UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                   FORM 10-QSB

 (MARK ONE)
       |X|    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934

              FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001


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

                        Commission File Number 000-31213


                             TEK DIGITEL CORPORATION
                          ---------------------------
           (Name of small business issuer as specified in its charter)

              WYOMING                                         84-1465503
              -------                                         ----------
  (State or other jurisdiction of                            (IRS Employer
  incorporation or organization)                          Identification No.)

                                     ADDRESS
                         20030 CENTURY BLVD., SUITE 201
                           GERMANTOWN, MARYLAND 20036
                           --------------------------
                    (Address of principal executive offices)

                                 (301) 916-7600
                           (Issuer's telephone number)

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

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 the past 90 days. |_| Yes |X| No


As of July 31, 2001, 25,210,028 shares of Common Stock were issued and
outstanding.

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


<PAGE>


                             TEK DIGITEL CORPORATION

                                   FORM 10-QSB

                                      INDEX

<TABLE>
<CAPTION>

<S>               <C>                                                                                   <C>
PART I - FINANCIAL INFORMATION                                                                       PAGE
                                                                                                     ----


Item 1.           Financial Statements (Unaudited)

                  Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000................2

                  Consolidated Statement of Operations for the Three and Six Months Ended

                      June 30, 2001 and 2000...........................................................3

                  Consolidated Statement of Cash Flows for the Six Months Ended

                         June 30, 2001 and 2000........................................................4

                  Notes to Consolidated Financial Statements...........................................5

Item 2.           Management's Discussion and Analysis of Financial Condition
                  and Results of Operations............................................................8


PART II - OTHER INFORMATION

Item 1.           Legal Proceedings...................................................................14

Item 2.           Changes in Securities and Use of Proceeds...........................................14

Item 3.           Defaults Upon Senior Securities.....................................................14

Item 4.           Submission of Matters to a Vote of Security Holders.................................14

Item 5.           Other Information...................................................................14

Item 6.           Exhibits and Reports on Form 8-K....................................................14

</TABLE>



<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1.  Financial Statements

                             TEK DIGITEL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                             December 31,           June 30,
                                                                                 2000                 2001
                                                                                 ----                 ----

<S>                                                                     <C>                  <C>
Assets

Cash                                                                    $           885,297  $           548,102
Accounts receivable, net                                                             42,032               37,915
Inventory                                                                           508,118              442,674
Prepaid expenses and other current assets                                            88,417               46,250
                                                                           -----------------    -----------------
                  Total Current Assets                                            1,523,864            1,074,941
Property and equipment, net                                                          93,361               84,844
Other assets                                                                        144,783              121,151
                                                                           -----------------    -----------------
                                                                        $         1,762,008  $         1,280,936
                                                                           =================    =================

Liabilities and Stockholders' Equity

Accounts payable                                                        $           352,154  $           480,174
Accrued expenses                                                                    239,440              335,111
Note payable                                                                              -              500,000
Unearned revenue                                                                     92,229               18,668
                                                                           -----------------    -----------------
Total Current Liabilities                                                           683,823            1,333,953
                                                                           -----------------    -----------------
Commitments and Contingencies                                                             -                    -
Stockholders' Equity:
Preferred Stock, no par value, 20,000,000 shares
   authorized, of which 2,100,000 has been designated
   as convertible Series A voting preferred stock, of
   which 2,066,667 and 2,023,579 shares, were issued and
   outstanding    at December 31, 2000 and June 30, 2001, respectively.             435,798              426,712
Common stock no par value, 50,000,000 shares authorized, 25,215,128
   and 25,210,586 shares issued and outstanding at December 31, 2000
   and June30, 2001, respectively.                                                6,908,788            6,995,614
Other - stock options                                                               715,583              715,583
Deferred compensation                                                             (145,557)             (90,123)
Accumulated deficit                                                             (6,836,427)          (8,100,803)
                                                                           -----------------    -----------------
Total Stockholders' Equity                                                        1,078,185             (53,017)
                                                                           -----------------    -----------------
                                                                        $         1,762,008  $         1,280,936
                                                                           =================    =================
</TABLE>

See accompanying notes to the consolidated financial statements.

