TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                    FORM 10-Q

Quarterly Report pursuant to Section 13 of the Securities Exchange Act of 1934
                for the quarterly period ended September 30, 1999



                       TELEHUB COMMUNICATIONS CORPORATION
             (Exact Name of Registrant as Specified in its Charter)

     Nevada                        333-61441                  36-413-6730
(Jurisdiction of           (Commission File Number)          (I.R.S. Employer
  incorporation)                                          Identification Number)


                                 CO-REGISTRANTS
                      TeleHub Network Services Corporation
                        TeleHub Technologies Corporation
                           TeleHub Leasing Corporation
          (Exact Name of Co-Registrants as Specified in their Charters)
      Illinois                     333-61441                  36-406-6622
      Nevada                       333-61441                  36-421-3797
      Nevada                       333-61441                  36-335-3108
  (Jurisdiction                   (Commission              (I.R.S. Employer
of incorporation)                 File Number)           Identification Number)

                     John R. Lawson, Chief Financial Officer
                       TeleHub Communications Corporation
                        1175 Tri-State Parkway, Suite 250
                             Gurnee, Illinois 60031
                                 1 (800) TELEHUB
               (Address, including zip code, & telephone number,
                  of Registrants' principal executive offices)


Indicate by check mark whether the Registrants:        Yes    X      No
                                                           ------       -------

   (1)   have  filed  all  reports  to be  filed by  Section  13 or 15(d) of the
         Securities  Exchange Act of 1934 during the preceding 12 months (or for
         such  shorter  period  that the  registrant  was  required to file such
         reports), and

   (2)   has been subject to such filing requirements for the past 90 days.

           APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY  PROCEEDINGS DURING
THE PRECEDING  FIVE YEARS  Indicate by check mark whether the  Registrants  have
filed all documents and reports  required to be filed by Section 12, 13 or 15(d)
of the  Securities  Exchange  Act of  1934  subsequent  to the  distribution  of
securities under a plan confirmed by a court.  Yes  X   No
                                                   ---    ---

On September 30, 1999,  the Registrant  had  13,059,191  issued and  outstanding
common shares.

<PAGE>

                         TABLE OF CONTENTS FOR FORM 10-Q

                                                                           Page

                         PART I - FINANCIAL INFORMATION
Item 1.    Financial Statements.............................................. 3
           Consolidated Balance Sheets........................................4

           Consolidated Statements of Operations..............................5

           Consolidated Statements of Cash Flows..............................6

           Notes to Consolidated Financial Statements.........................7

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations.....................13

                           PART II - OTHER INFORMATION
Item 1.    Legal Proceedings.................................................21
Item 2.    Changes in Securities.............................................22
Item 3.    Defaults Upon Senior Securities...................................22
Item 4.    Submission of Matters to a Vote of Security Holders...............23
Item 5.    Other Information.................................................23
Item 6.    Exhibits and Reports on Form 8-K..................................23

SIGNATURE....................................................................24








                                       2
<PAGE>



NOTE  CONCERNING  FORWARD-LOOKING  INFORMATION.  Some of the information in this
Report contains  forward-looking  statements that involve  substantial risks and
uncertainties  that constitute  "forward-looking  statements"  under the Private
Securities  Litigation Reform Act of 1995.  Forward-looking words such as "may,"
"will," "expect," "anticipate,"  "believe," "estimate" and "continue" or similar
words identify such  statements.  Investors  should read statements that contain
these  words  carefully  because  they:  (1)  discuss  the  Registrants'  future
expectations;  (2) contain  projections  of the  Registrants'  future results of
operations or of its financial condition;  or (3) state other  "forward-looking"
information.  The Registrants  believe that it is important to communicate  such
future expectations to its investors. However, there may be events in the future
that the Registrants have not accurately predicted or over which the Registrants
have no control.  These events may include the  Registrants'  limited  operating
history and uncertainty as to the Registrants' future profitability; uncertainty
about the outcome of the bankruptcy  case;  uncertainty  as to the  Registrants'
ability to meet  business  targets  and  budgets  and to develop  and  implement
operational, sales and marketing and financial systems to manage rapidly growing
operations;  competition  from  other  participants  in the  highly  competitive
telecommunications  industry;  uncertainty  as to the  Registrants'  ability  to
obtain  financing  on  acceptable  terms  to  finance  its  business   strategy;
uncertainty as to the  Registrants'  ability to obtain and protect  intellectual
property   rights  or  to  develop   proprietary   products  that  will  receive
intellectual   property   protection;   the   possibility   that   technological
developments may adversely  affect the commercial  viability of the Registrants'
VASP(TM)   technology  and  the  Registrants'   other  products;   unanticipated
regulatory   changes  that  may  change  the  competitive   environment  to  the
Registrants'  detriment;  the Registrants'  efforts to address Year 2000 issues.
Cautionary language in this report provides examples of risks, uncertainties and
events that may cause the Registrants'  actual results to differ materially from
the  expectations  described in the  forward-looking  statements of this Report.
Occurrence of the events  described in this Report could have a material adverse
effect on the Registrants' business, operating results and financial condition.






