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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1998

                        Commission file number is 0-27604

                            PICK COMMUNICATIONS CORP.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

         Nevada                                        75-2107261
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
Incorporation or jurisdiction)

155 Route 46 West, Wayne, New Jersey                     07470
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code:  (973) 812-7425

Securities registered under Section 12(b) of the Exchange Act: None 
Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock. $0.001 par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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. [X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]

The aggregate market value of the 18,985,662 shares of voting stock held by
non-affiliates of the Registrant as of April 14, 1999 was $35,598,116 (assuming
solely for purposes of this calculation that all directors, officers and greater
than 5% stockholders of the Registrant are "affiliates").

The number of shares outstanding of the Registrant's Common Stock, par value
$0.001 per share, as of April 14, 1999, was 43,367,335.

Documents incorporated by reference: None.


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                                     PART I

This Report includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, including statements regarding expected future
revenues and expenses. Forward-looking statements relate to plans and
expectations of the Company and are subject to risks and uncertainties including
the timely development and acceptance of new products in constantly evolving
telecommunications and Internet industries, the impact of competitive products
and pricing, government regulations and other risks detailed from time to time
in the Company's SEC reports.

Item 1: Business

GENERAL DEVELOPMENT OF THE BUSINESS

PICK Communications Corp. ("PICK" or the "Company") was incorporated in April
1984 under the laws of the State of Utah as S.T.V., Inc. In February 1986, the
Company changed its name to Adolphus Companies, Inc. and to Prime International
Products Inc. ("Prime") in May 1988. Prime ceased operations in late 1990. In
July 1995, Prime changed its state of organization from Utah to Nevada. On
September l2, 1995, Prime executed a Stock Purchase Agreement to exchange
16,500,000 shares of Prime's Common Stock for all of the common stock and
warrants of Public Info/Comm. Kiosk, Inc. ("Kiosk"), which made Kiosk a
subsidiary of Prime. Kiosk was incorporated under the laws of New Jersey in
August. 1992. Prime changed its name to PICK Communications Corp. in December
1995. Unless otherwise indicated, all references to "the Company" or "PICK"
hereinafter include the business and operations of Kiosk prior to the September
12, 1995 transaction and the combined companies thereafter. The transaction was
a reverse acquisition accounted for as a re-organization of Kiosk.

PICK is an interlink facilities based telecommunications service provider
targeting newly deregulated and regulated emerging international markets,
through five wholly-owned subsidiaries -- PICK US Inc., which markets and
distributes prepaid telephone calling cards nationally; PICK Net Inc. and PICK
Net UK PLC, both of which provide international long distance services to other
carriers and resellers, PICK Sat Inc., created with the assistance of Microsoft
and Philips, which recently commenced providing satellite delivered, high speed
broadband Internet access; and PICK Online.Com Inc., recently formed to be an
aggregator and delivery provider of audio and video streaming content
(broadcasts) using multicasting technology to the "Edge of the Internet." In
addition, the Company owns 79% of P.C.T. Prepaid Telephone, Inc., which has
rights to market and distribute a patented, prepaid cellular telephone system in
the United States and Canada.

The Company's business strategy is to be a diversified telecommunications
carrier delivering an integrated package of advanced services, through satellite
communications and through broadband delivery on the Internet of high-speed
voice, data and video services. The Company's initial focus has been to expand
its facilities-based network and augment its capacity to terminate international
traffic throughout the Middle East, Africa and Asia. This expansion is expected
to be facilitated by several reciprocal agreements that the Company has entered
into for delivery of communications

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services into these regions. The current footprint for PICK Sat is North and
South America with plans for expansion into Asia. The Company is currently
attempting to secure financing for its PICK Sat and PICK Online.Com Inc.
subsidiaries which recently commenced providing services and need to be
capitalized in order to implement their respective business plans. The Company
does not currently plan to expand its prepaid telephone calling card business
and is exploring various alternatives, including the possible sale of such
business.

The Company increased its sales from approximately $23,000 in 1993, to $0.5
million in 1994, $1.6 million in 1995, $5.9 million in 1996, $9.0 million in
1997 and $9.8 million in 1998. The increases in sales, however, corresponded
with net losses for the Company of approximately $1.3 million, $1.1 million,
$9.5 million and $17.1 million for the years ended December 31, 1994, 1995,
1997, and 1998. The Company had a net profit of $1.6 million in 1996. The
Company significantly curtailed its operations during 1998, while it installed
and tested the two Siemens Telecom Networks Digital Central Office switches. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Between July 29 and September 8, 1998, the Company sold an aggregate of 99 Units
in a bridge loan (the "July Bridge Loan") for gross proceeds of $9,900,000. A
portion of the net proceeds of the July Bridge Loan was used to repay a
$1,000,000 unsecured bridge loan incurred in April 1998 and a $575,000 bank loan
which bore interest at 8% above the bank's prime rate. Upon repayment of the
Bank Loan, the Bank released its security interest and a security interest on
the Company's assets was filed on behalf of the investors in the July Bridge
Loan. In November 1998, the interest rate of the July Bridge Loan was increased
retroactively to 18% and the maturity date of the promissory notes evidencing
the loan (the "Notes") was extended to April 27, 1999. 

In excess of 90% in interest of the Noteholders have consented to a
restructuring (the "Restructuring") to amend their Notes (the "Amended Note"),
for which the Company has agreed for a two-year period to allow each consenting
Noteholder to (a) exchange one share of Common Stock for each warrant issued in
connection with the original issuance of the Notes, and (b) either receive one
share of Common Stock for every one dollar principal amount of Notes amended, or
alternatively elect to have the conversion price of the Amended Note reset to
$.50 per share. Commonwealth, as agent for the Notes will be paid 10% of the
shares issued to Noteholders in the restructuring up to a maximum of 2 million
shares, plus 500,000 warrants exercisable at $1.375 per share, and the exercise
price of warrants previously issued to Commonwealth was reduced to $.10 per
share.

The maturity date of the Amended Notes will be April 27, 2002. Each Amended Note
shall be convertible at any time at the option of the holder thereof into shares
of Common Stock at $1.00 per share, subject to adjustment under certain
circumstance at the first anniversary date of the

                                       -3-

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Restructuring. In addition, the Company shall have the option to extend the
maturity date for one additional year, in which event the Conversion Price shall
be subject to adjustment.

The Amended Notes shall be automatically converted into shares of Common Stock
in the event that the closing bid price for the Common Stock has exceeded $1.50
per share for 20 consecutive trading days. Commonwealth shall be entitled to
designate one nominee to the Board and the Noteholders shall have the right to
nominate one person to a reconstructed Board consisting of a majority of
independent directors. The Company has agreed to register the Common Stock
issued to the Noteholders in exchange for the Warrants initially issued to them
immediately following the filing of this Report and register all other shares
disclosed above including those issued upon conversion of the Amended Notes,
within six months of the completion of the Restructuring.

International Long Distance Services

The international long distance telecommunications market has experienced
significant growth in recent years. During 1996, according to the Federal
Communications Commission (the "FCC"), the United States originated
international long distance telecommunications market grew at a rate of 20.7%
from $15.9 billion to $19.2 billion for that year. The factors driving this
growth include: (1) deregulation of the telecommunications industry by the FCC
in the United States; (2) new United States regulations regarding international
settlement rates and direct agreements; (3) deregulation and privatization of
the telecommunications industry in developing countries; (4) improvement of
telecommunications infrastructure in the United States and abroad; (5) worldwide
increases in voice and other data communications equipment; and (6)
globalization of commerce.

Major providers such as American Telephone & Telegraph Company ("AT&T"), MCI/
WorldCom, Inc. ("MCI") and Sprint Communications Company ("Sprint") have raised
the threshold for wholesalers seeking to participate in the international long
distance market by linking favorable rates to long-term contracts, coupled with
substantial commitment levels and substantial deposits. Only resellers able to
meet these requirements have the opportunity to aggregate traffic from smaller
resellers and negotiate even more favorable rates. Management believes that PICK
is in a position to exploit its established presence in this market.

PICK Net Inc. and PICK Net UK PLC (collectively, "PICK Net") are two separate
subsidiaries both providing international long distance services to other
carriers and resellers. Each of these companies is a facilities based, switched
carrier, with wholesale digital licenses. To gain rapid market entry without
investment in major capital expenditures or a technical staff, PICK initially
elected to contract for services with an experienced switch service provider. In
1997 and 1998 PICK leased and installed two Siemens Telecom Networks Digital
Central Office switches in Jersey City, New Jersey and Miami, Florida as
international gateways, and anticipates implementing additional "collection
point" international gateway switches which should enhance the Company's ability
to aggregate long distance calls for its network. PICK has also signed a
contract for satellite communications and is seeking to secure several providers
for earth station facilities and transatlantic, as well as domestic, fiber optic
cable systems. PICK established a technical staff to

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bring this segment of its business under direct Company control rather than
relying on third party providers.

PICK Net has organized and developed dedicated networks combining transatlantic
fiber and internationally based transponder facilities with digital satellite
delivery into the Gulf, Central and East Asian and North and Central African
regions in association (see agreement below) with Gulfsat Communications Company
("Gulfsat"), a Kuwait based satellite telecommunications firm primarily engaged
in providing VSAT (Very Small Aperture Terminal) solutions world wide. Gulfsat
has teamed with PICK to transform itself from a closed network corporate
communications provider, to a satellite based, international long distance
voice, data, and multimedia services provider.

PICK Net in conjunction with Gulfsat delivers international telecommunications
traffic originating from the United States into the deregulating countries
currently served by and contracted with Gulfsat. The Companies will continue to
collectively deploy and implement a dedicated and exclusive network in full
digital ATM protocol which will provide for the termination of voice, data, and
fax traffic originating in the United States and Europe into emerging
international markets.

PICK Net has agreed, together with Gulfsat, to deploy and implement switches
internationally, and for PICK Net to deploy switches in the United States. This
joint deployment strategy calls for the opening of approximately three new
countries each month until all 50 countries currently contracted with Gulfsat
are on-line. Three countries are on-line and fully operational as of April 12,
1999. To access the Gulfsat satellite connections, the Company has access to
earth stations in Nova Scotia and the U.K. and is working to secure access to
other international earth stations.

In late 1997, the Company entered into a reciprocal telecommunications agreement
(the "Gulfsat Contract") for international traffic termination in Africa, the
Middle East and Asia, via satellite, with Gulfsat, which agreement, as amended
in March 1998, terminates on February 28, 2003. Under the agreement, the Company
is entitled to terminate up to approximately 70 million minutes per month in
telecommunications services from the United States and Europe into the above
regions, at the most favorable price per minute rates charged by Gulfsat.
Management believes, based on its knowledge of the industry, that these rates
are lower than those currently available to its competitors. However, in the
second half of 1998, the Company became aware of newer, state-of-the-art
technology that would facilitate the transmission of not only voice traffic but
also data and Internet traffic. In order to capitalize on this technology and
maximize the benefit the Company could derive from the Gulfsat Contract, it
became necessary to defer installation. The Company first had to investigate the
companies offering the appropriate asynchronous transmission mode (ATM)
equipment and then, in concert with Gulfsat, select a strategic vendor in this
global effort. The Company and Gulfsat then had to purchase and install the
appropriate telephone switching and compression equipment for the Jersey City,
New Jersey, hub, the United Kingdom and the first of the several destination
countries. To begin installation, the Company required a portion of the proceeds
from the short-term debt financing obtained in the third quarter of 1998 to
purchase this equipment in late 1998. During 1998, the Company was only able to
terminate traffic into one country in the Middle East via Gulfsat and was unable
to satisfy the requirements of its existing customers.

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The Company is currently sending traffic into three countries and anticipates
adding subsequent countries in fairly rapid succession. The Company has
purchased the necessary equipment for the installation in half-a-dozen
additional countries, but will require additional funding for further
installations.

On July 20, 1998, the Company signed an agreement (the "Nortel Agreement") with
Northern Telecom Inc. ("Nortel") pursuant to which the Company may purchase
Nortel equipment. The equipment purchased and to be purchased from Nortel is
expected to significantly increase the capacity of the Company's network and is
enabling the Company to transition from a traditional, voice-only network to a
network which supports multimedia services and the Internet protocol. The Nortel
Agreement requires that Nortel and Gulfsat, as a network partner of Nortel,
refer to the Company purchasers of Nortel switches who intend to connect to the
Gulfsat system to connect through the Company's switch network. The Nortel
Agreement provides PICK with a premier ATM switch for its network and prevents
its partner, Gulfsat, from using its PICK network dedicated switches with any
other carriers. As of April 1, 1999, the Company has installed Nortel equipment
in Jersey City, New Jersey and London, England, and Gulfsat has purchased
equipment for installation in eight countries. The Company requires additional
financing to purchase additional equipment needed to increase the Company's
ability to capitalize on the Gulfsat agreement.

In September 1998, PICK Net UK PLC commenced operations in London to work in
tandem with PICK Net, Inc. to grow PICK's international network infrastructure.
PICK Net UK PLC has been granted an International Simple Voice Reseller Standard
License from the United Kingdom to operate as a reseller of international
telephony traffic. PICK Net UK PLC also provides uplink capabilities to numerous
satellites terminating in Africa, Asia, Europe and the Middle East.

In late 1996, the Company entered into a reciprocal telecommunications agreement
with IDT Corporation ("IDT"), one of the Company's customers/carriers. Under the
agreement, IDT agreed to purchase certain telecommunication services from the
Company, and the Company agreed to purchase certain telecommunications services
from IDT for one year, renewable with the consent of both parties. In February
1998, the Company amended its agreement with IDT to provide IDT with a preferred
purchasing arrangement for 16 months from February 1998. Pursuant to the
amendment, IDT agreed to lend the Company $2,000,000 in working capital
financing for one year. In return, the Company agreed to allow IDT to purchase
telecommunications services to specified countries (up to a maximum of 10
million minutes per month) at a preferred rate per minute and additional
capacity available at the same rate charged to the Company's other customers.
IDT loaned the Company $500,000 on February 3, 1998, $1,000,000 on April 24,
1998 and $500,000 on June 10, 1998. The loan bears interest at 9% per annum and
matured on February 9, 1999.

In April 1999, the Company and IDT reached an agreement in principle to execute
a new six month note in the principal amount of $2,060,000, at 12% interest per
annum. A payment of $500,000 is due by May 31, 1999, half of which shall be
applied to the Note and the other half to accounts receivable from the Company
to IDT. Thereafter, PICK agreed to pay IDT $50,000 per month towards payment of
the Note; grant to IDT 200,000 shares of PICK Common Stock, and extend the term
of 400,000 outstanding warrants for an additional three years.

Primarily because of the attractive rates the Company can offer its customers to
Africa, the Middle East and Asia, many first and second tier carriers have
expressed interest in purchasing international long distance services from the
Company. The Company has signed agreements to sell telecommunications services
to several of these carriers and based on its knowledge of the industry

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believes it can sign agreements with other carriers contingent upon the Company
being able to increase capacity from Gulfsat.

High Speed Broadband Internet Services

PICK Sat provides satellite-based, high-speed broadband, Internet access and
interactive multimedia services to end user service providers. This company is a
fully developed and tested wide band data transmission wireless carrier which
was created in association with Microsoft Corporation ("Microsoft") and Philips
Digital Video Systems Company ("Philips"), as described below. PICK Sat became
commercially operational in March 1999 and provides data distribution, Internet
carrying services, and multimedia WEG 2 DVB compliant transmission via satellite
at 8MB down stream. PICK Sat is operating out of temporary facilities in Miami,
Florida and will be headquartered in a 10,000 sq. ft. facility in Miami, FL at
Kroger Park, where an advanced Network Operating Center (NOC) is currently under
construction. This facility will provide ample room for expansion and
anticipated customer transmission requirements. Additionally, a satellite
broadcast dish farm will be constructed next to the building, and is expected to
be completed by Summer of 1999. In September 1998, Mario J. Pino was appointed
as President of this new subsidiary. Mr. Pino was former General Manager of
ZakSat General Trading Company W.L.L., a corporation formed under the laws of
Kuwait to deliver global direct television, cable television and broadband
interactive services, which was a similar, but closed content provider and
delivery system. The Company is negotiating for satellite transmission with New
Sky Satellite and Sat Mex, although there can be no assurance it will be
successful in its efforts.

PICK Sat offers customers three different types of service: data delivery
services, broadcast services and interactive services. Data delivery services
allow for the simultaneous distribution of multimedia files, video, data streams
and real-time feeds to single users or groups of users. Broadcast delivery
services allow for the delivery of Internet, E-mail, Digital IP Television and
Digital IP Radio. The interactive services will provide the scalability to
allocate significant levels of bandwidth to deliver high speed interactive
services such as digital interactive television, radio and Internet.

The PICK Sat system provides real time multicast digital video streaming via
satellite and has accomplished its intended near term goal of true wide band
broadcast satellite distribution ability. As such, the Company has entered into
a preliminary agreement with its first client for this service. This client is
an owner and distributor of Latin American / Spanish and Portuguese drama
programming which will be transmitted via this open architecture broadcast
methodology to cable networks and cable services providers in North, Central and
South America and Spain. Additionally, PICK has identified business models which
include push technology hosting, secured corporate and data transmission
networks, high speed bandwidth sales and international real time transmission of
data, video, and live feed content. The Company has targeted as potential
initial clients, Internet Service Providers (ISP's), cable service providers,
media content providers, and high traffic E-Commerce internet / Web site
companies and information services providers.