                                       2
<PAGE>


TEK DIGITEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>

                                                  For the three months ended                 For the six months ended
                                                           June 30,                                  June 30,
                                                    2000                 2001                  2000                2001
                                                    ----                 ----                  ----                ----

<S>                                        <C>                  <C>                  <C>                   <C>
Product sales revenue                      $            45,270  $           157,078  $           195,990   $        1,234,622

Operating expenses:
     Cost of sales                                      49,915              136,781              153,470              968,661
     Sales and marketing                               313,452              100,111              460,210              282,325
     General and administrative                        274,315              381,810              646,648              648,459
     Research and development                          351,614              274,757              641,170              613,710
                                               ----------------     ----------------      ---------------     ----------------
          Total operating expenses                     989,296              893,459            1,901,498            2,513,155
                                               ----------------     ----------------      ---------------     ----------------

Loss from operations                                 (944,026)              736,381          (1,705,508)          (1,278,533)

Other income                                            17,560                4,742               17,560               14,157
                                               ----------------     ----------------      ---------------     ----------------
Net loss                                   $         (926,466)  $         (731,639)  $       (1,687,948)   $      (1,264,376)
                                               ================     ================      ===============     ================
Net loss per share:
     Basic and diluted                     $            (0.04)  $            (0.03)  $            (0.08)   $           (0.05)
                                               ================     ================      ===============     ================

Weighted average common shares used in
calculation of net loss per share                  20,864,308           25,085,764            20,864,308          25,021,132
                                               ================     ================      ===============     ================

</TABLE>

See accompanying notes to the consolidated financial statements.

                                       3
<PAGE>



TEK DIGITEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>

                                                                   Six Months Ended June 30,
                                                                      2000              2001
                                                                      ----              ----

<S>                                                           <C>                <C>
Cash Flows From Operating Activities
Net loss                                                      $     (1,687,948)  $    (1,264,376)
Adjustments to reconcile net loss to net cash
   Provided by operating activities:
   Depreciation                                                          17,936            19,396
   Amortization of deferred compensation                                 87,844            55,434
   Donated services from a shareholder                                        -            77,740
   Changes in operating assets and liabilities
        (Decrease) in accounts receivables                             (44,034)             4,117
        Decrease in inventory                                             5,623            65,444
        Decrease in prepaid and other
             Current assets                                              47,644            42,167
        Decrease in other assets                                       (30,949)            23,632
        (Decrease) increase in accounts payable                          32,650           128,020
        Increase in accrued expenses                                     66,854            95,671
        Decrease in unearned revenue                                   (27,103)          (73,561)
                                                                 ---------------    --------------

Net cash used in operating activities                               (1,531,483)         (826,316)
                                                                 ---------------    --------------

Cash Flows From Investing Activities
Purchases of property and equipment                                    (45,611)          (10,879)
                                                                 ---------------    --------------

Cash Flows From Financing Activities
Proceed from note payable                                                     -           500,000
Proceeds from the exercise of stock purchase
    Warrants                                                          2,200,000                 -
Proceeds from exercise of stock options                                     500                 -
                                                                 ---------------    --------------

Net cash provided by financing activities                             2,200,500           500,000
                                                                 ---------------    --------------

Net change in cash                                                      623,406         (337,195)
Cash at beginning of period                                             477,682           885,297
                                                                 ---------------    --------------
Cash at end of period                                            $    1,101,088     $     548,102
                                                                 ===============    ==============
</TABLE>


See accompanying notes to the consolidated financial statements.

                                       4

<PAGE>


TEK DIGITEL CORPORATION
Notes to Consolidated Financial Statements
JUNE 30, 2001
(Unaudited)


1 - BASIS OF PRESENTATION

The Company is a state-of-the-art technology company that develops and
manufactures internet access devises used by service providers to offer
integrated voice/data services to the small and medium business and SOHO
marketplaces. In addition, the Company has developed the software and services
necessary to help them deploy and manage these devises and offer sophisticated
voice services to their customers.

In the opinion of the Company's management, the interim consolidated financial
statements include all adjustments, consisting of only normal recurring
adjustments, necessary for a fair presentation of the results for the interim
periods. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The interim consolidated financial
statements should be read in conjunction with the Company's December 31, 2000
audited financial statements included with the Company's filing on Form 10-KSB
filed with the Securities and Exchange Commission on March 29, 2001. The interim
operating results are not necessarily indicative of the operating results for
the full fiscal year.

