants to purchase 125,000 shares
     of common stock at $4.95 per share, which expired on March 24, 2000. The
     underwriter also was granted the right to purchase 125,000 redeemable
     warrants at $.11 per redeemable warrant all of which are exercisable at any
     time within the three years ending March 24, 2000. None of the warrants
     issued to the underwriter have been exercised, and none of the redeemable
     warrants have been exercised.

NOTE I - RELATED PARTY TRANSACTIONS

     For the years ended April 30, 2000 and 1999, a vice president and director
     of the Company performed tax preparation services for the Company, was paid
     approximately $17,000 and $19,000 for the years ending April 30, 2000 and
     1999, respectively.

     On September 11, 1999, the Company entered into a four-month consulting
     agreement with Torbay Management Services, Inc., ("Torbay") a corporation
     controlled by Mr. Peter J. Russo, former Chief Financial Officer and
     Director of the Company. For the year ending April 30, 2000, the Company
     paid Torbay $24,000.

NOTE J - SALE OF CUSTOMER BASE

     The Company entered into an Asset Purchase Agreement ("agreement") with
     another company ("purchaser") on April 30, 2000. The purchaser is a wholly
     owned subsidiary of Coyote (see Note K). Under the agreement, the Company
     sold to the purchaser a "customer base," which includes certain of the
     Company's customers under a series of related sites. The purchase price for
     this transaction is $1 million payable with $50,000 in cash on April 30,
     2000 and a note of $950,000 due on April 30, 2002 with an annual interest
     rate of 8%. The note is secured by all existing and future pledges and
     Security Agreement dated April 30, 2000 and interest is payable monthly.
     Repayment of the note is to be with receipts from the purchased customer
     base.

                                                                     (continued)
                                      F-17

<PAGE>
                   Group Long Distance, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                             April 30, 2000 and 1999



NOTE J - SALE OF CUSTOMER BASE - Continued

     In addition, the Company agrees to provide the purchaser with "customer
     service". Customer service shall mean collection services provided by the
     Company, which is currently being provided to the Company by TALK. The
     price for the customer service under this agreement shall be $10,000 per
     month, commencing May 2000, and ending on the earliest of (1) upon
     completion of the purchaser's obligations to the Company under the Asset
     and Purchase Agreement and the promissory note or (2) the mutual consent of
     the parties at any time. In conjunction with the agreement and the related
     sale of the customer base, the Company recorded a gain of $1,000,000 in the
     year ended April 30, 2000.

NOTE K - SALE OF THE COMPANY

     On May 1, 2000, the Company executed an Agreement and Plan of Merger
     ("merger") with Coyote Network Systems, Inc. ("Coyote"). This agreement
     contemplates a merger between a wholly owned subsidiary of Coyote and the
     Company. On July 31, 2000, a First Amendment to the Agreement and Plan of
     Merger was executed.

     As a result of the contemplated merger, among other things, Coyote would
     acquire all of the assets and business of the Company, and the Company's
     shareholders would receive a number of shares of Coyote Common Stock
     determined, pursuant to a formula, but not less than 562,500 shares of
     Coyote Common Stock, subject to adjustment under certain circumstances.

     Per the amendment, if the price of the Coyote Common Stock closes at less
     than $4 per share during each of the five trading days immediately prior to
     the closing, then either party in its discretion may terminate the
     Agreement and Plan of Merger.

     The closing of the transactions is subject to a number of conditions,
     including without limitation the completion of due diligence, the receipt
     of all requisite regulatory approvals, and the receipt of approval of the
     Company's shareholders. It is anticipated that the closing would occur
     before the end of the calendar year 2000.



                                      F-18