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Demand for these services continues to grow as cost effective and multimedia
programming are required by margin conscious distributors and media content
companies. Additionally, this system is designed as an open architecture
non-proprietary system which allows PICK Sat to act as a carrier for content
owners, ISP's, voice traffic providers, data providers and video providers.
These are fully digitized transmissions, and PICK Sat can increase the bandwidth
of service providers by eight times using its ATM compression technologies. For
example, this technology allows a 30 channel cable operator to become a 240
channel cable operator and effectively compete with DirectTV with only marginal
new infrastructure purchases.

In June 1998, PICK Sat entered into agreements for hardware with Philips and
software with Microsoft for the above-described broadband interactive service.
Pursuant to the Company's strategic agreement with Philips, the Company obtained
the right to use the Philips Clevercast(TM) end-to-end data broadcasting system
and the Philips PC-DVB Digital Receiver Cards designed to be installed into all
modern multimedia PCs and to be integrated into PC software via the Windows 95,
98 and NT features. This will allow PC desktop users to receive satellite
transmissions of digital data, television audio, high speed Internet, E-commerce
and other multimedia applications. Microsoft provided software solutions to
support PICK Sat's services. This is expected to be among the first satellite
interactive platforms that will use the complete range of Microsoft's server
software solutions. The Company's Commitment to Cooperate with Microsoft
provides for Microsoft to license certain equipment and provide technical
support, consulting services, know-how and training to the Company for three
years in exchange for a license fee with an initial platform license fee and
monthly fees based on usage. Microsoft may terminate the commitment to cooperate
if the Company does not have a certain amount of subscribers after two years of
commercial operation.

PICK Online.Com Inc.

PICK Online.Com was recently formed to be an aggregator and delivery provider of
audio and video streaming content (broadcasts) to the "Edge of the Internet".
PICK Sat will provide the satellite-based platform for PICK Online.Com to be
able to assemble and broadcast live streams of audio and video from broadcast
radio and TV stations from anywhere in the world.

The Company's initial goal will be to offer radio and later TV stations, the
ability to reach an audience as IP Multicasting was intended to, but in a more
effective and economical way. Multicasting is a method of disseminating an audio
or video Internet media stream that is normally made available from a source to
a single end user and instead making it available to an unlimited number of end
users.

Through the use of the PICK Sat platform, PICK Online.Com intends to present a
common sense solution to bringing audio and video streaming to ISPs and
broadband networks such as Cable Modem and Asynchronous Digital Service Line
(ADSL) service providers. Later goals are to further utilize the PICK Sat
platform to provide Internet access and other IP services direct to office and
to home.


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Microsoft has been a critical resource in the development of the PICK Sat
platform and PICK Online.Com. Contributions have included migration of Microsoft
Windows NT Server, Microsoft Commercial Internet Server (MCIS) and the Windows
Media Technology onto the PICK Sat platform.

PICK Online.Com will have the ability to deliver IP data directly to ISPs, LANs,
Broadband networks and any other IP end user "node" at the Edge of the Internet.
PICK Online.Com will be the portal for end users to access multicast radio and
TV streaming content. The service will use Microsoft Media Server to encode
signals and multicast them efficiently to Internet Edge points.

End users will be able to listen to or watch a stream via their ISP or Broadband
provided through their Microsoft browser never knowing that the stream is
multicast and delivered via satellite.

Terrestrial technology using increasing quantities of the Internet backbone has
been available for some time, but has only been implemented in a relatively
small number of locations. To work properly, terrestrial multicasting requires
Internet-wide implementation which is both costly and time consuming. PICK
Online.Com "leapfrogs" the Internet infrastructure and delivers streaming
content directly to the Edge of the Internet. This not only gets the streams
there with higher quality, but also without using any of the provider's
expensive and limited backbone bandwidth.

Prepaid Telephone Calling Cards

PICK US Inc. is a pre-paid services company currently providing domestic and
international pre-paid calling card services through its dedicated pre-paid
network switching facility. For consumers who do not have access to long
distance and international telephone services through a home telephone or credit
card because of an inability to access credit, prepaid telephone calling cards
represent a convenient and cost-effective way to obtain such access. This is
because prepaid telephone cards enable an individual to purchase prepaid
telephone service with cash and then use the card by entering a PIN number that
is provided. In addition, students, military personnel, foreign and domestic
vacationers and business travelers, immigrants and visitors to the United States
are also strong markets for prepaid telephone calling cards. Many businesses
with mobile workforces now use prepaid telephone calling cards in order to
allocate and budget expenditures on a monthly basis. Additionally, since calling
cards are used extensively throughout the world, they are widely recognized and
accepted.

PICK US Inc. believes its niche is the sale of pre-paid international services
to the immigrant United States population as this population segment typically
falls below traditional credit benchmarks and at the same time requires the
ability to make international calls. PICK provides a prepaid platform, including
a voice response unit, inbound 800 service, data base and customer service,
through a contract with a third-party provider (Innovative Telecom Corp.) and
supplies all domestic and international call termination through its own
switches.

PICK entered the prepaid telephone calling card business in 1993 utilizing its
own branded cards. In February 1998, the Company entered into an agreement with
Blackstone Calling Card, Inc.

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("Blackstone"), a major marketer and distributor of prepaid telephone calling
cards (the "Blackstone Agreement") expiring in April 2000. Under the terms of
the Blackstone Agreement, as amended, after a six month phase-in period ending
October 27, 1998, Blackstone was to purchase prepaid telephone calling cards
with a minimum retail face value of $5,000,000 per month from the Company, which
was expected to result in net revenues of approximately $3,000,000 per month to
the Company. These calls originate in the United States and are directed for
termination primarily to parts of Africa and Asia. The Blackstone Agreement is
subject to termination by either party without cause at the end of year one upon
60 days' prior notice, or by Blackstone if the Company fails to maintain overall
network quality. The parties are negotiating to extend the term of the contract
an additional two years. It is anticipated that the Blackstone Agreement will
have to be amended to lower the purchase minimum amount and the corresponding
revenue to the Company due to the fact that the Company has not received
sufficient capacity from Gulfsat, as described above, to terminate the traffic
per month needed to satisfy Blackstone and other customers and this
significantly impacts Blackstone's purchases.

Prepaid Cellular Technology

In October 1995, the Company entered into an agreement with The Phone Store,
Inc. ("TPST") pursuant to which the Company obtained a 50% ownership interest in
a patent for prepaid cellular technology which utilizes an internal
programmable, tamper-proof chip that allows the phone to operate for a prepaid
amount of time, then switches off the power to the phone when the prepaid time
is depleted. In October 1995, the Company also obtained an exclusive license to
make and market this product on a worldwide basis. This license has an initial
term of five years and options for additional multiple five year periods. The
agreement requires the Company to pay TPSI a total of $500,000, payable at a
rate of $25,000 per quarter for a period of five years, beginning January 1,
1996. In 1996, the Company purchased treasury securities, which were used, in
substance, to fund this obligation. The Company was also required to issue a
total of 100,000 shares of its common stock to TPSI in increments of 20,000
shares each year for five years beginning on January 1, 1996; these shares have
been issued and placed in an escrow account to be issued to TPSI on applicable
due dates. The Company has not marketed this technology to date, however, it may
introduce this product on a limited basis if funds are available.

Customers, Sales and Marketing

The Company did not perform any meaningful sales or marketing efforts of its own
during 1998 because (a) Blackstone and others market the Company's prepaid
telephone calling card products, and (b) the Company has commitments for most of
its capacity for international long distance carrier services and needs
additional funding prior to being able to expand its customer base. The Company
commenced marketing efforts, however, in March 1999, concerning PICK Sat and
PICK Online.Com

PICK Sat is marketing to companies that transmit large amounts of data
(including video) to multiple locations, including television broadcasters and
programmers, corporations and other institutions, and to Internet Service
Providers ("ISPs") and cable television companies with existing subscriber

                                      -10-

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bases for the delivery of "customer specific content" to such customer's end
users. PICK Sat believes that this strategy will enable it to market to a
broader base of clients and gain subscribers without the high costs of direct
sales, while retaining its primary focus, service delivery. As such, a necessary
client base will include content providers whose products can be bundled for
distribution through PICK Sat's ISP and cable television clients or directly to
offices and homes. This approach enables PICK Sat to negotiate with clients on a
global basis. For example, European content providers wishing to deliver content
to South and Central America, can do so through PICK Sat's contracts with South
and Central American ISPs and cable television companies. Both clients benefit
since the content provider broadens its base of distribution and the cable
company enhances the quality and volume of end user choices. In addition, PICK
Sat will market to corporations looking to broadcast presentations and training
courses to their locations worldwide. PICK Online.Com intends to market its
service first to radio stations already hosted on the Internet. There will
initially be no charge for them to participate. For ISPs, an Initial number of
reception cards and dishes will be given away with no charge for service until a
predetermined number of radio stations becomes available.

Media-rich banner advertising opportunities on the Internet will exist for both
PICK Online.Com and its affiliate broadcasters and IP service providers. Banners
for local ads will alternate with national ads at both the PICK Online.Com home
page, as well as www.pickradio.com radio station page.

Banner space on the PICK Online.Com home page will be allocated for local area
ISP sales while radio station (destination) banners will be allocated for radio
station ad sales. Advertising space will be made available on consignment with a
share of the revenue going to PICK Online.Com The Company will sell banner space
on both pages and charge for creation and insertion of banners.

Once there is an established network of Internet Edge providers, PICK Online.Com
will be able to offer one-to-many closed circuit broadcasts of audio and video
for teleconferencing distant education, pay-per-view events or other multicast
applications.

In addition to aggregating radio stations and later TV stations for broadcasting
through its Web site portal, PICK Online.Com seeks to partner with other
important content providers to have them see the benefit of making their content
available on PICK Online.Com Microsoft has recognized the potential of PICK
Online.Com as a link to its new Internet Explorer 5.0 browser. Microsoft Windows
Media Server and Player are integral parts of PICK Online.Com services.

PICK's primary customers for its international long distance carrier services
are carriers and resellers such as ComTech International, IDT Corporation, World
Access Telecommunications Group, Inc. and Teleglobe USA Inc. Carrier customers
require little on-going maintenance, and the carrier segment of the business
shares certain costs with the prepaid telephone calling card segment. In 1998,
approximately 72% and 10% of the Company's revenues were from two customers,
Blackstone and IDT Corporation. In 1997, approximately 19% and 13% of the
Company's revenues were derived from two customers, Trescom and DC
Communications Corp. and in 1996, 36% & 25% were from two customers.


                                      -11-

<PAGE>



Competition

The international long distance services business is highly competitive and is
characterized by rapidly changing per minute rates, particularly to key
international cities and countries. The Company's future success depends upon
its ability to compete with other carriers, providing high quality service at
competitive prices. PICK's competitors in the sale of international long
distance services include AT&T, MCI/Worldcom and Sprint, as well as British
Telecom and other first tier carriers in deregulated European countries.
However, AT&T, MCI/Worldcom and Sprint are regulated carriers. This means they
were the originally deployed long distance carriers permitted to terminate
traffic where government controlled Post Telephone and Telegraph (PTT's)
administrations existed. As such their rates were and still are significantly
higher than those available to the new, deregulated carriers.

Additionally, second tier carriers (such as PICK Net) are direct competitors as
well. They include Pacific Gateway, IDT Corp, Primus Telecommunications, and
Star Telecommunications. These competitors are well capitalized and address much
larger markets than PICK. Service to the customer is more crucial to the success
of a telecommunications company than acquiring market share. Therefore,
partnering with competitors to increase traffic capacity and prevent
international busy signals is crucial. To prevent busy signals and better serve
its customers, PICK has signed many telephone traffic agreements with first and
second tier international and domestic long distance carriers. Each
telecommunications company and partner targets a specific market / country and
leverages its other reciprocal long distance carrier partners for its
non-targeted regions.

The Internet services business is highly competitive and there are few
significant barriers to entry. Currently, the Company competes with a number of
national and local ISPs. In addition, a number of multinational corporations,
including giant communications carriers such as AT&T, MCI/Worldcom, Sprint and
some of the regional Bell operating companies, are offering, or have announced
plans to offer, Internet access or on-line services. The Company also faces
significant competition from Internet access consolidators such as Verio, Inc.
and from on-line service firms such as America Online (AOL), CompuServe, and
Prodigy. The Company believes that new competitors which may include computer
software and services, telephone, media, publishing, cable television and other
companies, are likely to enter the on-line services market.

In addition, the Company believes that the Internet service and on-line service
businesses will further consolidate in the future, which could result in
increased price and other competition in the industry and adversely impact the
Company. In the last year, a number of on-line services have lowered their
monthly service fees, which may cause the Company to lower its monthly fees in
order to compete.

The Company believes that the primary competitive factors among Internet access
providers are price, customer support, technical expertise, local presence in a
market, ease of use, variety of value-added services and reliability. The
Company believes it will be able to compete favorably in these areas. The
Company's success in the high-speed Internet market will depend heavily upon its
ability to provide high quality Internet connectivity and value-added Internet
services targeted in select markets. Other factors that will affect the
Company's success in these markets include the

                                      -12-

<PAGE>

Company's continued ability to attract additional experienced marketing, sales
and management talent, and the expansion of support, training and field service
capabilities.

PICK Online.Com is expected to be well received by radio and TV stations who
want to reach large Internet audiences and by IP service providers who are
experiencing backbone bandwidth limitation and are not able to deliver good
quality streaming due to increased usage by their subscribers to streaming media
services. PICK is not aware of any other company today that can offer streaming
services to any ISPs and, in turn, to end users in the same manner as PICK
Online.Com The only company that has been successful in providing streaming
services is broadcast.com. This operator has well over 300 radio and TV streams
available through its Web site and uses terrestrial IP multicasting over the
Internet. However, broadcast.com multicasts to only a limited number of member
ISPs and through private land line connections. Part of broadcast.com's strength
has been in using its private terrestrial infrastructure to sell other
specialized high margin services such as teleconferencing, pay-per view and
other types of Web events. Another strength is the signing of hundreds of
exclusive content agreements with broadcasters, sports teams and a number of
music and audio CDs.

PICK Online.Com's major strength is its ability to send its multicast signal to
an unlimited number of ISPs almost immediately and at a low cost. There are
hundreds of radio and TV stations that are not on broadcast.com or even on the
Internet at all. More streams to more Edge of the Internet sites and the ability
to roll out quickly are all factors in how the Company will compete against
broadcast.com. As the Company gains content and as it expands it presence at the
Edge of the Internet, it is expected to become a more effective competitor to
broadcast.com.

The competition in the marketing and sale of prepaid telephone calling cards is
intense at the retail level. Some telephone calling cards are marketed by
companies which are well-established and have significantly greater financial,
marketing, distribution, and personnel resources than the Company. These large
companies already have name recognition and can implement extensive advertising
and promotional campaigns. Other cards are sold by more transient companies that
only survive for a short time. Many of these small companies advertise low
calling prices offset by hidden charges. The Company does not currently plan to
expand its prepaid telephone calling card business and is exploring various
alternatives, including the possible sale of such business.

Many of the Company's competitors possess financial resources significantly
greater than those of the Company and, accordingly, could initiate and support
prolonged price competition to gain market share. If significant price
competition were to develop, the Company might be forced to lower its prices,
possibly for a protracted period, which would have a material adverse effect on
its financial condition and results of operations and could threaten its
economic viability.


                                      -13-

<PAGE>



Patents and Trademarks

The Company and TPSI are joint owners of a patent on the technology for a
microprocessor-controlled prepaid cellular telephone system. The Company has
obtained or applied for trademark registrations for the name PICK and of each of
its subsidiaries and has obtained trademark registrations for the names
"Communicard by PICK(R)", "LOVE CALL(R)", "COMMUNICASH(R)", and "las Americas
(R)."

Government Regulation

Long distance telecommunication services are subject to regulation by the FCC
and by state regulatory authorities. Among other things, these regulatory
authorities impose regulations governing the rates, terms and conditions for
interstate and intrastate telecommunication services. The federal law governing
regulation of interstate telecommunications are the Communications Acts of 1934
and 1996 (the "Communications Acts"), which apply to all "common carriers,"
including AT&T, MCI/Worldcom and Sprint, as well as entities, such as the
Company, which resell the transmission services provided through the facilities
of other common carriers. In general, under the Communications Acts, common
carriers are required to charge reasonable rates and are prohibited from
engaging in unreasonable practices in the provision of their services. Common
carriers are also prohibited from engaging in unreasonable discrimination in
their rates, charges and practices.

The Communications Acts require each common carrier to file tariffs with the
FCC. A tariff is a list of services offered, the terms under which the services
are offered, and the rates, or range of rates, charged for services. Upon filing
a tariff, the service provider is required to provide the services at the rates
and under the terms and conditions specified in the tariff. Failure to file a
tariff could result in fines and penalties. The Company believes it has filed
all required tariffs with the FCC.

In addition to federal regulation, resellers of long distance services may be
subject to regulation by the various state regulatory authorities. The scope of
such regulation varies from state to state, with certain states requiring the
filing and regulatory approval of various certifications and state tariffs. As
the Company expands the geographic scope of its long distance operations, it
intends to obtain operating authority as may be required to provide long
distance service.

The Company is also subject to regulations administered by the Occupational
Safety and Health Administration, various state agencies and county and local
authorities acting in cooperation with federal and state authorities. The
extensive regulatory framework imposes significant compliance burdens and risks
on the Company. Governmental authorities have the power to enforce compliance
with these regulations and to obtain injunctions or impose civil and criminal
fines in the case of violations.