As shown in the accompanying financial statements, the Company has incurred
operating losses since its inception, and has accumulated a deficit of
$8,100,803 at June 30, 2001. The Company's continued existence is dependent upon
its ability to develop profitable operations, successfully introduce its
products to market and obtain additional financing to fund its current and
future operations. Although during the fiscal quarter ended June 30, 2001,
management received $500,000 of financing in the form of a promissory note, the
Company still needs additional financing to support its current and future
operations. Management has been aggressively in search of additional financing
from current and potential investors and business partners. Management believes
that if its current attempts to secure additional financing are not successful,
the Company may not be able to continue as a going concern through December 31,
2001.

2. - INVENTORY

Inventories are stated at the lower of cost, utilizing the first-in, first-out
method, or market. At June 30, 2001 and December 31, 2000 inventory consisted of
the following.

                                          2000               2001
                                          ----               ----

Raw Materials                             $163,514        $263,139
Work in process                            213,300           4,000
Finished goods                             131,304         175,535
                                          --------        --------
                                          $508,118        $442,674
                                          --------        --------

                                       5
<PAGE>

3. - NOTE PAYBLE

During the quarter ended June 30, 2001, the Company secured a promissory note
providing proceeds of $500,000. The note bears interest of 6% per annum and
unpaid principal and accrued interest are due on November 30, 2001. At the
option of the lender, on or after October 1, 2001, the outstanding principal
balance plus unpaid accrued interest may be converted into the Company's common
stock at a conversion price of $0.33 per share.

4. - PREFERRED STOCK

As of June 30, 2001, the Company achieved the second milestone set forth in the
written agreement by and among the Company and its preferred stockholders, dated
April 24, 2000. Pursuant to that same agreement, the preferred stockholders now
have the right to convert up to 50% of their preferred stock into common stock.
Each preferred share is convertible into six shares of common stock. As of June
30, 2001, 43,088 preferred shares were converted into 258,528 common shares.

5. - EMPLOYEES' DEFERRED COMPENSATION

During the fiscal quarter ended June 30, 2001, the Company requested the
employees to voluntarily defer portions of their salaries to conserve operating
cashflow. The Company and its employees agreed that each of the employees'
salaries would be reduced to $1000 per month with the unpaid portions deferred
to a later date. The three executive officers of the Company have deferred their
entire salaries until the Company's operating cashflow has improved. Should any
of the employees decide to terminate their employment, the deferred portions of
the salary will be paid in the form of the Company's common stock at the fair
market value of the stock as of the date of termination. As of June 30, 2001,
total deferred salary amounted to approximately $116,000 and is recorded in
accrued salary in the accompanying financial statements.

6. - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 141
requires all business combinations initiated after June 30, 2001 to be accounted
for using the purchase method. The provisions of SFAS 142 eliminate amortization
of goodwill and identifiable intangible assets with indefinite lives and require
an impairment assessment at least annually by applying a fair-value based test.
The Company is required to adopt SFAS 142 January 1, 2002. Management does not
expect the provisions of the statements to have a material impact on the
Company's results of operations or financial condition.

7. - MAJOR CUSTOMER

During the six months ended June 30, 2001, 77% of our product sales were made to
a single customer. At June 30, 2001, 15 % of our accounts receivable was due
from this customer .

8. - REINCORPORATION AND CHANGE IN DOMICILE

For a full description of the Company's plan to change its domicile from Wyoming
to Maryland the reader should refer to the Information Statement mailed to its
shareholders on June 13, 2001 and filed with the Securities and Exchange
Commission on July 3, 2001.

                                       6

<PAGE>


The Company's Board of Directors, along with shareholders Tseng Yun Tsai and
Glocom, Inc. own in excess of a majority of the Company's outstanding voting
securities, and as of June 11, 2001, the Company's Board of Directors had
received the commitment of a sufficient number and percentage of votes entitled
to be cast to approve the election of directors and to change the Company's
domicile from the State of Wyoming to the State of Maryland by merging the
Company with and into the Company's wholly-owned subsidiary, TEK DigiTel
Corporation II, a Maryland corporation. Management currently anticipates that
the reincorporation will be completed by the end of the third quarter of 2001.

The Company authorized capital stock at June 30, 2001 consisted of 50,000,000
shares of common stock, no par value per share and 20,000,000 shares of
preferred stock, no par value per share. As authorized by the Wyoming Business
Corporation Act, by unanimous written consent on June 15, 1998, the Board of
Directors established a series of preferred stock, known as Series A, Voting
Convertible Preferred Stock, consisting of 2,100,000 shares, $.001 par value per
share. As of June 30, 2001, 25,132,532 shares of common stock were issued and
outstanding and 2,036,495 shares of Series A, Voting Convertible Preferred Stock
were issued and outstanding.




                                       7


<PAGE>


ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Certain statements made by our management may be considered to be
"forward-looking statements" within the meaning of the Private Securities
Litigation Act of 1995. Forward-looking statements are based on various factors
and assumptions that include known and unknown risks and uncertainties. The
words "believe," "expect," "anticipate" and "project," and similar expressions
identify forward-looking statements, which speak only as of the date the
statement was made. Such statements may include, but not be limited to,
projections of revenues, income or loss, expenses, plans, as well as assumptions
relating to the foregoing. Forward-looking statements are inherently subject to
risks and uncertainties, some of which cannot be predicted or quantified. Future
results could differ materially from those described in forward-looking
statements as a result of the risks set forth in the following discussion, among
others.

Our financial statements have been presented on a going concern basis, which
contemplates the realization of assets and settlement of liabilities and
commitments in the normal course of business. The Company has experienced losses
since its inception and we expect to incur additional losses for the foreseeable
future. Our auditors included a fourth paragraph in their Report of Independent
Certified Public Accountants on our December 31, 2000 financial statements
drawing special attention to several factors that raise doubt about our ability
to continue as a going concern.

On the following pages we present management's discussion and analysis of
financial condition and results of operations. You should read this information
in conjunction with our consolidated financial statements and notes included in
the Form 10-KSB. The following financial review is presented on a consolidated
basis and is intended to provide a comparison of our financial performance for
the three-months and six-month periods ended June 30, 2001 and 2000.

OVERVIEW

The Company is a Wyoming corporation with a limited operating history, We are a
hardware technology equipment developer that provides integrated communication
solutions for the small to medium size enterprise and small office/home
marketplace. By integrating traditional PBX technology with data routing, the
latest advances in VoIP technology and sophisticated Linux based server
technology, we are producing Internet access devices used by the new generation
of service providers to deploy integrated voice, fax and data services to their
customers.

We have a limited operating history on which to base an evaluation of our
business and prospects. Similar to other companies in their early stages of
development, and particularly for companies in the rapidly evolving technology
industry, our prospects must be considered in light of the risks frequently
encountered. We set forth what we believe to be the risks in the "Factors That
May Affect Future Results" section included in our Management Discussion and
Analysis of Financial Condition and Result of Operations of our Form 10-KSB we
filed with the Commission on March 29, 2001, to which the reader is referred. To
address these risks, we must, among other things, successfully continue to
develop and execute our business and marketing plan, continue to expand and
otherwise improve our products, and increase our operating infrastructure. We
can provide no assurances that we will be successful in addressing the risks we
face, and the failure to do so could prevent us from continuing to be a going
concern through December 31, 2001.


                                       8
<PAGE>



The following table lists in chronological order, some of the major milestones
we have accomplished during the evolution of our company and our products. The
table is not meant to be all-inclusive, but merely serves to highlight our
progress.


<TABLE>
<CAPTION>

    Date                                    Major Milestone

<S>              <C>
December 1995    Formed ATC LLC, the predecessor company to TEK DigiTel.

February 1998    Completed the prototype of our router product. Installed, for
                 evaluation and alpha field trial purposes, our first V-Server
                 iGATE product, in Mongolia.

July 1998        ATC LLC merged with Diversified Technologies, Inc., changed its
                 name to TEK DigiTel and became a public company listed on the OTC
                 BB.

February 1999    Completed our first prototype of the V-Server iGATE product.
                 Installed, for evaluation and field trial purposes, our first
                 V-Server iGATE product in Asia.