                                      -14-

<PAGE>



Employees

As of April 5, 1999, the Company employed a total of 36 full-time employees and
also employed independent contractors for various purposes. The employees are
not represented by a labor union, and the Company believes that its employee
relations are excellent.

Item 2: Properties

The Company leases office space at Wayne Interchange Plaza II, 155 Route 46
West, Third Floor, Wayne, New Jersey 07470, under a lease that expires on
September 30, 2001, with a monthly rental of $8,000. In addition, the Company,
leases space where its digital central office telephone switching equipment is
located in Jersey City, New Jersey (which expires September 1, 2000) and Miami,
Florida (which expires July 1, 2000). PICK Sat has signed a lease for its new
facilities at 5255 N.W. 87th Avenue, Miami, FL 33166. The lease is for
approximately 10,300 square feet and expires on October 31, 2003. The rent is as
follows: $6,441 per month from November 1, 1998 to November 30, 1998; $12,883
per month from December 1, 1998 to October 31, 1999; $13,269 per month from
November 1, 1999 to October 31, 2000; $13,667 per month from November 1, 2000 to
October 31, 2001; $14,077 per month from November 1, 2001 to October 31, 2002;
and $14,500 per month from November 1, 2002 to October 31, 2003.

Item 3: Legal Proceedings

Other than the following lawsuits, the Company is not a party to any material
legal proceedings. In February 1997, the Company commenced a mediation action
against AT&T seeking $ 10 million in damages for breach of contract and
fraudulent inducement and malicious conduct under a carrier agreement (the
"Carrier Agreement") entered into in February 1996. The Company contracted with
AT&T under the Carrier Agreement for inbound 800 service and outbound domestic
and international long distance service. The Company claims that AT&T reneged on
certain commitments to provide the Company with lower international rates than
the Company was invoiced by AT&T. AT&T has claimed that the Company owes it in
excess of $1,000,000. In 1996, the Company provided for a non-cash reserve of
$1,750,000, which was reduced to $1,100,000 in the third quarter of 1997 and is
a part of the Company's working capital deficiency and is included in other
current liabilities in the Company's consolidated financial statements. After
two mediation sessions, AT&T indicated that it intended to withdraw from the
mediation. Accordingly, on November 5, 1997, the Company filed for arbitration
proceedings against AT&T and reduced its claim to $5 milllion. The trial began
on April 19, 1999 and ended on April 22, 1999. There can be no assurance that
the Company will be able to prevail in this arbitration. Any adverse judgment or
settlement could have a material impact on the Company's financial condition.

On or about March 15, 1999, Worldcom Network Services, Inc., d/b/a Wiltel,
commenced a lawsuit against the Company in the United States District Court,
Southern District of New York demanding a judgment in the amount of $1,177,734
and interest at 18% per annum plus costs and expenses. The plaintiff alleges
that the Company failed to pay for telecommunications services provided. On
April 15, 1999, the Company and Worldcom agreed to a Settlement Agreement. Under
the terms of the

                                      -15-

<PAGE>



Settlement Agreement, the Company agreed to pay Worldcom $1,256,622 by June 30,
1999, in exchange for a full and complete settlement of Worldcom's lawsuit
against the Company. The Company is entitled to deduct $580 per day interest
charge for each day in advance of June 30, 1999 on which the Company makes
payment to Worldcom.

Item 4: Submission of Matters to a Vote of Security Holders

On November 4, 1998, the Company held an annual meeting of shareholders to
consider and vote upon (i) a proposal to elect Diego Leiva, Robert R. Sams,
Ricardo Maranon, Marilou C. Halvorsen and Hans d'Orville as directors and (ii)
to ratify the appointment of Goldstein Golub Kessler LLP as the Company's
auditors. The number of votes cast for and against each of the foregoing
proposals and the number of abstentions are set forth below.

(i)  Proposals to elect Directors:
                                                                    Withhold
                                            For                     Authority
                                            ---                     ---------
Diego Leiva                                 30,423,309                 11,650
Robert R. Sams                              30,423,309                 11,650
Ricardo Maranon                             30,423,309                 11,650
Marilou C. Halvorsen                        30,423,309                 11,650
Hans d'Orville                              30,423,309                 11,650

(ii) To ratify the appointment of Goldstein Golub Kessler LLP as the Company's
auditors:

          For                                Against                   Abstain
          ---                                -------                   -------
          30,147,879                         5,300                     281,780

On December 14, 1998 and March 24, 1999, the Company distributed Information
Statements to the Company's shareholders informing them of amendments of the
Company's Articles of Incorporation to increase the number of shares of
authorized Common Stock first from 75,000,000 to 100,000,000 shares in January
1999 and then from 100,000,000 to 400,000,000 shares in April 1999.

                                      -16-

<PAGE>



                                     PART II

Item 5: Market for Registrant's Common Equity and Related Stockholder Matters

The Company's common stock has been traded in the over-the-counter market and
reported on the OTC Bulletin Board under the symbol "PICK" since September 1996.
The Company's common stock had been traded in the over-the-counter market and
reported on the OTC Bulletin Board under the symbol "PRMF" from August 17, 1995
through September 23, 1996. The following table sets forth the high and low bid
prices of the Company's common stock as reported on the over-the-counter market
for the periods indicated. The prices represent inter-dealer quotations, without
retail mark-up, mark down or commission, and may not represent actual
transactions.

                                                     Bid Prices
                                                     ----------
         Period                             High                      Low
         ------                             ----                      ---

         Calendar Year 1997
         ------------------

         First quarter                      $0.78                    $ 0.16
         Second quarter                      0.33                      0.12
         Third quarter                       0.27                      0.05
         Fourth quarter                      0.51                      0.15

         Calendar Year 1998
         ------------------

         First quarter                       0.51                      0.19
         Second quarter                      1.05                      0.41
         Third quarter                       0.88                      0.42
         Fourth quarter                      0.93                      0.39

         Calendar Year 1999
         ------------------

         First quarter                       1.52                      0.36

As of April 5, 1999, there were 452 shareholders of record of the Company's
common stock. The Company reasonably believes that there are in excess of 1,000
beneficial owners of its common stock.

The Company has never paid any cash dividends on its common stock and has no
intention of doing so at this time. The Company intends to retain all its
earnings for use in the business.

Item 6: Selected Financial Data

The following selected, financial data should be read in conjunction with the
Consolidated Financial Statements and "Management's Discussion and Analysis of
Financial Condition and Results of

                                      -17-

<PAGE>



Operations" appearing elsewhere in this Report. The selected financial
information for and as of the years ended December 31, 1997, 1996, 1995 and 1994
are derived from the Consolidated Financial Statements of the Company, which
financial statements have been audited by Durland & Company, CPAs, P.A.,
independent certified public accountants. The selected financial information for
and as of the year ended December 31, 1998 have been audited by Goldstein Golub
Kessler LLP. The Consolidated Balance Sheets as of December 31, 1998 and 1997
and the Consolidated Statements of Operations for the years ended December 31,
1998, 1997 and 1996 and the accountants' reports thereon are included elsewhere
in this Report.

Statement of Operations Data:
<TABLE>
<CAPTION>
                                                                Years Ended December 31,
                                                                ------------------------
                                        1998             1997            1996            1995           1994
                                        ----             ----            ----            ----           ----
<S>                                   <C>             <C>              <C>             <C>               <C>      
Net Sales                          $   9,822,903    $  9,015,903     $  5,869,682    $  1,565,039     $    529,913
Cost and expenses                     20,758,095      10,709,816       11,103,440       2,591,084        1,780,493
                                   -------------    ------------      -----------     -----------     ------------
Income (loss) before               
  other income (Expense)             (10,935,192)     (1,693,913)      (5,233,758)     (1,026,045)      (1,250,580)  
                                   -------------    ------------      -----------     -----------     ------------
Other - net                           (6,130,179)    (10,047,953)       8,417,007         (44,996)              --     
                                   -------------    ------------      -----------     -----------     ------------
Income (loss) before minority
  interest and income taxes          (17,065,371)    (11,741,866)       3,183,249      (1,071,041)      (1,250,580)
Minority interest and                                                                  
  income taxes                             2,062       2,242,064       (1,547,459)             --               --
                                   -------------    ------------     ------------    ------------     ------------
Net income (loss)                  $ (17,063,309)   $ (9,499,802)    $  1,635,790    $ (1,071,041)    $ (1,250,580)
                                   =============    ============     ============    ============     ============
Net income (loss)                         $(0.46)         $(0.26)           $0.04          ($0.03)              --     
    per common share - basic             =======         =======            =====          ======     ============
</TABLE>

Balance Sheet Data: 
<TABLE>
<CAPTION>
                                                                     December 31,
                                                                     ------------
                                        1998             1997            1996            1995           1994
                                        ----             ----            ----            ----           ----
<S>                                   <C>             <C>              <C>             <C>               <C> 
Working capital (deficiency)       $(14,677,342)    ($7,405,608)      (3,152,216)    $(1,074,159)     $(1,127,590)
                                   ============     ===========      ===========     ===========      ===========
Long-term liabilities                10,815,216         794,905               --         400,000               --      
                                   ============     ===========      ===========     ===========      ===========
Stockholders' equity (deficiency)   (20,351,879)     (7,093,114)          869,579       (846,407)      (1,021,686)
                                   ============     ===========      ============    ===========      ===========

</TABLE>

Item 7:  Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following should be read in conjunction with the Consolidated Financial
Statements included elsewhere in this Report.


                                      -18-

<PAGE>

Results of Operations

The Company generates revenues from the sale of telecommunication services. This
includes international long distance service to carriers and resellers, and
revenues derived from prepaid telephone calling cards to distributors for resale
to retail outlets. In 1999, the Company, through its wholly owned subsidiary
PICK Sat Inc. ("PICK Sat") commenced development of a system to multicast the
delivery of Internet Protocol multi-media content via satellite. Also in 1999,
the Company formed PICK Online.Com Inc. to provide broadband Internet content to
users, including radio streaming using the PICK Sat platform
(www.pickradio.com). PICK Sat and PICK Online.Com are in the development stage
and have not generated any revenue.

The Company's costs of sales primarily consist of the cost of telephone
services, for both the resale of international long distance services and for
prepaid telephone calling cards.

For the resale of international long distance, the Company recognizes revenues
as its customers use the traffic. For prepaid telephone calling cards sales, the
Company recognizes revenues at the time it provides the telephone services
associated with its cards and recognizes the cost of the carrier telephone
traffic based on the minutes used in the same periods that the Company
recognizes revenues. For PICK Sat business, the Company will charge its
customers for the cost of service including set-up, equipment, band width on the
satellite and a portion of the facilities cost. In addition, monthly service
fees are charged both for the up link of broadband content and for the down link
to individual receivers.

Gulfsat Contract

In late 1997, the Company entered into a reciprocal telecommunications agreement
for international traffic termination in Africa, the Middle East and Asia, via
satellite, with Gulfsat Communications Company ("Gulfsat" and the "Gulfsat
Contract"), a communications company located in the Middle East. In March 1998,
the term of the contract was extended to February 28, 2003 and Gulfsat agreed
that its rates to Africa, the Middle East and Asia would be offered in the
United States exclusively through the Company. Under the contract, the Company
is entitled to terminate up to approximately 70 million minutes per month in
telecommunications services into the above regions. Management believes, based
upon its knowledge of the industry, that costs per minute to terminate traffic
through Gulfsat are lower than those currently available to the Company's
competitors.

In the second half of 1998, however, the Company became aware of newer,
state-of-the art technology that would facilitate the transmission of not only
voice traffic but also data and Internet traffic. In order to capitalize on this
technology and maximize the benefit the Company could derive from the Gulfsat
Contract, it became necessary to defer equipment installation. The Company first
had to investigate the companies offering the appropriate asynchronous
transmission mode (ATM) equipment and then, in concert with Gulfsat, select a
strategic vendor in this global effort. Then the Company and Gulfsat had to
purchase and install the appropriate telephone switching and compression
equipment for the Jersey City, New Jersey, hub, the United Kingdom and the first
of several destination countries. To begin installation, the Company required a
portion of the proceeds

                                      -19-

<PAGE>
from the short-term debt financing obtained in the third quarter of 1998 to
purchase this equipment in late 1998. The Company is currently sending traffic
into three countries and anticipates adding subsequent countries in fairly rapid
succession. The Company has purchased the necessary equipment for the
installation in half-a-dozen additional countries, but will require additional
funding for further installations.

Blackstone Contract

Early in 1998, the Company entered into a two-year contract with Blackstone
Calling Card, Inc. ("Blackstone"), a major marketer and distributor of prepaid
telephone calling cards (the "Blackstone Agreement"). Under terms of the
Blackstone Agreement, as amended, after a six-month phase-in period ending
October 27, 1998, Blackstone was to purchase prepaid telephone cards with a
minimum retail face value of $5.0 million per month from the Company, which was
expected to result in net revenues of approximately $3.0 million per month to
the Company.

As described previously, the Company has not been able to terminate as much
traffic from Blackstone and others pursuant to the terms of the Gulfsat
Agreement as it anticipated. Accordingly, the Company has not been able to
service the minimum traffic called for in the Blackstone Agreement and
Blackstone has been delivering less traffic than originally anticipated. This
has significantly reduced the volume of Blackstone's purchases and, because the
Company has had to purchase time from other carriers (at higher prices than the
Company anticipated paying to Gulfsat) to satisfy the traffic generated by the
users of Blackstone's calling cards, the Company has negative gross profit under
the contract.

Multicasting, Broadband Satellite Internet Services
---------------------------------------------------

About mid-year 1998, through its wholly owned subsidiary - PICK Sat Inc. - the
Company began development of a multicast, satellite-delivered, broadband, high
speed Internet and multi-media platform. Customers began beta sites using this
platform for delivery of data and multi-media in March 1999. In April 1999, the
Company formed PICK Online.Com Inc. to provide broadband Internet content to
users, including radio streaming using the PICK Sat platform
(www.pickradio.com). PICK Sat and PICK Online.Com are both in the development
stage and to date have not generated any revenue.

Year Ended December 31, 1998 as Compared with Year Ended December 31, 1997
--------------------------------------------------------------------------

Total revenues amounted to $9,822,903 for the twelve months ended December 31,
1998 ("1998") compared to $9,015,903 for the twelve months ended December 31,
1997 ("1997"). The Company significantly curtailed its operations during the
first half of 1998, while it installed and tested two leased Siemens Digital
Central Office Switches. Consequently, the Company decided to curtail its
marketing efforts for the sale of international long distance services until the
switches were installed and enough countries were hooked into the Gulfsat
network to give the Company the capability to



                                      -20-
<PAGE>
deliver competitively priced traffic through Gulfsat. For 1998, the Company
generated international long distance revenue of $1,978,441, compared with
$7,669,243 for 1997, a decrease of $5,690,802 or 74%. Prepaid telephone calling
card revenues were $7,844,462 for 1998, compared to $1,346,660 for 1997. This
represents an increase of $6,497,802, or 483%. This increase reflects beginning
of the Blackstone Agreement, even at lower than anticipated levels.

The cost of telephone time purchased increased from $8,326,318 to $13,322,978,
an increase of $4,996,660. These costs increased by 60%, even though revenues
declined by 74%, primarily due to the costs of long distance arising from the
usage of prepaid telephone calling cards sold through Blackstone. Other cost of
sales increased from $762,431 to $3,069,566 primarily due to the fixed costs
associated with the Company's newly developed network and processing costs
arising from the increased prepaid telephone calling card activity. 1997 cost of
sales benefitted from the reversal of $649,563, representing a portion of a
previous provision for contingent costs.

Selling, general and administrative expenses were $3,880,100 for 1998, compared
to $1,836,829 for 1997, reflecting an increase of $2,043,271, or 111%. This
increase is primarily due to increases in staffing.

The Company's loss before other income (expense) rose from $1,693,913 for 1997
to $10,935,192 for 1998 primarily due to the increases in cost of sales and
general and administrative expenses discussed above.

Interest and debt placement expenses increased significantly from the prior year
due to the substantial increase in the amount of short-term debt placed in 1998.

Year Ended December 31, 1997 as Compared with Year Ended December 31, 1996
--------------------------------------------------------------------------

Total revenues amounted to $9,015,903 for the twelve months ended December 31,
1997 ("1997") compared to $5,869,682 for the twelve months ended December 31,
1996 ("1996"). This represents an increase of $3,146,221, or 54%. For 1997, the
Company generated international long distance revenue of $7,669,243 compared to
$4,444,342 for 1996; the international long distance business began in May of
1996. Prepaid telephone calling card revenues were $1,346,660 for 1997, compared
to $1,425,340 for 1996. This represents a decrease of $78,680, or 5.5%. This
decrease reflects reductions in the Company's advertising and market changes
which have resulted in product returns and reductions in repeat sales of calling
cards.

The direct costs of international long distance and calling card services
amounted to $9,088,749 (which excludes a $649,563 credit arising from reversal
of a portion of the previously-provided contingency reserve related to billing
disputes with AT&T - see Note 12 of Notes to the Consolidated Financial
Statements) for 1997 compared to $6,401,231 (which excludes a $1,749,563
provision for contingent costs provided related to billing disputes with AT&T)
for 1996. As a result, the gross margin was negative 0.8% of revenues for 1997,
compared to a negative gross margin of 9.1% in 1996. Including the adjustments
to the contingency reserve, gross margin would be 6.4% for 1997 and negative
38.9% for 1996.



                                      -21-
<PAGE>
The decrease in selling and marketing expenses were a direct result of a
reduction in product advertising, largely due to market changes. The general and
administrative costs increased primarily due to a need for increased outside
professional assistance. In addition, there was a modest increase in personnel
cost. Bad debt expense increased primarily because of the bankruptcy of one of
the Company's international long distance customers.

The Company's loss from operations improved from $5,233,758 for 1996 to
$1,693,913 for 1997. The primary reasons for this improvement are (i)
improvement in gross margin (other than changes to the contingency reserve) of
approximately $460,000, (ii) changes in amounts charged to the contingency
reserve of approximately $2,400,000 and (iii) reductions in advertising expenses
of approximately $1,040,000, offset by increases in general and administrative
expenses (primarily rent, salaries and professional fees) of approximately
$350,000. Absent changes in charges to the contingency reserve, the Company's
operating loss would have improved by approximately $1,140,000.

The Company recognized approximately $9,900,000 in non-cash, non-operating
losses in 1997 from losses from disposition of marketable equity securities and
a write-off of the Company's investment in prepaid cellular telephone
technology. The Company recognized approximately $8,400,000 in non-cash,
non-operating income in 1996 from gains on disposition of marketable equity
securities and a one-time license fee related to the Company's prepaid cellular
telephone technology.

The Company initially did not report any gains or losses on the disposition of
the marketable equity securities referred to above, as the Company believed that
it was not appropriate to recognize losses on the acquisition of its and its
subsidiary's common stock or on exchange of one investment in marketable equity
securities for another. The Company subsequently determined that it would have
been preferable to record these transactions based upon the fair value of the
assets exchanged, resulting in the recognition of approximately $9,500,000 in
losses.

Liquidity and Capital Resources

In order to assure the Company's survival and continuation as a going concern,
it is essential that the Company (i) develop its operations so that operating
profits are generated and (ii) obtain additional capital.

The Company is pursuing several sources of capital. In addition to potential
funds from investors and from corporate strategic partners, the Company may
receive funding from the exercise of outstanding options and warrants on the
Company's stock. While the Company believes it will be successful in its efforts
to raise sufficient capital and to restructure its operations so that it may
continue as a going concern, there can be no assurance that the Company will be
successful.

The Company's 1998 operating loss before other income (expense) of $10,935,192
(and net loss of $17,063,309) generated negative cash flow from operations of
$5,073,495 for 1998, compared with negative cash flow from operations of
$419,672 and $1,218,381 for 1997 and 1996, respectively.

Due to the losses discussed above, the Company's working capital deficiency
increased from $7,405,608 at December 31, 1997 to $14,677,342 at December 31,
1998 (an increase in the working capital deficiency of $7,271,734. Included in
the working capital deficiency as of December 31, 1998 is approximately
$11,900,000 of short-term debt. This includes $9.9 million principal amount
which matured on April 27, 1999, more than 90% of which is being converted into
three-year notes. It also includes $2 million which the parties have agreed in
principle to extend for six months. The Company's net worth changed from a
negative $7,093,114 at December 31, 1997 to a negative $20,351,879 at December
31, 1998 (an increase in negative net worth of $13,258,765).


                                      -22-

<PAGE>
Current assets increased by $942,425 from December 31, 1997 to 1998, primarily
due to increases in cash, accounts receivable, and prepaid expenses and other
current assets. Current liabilities increased by $8,214,159. This increase is
largely due to net increases in short-term borrowing. The proceeds of the
short-term borrowings were used to fund (i) approximately $1,200,000 in
placement costs, (ii) $2,185,000 in debt repayments, (iii) $1,725,000 in capital
expenditures, (iv) a $2,200,000 increase in cash and (v) the operating losses
discussed above.

Substantially all of the liabilities of the Company mature or are subject to
payment agreements calling for payment before the end of the first-half of 1999.
In addition, the Company has committed approximately $690,000 to license
computer software, payments for which will be due in 1999.

The Company significantly increased it capital spending in property and 
equipment to $3,817,153 in 1998 from $6,510 in 1997. These expenditures were to
support the development of the Company's international long distance telephone
and high speed broadband Internet service businesses.

During March 1999, the Company authorized the issuance of Series B and Series D
convertible preferred stock totaling 2,500,000 shares. The Series B Convertible
Preferred Stock has a liquidation preference of $1.00 per share and is
convertible into 20,000,000 shares of the Company's common stock. As of April
27, 1999, the Company had sold $1,871,000 of Series B Convertible Preferred
Stock convertible into 18,710,000 shares of Common Stock. The Series D
Convertible Preferred Stock has a stated par value of $0.001 per share and is
convertible into 11,905,000 shares of the Company's common stock. As of April
27, 1999, the Company had sold $1,500,000 of Series D Convertible Preferred
Stock convertible into 3,571,429 shares of Common Stock.




                                      -23-
<PAGE>

Impact of Year 2000

Many older computer software programs recognize only the last two digits of the
year in any date (e.g.: "98" for "1998"). These programs were designed and
developed without considering the impact of the upcoming change in century. If
the software is not reprogrammed or replaced, many computer applications could
fail or create erroneous results by or at the Year 2000. The Year 2000 ("Y2K")
issue refers to possible events resulting directly or indirectly from the
inability of digital computer equipment or software to accurately and without
interruption handle dates both before and after January 1, 2000.

The Company has reviewed its software and current operating systems and believes
that they are Y2K compliant. The Company primarily utilizes operating systems
obtained from Microsoft, which the Company believes, based on information
provided by Microsoft, are Y2K compliant. The Company believes that none of its
equipment is date sensitive or otherwise uses imbedded computer chips.
Accordingly, the Company does not believe that imbedded chip technology will
present any Y2K issues The Company is, however, checking its equipment to verify
this as part of its overall Y2K program. The Company expects that the costs of
achieving internal Y2K compliance will not have a material adverse impact on
results of operations, liquidity or capital resources.

The risk to the Company resulting from the failure of suppliers, customers and
other third parties to attain Y2K readiness is the same as other companies in
its industry or other business enterprises generally. The Company has initiated
a program of formally contacting its suppliers and customers to identify any
potential disruption due to Y2K. The Company expects to resolve any significant
Y2K issues before the occurrence of any business disruptions, although the
Company has limited or no control over the actions of its suppliers and
customers.


                                      -24-
<PAGE>
The Company expects to identify and adequately prepare for all significant
internal Y2K issues that could adversely affect its business operations. The
Company does not expect the cost of resolving such issues will have a material
impact on its financial position, results of operations or liquidity. The
Company does not believe that it is possible, with complete certainty, to
identify all potential Y2K issues that may affect the Company, its suppliers and
it customers. While the Company believes that its overall efforts are adequate
to address the Y2K issues, there can by no guarantee that all internal systems
as well as those of third parties on which the Company relies, will converted on
a timely basis. These unknown or unresolved Y2K issues may have a materially
adverse affect on the Company's business, financial condition, cash flows and
operations.

Item 8: Financial Statements and Supplementary, Data

The Company's financial statements are included in a separate section of this
Report, following Item 14.

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

Effective September 17, 1998, Goldstein Golub Kessler LLP were engaged as the
Company's independent accountants for the 1998 fiscal year. The change in the
independent accountants had been approved by the Company's Board of Directors.
Upon the engagement of Goldstein Golub Kessler LLP, the Company dismissed
Durland & Company, CPAs, P.A., its independent accountant for the years ended
December 31, 1996 and 1997. The Company has no disagreements with its current
and former accountants on accounting and financial disclosures.



                                      -25-
<PAGE>



                                    PART III

Item 10: Directors and Executive Officers of the Registrant

The following table sets forth the names, ages and positions with the Company as
of the date of this Report of all of the executive officers of the Company and
its principal subsidiaries and directors of the Company. Also set forth below is
information as to the principal occupation and background for each named person
in the table.

         Name                 Age     Position
         ----                 ---     --------
Diego Leiva                   48      Chairman of the Board and Director

Thomas M. Malone              43      Chief Executive Officer and Director

James H. Season               55      Vice President and Chief Financial Officer

Niles D. Ring                 65      Vice President of Human Resources

Mario Pino                    36      President of PICK Sat Inc.

Karen M. Quinn                51      President of PICK US INC.

Robert R. Sams  (1)           60      Director

Ricardo Maranon (2)           54      Director

John Tydeman (1)              51      Director

Alberto M. Delgado (2)        52      Director
----------------------------------------------------
(1)   Member of audit committee.
(2)   Member of compensation committee.

Diego Leiva founded Public Info/Comm Kiosk, Inc. ("Kiosk"), a New Jersey
corporation, which is currently a wholly-owned subsidiary of the Company, in
August 1992, and has served as the Company's Chairman of the Board, a Director
and President since that time and as Chief Executive Officer until April 1999.
From 1989 through July 1992, Mr. Leiva served as Director of Sales for Apertus
Technologies, Inc., a computer telecommunications sales firm.

Thomas M. Malone, Chief Executive Officer and a director joined the Company as
an officer on April 1, 1999 and as a director on April 26, 1999. Prior thereto,
from 1988, he was employed by Cable and Wireless Inc., last holding the position
of President of the Internet, Web-hosting and Messaging division. He was
responsible for integrating, managing and directing the engineering, operations,
Web hosting and customer care groups for the Internet



                                      -26-
<PAGE>
business that were acquired for $1.7 billion from MCI when the latter company
was acquired by Worldcom. Mr. Malone joined Cable and Wireless in 1988 and held
several positions, including Senior Vice President and General Manger, from 1990
to 1998, and Assistant Vice President of Business Development from 1988 to 1990.
Prior thereto, from 1984 to 1988, he was employed by Sprint International, last
holding the position of Director of Marketing, Product Management and Alliances
and from 1979 to 1983, Mr. Malone was employed by CompuServe, Inc., last holding
the position of District Sales Management, Houston, Texas.

James H. Season, Vice President and Chief Financial Officer, joined the Company
in April 1999. Prior thereto, Mr. Season was a founder, Chief Financial Officer,
Treasurer and Director of Hungarian Broadcasting Corp. from August 1996 to
January 1999. From January 1990 to August 1996 he was Managing Director of RHL
Management Group, Inc., an investment banking and financial consulting firm.
From 1982 to 1986, Mr. Season was Managing Director of Chase Manhattan
Investment Bank. Mr. Season serves on the Board of Directors of Hungarian
Telephone and Cable Corp. and Hungarian Broadcasting Corp.

Niles D. Ring, Vice President/Human Resources, joined the Company in September
1998, having been Human Resources specialist with Bristol-Myers Squibb, and
founding Director of Bristol-Myers Career Center, Evansville, Indiana since
1992.

Mario Pino, President of PICK Sat Inc. since October 1998. Prior thereto, Mr.
Pino was a division manager of Zaid Al Kazemi Trading from 1995 to 1998. From
1993 to 1995, he was general manager of American Cable Trading.

Karen M. Quinn, President of PICK US Inc. since January 1999. She had been Vice
President of Operations and Corporate Communications of the Company from
September 1995. Ms. Quinn has also worked for Kiosk since December 1992, having
become its Vice President of Operations in May 1994. Previously, Ms. Quinn was a
Business Manager in the health care industry for 22 years, and Vice-President of
Operations at two computer sales and service companies over a period of six
years.

Robert R. Sams has served as director of the Company since September 1995 and of
Kiosk since November 1994. He has been engaged in merchant banking, corporate
finance, acquisitions and financial advisory services since founding Saicol
Limited in 1983.

Ricardo Maranon has served as director of the Company since September 1995 and
of Kiosk since December 1994. He has served as President of the Florida-based
advertising agency Maranon & Associates Advertising since founding that company
in 1985.

John Tydeman has served as a director of the Company since November 1998. He has
been a strategic advisor since 1985 to a number of pay television and satellite
ventures worldwide. His expertise is in the commercial design, restructuring and
implementation of such ventures. His positions with these entities include: SES,
operator of ASTRA satellite system; Dolphin Group, a privately held Middle East
multi-business enterprise; CEO of ATL (News Corporation and Zee



                                      -27-
<PAGE>
Telefilm Joint Venture); CEO Showtime (Kipco/Viacom JV) and advisor to Kipco;
advisor to Zaksat; advisor to TVNZ; Advisor to Shinawatra Group; advisor to
Regional Television Operators (Australia); advisor to Jamison, a merchant
banking organization; advisor to Optus, Australia telco. Dr. Tydeman holds a PhD
in systems engineering and serves on the Board of Directors of Nostrad
Telecommunications, Asia Today Limited and Asia Television Limited and as
advisor to the Dolphin Group.

Alberto M. Delgado has served as a director of the Company since November 1998.
Dr. Delgado is the Pastor of Alpha & Omega Church, Miami, Florida which he
established in September 1981. In 1995, Dr. Delgado received his Doctoral Degree
in Theology from Logos Bible College and Graduate School, Jacksonville, Florida.
He is a member of the National Religious Broadcasters and Chairman of the
Christian Brotherhood Foundation.

Pursuant to Section 16 of the Exchange Act, the Company's Directors and
executive officers and beneficial owners of more than 10% of the Company's
common stock, par value $0.001 ("Common Stock") or warrants are required to file
certain reports, within specified time periods, indicating their holdings of and
transactions in the Common Stock and derivative securities. Based solely on a
review of such reports provided to the Company and written representations from
such persons regarding the necessity to file such reports, the Company is not
aware of any failures to file reports or report transactions in a timely manner
during the Company's fiscal year ended December 31, 1998, other than one late
Form 4 filing by both Robert R. Sams and Ricardo Maranon.

Item 11: Executive Compensation

Summary Compensation Table

         The following table sets forth all compensation awarded to, earned by,
or paid to the executive officer named therein for all services rendered to the
Company during the three fiscal years ending December 31, 1998. No other
executive officer of the Company received total compensation in excess of
$100,000 during any of the last three years:

Annual Compensation
<TABLE>
<CAPTION>
                                                                                                 Shares
Name and                                                                                         Underlying
Positions                           Year             Salary($)                  Bonus $          Stock Options
---------                           ----             ---------                  -------          -------------
<S>                                 <C>               <C>                       <C>               <C>      
Diego Leiva, President              1998              $162,500(1)               $15,201           2,750,000
  Chief Executive                   1997               150,000                       __             750,000(1)
  Officer and                       1996               150,000                       __                  __(1)
  Chairman of the
  Board of Directors
</TABLE>


                                      -28-

<PAGE>
<TABLE>
<CAPTION>
                                                                                                 Shares
Name and                                                                                         Underlying
Positions                           Year             Salary ($)                 Bonus $          Stock Options
---------                           ----             ----------                 -------          -------------
<S>                                 <C>                <C>                                           <C>      
Robert Bingham,                     1998               $111,500                   --                 50,000(2)
 Vice President and                 1997                 34,417                   --                500,000(3)
 Chief Financial Officer            1996                   --                     --                     --
                                                                          
Raymond Brennan,                    1998               $138,340                   --                250,000(4)
 Vice President and                 1997                 88,419                   --                750,000(5)
 Secretary                          1996                 85,365                   --                     --
                                                                          
Karen M. Quinn                      1998               $100,179                   --                300,000(6)
 President  PICK US Inc.            1997                 85,164                   --                750,000(5)
                                    1996                 85,153                   --                     --
</TABLE>
                                                                       
-----------------------
(1)   Includes options to purchase 500,000 shares granted in 1996, at prices
      varying from $0.875 to $0.9625 per share were canceled and re-issued in
      1997 at $0.19 per share and 250,000 options granted in 1997 at $0.30 per
      share.

(2)   Exercisable at $0.37 per share.

(3)   Includes options to purchase 250,000 shares at $0.25 per share and options
      to purchase 250,000 shares at $0.50 per share.

(4)   Includes options to purchase 150,000 shares at $0.37 per share and options
      to purchase 100,000 shares at $0.55 per share.

(5)   Includes options to purchase 250,000 shares at $0.27 per share and options
      to purchase 500,000 shares at $0.17 per share.

(6)   Includes options to purchase 150,000 shares at $0.37 per share and options
      to purchase 150,000 shares at $0.55 per share.

         The Company maintained a $250,000 term life insurance policy for Diego
Leiva for his benefit, for which the Company paid $1,377, $1,257 and $1,186 in
1998, 1997 and 1996, respectively. In addition, the Company maintains a
$1,000,000 key man life insurance policy for Mr. Leiva.

         Effective April 1, 1999, Thomas M. Malone and James H. Season became
Chief Executive Officer and Vice President and Chief Financial Officer,
respectively, of the Company. Mr. Malone will be paid $250,000 per annum and
will receive a $100,000 signing bonus. Mr. Season will be paid $125,000 per
annum and will receive a $15,000 signing bonus. Both Mr.



                                      -29-
<PAGE>
Malone and Mr. Season are expected to sign employment agreements with the
Company and receive further benefits including a monthly car allowance and stock
options.

Employment Agreement

         In September 1998, the Company entered into a five-year employment
agreement with Diego Leiva, as President and Chief Executive Officer, which
commenced on January 1, 1999 (the "Commencement Date"). The Agreement is
automatically renewable for additional one-year periods unless terminated on 90
days' prior written notice. Mr. Leiva will be paid $300,000 per annum beginning
on the Commencement Date, increasing by $50,000 increments on January 1, in each
of the four following years and by $75,000 per year in each year after the fifth
anniversary date if the Agreement is automatically extended. The agreement
provided that Mr. Leiva would continue to receive his then current base salary
until the Company's Senior Secured Notes are repaid. Mr. Leiva is entitled to a
monthly car allowance of $1,600 per month for automobiles in Florida and New
Jersey and shall also be reimbursed for reasonable living expenses in the
location which is not his principal residence. Mr. Leiva's agreement precludes
him from soliciting employees of the Company or interfering with PICK's
relationships with other employees for 18 months after termination of
employment. Mr. Leiva is also prohibited from competing with the Company during
the period following termination of employment for which PICK is liable to pay
him his base salary are for one year, whichever is longer.