March 1999       First beta test of the iGATE product initiated in North
                 America, Canada and several European countries.

May 1999         Began sales of our V-Server products.

July 1999        Entered into a business relationship with ePHONE in which
                 ePHONE agreed to purchase 500 of our iGATE products.

October 1999     Launched the Pronto service package to help ISP's and CLEC's
                 deploying iGATE massively.

November 1999    Beta test initiated in Asia including Taiwan, Hong Kong, China
                 and New Zealand.

September 2000   Beta test completed in most of the countries participating.
                 Announced OfficeBuilder product with embedded PBX function.

July 2000        Latest software version released. Ready for mass deployment
                 of iGATE product.

August 2000      Filed SEC Form 10-SB in order to become an SEC-reporting
                 company and to regain our listing on the OTC BB.

August 2000      Delivered the last of the 500 iGATES ordered by ePHONE in
                 July 1999.

August 2000      ePHONE placed purchase order for 1,000 additional iGATES.

September 2000   Arelnet placed an order for 5,000 iGATES. As of the end of
                 March 2001, we have delivered approximately 900 iGates to
                 Arelnet under this order. We anticipate the remaining units
                 being purchased by Arelnet during 2001 and 2002.

January 2001     Introduced a new version of V-Server product, the iPRO,
                 which is equipped with four voice ports.

January 2001     Formed a strategic alliance with Formosa Industrial
                 Computing to work together in the development of an advanced
                 IP phone.
</TABLE>

                                       9
<PAGE>
<TABLE>

<S>              <C>
January 2001    We received a new purchase order for 3,200 iGATES/iPROs from
                Arelnet. As of the end of March 2001, we have delivered
                approximately 2,000 of these units, and anticipate
                delivering the remaining 1,200 units during 2001.

February 2001   Began beta testing of TEKVPN by Formosa Industrial
                Computing, our"turn key" voice VPN solution.

March 2001      Successfully completed beta testing of the iPRO and began
                production and delivery of the iPRO to the customers.

April 2001      Arelnet placed an order for 500 iGATES.

May 2001        Received an order for 500 iPROs from IPFon of Taiwan

</TABLE>

We have incurred net operating losses in each period since our inception; and,
we expect to incur additional losses for the foreseeable future, primarily as a
result of our building the corporate infrastructure necessary for continued
product development and enhancement, for increased sales and marketing efforts
and for research activities. As of June 30, 2001, we had accumulated a deficit
of approximately $8,101,000.

We believe that our success depends, in large part, on our ability to create
market awareness and acceptance for our products, raise additional operating
capital to grow operations, build technology infrastructures and continue
product research and development.

Currently, our primary source of revenues is from the sale of our V-Server
products. We are also investigating other applications for the V-Server products
and marketing channels. The principal end-users of our products and solutions
are small and medium enterprise users.

We strategically partner with Internet service providers, including traditional
and new telecommunications carriers, in order to distribute our products to the
end-users. We also maintain a direct sales organization, OEM relationships and
value added resellers for sales targets other than service providers.

Since the introduction of our V-Server products to market, we have generated a
significant percentage of our revenues through several of our strategic
partners. We are currently highly dependent upon the sales of our products to
these partners.

We believe that our current dependency on a few customers is due to the market
timing of our VoIP CPE equipment as the market is still in its infancy stage.
The infrastructure for the full utilization of VoIP CPE equipment has not
matured yet. Currently, there are only a limited number of practical
applications for VoIP CPE equipment. We are planning to restructure and expand
our direct sales force and develop an indirect sales channel, targeting value
added resellers ("VARs") and OEM relationships as noted above. We also plan to
continue to expand our global distribution channels.

The market for our products and solutions is in the early stages of development
and is characterized by rapid technological change, evolving industry standards,
changes in end-user requirements, intense competition by more established
industry participants and frequent new product introductions and enhancements.
As is typical in the case of new and rapidly emerging technologies, demand and
market acceptance are subject to a high level of uncertainty. Broad acceptance
of our products by customers and end-users is critical to our success and
ability to generate revenues.