         In April 1999, Mr. Leiva's employment agreement was amended to provide
he would continue solely as Chairman of the Board and a Director. Mr. Leiva
agreed to vote his shares of Common Stock in favor of Management's nominees,
provided he is a nominee for the Board.

Directors Compensation

         Directors currently receive no cash compensation for serving on the
Board of Directors or any Committee of the Board, other than reimbursement of
travel expenses incurred by them and their spouses in attending Board meetings
held outside the New York Metropolitan area. One of the directors is an employee
of the Company. Each of the Directors has received stock options from the
Company.

Option Grants in Last Fiscal Year

         The table below contains certain information concerning stock options
granted to the Named Executive Officers, named in the Summary Compensation
Table, during the year ended December 31, 1998:



                                      -30-

<PAGE>

<TABLE>
<CAPTION>


                       Number of  Percent of Total                                  Potential Realizable Value at
                      Securities       Options                                    Assumed Annual Rates of Stock Price
                      Underlying     Granted to       Exercise                       Appreciation for Option Term
                        Options     Employees in        Price      Expiration              5%             10%
Name                    Granted      Fiscal year      ($/Share)       Date                 ($)            ($)
----                    -------      -----------      ---------    ----------     -----------------------------------
<S>                    <C>               <C>           <C>           <C>  <C>           <C>                <C>     
Diego Leiva            2,500,000         60%           $.55          11/2/03            $343,750           $687,500
                         150,000        3.6%            .41          2/19/01              $9,225            $18,450
                         100,000        2.4%            .61          11/4/01              $9,150            $18,300


Robert Bingham            50,000        1.2%           $.37            (1)                   (1)                (1)

Raymond Brennan          150,000        3.6%           $.37          2/19/01              $8,325            $16,650
                         100,000        2.4%            .55          11/4/01              $8,250            $16,500

Karen M. Quinn           150,000        3.6%           $.37          2/19/01              $8,325            $16,650
                         150,000        3.6%            .55          11/4/01             $12,375            $24,750
</TABLE>

--------------
(1) Forfeited following Mr. Bingham's resignation on February 10, 1999.

Option Grants in 1999

         In March 1999, the Company granted an aggregate of 11,505,000 options
to employees and consultants, all exercisable at $0.50 per share and vesting
over a three-year period, except Mr. Malone's option vesting over a four-year
period. Included were the following grants to officers and/or directors: Thomas
Malone, Chief Executive Officer (5,000,000 shares); Mario Pino, President of
PICK Sat (2,500,000 shares); James H. Season, Chief Financial Officer (500,000
shares); Niles Ring, Vice President (500,000 shares); and Karen Quinn, President
of PICK US Inc. (150,000 shares).

Aggregated Option Exercises in Last Fiscal Year and Year End Option Values

         The table below includes information regarding the value realized on
option exercises and the market value of unexercised options held by the Named
Executive Officers named in the Summary Compensation Table during the year ended
December 31, 1998:
<TABLE>
<CAPTION>
                                                                       Number of           Value of Unexercised
                                                                      Unexercised              In-the-Money
                              Shares                                    Options                   Options
                             Acquired                                at FY-End(#)              at FY-End (S)
                                on                 Value             Exercisable/              Exercisable/
   Name                    Exercise (#)         Realized($)          Unexercisable           Unexercisable(1)
   ----                    ------------         -----------          -------------           ----------------
<S>                            <C>                 <C>            <C>       <C>              <C>      <C>     
Diego Leiva                    250,000             $95,000        1,225,000/2,025,000        $345,750/$321,750
Robert Bingham                       0                   0          300,000/250,000          $120,500/$45,000
Raymond Brennan                250,000            $102,500             750,000/0                $307,000/0
Karen M. Quinn                 250,000            $102,500             800,000/0                $321,000/0
</TABLE>

-------------------------------
(1)   As of December 31, 1998, the market value of the shares was $0.68.



                                      -31-

<PAGE>
Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee was an officer or employee of the
Company or any of its subsidiaries during the prior year or was formerly an
officer of the Company or of any of its subsidiaries. None of the Executive
Officers of the Company has served on the Compensation Committee during the last
fiscal year of any other entity, any of whose officers served on the
Compensation Committee of the Company.

Employee Benefit Plans

Other than stock options, the Company does not currently have, nor during the
1998 fiscal year did it have, any other long-term incentive plans.

Item 12: Security  Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of April 14, 1999, the number of shares of
the Company's outstanding Common Stock beneficially owned by (i) each director
of the Company, (ii) each Named Executive Officer named above, (iii) each
beneficial owner of more than 5% of the Company's Common Stock and (iv) all of
the Company's executive officers and directors as a group:

Name and Address                 Amount and Nature of
of Beneficial Owner (1)        Beneficial Ownership (2)          Percentage (3)
-----------------------        ------------------------          --------------

Diego Leiva                         13,798,247(4)(5)                 30.9%

Robert R. Sams                       2,633,674(6)                     5.2%

Ricardo Maranon                      1,504,674(7)                     3.4%

Alberto M. Delgado                   3,212,500(8)(9)                  6.9%

John Tydeman                           692,500(8)(10)                 1.6%



                                      -32-
<PAGE>

<TABLE>
<CAPTION>
Name and Address                   Amount and Nature of
of Beneficial Owner (1)          Beneficial Ownership (2)     Percentage (3)
-----------------------          ------------------------     --------------
<S>                                      <C>       
Robert Bingham                           25,0000                    .1%

Raymond Brennan                          1,430,174(11)             3.2%

Karen M. Quinn                           1,359,924(12)             3.1%

All executive officers and 
directors as a group 
(11 persons)                            24,631,693(13)            44.9%
</TABLE>

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

(1)   The address of all officers and directors is c/o the Company, 155 Route 46
      West, 3rd Floor, Wayne, New Jersey 07470.

(2)   Unless otherwise noted, all shares are beneficially owned and the sole
      voting and investment power is held by the person indicated.

(3)   Based on 43,367,355 shares outstanding as of April 14, 1999. Each
      beneficial owner's percentage ownership is determined by assuming that
      options or warrants that are held by such person and which are convertible
      or exercisable within sixty (60) days of such date pursuant to Rule l3d-3
      under the Exchange Act have been converted or exercised.

(4)   Includes 4,290,000 shares beneficially owned by Mr. Leiva's wife.

(5)   Includes an aggregate of 1,250,000 stock options consisting of incentive
      stock options to purchase up to l31,578 shares of the Company's Common
      Stock at $0.19 per share, 150,000 shares at $0.41 per share, 63,000 shares
      at $0.61 per share, non-qualified stock options to purchase up to 368,422
      shares of the Company's Common Stock at $0.19 per share, 37,000 shares at
      $.061 per share under the Plan; and non-qualified stock options to
      purchase 500,000 shares at $0.55 per share outside of the Plan, but
      excludes non-qualified stock options to purchase 2,000,000 shares at $0.55
      per share.

(6)   Includes non-qualified stock options to purchase up to 750,000 shares of
      the Company's Common Stock, including 500,000 shares at $0.17 per share,
      150,000 shares at $0.37 per share and 100,000 shares at $0.55 per share
      pursuant to the Plan. Excludes 96,000 shares owned by Vulcan Petroleum of
      which Mr. Sams is a director and minority shareholder. Includes 1,600,000
      shares of Common Stock issuable upon conversion of 160,000 shares of
      Series B Convertible Preferred Stock, but excludes 500,000 shares of
      Common Stock issuable upon exercise of non-qualified stock options which
      vest on March 3, 2000. See Item 13. "Certain Relationships and Related
      Transactions."

(7)   Includes non-qualified stock options to purchase up to 750,000 shares of
      the Company's Common Stock, including 500,000 shares at $0.17 per share,
      150,000 shares at $0.37 per share and 100,000 shares at $0.55 per share
      pursuant to the Plan. Includes 37,250 shares



                                      -33-

<PAGE>
      of the Company's Common Stock beneficially owned by Mr. Maranon's 
      daughter. Includes 210,000 shares of Common Stock issuable upon conversion
      of 21,000 shares of Series B Convertible Preferred Stock, but excludes 
      500,000 shares of Common Stock issuable upon exercise of non-qualified 
      stock options which vest on March 3, 2000. See Item 13. "Certain 
      Relationships and Related Transactions."

(8)   Includes non-qualified stock options to purchase up to 62,500 shares at
      $0.55 per share. Excludes nonqualified stock options to purchase up to
      187,500 shares at $0.55 per share, vesting on November 2, 1999, and
      500,000 shares of Common Stock issuable upon exercise of non-qualified
      stock options which vest on March 3, 2000.

(9)   Includes 3,l50,000 shares of Common Stock issuable upon conversion of
      315,000 shares of Series B Preferred Stock. See Item l3. "Certain
      Relationships and Related Transactions."

(10)  Includes 600,000 shares of Common Stock issuable upon conversion of
      $60,000 shares of Series B Preferred Stock. See Item l3. "Certain
      Relationships and Related Transactions."

(11)  Includes 340,000 shares beneficially owned by Mr. Brennan's wife. Also
      includes an aggregate of 750,000 options, including incentive stock
      options to purchase up to 191,176 shares at $0.17 per share, 150,000
      shares at $0.37 per share, 80,000 shares at $0.55 per share, non-qualified
      stock options to purchase up to 308,824 shares at $0.17 per share and
      20,000 shares at $0.55 per share pursuant to the Plan.

(12)  Includes an aggregate of 800,000 options, including incentive stock
      options to purchase 191,176 shares at $0.17 per share, 150,000 shares at
      $0.37 per share, 80,000 shares at $0.55 per share and non-qualified stock
      options to purchase up to 308,824 shares at $0.17 per share and 70,000
      shares at $0.55 per share pursuant to the Plan. Excludes non-qualified
      stock options to purchase up to 150,000 shares at $0.50 per share, vesting
      as follows: 30,000 on September 1, 1999; 45,000 on September 1, 2000;
      45,000 on September 1, 2001; and 30,000 on September 1, 2002.

(13)  Includes non-qualified stock options and incentive stock options to
      purchase up to 4,362,500 shares by the parties named above and shares of
      Preferred Stock to purchase up to 5,560,000 shares of Common Stock at the
      prices per share stated in footnotes (5-12), also includes options to
      purchase an aggregate of 1,075,000 shares held by current executive
      officers not listed in the table, Thomas M. Malone, James H. Season, Mario
      Pino and Niles D. Ring, which are currently exercisable, plus 500,000
      shares of Common Stock issuable upon conversion of Series B Preferred
      Stock granted to Thoms M. Malone, but excludes options to purchase an
      aggregate of 7,725,000 shares which are not currently exercisable.


                                      -34-

<PAGE>



Item 13: Certain Relationships and Related Transactions

See "Item 11 - Executive Compensation" for terms and conditions of employment
agreements entered into between the Company and Diego Leiva and options granted
to the Company's Executive Officers and Directors.

On March 3, 1999, the Company, Diego Leiva ("Leiva"), the Company's Chairman of
the Board, and Commonwealth Associates L.P. ("Commonwealth") the placement agent
for the holders of the Company's outstanding 18% senior secured notes, entered
into an Agreement by which Commonwealth and its designees, including J.P. Turner
& Company, L.L.C. ("Turner") and management of the Company, would purchase up to
$2,000,000 of preferred stock of the Company (the "Series B Preferred Stock") at
a purchase price of $1.00 per share. On March 12, 1999, the Company filed a
Certificate of Designation, as later amended, relating to the Series B Preferred
Stock (the "Series B Certificate") with the Secretary of State for the State of
Nevada. The Series B Certificate authorized 2,000,000 shares of Series B
Preferred Stock convertible by the holders thereof into the Company's Common
Stock at $.10 per share. In addition, the Series B Preferred Stock has a
liquidation preference of $1.00 per share. As of April 22, 1999, the Company had
received cash (and as part of Mr. Malone's signing bonus) for 1,871,000 shares
of Series B Preferred Stock from Commonwealth, Turner and officers and directors
of the Company convertible into 18,710,00 shares of Common Stock. The following
officers and/or directors have purchased the respective amounts of Series B
Preferred Stock:

                  Robert R. Sams                      $160,000
                  Alberto M. Delgado                   315,000
                  Ricardo Maranon                       21,000
                  John Tydeman                          60,000
                  Thomas M. Malone                      50,000
                                                      --------
                  Total                               $606,000

On March 3, 1999, the Board of Directors granted to each of the Company's four
independent directors, Robert Sams, Ricardo Maranon, Alberto M. Delgado and John
Tydeman, with each abstaining as to themselves, options to purchase 500,000
shares of Common Stock at $.51 per share in consideration of their substantial
efforts in assisting the Company in obtaining financing and for other valuable
consideration rendered to the Company. These options shall be fully vested on
March 3, 2000.


                                      -35-


<PAGE>


                                        PICK COMMUNICATIONS CORP. AND SUBSIDIARY

                                      INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------









Independent Auditor's Report                                             F-2

Independent Auditor's Report                                             F-3


Consolidated Financial Statements:

   Balance Sheet                                                         F-4
   Statement of Operations                                               F-5
   Statement of Stockholders' Deficiency                              F-6 - F-7
   Statement of Cash Flows                                            F-8 - F-9
   Notes to Financial Statements                                     F-10 - F-21





<PAGE>

INDEPENDENT AUDITOR'S REPORT

The Board of Directors
PICK Communications Corp.

We have audited the accompanying consolidated balance sheet of PICK
Communications Corp. and Subsidiaries as of December 31, 1998, and the related
consolidated statements of operations, stockholders' deficiency, and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of PICK Communications
Corp. and Subsidiaries as of December 31, 1998, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 16 to
the consolidated financial statements, the Company has incurred substantial
recurring losses from operations, has a net capital deficiency and has a working
capital deficiency that raise substantial doubt about its ability to continue as
a going concern. Management's plans in regard to these matters are also 
described in Note 16. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


GOLDSTEIN GOLUB KESSLER LLP
New York, New York

March 5, 1999, except for portions of
Notes 13 and 17 as to which the
date is March 26, 1999 and Notes 6 and 16
as to which the date is April 28, 1999



                                                                             F-2



<PAGE>

                     Report of Certified Public Accountants


To:  The Board of Directors
     PICK Communications Corp.
     Wayne, New Jersey

We have audited the accompanying consolidated balance sheets of PICK
Communications Corp. and its Subsidiaries (the "Company") as of December 31,
1997 and the related consolidated statements of operations, stockholders' equity
and cash flows for the years ended December 31, 1997 and 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

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

In our opinion, the 1997 and 1996 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of PICK
Communications Corp. and its Subsidiaries as of December 31, 1997 and the
results of its operations and its cash flows for the years ended December 31,
1997 and 1996, in conformity with generally accepted accounting principles.
 
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 14 to
the consolidated financial statements, the Company has experienced significant
losses, resulting in a deficit equity position. The Company's financial position
and operating results raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 14. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

Durland & Company, CPAs, P.A.


Palm Beach, Florida
April 29, 1998

                                                                             F-3



<PAGE>

                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                               CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

December 31,                                                                               1998                 1997
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>                 <C>
ASSETS
Current Assets:
  Cash                                                                               $    248,551         $     44,400
  Accounts receivable, less allowance for doubtful accounts of
   $351,838 and $326,497, respectively                                                    740,886              451,818
  Prepaid expenses and other current assets                                               575,022              125,816
----------------------------------------------------------------------------------------------------------------------
      Total current assets                                                              1,564,459              622,034
----------------------------------------------------------------------------------------------------------------------
Property and Equipment - at cost, net of accumulated depreciation
 and amortization of $428,199 and $68,488, respectively                                 5,048,551            1,000,083
----------------------------------------------------------------------------------------------------------------------
Other Assets:
  Security deposits                                                                       178,146               24,396
  Investment in marketable equity securities                                                    -              171,000
  Deferred income tax asset, net of valuation allowance of $11,000,000
   and 4,800,000 respectively                                                                   -                    -
----------------------------------------------------------------------------------------------------------------------
      Total other assets                                                                  178,146              195,396
----------------------------------------------------------------------------------------------------------------------
      Total Assets                                                                   $  6,791,156         $  1,817,513
======================================================================================================================

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
  Current portion of debt                                                             $ 2,127,500         $  1,000,000
  Current portion of capital leases                                                       271,676              146,128
  Accounts payable and accrued expenses                                                 7,690,978            4,876,336
  Deferred revenue - prepaid calling cards                                              2,183,806              681,653
  Other current liabilities                                                             3,967,841            1,323,525
----------------------------------------------------------------------------------------------------------------------
      Total current liabilities                                                        16,241,801            8,027,642
Capital Leases, less current portion                                                    1,042,716              794,905
Short term debt expected to be refinanced, less current portion                         9,772,500                    -
----------------------------------------------------------------------------------------------------------------------
      Total liabilities                                                                27,057,017            8,822,547
----------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies
Minority Interest in Consolidated Subsidiary                                               86,018               88,080
----------------------------------------------------------------------------------------------------------------------
Stockholders' Deficiency:
  Common stock - $.001 par value; authorized 100,000,000 shares at December 31,
   1998 and 75,000,000 shares at December 31, 1997; 38,201,881 issued and
   38,166,381 outstanding at December 31, 1998;
   43,325,317 issued and 36,059,817 outstanding at December 31, 1997                       38,202               43,325
  Additional paid-in capital                                                            4,008,029            5,886,825
  Options and warrants                                                                  2,687,461               21,242
  Treasury stock, at cost, 35,500 and 7,265,500 shares at
   December 31, 1998 and 1997, respectively                                               (11,978)          (3,072,222)
  Accumulated other comprehensive income                                                        -               38,000
  Accumulated deficit                                                                 (27,073,593)         (10,010,284)
----------------------------------------------------------------------------------------------------------------------
      Stockholders' deficiency                                                        (20,351,879)          (7,093,114)
----------------------------------------------------------------------------------------------------------------------
      Total Liabilities and Stockholders' Deficiency                                 $  6,791,156         $  1,817,513
======================================================================================================================
</TABLE>

               The accompanying notes and independent auditor's report should
               be read in conjunction with the consolidated financial statements



                                                                             F-4

<PAGE>


                                   PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      CONSOLIDATED STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Year ended December 31,                                              1998                 1997                 1996
----------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                  <C>                   <C>        
Sales of long-distance services                                 $  1,978,441         $  7,669,243          $ 4,444,342
Sales of prepaid calling cards                                     7,844,462            1,346,660            1,425,340
----------------------------------------------------------------------------------------------------------------------
Net sales                                                          9,822,903            9,015,903            5,869,682
----------------------------------------------------------------------------------------------------------------------

Costs and expenses:
  Cost of sales:
    Cost of telephone time purchased                              13,322,978            8,326,318            5,308,626
    Other cost of sales                                            3,069,566              762,431            1,092,605
    Adjustment to provision for contingent costs                           -             (649,563)           1,749,563
----------------------------------------------------------------------------------------------------------------------
Total cost of sales                                               16,392,544            8,439,186            8,150,794

  Selling, general and administrative                              3,880,100            1,836,829            2,551,142
  Depreciation and amortization                                      359,711              180,531              181,758
  Bad debt expense                                                   125,740              253,270              219,746
----------------------------------------------------------------------------------------------------------------------
Total costs and expenses                                          20,758,095           10,709,816           11,103,440
----------------------------------------------------------------------------------------------------------------------

Loss before other income (expense)                               (10,935,192)          (1,693,913)          (5,233,758)
----------------------------------------------------------------------------------------------------------------------

Other income (expense):
  Interest expense                                                (3,191,869)            (157,669)             (19,802)
  Debt placement expenses                                         (2,805,310)                   -                    -
  Gain on in-substance defeasance                                          -                    -               53,080
  License fees                                                             -                    -            3,650,000
  Loss on disposal of fixed assets                                         -                    -              (50,271)
  Write-off of intangible asset                                            -             (441,205)                   -
  Net gains (losses) on marketable equity securities                (133,000)          (9,449,079)           4,784,000
----------------------------------------------------------------------------------------------------------------------
Total other income (expense)                                      (6,130,179)         (10,047,953)           8,417,007
----------------------------------------------------------------------------------------------------------------------

Income (loss) before minority interest in subsidiary
 loss and income taxes                                           (17,065,371)         (11,741,866)           3,183,249

Benefit (provision) for income taxes                                       -            1,808,000           (1,808,000)

Minority interest in subsidiary loss                                   2,062              434,064              260,541
----------------------------------------------------------------------------------------------------------------------
Net income (loss)                                               $(17,063,309)        $ (9,499,802)         $ 1,635,790
======================================================================================================================

Net income (loss) per common share - basic                      $       (.46)        $       (.26)         $       .04
======================================================================================================================

Weighted average shares outstanding - basic                       36,923,564           36,958,530           41,991,502
======================================================================================================================
</TABLE>

               The accompanying notes and independent auditor's report should
               be read in conjunction with the consolidated financial statements



                                                                             F-5

<PAGE>

                                   PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                              CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                              Common Stock                                                
                                       -----------------------     Additional     Options
                                         Number                     Paid-in         and            Stock          Treasury      
                                       of Shares       Amount       Capital       Warrants      Subscription        Stock       
--------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>            <C>          <C>              <C>             <C>            
Balance at December 31, 1995           40,542,516      $81,085     $2,018,780        -           $(800,000)              -      
Issuance of common stock for cash
 and reduction of receivable              250,000          500        249,500        -            (125,000)              -      
Issuance of common stock
 for prepaid advertising                1,150,000        2,300      2,697,700        -                   -               -      
Issuance of common stock for
 500,000 shares of Ultimistics, Inc.    1,250,000        2,500      1,272,500        -                   -               -      
Reacquisition of shares for cash         (230,000)           -              -        -                   -       $ (29,500)     
Reacquisition of shares for cash,
 prepaid calling cards and unused
 advertising                             (250,000)           -              -        -                   -        (572,589)     
Issuance of common stock for
 compensation and services                505,000        1,010        161,240        -                   -               -      
Collections of subscription
 receivable                                     -            -              -        -             325,000               -      
Accumulated other comprehensive                 
 income (loss)                                  -            -              -        -                   -               -      
Net income                                      -            -              -        -                   -               -      
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996           43,217,516       87,395      6,399,720        -            (600,000)       (602,089)     
Reduction of $0.002 to $0.001
 par value                                      -      (43,697)        43,697        -                   -               -         
Cancellation of 600,000 shares
 subscribed                              (600,000)        (600)      (599,400)       -             600,000               -  
Reacquisition of shares for cash          (35,500)           -              -        -                   -         (11,978)      
Reacquisition of shares for
 unused prepaid advertising, with
 a book value of $2,038,155              (750,000)           -              -        -                   -      (2,038,155)     

<CAPTION>

                                       Accumulated                           Total
                                          Other                          Stockholders'
                                      Comprehensive     Accumulated         Equity
                                      Income (Loss)       Deficit        (Deficiency)
--------------------------------------------------------------------------------------
<S>                                        <C>              <C>               <C>          
Balance at December 31, 1995                     -      $(2,146,272)     $  (846,407)
Issuance of common stock for cash
 and reduction of receivable                     -                -          125,000
Issuance of common stock
 for prepaid advertising                         -                -        2,700,000
Issuance of common stock for
 500,000 shares of Ultimistics, Inc.             -                -        1,275,000
Reacquisition of shares for cash                 -                -          (29,500)
Reacquisition of shares for cash,
 prepaid calling cards and unused
 advertising                                     -                -         (572,589)
Issuance of common stock for
 compensation and services                       -                -          162,250
Collections of subscription
 receivable                                      -                -          325,000
Accumulated other comprehensive       
 income (loss)                         $(3,904,965)               -       (3,904,965)
Net income                                       -        1,635,790        1,635,790
------------------------------------------------------------------------------------
Balance at December 31, 1996            (3,904,965)        (510,482)         869,579
Reduction of $0.002 to $0.001
 par value                                       -                -                -
Cancellation of 600,000 shares
 subscribed                                      -                -                -
Reacquisition of shares for cash                 -                -          (11,978)
Reacquisition of shares for
 unused prepaid advertising, with
 a book value of $2,038,155                      -                -       (2,038,155)

                                                                          (continued)
</TABLE>
                                                                                
               The accompanying notes and independent auditor's report should
               be read in conjunction with the consolidated financial statements

                                                                             F-6


<PAGE>


                                  PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                              CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                             Common Stock                                                                       
                                       -----------------------      Additional      Options                                     
                                         Number                      Paid-in          and            Stock         Treasury     
                                       of Shares        Amount        Capital       Warrants      Subscription       Stock      
--------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>           <C>           <C>             <C>             <C>       
Reacquisition of shares for
 Firenze, Ltd. and Ultimistics, Inc.   (6,000,000)           -              -             -            -         $  (420,000)   
Issuance of common stock for
 services                                 227,000      $   227    $    42,808             -            -                   -    
Issuance of warrants in connection                                                                                         
 with short-term debt                           -            -              -    $   21,242            -                   -    
Accumulated other comprehensive                                                                                            
 income (loss)                                  -            -              -             -            -                   -    
Net loss                                        -            -              -             -            -                   -    
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997           36,059,016       43,325      5,886,825        21,242            -          (3,072,222)   
Issuance of common stock for
 compensation                             662,997          663        296,363             -            -                   -    
Issuance of common stock in                                                                                                
 connection with private placement      1,394,368        1,394        864,405             -            -                   -    
Issuance of common stock upon                                                             -            -                   -    
 exercise of warrants by director          50,000           50         13,450             -            -                   -    
Issuance of warrants in connection                                                                                         
 with short-term debt                           -            -              -     2,359,940            -                   -    
Issuance of options for compensation            -            -              -       306,279            -                   -   
Cancellation of 7,230,000
 shares of treasury stock                       -       (7,230)    (3,053,014)            -            -           3,060,244    
Accumulated other comprehensive
 income (loss)                                  -            -              -             -            -                   -    
Net loss                                        -            -              -             -            -                   -    
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998           38,166,381      $38,202    $ 4,008,029    $2,687,461          $-0-     $      (11,978)   
================================================================================================================================

<CAPTION>

                                       Accumulated                           Total   
                                          Other                          Stockholders'
                                      Comprehensive     Accumulated         Equity
                                      Income (Loss)       Deficit        (Deficiency)
--------------------------------------------------------------------------------------
<S>                                         <C>             <C>             <C>
Reacquisition of shares for
 Firenze, Ltd. and Ultimistics, Inc.             -                  -     $   (420,000)
Issuance of common stock for
 services                                        -                  -           43,035
Issuance of warrants in connection    
 with short-term debt                            -                  -           21,242
Accumulated other comprehensive       
 income (loss)                          $3,942,965                  -        3,942,965
Net loss                                         -       $ (9,499,802)      (9,499,802)
--------------------------------------------------------------------------------------  
Balance at December 31, 1997                38,000        (10,010,284)      (7,093,114)
Issuance of common stock for
 compensation                                    -                  -          297,026
Issuance of common stock in           
 connection with private placement               -                  -          865,799
Issuance of common stock upon                    -                  -
 exercise of warrants by director                -                  -           13,500
Issuance of warrants in connection    
 with short-term debt                            -                  -        2,359,940
Issuance of options for compensation             -                  -          306,279
Cancellation of 7,230,000
 shares of treasury stock                        -                  -                -
Accumulated other comprehensive
 income (loss)                             (38,000)                 -          (38,000)
Net loss                                         -        (17,063,309)     (17,063,309)
--------------------------------------------------------------------------------------
Balance at December 31, 1998            $      -0-       $(27,073,593)    $(20,351,879)
======================================================================================

</TABLE>

      The accompanying notes and independent auditor's report should be read in
      conjunction with the consolidated financial statements



                                                                             F-7

<PAGE>


                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                         CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Year ended December 31,                                                      1998           1997               1996
----------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>            <C>                <C> 
Cash flows from operating activities:
  Net income (loss)                                                    $(17,063,309)    $(9,499,802)       $ 1,635,790
  Adjustments to reconcile net income (loss) to net cash
   used in operating activities:
    Loss (gain) on marketable securities                                    133,000       9,449,079         (4,784,000)
    Revenue from license fees                                                     -               -         (3,650,000)
    Gain on in-substance defeasance                                               -               -            (53,080)
    Advertising expense                                                           -               -            256,845
    Stock, options and warrants issued for compensation
     or services                                                            603,305          64,277            162,250
    Amortization of debt discounts and placement expenses                 4,656,773               -                  -
    Depreciation and amortization                                           359,711         180,531            181,758
    Write-off of intangible asset                                                 -         441,205                  -
    Loss on abandonment of property and equipment                                 -               -             50,271
    Minority interest in subsidiary loss                                     (2,062)       (434,064)          (260,541)
    Bad debt expense                                                        125,740         253,270            219,746
    Adjustment to provision for contingent liabilities                            -        (649,563)         1,749,563
    Provision (benefit) for deferred income taxes                                 -      (1,808,000)         1,808,000
    Changes in operating assets and liabilities:
      Decrease (increase) in accounts receivable                           (414,808)         73,092           (163,490)
      Decrease (increase) in other operating assets                        (602,956)        (44,046)           175,716
      Increase in accounts payable and accrued expenses                   2,814,642       3,408,763            880,161
      Increase (decrease) in deferred revenue                             1,502,153        (985,735)           862,005
      Increase (decrease) in other operating liabilities                  2,814,316        (868,679)          (289,375)
----------------------------------------------------------------------------------------------------------------------
          Net cash used in operating activities                          (5,073,495)       (419,672)        (1,218,381)
----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Investment in debt securities                                                   -               -           (371,920)
  Purchase of property and equipment                                     (3,817,153)         (6,510)           (65,966)
----------------------------------------------------------------------------------------------------------------------
          Cash used in investing activities                              (3,817,153)         (6,510)          (437,886)
----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Common stock issued for cash                                               13,500               -            250,000
  Common stock issued for cash by subsidiary                                      -               -            527,612
  Acquisition of treasury stock for cash                                          -         (11,978)           (44,500)
  Proceeds from stock subscriptions receivable                                    -               -            200,000
  Principal paid on capital leases                                         (217,667)              -                  -
  Proceeds from third-party debt                                         11,468,966         250,000            750,000
  Payments on third-party debt                                           (2,000,000)              -            (75,000)
  Funds advanced by stockholder                                              15,000         170,000             75,152
  Payments on stockholder advances                                         (185,000)        (25,152)           (50,000)
----------------------------------------------------------------------------------------------------------------------
          Net cash provided by financing activities                       9,094,799         382,870          1,633,264
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                                             204,151         (43,312)           (23,003)
Cash at beginning of year                                                    44,400          87,712            110,715
======================================================================================================================
Cash at end of year                                                    $    248,551     $    44,400        $    87,712
======================================================================================================================
                                                                                                           (continued)
</TABLE>

      The accompanying notes and independent auditor's report should be read in
      conjunction with the consolidated financial statements




                                                                             F-8
<PAGE>


                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                         CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Year ended December 31,                                                    1998            1997           1996
------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>             <C>             <C> 
Supplemental disclosure of cash flow information:

  Cash paid during the year for interest                               $1,167,716      $   75,877       $    8,271
==================================================================================================================


Supplemental schedule of noncash investing and
 financing activities:

  Assets acquired under capital leases                                 $  591,026      $  941,033                -
==================================================================================================================
  Discount on short-term debt                                          $1,312,934               -                -
==================================================================================================================
  Book value of marketable equity securities exchanged
   for common stock of the Company and its subsidiary                           -      $6,390,625                -
==================================================================================================================
  Book value of marketable equity securities exchanged
   for other marketable equity securities                                       -      $4,085,000                -
==================================================================================================================
  Book value of prepaid advertising and telephone cards
   exchanged for common stock of the Company and
   its subsidiary                                                               -      $2,458,155       $  557,589
==================================================================================================================
  Stock issued for investment in marketable equity securities                   -               -       $1,275,000
==================================================================================================================
  Stock issued for suscriptions receivable                                      -               -       $  125,000
==================================================================================================================
  Stock issued to acquire prepaid advertising                                   -               -       $2,700,000
==================================================================================================================
  In-substance defeasance                                                       -               -       $  425,000
==================================================================================================================
</TABLE>

      The accompanying notes and independent auditor's report should be read in
      conjunction with the consolidated financial statements



                                                                             F-9
<PAGE>

                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1. PRINCIPAL       PICK Communications Corp. and Subsidiaries acts as a        
   BUSINESS        wholesaler of long-distance telephone services and sells    
   ACTIVITY AND    prepaid telephone calling cards through distributors. Also, 
   SUMMARY OF      the Company intends to provide satellite-based Internet     
   SIGNIFICANT     access and interactive multimedia services to end user      
   ACCOUNTING      service providers. The Company is headquartered in Wayne, New
   POLICIES:       Jersey, and also leases facilities and telephone switching  
                   equipment in Jersey City, New Jersey, and Miami, Florida.   
                   
                   The accompanying consolidated financial statements include
                   the accounts of the Company and its wholly-owned
                   subsidiaries: PICK US Inc. f/k/a PICK Inc. ("PICK US"); PICK 
                   Net Inc. ("PICK Net"); PICK Net UK PLC; PICK Sat Inc. and
                   P.C.T. Prepaid Telephone, Inc. ("PCT"), a majority-owned
                   subsidiary (collectively, the "Company"). All significant
                   intercompany balances and transactions have been eliminated.
                                                                                
                   Subsequent to year-end, the Company formed a new subsidiary,
                   PICK Online.Com Inc., a media content aggregator using a
                   satellite-based multicast delivery system for Internet
                   Service Providers and Broadband Networks.
                                                                                
                   Minority interest represents the minority shareholders'      
                   proportionate share of the equity and loss of PCT.           
                                                                                
                   For comparability, certain 1997 and 1996 amounts have been   
                   reclassified, where appropriate, to conform to the           
                   consolidated financial statement presentation used in 1998.  
                                                                                
                   The consolidated financial statements have been prepared in  
                   conformity with generally accepted accounting principles. In 
                   preparing the consolidated financial statements, management  
                   is required to make estimates and assumptions that affect the
                   reported amounts of assets and liabilities as of the dates of
                   the consolidated balance sheet and revenue and expenses for  
                   the periods then ended. Actual results could differ from     
                   those estimates.                                             
                                                                                
                   Sales of long-distance time are recognized at the time that  
                   service is provided, as reported by the electronic switching 
                   devices. The Company defers revenue related to prepaid       
                   calling cards (which is recorded net of distributor          
                   discounts) and recognizes revenue as the card is used.       
                                                                                
                   Basic net loss per share is computed by dividing the net loss
                   by the weighted-average number of common shares outstanding  
                   during the year. Diluted net loss per share is not presented 
                   because the inclusion of common share equivalents would be   
                   antidilutive.                                                
                                                                                
                   The Company does not believe that any recently issued but not
                   yet effective accounting standards will have a material      
                   effect on the Company's consolidated financial position,     
                   results of operations or cash flows.                         
                                                                                
                   In 1998, approximately 72% and 10% of revenue were from two  
                   customers; in 1997, approximately 19% and 13% of revenue were
                   from two customers; and in 1996, approximately 36% and 25% of
                   revenue were from two customers. The Company performs
                   periodic credit evaluations of its customers, and may, under
                   certain  circumstances, require deposits or prepayments where
                   deemed appropriate.                              
                                                                                


                                                                            F-10


<PAGE>

                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

                              Two customers comprised approximately 65% and 11%
                              of gross accounts receivable, respectively, at
                              December 31, 1998. Five customers comprised
                              approximately 35%, 20%, 16%, 13% and 10% of gross
                              accounts receivable, respectively, at December 31,
                              1997. The Company also purchases
                              telecommunications services from many of its
                              customers. Frequently, accounts receivable are
                              settled by set-offs against liabilities with the
                              same party.