                                       10
<PAGE>



RECENT DEVELOPMENTS

The development of the first prototype of the OfficeBuilder product, a
co-development effort with Centrepoint Technologies, was delayed during this
quarter and we anticipate field beta test of the prototype during the third
quarter of 2001.

In January 2001, we started working jointly with Formosa Industrial Computing
(FIC) Corporation, a technology company in Taiwan, to develop and advanced IP
phone system (iPOTS). The iPOTS is a stand-alone Internet accessible telephone
set. It has been designed to integrate voice/data devices for the small, and
medium size business user and can also be connected to a single platform for
both voice and data applications. Under this joint effort, the Company is
responsible for the design of the software architecture and FIC is responsible
for the hardware development and manufacturing. The product is currently
undergoing integration testing and we plan to introduce the iPOTS during the
last fiscal quarter of 2001.

In June 2001, the Company's Board of Director unanimously approved the
reincorporation of the Company in Maryland. Management currently anticipates
that reincorporation will be completed by the third quarter of 2001


RESULTS OF OPERATIONS

Three Months and Six Months Ended June 30, 2001 and 2000
--------------------------------------------------------

We recorded revenues from product sales of $ 1,234,622 for the six months period
ended June 30, 2001. This represented a significant increase in product sales
over the period ended June 30, 2000 of $ 195,990. We have sold approximately
2,780 units during the six months ended June 30, 2001 compared to 280 units sold
during the six months ended June 30, 2000. Majority of the sales for the six
months ended June 30, 2001 occurred during the first quarter ended March 31,
2001. We sold approximately 2,560 and 220 units during three months ended March
31, 2001 and three months ended June 30, 2001, respectively.

During the six months ended June 30, 2001, the majority of our product sales
were attributable to a single customer, Arelnet. As discussed above, we are in
the process of working to expand our sales and marketing efforts and our global
distribution channels.

Our cost of product sales for the six months ended June 30, 2001 was $968,661
compared to $153,470 for the period ended June 30, 2000. The unit cost of
product sales improved 36 % of cost saving in production. The decrease in unit
cost of product sales is attributable to improvements in our manufacturing
process, increase in the size of our production lots and the introduction of
iPRO, which requires substantially less materials to produce. However, our gross
margin remained constant at approximately 22%. While the cost of production
decreased, our sales price also decreased. We are currently experiencing a lower
sales price in order to satisfy our limited number of current customers and in
an attempt to expand our customer base. In addition, we believe that we will
continue to experience cost savings from the purchase of larger quantities of
component parts. In the future, we expect our gross profit margins to be
approximately 30%, which is in line with typical gateway/router hardware
margins. Currently, we use a local manufacturer to produce our iPRO units. We
have entered into agreements with Formosa Industrial Computing to also
manufacture our products in Taiwan. The gross margin for the three months ended
June 30, 2001 was consistent with the six month average ending June 30, 2001.
However, the gross margin for the three months ended June 30, 2000 reflected
negative margin due to excess costs incurred during the period for product
modification.

Since we use contract manufacturers for the assembly of our products, the focus
of our employees and equipment is not on our manufacturing process but on
research and development and quality control. We have used several manufacturers
in the past and believe there are many manufacturers that can assemble our
products. We do not have any fixed or long- term agreements for the assembly of
our products. The contract


                                       11
<PAGE>


manufacturer charges us on a per unit basis for assembly and quality control
functions, which we include in our costs of sales. We expect these charges, on a
per unit basis, will continue to decrease, as size of each manufacturing batch
we have assembled increases.

Our sales and marketing expenses for the six months ended June 30, 2001 and 2000
were $282,325 and $460,210, respectively, and $100,111 and $313,452,
respectively, for the three months ended June 30, 2001 and 2000. During late
2000, we closed our sales and marketing location in Canada. This included the
termination of our consultants and employees in Canada and we relocated our
sales and marketing function to our corporate headquarters in Germantown,
Maryland, which contributed to significant savings. We believe that, by
reorganizing our sales and marketing function and co-locating it in our
corporate offices, we have improved communications between our executives and
our sales and marketing personnel, improved sales of our products, and reduced
travel and other related expenses that we had incurred due to the geographic
distances. The decrease in sales and marketing expenses was partially offset by
an increase in the same resulting from the write off of demo units supplied to
current and potential customers who have exceeded the grace period of 90 days at
which point the units must be returned or paid for. Decrease in sales and
marketing expense for the three months ended June 30, 2001 compared to the three
months ended June 30, 2000 was also the result of the termination of our
consultants and employees in Canada.