                              Depreciation of property and equipment is provided
                              for by the straight-line method over the estimated
                              useful lives of the related assets.

                              The Company's intangible assets (patent and
                              related rights for prepaid cellular technology)
                              were valued at cost and amortized over their
                              estimated useful lives of five years. Since, among
                              other factors, this technology generated no
                              revenue during 1997, the Company elected to write
                              off the unamortized balance at December 31, 1997.

                              The Company accounts for income taxes in
                              accordance with Statement of Financial Accounting
                              Standards ("SFAS") No. 109, Accounting for Income
                              Taxes. The Company recorded a deferred tax asset
                              for the tax effect of net operating loss
                              carryforwards and temporary differences. In
                              recognition of the uncertainty regarding the
                              ultimate amount of income tax benefits to be
                              derived, the Company has recorded a full valuation
                              allowance.

    2.  PREPAID               Prepaid expense and other current assets consist 
        EXPENSES AND          of the following:
        OTHER CURRENT          
        ASSETS:
<TABLE>
<CAPTION>
                              December 31,                                                   1998                 1997          
                              ----------------------------------------------------------------------------------------
<S>                           <C>                                                        <C>                  <C>     
                              Computer equipment for resale                              $100,624             $  2,054
                              Prepaid expenses                                             99,722               27,699
                              Advances and other current assets                           225,020                    -
                              Deposits                                                    149,656               96,063
                              ----------------------------------------------------------------------------------------
                                                                                         $575,022             $125,816
                              ========================================================================================

</TABLE>

                                                                            F-11

<PAGE>

                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

    3.  PROPERTY AND          Property and equipment, at cost, consists of the
        EQUIPMENT:            following:

<TABLE>
<CAPTION>
                                                                                                            Estimated 
                              December 31,                                      1998           1997        Useful Life
                              ----------------------------------------------------------------------------------------
<S>                           <C>                                       <C>            <C>               <C>    
                              Property, equipment and software            $1,186,464    $   127,538      3 and 5 years
                              Telephone switching equipment                1,532,059        941,033            5 years
                              Asset development/installation
                               in process                                  2,758,227              -
                              ----------------------------------------------------------------------------------------
                                                                           5,476,750      1,068,571
                              Less accumulated depreciation and
                               amortization                                  428,199         68,488
                              ----------------------------------------------------------------------------------------
                                                                          $5,048,551     $1,000,083
                              ========================================================================================
</TABLE>

                              Telephone switching equipment was acquired under
                              capital leases costing $1,252,271 and $941,033 at
                              December 31, 1998 and 1997, respectively, net of
                              accumulated depreciation of approximately $280,000
                              at December 31, 1998.

                              Asset development/installation in process consists
                              of (i) hardware and software costs related to the
                              Company's high-speed Internet business, which is
                              under development, and (ii) costs of
                              telecommunication equipment being installed.

                              Depreciation will commence when the development
                              and/or installation is complete and the assets are
                              fully operational.


    4.  PREPAID               In October 1995, the Company acquired the 
        CELLULAR              worldwide rights to market, distribute, sell and 
        TELEPHONE             manufacture a prepaid cellular telephone 
        TECHNOLOGY            technology for $712,500, of which $212,500 was 
        AND WRITE-OFF         paid by the issuance of 100,000 shares of the 
        OF INTANGIBLE         Company's stock. Although the Company believes 
        ASSET:                this technology may prove to have value, the
                              technology generated no revenue in 1997 and the
                              Company elected to write off its remaining
                              investment ($441,205) as of December 31, 1997.


    5.  INVESTMENT IN         In 1996, the Company acquired 4,700,000 restricted
        MARKETABLE            shares of the common stock of  Ultimistics, Inc.
        EQUITY                ("Ultimistics"). During the first quarter of 1997,
        SECURITIES:           the Company, in four separate transactions, 
                              disposed of all of its shares of Ultimistics,
                              along with $420,000 of prepaid advertising, in
                              return for (i) 1,000,000 shares of the Company's
                              common stock, (ii) 10,000,000 shares of PCT, and
                              (iii) 380,000 restricted shares of the common
                              stock of Fairbanks, Inc. (which subsequently
                              changed its name to Jet Vacations, Inc. and then
                              Precom Tech Inc.). The Company recorded losses of
                              $9,399,079 on these transactions. During 1998, the
                              balance of $133,000 was written off.

                                                                            F-12

<PAGE>
                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

    6.  SHORT-TERM DEBT      Debt consists of the following:
        EXPECTED TO BE
        REFINANCED:
<TABLE>
<CAPTION>
                              December 31,                                                               1998            1997
                              -----------------------------------------------------------------------------------------------
<S>                           <C>                                                                 <C>             <C>           
                              Borrowings from bank                                                          -      $  750,000(a)
                              Loan from customer/supplier                                         $ 2,000,000(c)            -
                              Private placement debt                                                9,900,000(d)      250,000(b)
                              -----------------------------------------------------------------------------------------------
                                                                                                  $11,900,000       1,000,000
                              Less current portion of debt                                          2,127,500       1,000,000
                              -----------------------------------------------------------------------------------------------
                              Short-term debt expected to be refinanced, less current portion     $ 9,772,500      $        -
                              ===============================================================================================
</TABLE>
                              (a)   The bank borrowing was repaid on July
                                    29,1998 from a portion of the proceeds of
                                    the borrowing discussed below (d).

                              (b)   The $250,000 short-term loan outstanding at
                                    December 31, 1997 was repaid in April 1998
                                    from the borrowing discussed in the
                                    following paragraph. As additional
                                    compensation for lending the Company funds,
                                    the individual was initially granted
                                    warrants (exercisable over three years) to
                                    purchase 250,000 shares of the Company's
                                    common stock at $0.50 per share. In return
                                    for extending the maturity date of the loan
                                    from March 9, 1998 to April 13, 1998, the
                                    individual was granted warrants for an
                                    additional 125,000 shares on the same terms.
                                    Management estimates the value of these
                                    additional warrants reflected in interest
                                    expense in 1998 at $5,750.

                              (c)   In February 1998, the Company amended its
                                    existing telecommunications agreement with
                                    IDT Corporation ("IDT"), one of its long
                                    distance vendors/customers. Under the terms
                                    of the amendment, the Company agreed to sell
                                    IDT up to 10,000,000 minutes per month of
                                    long distance traffic, through June 9, 1999,
                                    at favorable rates and IDT agreed to lend
                                    the Company $2,000,000. Of this amount,
                                    $500,000 was funded when the transaction was
                                    signed, $1,000,000 was funded in April 1998
                                    and the remaining $500,000 was advanced in
                                    June 1998. Concurrently, the Company has
                                    issued 100,000 warrants with an exercise
                                    price of $0.24 per share, 200,000 warrants
                                    with an exercise price of $1.00 per share
                                    and 100,000 warrants with an exercise price
                                    of $0.56 per share. The warrants are
                                    exercisable for a period of one year from
                                    the respective dates of grant. Management
                                    estimates the value of these warrants
                                    reflected in interest expense in 1998 at
                                    $30,879. The loan bears interest at 9% per
                                    annum and matured on February 9, 1999. In
                                    April 1999 the Company and IDT agreed in
                                    principal to a new note (the "New Note") due
                                    in six months with a principal amount of
                                    $2,060,000 at 12% interest per annum. The
                                    Company is required to make a payment of
                                    $500,000 on May 31, 1999, half of which
                                    shall be applied to the New Note and the
                                    balance against accounts receivable due to
                                    IDT. Thereafter, the Company has agreed to
                                    pay IDT $50,000 per month against the New
                                    Note. In connection with the New Note, the
                                    Company has granted additional shares of
                                    common stock and warrants as defined in the
                                    agreement.
                                   
<PAGE>

                                    In April 1998, the Company borrowed
                                    $1,000,000 from unaffiliated investors. The
                                    loan was unsecured, bore interest at 10% per
                                    annum and matured July 1, 1998. In
                                    consideration for advancing the funds, the
                                    lenders received warrants to purchase
                                    1,000,000 shares of the Company's common
                                    stock at $0.35 per share, which are
                                    exercisable on or before April 1, 2001. The
                                    $175,000 value assigned to these warrants is
                                    reflected in interest expense. The placement
                                    agent for this loan received $75,000 and
                                    warrants to purchase 250,000 shares of the
                                    Company's common stock at $0.35 per share.
                                    The $43,750 value assigned to these warrants
                                    is included in debt placement expenses. This
                                    borrowing was repaid on July 31, 1998 from a
                                    portion of the proceeds of the borrowing
                                    discussed below. Because the borrowing was
                                    repaid after the maturity date, the interest
                                    rate was increased, effective July 1, 1998,
                                    to 18% and the lenders and the placement
                                    agent were granted warrants to purchase
                                    1,250,000 shares of the Company's common
                                    stock, exercisable through August 14, 2001,
                                    at $0.25 per share. Management estimates the
                                    value of these warrants reflected in
                                    interest and debt placement expense at
                                    $326,900 and $81,725, respectively.

                                                                            F-13

<PAGE>
                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

                              (d)  Between July 29, 1998 and September 8, 1998,
                                   the Company, through Commonwealth Associates
                                   ("Commonwealth") placed $9,900,000 (face
                                   amount) of 10%, 120-day Senior Secured Notes
                                   (the "Original Notes") and 9,900,000
                                   warrants to purchase shares of the Company's
                                   common stock at $0.50 per share for five
                                   years (the "Placement"). The Notes are
                                   secured by all of the assets of PICK
                                   Communications Corp. The Company allocated
                                   $8,587,066 of the gross sale proceeds to the
                                   debt and $1,312,934 to the warrants. The
                                   $1,312,934 discount was amortized as
                                   interest expense over the original 120-day
                                   life of the Notes. In November and December
                                   1998, the Company exercised its right to
                                   extend the maturity date of the Notes for 60
                                   days. Under the terms of the Notes, the
                                   interest rate of the Notes was increased to
                                   18% per annum, retroactive to the issuance
                                   of the Notes. In January, February and March
                                   1999, the holders of the Notes agreed to
                                   extend the maturity of the Notes until April
                                   27, 1999. In return for the extensions, the
                                   Company agreed to issue 500,000 shares of
                                   its common stock and warrants to purchase
                                   2,475,000 shares of the Company's common
                                   stock for five years at $0.50 per share to
                                   the holders of the Notes. On April 27, 1999,
                                   the holders of the Original Notes, who
                                   control in excess of 90% of the principal
                                   which was due on April 27, 1999, consented
                                   to restructure their Original Notes (the
                                   "Restructured Notes") and extend the maturity
                                   date until April 27, 2002. In return, the
                                   Company has agreed, for a two year period,
                                   to allow each of the holders of the
                                   Restructured Notes certain rights regarding
                                   the purchase or exchange of the Company's
                                   common stock or warrants as deferred in the
                                   agreement.

                              For the Placement of the Original Notes, the
                              Company paid Commonwealth and Liberty Capital (the
                              Company's co-financial advisor) $1,099,000 in
                              cash, issued 1,394,368 shares of common stock
                              (valued at $865,799) and warrants to purchase
                              2,509,859 shares of common stock at $0.50 per
                              share for five years (valued at $383,002). The
                              costs related to the Placement were being deferred
                              and amortized as debt placement expenses over the
                              term of the debt. At December 31, 1998, all debt
                              placement expenses were amortized and included in
                              the consolidated statement of operations.

    7.  ACCOUNTS              Accounts payable and accrued expenses consist of
        PAYABLE AND           the following.
        ACCRUED    
        EXPENSES:
<TABLE>
<CAPTION>
                             <S>                  <C>                                 <C>                    <C> 
                              December 31,                                                   1998                 1997
                              ----------------------------------------------------------------------------------------         
                              Accounts payable - operating                             $5,530,511           $4,480,815
                              Accrued expenses - operating                                510,467              395,521
                              Accrued expenses - for equipment                          1,650,000                    -  
                              ----------------------------------------------------------------------------------------
                                                                                       $7,690,978           $4,876,336
                              ========================================================================================

</TABLE>
                              Accounts payable at December 31, 1998 include
                              $1,120,544 payable to WorldCom Network Services,
                              Inc., which was payable in monthly installments of
                              between $350,000 and $385,544, plus interest at
                              18% per annum, through December 1998. The Company
                              is in the process of renegotiating payment terms
                              (see Note 13).

                                                                            F-14
<PAGE>
                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
    8.  OTHER CURRENT      Other current liabilities consist of the following:
        LIABILITIES: 

                           
<TABLE>
<CAPTION>
                           December 31,                                                   1998                 1997
                           ----------------------------------------------------------------------------------------        
<S>                        <C>                                                      <C>                  <C>       
                           Reserve for contingent liability                         $1,100,000           $1,100,000
                           Advance from customer                                     1,000,000                    -
                           Provision for loss on deferred revenue -
                            prepaid calling cards                                    1,580,000                    -
                           Customer deposits                                           287,841                    -
                           Advances from stockholder                                         -              170,000
                           Accrued compensation due to stockholders                          -               53,525
                           ----------------------------------------------------------------------------------------
                                                                                    $3,967,841           $1,323,525
                           ========================================================================================
</TABLE>
    9.  CAPITAL LEASE      The Company leases telephone switching equipment 
        OBLIGATIONS:       under capital leases which expire during 2002. The
                           leases require monthly payments of principal and
                           interest imputed at 12% per annum.

                           Future minimum lease payments under capital leases
                           are as follows:
<TABLE>
<CAPTION>
                           Year ending December 31,
<S>                        <C>                                                                        <C>    

                                       1999                                                             $   414,783
                                       2000                                                                 414,783
                                       2001                                                                 414,783
                                       2002                                                                 414,783
                           ----------------------------------------------------------------------------------------
                                                                                                          1,659,132
                           Less amount representing interest                                                344,740
                           ----------------------------------------------------------------------------------------
                                                                                                          1,314,392
                           Less current portion                                                             271,676
                           ----------------------------------------------------------------------------------------
                                    Capital leases, less current portion                                 $1,042,716
                           ========================================================================================
</TABLE>
    10. COMMITMENTS:       The Company leases facilities under noncancelable 
                           operating leases expiring from July 2000 through
                           October 2003. The future minimum payments due
                           under such leases as of December 31, 1998 are as
                           follows:
<TABLE>
<CAPTION>
                           December 31,
                           ----------------------------------------------------------------------------------------
<S>                        <C>                                                                        <C>    
                           1999                                                                         $   482,483
                           2000                                                                             400,744
                           2001                                                                             251,425
                           2002                                                                             169,769
                           2003                                                                             144,994
                           ----------------------------------------------------------------------------------------
                                    Total payments                                                       $1,449,415
                           ========================================================================================
</TABLE>

                                                                         F-15

<PAGE>
                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

                              Rental expense under operating leases was
                              $356,718, $106,586 and $45,315 for the years ended
                              December 31, 1998, 1997 and 1996, respectively.
                              The Company has the right to renew its operating
                              leases for terms of between three and five years.

                              At December 1998, the Company has outstanding
                              commitments for the purchase of telecommunications
                              and computer equipment and for the license of
                              computer software of approximately $690,000.

                              In September 1998, the Company entered into an
                              employment agreement with a key executive. This
                              agreement commenced January 1, 1999. The agreement
                              provides for annual base salaries of $300,000,
                              $350,000, $400,000, $450,000 and $500,000 for the
                              next five years. In addition, the agreement
                              provides for additional compensation, as defined
                              in the agreement.


    11. INCOME TAXES:         The Company's deferred tax assets at December 31, 
                              1998 consist of the following:
<TABLE>
<CAPTION>

<S>                           <C>                                                                        <C>         
                              Federal                                                                     $  9,300,000
                              State                                                                          1,700,000
                              ----------------------------------------------------------------------------------------
                                                                                                            11,000,000
                              Less valuation allowance                                                     (11,000,000)
                              ----------------------------------------------------------------------------------------
                                         Net deferred tax assets                                        $      - 0 -
                              ========================================================================================
</TABLE>
                              The deferred tax assets are comprised of the tax
                              benefit of net operating loss carryforwards and
                              capital loss carryforwards of approximately
                              $20,000,000 and $8,300,000, respectively, at
                              December 31, 1998. These losses are available to
                              offset future taxable income through the years
                              2018 and 2003, respectively.


    12. CONTRACT WITH         In February 1998, the Company entered into a 
        BLACKSTONE            two-year agreement with Blackstone Calling Card, 
        CALLING CARD,         Inc. ("Blackstone" and the "Blackstone  
        INC.:                 Agreement"), a major distributor of prepaid 
                              telephone calling cards. Under the terms of the
                              Blackstone Agreement, as amended, after a
                              six-month phase-in period commencing April 27,
                              1998, Blackstone would purchase prepaid calling
                              cards with a minimum retail value of $5,000,000
                              per month from the Company, which was expected to
                              result in net revenue of approximately $3,000,000
                              per month to the Company. While Blackstone's
                              purchases from the Company had increased
                              significantly during the first nine months of the
                              contract, it is anticipated that the Blackstone
                              Agreement will have to be amended to raise the per
                              minute rates charged to users of the prepaid
                              telephone calling cards sold through Blackstone
                              and lower the purchase minimum amount and the
                              corresponding revenue to the Company. The
                              Blackstone Agreement is also subject to
                              termination by either party without cause at the
                              end of any year upon 60 days' prior notice, or by
                              Blackstone if the Company fails to maintain
                              overall network quality.

                              Other current liabilities includes a provision of
                              $1,580,000 for anticipated losses from providing
                              future service on prepaid telephone calling cards
                              sold prior to December 31, 1998.

                                                                            F-16



<PAGE>

                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

13.  LITIGATION AND           The Company is, from time to time, party to       
     RESERVE FOR              litigation that arises in the ordinary course of  
     CONTINGENT               its business operations. Except as described      
     LIABILITY:               below, the Company is not presently a party to any
                              litigation that it believes would have a material 
                              adverse effect on its business.                   

                              In February 1997, the Company commenced a
                              mediation action against American Telephone &
                              Telegraph ("AT&T") seeking $10,000,000 in damages
                              for breach of contract and fraudulent inducement
                              and malicious conduct under a carrier agreement
                              (the "Carrier Agreement") entered into in February
                              1996. The Company contracted with AT&T under the
                              Carrier Agreement for inbound 800 service and
                              outbound domestic and international long distance
                              service. The Company claims that AT&T reneged on
                              certain commitments to provide the Company with
                              lower international rates than the Company was
                              invoiced by AT&T. AT&T has claimed that the
                              Company owes it in excess of $1,000,000. In 1996,
                              the Company provided for a noncash reserve of
                              $1,750,000, which was reduced to $1,100,000 in the
                              third quarter of 1997. The reserve is included in
                              other current liabilities in the accompanying
                              consolidated financial statements. After two
                              mediation sessions, AT&T indicated that it
                              intended to withdraw from the mediation. On
                              November 5, 1997, the Company filed for
                              arbitration proceedings against AT&T and reduced
                              its claim to $5,000,000. The trial began on April
                              19, 1999 and ended on April 22, 1999. There can be
                              no assurance that the Company will be able to
                              prevail in this arbitration. Any adverse judgement
                              or settlement could have a material impact on the
                              Company's financial condition.

                              During March of 1999, Worldcom Network Services,
                              Inc., d/b/a Wiltel, (Worldcom) commenced a lawsuit
                              against the Company in the United States District
                              Court, Southern District of New York demanding a
                              judgment in the amount of $1,256,622 which
                              includes interest of 18% per annum plus costs and
                              expenses. The plaintiff had previously sued the
                              Company for failure to pay for telecommunications
                              services provided and the parties reached
                              agreement on a settlement. However, the Company
                              has not made the required payments. On April 15,
                              1999 the Company and Worldcom agreed to a 90-day
                              extension of monies due at an interest rate of 16%
                              per annum payable by June 30, 1999. Accounts
                              payable and accrued expenses includes a liability
                              of $1,137,352 for this settlement at December 31,
                              1998.


                                                                            F-17
<PAGE>
                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

14. STOCK OPTIONS:            

                              In February 1996, the Company adopted an incentive
                              stock option plan for employees, directors,
                              independent contractors and consultants of the
                              Company which provides for the grant of stock
                              options and stock appreciation rights. Options may
                              be granted at prices not less than fair market
                              value of the Company's common stock at the date of
                              grant and may not be exercised more than 10 years
                              after the date granted. Unless otherwise provided,
                              options vest at a rate of 20% a year commencing
                              with the date of grant. Pursuant to this plan an
                              aggregate of 7,500,000 shares of common stock have
                              been reserved for issuance. Of the total number of
                              shares of common stock as of December 31, 1998,
                              3,955,000 shares of common stock relate to options
                              issued outside of the incentive stock option plan.

                              Transactions related to stock options are as
                              follows:
<TABLE>
<CAPTION>
                                                                                 Number of          Weighted-average
                                                                                  Shares             Price per share
                              ----------------------------------------------------------------------------------------
<S>                                                                              <C>                            <C>   
                              Granted during 1996                                3,500,000                      $ 0.88
                              ----------------------------------------------------------------------------------------
                              Balance at December 31, 1996                       3,500,000                        0.88
                              Granted                                            4,500,000                        0.23
                              Expired/canceled                                  (3,500,000)                      (0.88)
                              ----------------------------------------------------------------------------------------
                              Balance at December 31, 1997                       4,500,000                        0.23
                              Granted                                            6,800,000                        0.52
                              Exercised                                            (50,000)                      (0.27)
                              ----------------------------------------------------------------------------------------
                              Balance at December 31, 1998                      11,250,000                      $ 0.41
                              ========================================================================================
</TABLE>
                              The weighted-average fair value per share of
                              options granted during the years ended December
                              31, 1998, 1997 and 1996 amounted to $0.13, $0.64
                              and $0.10, respectively.

                              Approximately $306,000 is reflected in selling,
                              general and administrative expenses for the year
                              ended December 31, 1998 relating to options
                              granted to nonemployees.

                              The Company has elected, in accordance with the
                              provisions of SFAS No. 123, "Accounting for Stock
                              Based Compensation" to apply the current
                              accounting rules under Accounting Principles Board
                              Opinion No. 25 and related interpretations in
                              accounting for its stock options and, accordingly,
                              has presented the disclosure-only information as
                              required by SFAS No. 123. If the Company had
                              elected to recognize compensation cost based on
                              the fair value of the options granted at the grant
                              date as prescribed by SFAS No. 123, the Company's
                              net income (loss) and net income (loss) per common
                              share for the years ended December 31, 1998, 1997
                              and 1996 would approximate the pro forma amounts
                              indicated in the table below:
<TABLE>
<CAPTION>
                                                                                1998             1997             1996
                              ----------------------------------------------------------------------------------------
<S>                                                                     <C>              <C>                <C>       
                              Net income (loss) - as reported           $(17,063,309)    $ (9,499,802)      $1,635,790
                              Net income (loss) - pro forma             $(17,253,914)    $(10,138,680)      $1,295,676
                              Diluted net income (loss) per
                               common share - as reported                     $(0.46)          $(0.26)           $0.04
                              Diluted net income (loss) per
                               common share - pro forma                       $(0.47)          $(0.27)           $0.03
                              ----------------------------------------------------------------------------------------
</TABLE>
                              The fair value of each option grant is estimated
                              on the date of grant using the Black-Scholes
                              option-pricing model with the following
                              weighted-average assumptions used for the years
                              ended December 31, 1998, 1997 and 1996,

                                                                            F-18
<PAGE>
                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

                              respectively; expected volatility of 18%, 134% and
                              68%, respectively; risk-free interest rates of
                              6.01%, 6.00% and 6.26%, respectively; no
                              annualized dividends paid with respect to a share
                              of common stock at the date of grant, and options
                              have expected lives of between two and five years.
                              The following table summarizes information about
                              fixed stock options outstanding at December 31,
                              1998:

<TABLE>
<CAPTION> 
                                                                                          Options              Options   
                                                                                        Outstanding          Exercisable 
                              ------------------------------------------------------------------------------------------
                                                                      Weighted-       
                                                         Number        Average     Weighted-     Number        Weighted-
                                                     Outstanding at   Remaining     Average  Exercisable at     Average
                                                      December 31,   Contractual   Exercise   December 31,     Exercise
                              Range of Exercise Prices    1998      Life (Years)     Price        1998           Price
                              ------------------------------------------------------------------------------------------
<S>                                                  <C>                 <C>        <C>        <C>                <C>  
                              1 - $0.17-$0.27          3,950,000         0.6        $0.21       3,950,000         $0.21
                              2 - $0.30-$0.41          1,350,000         1.8        $0.36       1,350,000         $0.37
                              3 - $0.50-$0.55          5,750,000         4.2        $0.54       2,703,750         $0.54
                              4 - $0.61-$0.99            200,000         3.8        $0.80         200,000         $0.80
                              ------------------------------------------------------------------------------------------
                                     Total            11,250,000         2.6        $0.41       8,203,750         $0.54
                              ==========================================================================================
</TABLE>


15.   COMPREHENSIVE           Comprehensive income, as defined in SFAS No. 130, 
      INCOME(LOSS):           "Reporting Comprehensive Income", includes all
                              changes in equity during a period from nonowner
                              sources. An example of items included in
                              comprehensive income that are excluded from net
                              income are unrealized gains or losses on
                              marketable equity securities. For the years ended
                              December 31, 1998, and 1997, changes in
                              accumulated other comprehensive income (loss) were
                              ($38,000) and $3,942,965, respectively and
                              relates to unrealized gains or losses on
                              marketable equity securities.

16.   GOING CONCERN           The accompanying consolidated financial statements
      MATTERS:                have been prepared assuming that the Company will 
                              continue as a going concern, which contemplates   
                              the realization of assets and the satisfaction of
                              liabilities in the normal course of business. The
                              Company has incurred substantial recurring losses
                              from operations, has a net capital deficiency 
                              in the amount of $20,351,879 and has a working
                              capital deficiency of $14,677,342 that raise
                              substantial doubt about its ability to continue as
                              a going concern. In addition, the Company had 
                              negative cash flow from operations in the years 
                              ended December 31, 1998, 1997 and 1996.

                              Significant short-term obligations exist including
                              the payment of a settlement with Wiltel in the
                              amount of $1,256,622 payable by June 30, 1999 (See
                              Note 13); an agreement with IDT which requires a
                              payment of $500,000 by May 31, 1999 (See Note
                              (6c)) and normal cash flows from operations.
                              Without the Company's ability to extend the
                              pay-out terms of the aforementioned liabilities or
                              obtain additional long-term financing, as well as
                              increasing revenue and/or decreasing expenses, the


                                                                            F-19

<PAGE>
                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================

                              Company will be unable to continue as a going
                              concern. The financial statements do not include
                              any adjustments relating to the recoverability of
                              assets or the classification of liabilities should
                              the Company be unable to continue as a going
                              concern.

                              The Company is negotiating with several potential
                              investors to raise additional funds through
                              private placement of debt and/or equity. The
                              Company believes that these plans, if successfully
                              implemented, will enable it to continue as a going
                              concern. However, there can be no assurance that
                              the Company will be successful in either
                              generating positive operating income or raising
                              additional funds in the immediate future in
                              amounts sufficient to allow it to continue as a
                              going concern.


17.   SUBSEQUENT              During March 1999, the Company authorized the     
      EVENTS:                 issuance of Series B and Series D Convertible     
                              Preferred Stock totaling 2,500,000 shares of     
                              convertible preferred stock. The Series B         
                              Convertible Preferred Stock has a stated par value
                              of $.001 per share and is convertible into
                              20,000,000 shares of the Company's common stock.
                              The Series D Convertible Preferred Stock has a
                              stated par value of $.001 per share and is
                              convertible into 11,905,000 shares of the
                              Company's common stock.             

                              During early 1999, the Company formed a 100% -
                              owned subsidiary, PICK Online.Com, Inc. to provide
                              audio and video broadcasting from radio and
                              television stations to be sent over the Internet.
                              This company is in its development stage and
                              management anticipates operations to commence
                              during 1999.

                              On March 3, 1999, the Board of Directors granted
                              each of the four independent directors three year
                              options to purchase 500,000 shares of common stock
                              at $0.51 per share. These options shall be fully
                              vested on March 3, 2000.

                              The Company intends to increase its authorized
                              shares of common stock from 100,000,000 to
                              400,000,000.


                                                                            F-20
<PAGE>
                                      PICK COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================


18.  ALLOWANCE FOR            Information relating to the allowance for doubtful
     DOUBTFUL                 accounts is as follows at December 31,:
     ACCOUNTS:


<TABLE>
<CAPTION>
                                                     Balance at
                                                      Beginning        Charged to                         Balance at
                                                       of Year           Expense         Deductions       End of Year
                              ----------------------------------------------------------------------------------------

<S>                                                  <C>                  <C>             <C>                 <C>     
                              1996                   $  42,650            $219,746        $  98,233           $164,163
                              ========================================================================================
                              1997                    $164,163            $253,270        $  90,936           $326,497
                              ========================================================================================
                              1998                    $326,497            $125,740         $100,399           $351,838
                              ========================================================================================
</TABLE>



                                                                            F-21

<PAGE>

                                     PART IV

Item 14: Exhibits, Financial Statement Schedules and Reports of Form 8-K.

(a) 1.  Financial Statements                                                Page
----------------------------                                                ----

Reports of Certified Public Accountants                                      F-1

Consolidated Balance Sheets at December 31, 1998 and 1997                    F-3

Consolidated Statements of Operations for the Years Ended
         December 31, 1998, 1997 and 1996                                    F-4

Consolidated Statement of Stockholders' Equity for the Years Ended
         December 31, 1998, 1997 and 1996                                    F-5

Consolidated Statements of Cash Flows for the Years Ended
         December 31, 1998, 1997 and 1996                                    F-6

Notes to Consolidated Financial Statements                                   F-8


                                      -36-

<PAGE>

(a) 3. Exhibits
---------------

3.1   Amended Articles of Incorporation (1)
3.2.  By-Laws(2)
4.1   Form of Warrant Agreement between Registrant and certain holders of
      warrants (3)
4.2   Form of Note issued by the Registrant to the Noteholders in the July
      Bridge Loan
4.3   Form of Note issued by the Registrant to the Noteholders in the July
      Bridge Loan, as amended
4.4   Form of Warrant issued by the Registrant to the Noteholders in the July
      Bridge Loan
4.5   Form of Warrant issued by the Registrant to the Noteholders in the July
      Bridge Loan as amended
10.1  Distributor Agreement, dated February 11, 1988, between the Registrant and
      Blackstone Calling Card. Inc. (the "Blackstone Agreement") (3)
10.2  Amendment dated April 13, 1998 to the Blackstone Agreement (3)
10.3  Amendment dated April 27, 1998 to the Blackstone Agreement (3)
10.4  Reciprocal Telecommunications Agreement, dated December 4, 1997, between
      Pick Net, Inc, and Gulfsat Communications Company (the "Gulfsat
      Agreement") (3)
10.5  Amendment, dated March 7, 1998, to the Gulfsat Agreement (3)
10.6  Promissory Note, dated April 2, 1998, between the Registrant and Wolfson
      Equities (3)
10.7  Letter Agreement, dated April 2, 1998, between the Registrant and Wolfson
      Equities (3)
10.8  Reciprocal Telecommunications Agreement, dated November 11, 1996 between
      Pick Net, Inc. and IDT Corporation (the "IDT Agreement") (3)
10.9  Amendment, dated November 11, 1996, to the IDT Agreement (3)
10.10 Promissory Note, dated February 12, 1998 between Pick Net, Inc. and IDT
      Corporation (3)
10.11 Form of Lease Agreement between Telecommunications Finance Group and PICK
      Communications, Corp. (3)
10.12 Employment Agreement, dated September 28, 1998 between Diego Leiva and the
      Registrant.
21.1  Subsidiaries of the Registrant (1)
27.1  Financial Data Schedule

-------------------
(1)   Incorporated herein by reference from Exhibits to Registrant's Annual
      Report on Form 10-K for the year ended December 31, 1996.
(2)   Incorporated herein by reference from Exhibits to Registrant's Form 10.
(3)   Incorporated herein by reference from Exhibits to Registrant's Annual
      Report on Form 10-K for the year ended December 31, 1997.

(b) Reports on Form 8-K

         The Company filed a Current Report on Form 8-K on September 16, 1998
reporting an event under Item 4.


                                      -37-

<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section l3 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, thereto duly authorized.


                                        PICK COMMUNICATIONS CORP.


Dated: April April 29, 1999              By    /s/ Diego Leiva
                                            -----------------------------------
                                            Diego Leiva, President and
                                            Chairman of the Board


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant in the
capacities and on the dates stated:

Signature               Title                                     Date

/s/ Diego Leiva
-----------------------
Diego Leiva               President and Chairman of the Board     April 29, 1999

/s/ Thomas M. Malone      Chief Executive Officer (Principal      April 29, 1999
-----------------------   Executive Officer) and Director
Thomas M. Malone        

/s/ James H. Season       Vice President and Chief Financial      April 29, 1999
-----------------------   Officer (Principal Financial Officer)
James H. Season         

/s/ Robert R. Sams
----------------------    Director                                April 29, 1999
Robert R. Sams

/s/ Ricardo Maranon
----------------------    Director                                April 29, 1999
Ricardo Maranon

/s/ John Tydeman
----------------------    Director                                April 29, 1999
John Tydeman

/s/ Alberto M. Delgado
----------------------    Director                                April 29, 1999
Alberto M. Delgado



                                      -38-