Our general and administrative expenses for the six months ended June 30, 2001
remained constant from the six months ended June 30, 2000 at approximately
$650,000. While general and administrative expenses contained higher legal and
accounting fees associated with the refilling with the SEC of our form 10-QSB
during the six months ended June 30, 2000, the balance for the six months ended
June 30, 2001 contained higher salary expense due to the higher number of
employees. For the three months ended March 31, 2001 compared to the three
months ended March 31, 2000, general and administrative expense increased from
$274,315 to $381,810. The increase was due to higher number of employees during
the three months ended June 30, 2001. The majority of the legal and accounting
fees for the six months ended June 30, 2000 was incurred during the first
quarter.

As discussed in Note 5, during the quarter ended June 30, 2001, the Company
requested its employees to voluntarily defer portions of their salaries to
conserve operating cashflow. The Company and its employees agreed that each of
the employees' salaries would be reduced to $1000 per month with the unpaid
portions deferred to a later date.

Our research and development expenses for the six months ended June 30, 2001 and
2000 were $613,710 and 641,170, respectively and $274,757 and $351,614 for the
three months ended June 30, 2001 and 2000. The decreases were due to cost
savings measures taken by the Company.

We did not make any provision for federal or state income taxes for the period
from our inception due to our operating losses. At June 30, 2001 and 2000, we
had net operating loss carry forward for income tax purposes. A valuation
allowance has been established and, accordingly, no benefit has been recognized
for our net operating losses and other deferred tax assets.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have primarily financed our operations through the sales
of equity securities in private placements; and, since that date through June
30, 2001, we have raised approximately $8,700,000. We received $500,000 from
Brilliant World Ltd. during the second quarter of 2001 in the form of a
promissory note. As of June 30, 2001, we had $548,102 in cash. We are currently
aggressively seeking additional financing to support our current and future
operations.

Net cash used in operating activities during the six months ended June 30, 2001
and 2000 were $826,216 and $1,531,483, respectively. The improvement in the net
cash used in operating activities was due to the increase in revenue during the
six months ended June 30, 2001 and the decrease in sales and marketing costs as
noted above.

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<PAGE>

Net cash used in investing activities during the six months ended June 30, 2001
and 2000 was $10,879 and $45,611, respectively, for the purchase of computer and
test equipment and office furniture.

We received $500,000 of cash from a promissory note during the six months ended
June 30, 2001. We also received $2,200,000 from exercise of stock purchase
warrants from our stockholders and $500 from exercise of stock options by
employees for the purchase of 5,000 shares of common stock.

We have no material commitments other than those under office and equipment
operating leases. However, until we become financially self-sufficient, we will
continue to moderate our activities to fit the cash we have at hand. We will
need to obtain additional financing during 2001, through sale of assets, equity
or debt securities, in order to fund all of our equipment purchases and
operating capital requirements for the remainder of the year.
 Additional funding, whether obtained through public or private debt or equity
financing or from strategic alliances, may not be available when needed or may
not be available on terms acceptable to us. Failure to secure additional
financing, if and when needed, may have a material adverse effect on our
business, financial condition and results of operations.

We currently lease, and plan to continue to lease, all facilities. During
remainder of 2001, we anticipate that our significant capital expenditure will
be approximately $20,000 for laboratory and diagnostic equipment and $100,000
for prototypes of our products under development.


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<PAGE>


PART II - OTHER INFORMATION

Item 1.  Legal proceedings - None.

Item 2.  Changes in securities and use of proceeds - None.

Item 3. Defaults upon senior securities - None.

Item 4. Submission of matters to a vote of security holders - None.

Item 5.  Other information - None.

Item 6.  Exhibits and reports on Form 8-K

A.       Exhibits

         None

B.       Reports on Form 8-K:

         None


SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

TEK Digitel Corporation
 (Registrant)


By:        /s/ Enghe Chimood                             Date:  August 14, 2001
           -----------------------------------
           Enghe Chimood, President
           and Chief Executive Officer


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