                                       3
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                    December 31,    September 30,
                                                                       1998             1999
                                                                   -------------    -------------
                                                                                      (unaudited)
               Assets
Current assets:
<S>                                                                <C>              <C>
    Cash and cash equivalents                                      $  36,727,589    $   1,713,825
    Restricted cash                                                      416,321          289,628
    Accounts receivable, net of allowance for
       doubtful accounts of $1,093,594 and
       $11,590,675 in 1998 and 1999, respectively                      3,114,053          628,577
    Due from TeraBridge                                                     --            136,729
    Prepayments on leases                                                905,268          828,682
    Debt issuance costs                                                  874,338          868,767
    Other assets                                                         983,516          955,711
                                                                   -------------    -------------
           Total current assets                                       43,021,085        5,421,919

Property and equipment, net                                           21,062,255       28,676,348
Prepayments on leases                                                  1,044,085          723,458
Debt issuance costs                                                    4,874,105        4,191,888
Other assets                                                             408,246          298,740
                                                                   -------------    -------------
           Total assets                                            $  70,409,776    $  39,312,353
                                                                   =============    =============

               Liabilities and Stockholders' (Deficit)
Current liabilities:
    Accounts payable                                               $   5,802,730    $  18,308,482
    Accrued liabilities                                                4,500,579        5,267,744
    Current portion--capital lease obligations                         2,393,015        9,587,520
    Current portion--long-term debt                                      281,116       79,317,399
    Deferred gain on sale/leaseback                                       24,477           13,605
    Deferred Revenue                                                        --          7,865,730
                                                                   -------------    -------------
          Total current liabilities                                   13,001,917      120,360,480

Capital lease obligations                                              8,274,635             --
Other long-term debt                                                  67,885,960             --
Accrued liabilities                                                    2,893,850          651,428
Deferred gain on sale/leaseback                                           29,630            2,860
                                                                   -------------    -------------
          Total liabilities                                           92,085,992      121,014,768
                                                                   -------------    -------------


Stockholders' (deficit):
  Convertible preferred stock, $.001 par value;
     100,000,000 shares authorized;
     4,000,000 shares designated as Series A;
     3,500,000 shares issued and outstanding
     at December 31, 1998 andS eptember 30, 1999;
     liquidation preference $17,500,000                                    3,500            3,500
  Common stock, $.001 par value;
     100,000,000 shares authorized;
     12,703,537 and 13,059,191 shares issued
     and outstanding at December 31, 1998 and
     September 30, 1999, respectively                                     12,704           13,059
Common stock warrants                                                 27,246,651       27,727,849
Additional paid-in capital                                            40,105,733       42,184,398
Note receivable--stockholder                                            (400,000)      (2,062,170)
Deferred compensation                                                   (118,422)         (29,606)
Accumulated deficit                                                  (88,526,382)    (149,539,445)
                                                                   -------------    -------------
         Total stockholders' (deficit)                               (21,676,216)     (81,702,415)
                                                                   -------------    -------------
          Total liabilities and stockholders' (deficit)            $  70,409,776    $  39,312,353
                                                                   =============    =============
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       4
<PAGE>


                       TELEHUB COMMUNICATIONS CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                            Three Months Ended               Nine Months Ended
                                                      -------------------------------  -----------------------------
                                                      September 30,    September 30,   September 30,   September 30,
                                                           1998            1999            1998            1999
                                                       ------------    ------------    ------------    ------------

Revenues:
<S>                                                    <C>             <C>             <C>             <C>
   Telecommunications services                         $  1,454,103    $  7,691,683    $  1,613,368    $ 20,700,281
   Licenses                                                    --              --         3,000,000            --
                                                       ------------    ------------    ------------    ------------
                                                          1,454,103       7,691,683       4,613,368      20,700,281
                                                       ------------    ------------    ------------    ------------

Operating expenses:
   Operations                                            10,468,413      21,234,192      25,040,951      61,882,287
   General and administrative                             2,129,606         386,030       5,337,888       5,301,238
   Research and development                               2,317,299        (733,616)      5,985,404       4,939,108
   Sales and marketing                                    1,160,985      11,480,874       2,103,503      17,264,520
   Depreciation and amortization                          1,173,337       1,390,415       3,270,855       4,309,492
                                                       ------------    ------------    ------------    ------------
               Total operating expenses                  17,249,640      33,757,895      41,738,601      93,696,645
                                                       ------------    ------------    ------------    ------------
Operating loss                                          (15,795,537)    (26,066,212)    (37,125,233)    (72,996,364)
                                                       ------------    ------------    ------------    ------------

Other income (expense):
   Amortization of debt discount                         (1,025,612)       (806,629)     (1,999,137)     (2,396,677)
   Interest expense                                      (2,715,366)     (3,721,357)     (4,012,602)    (10,792,923)
   Interest income                                          602,804          91,875         789,883         570,867
   Other income                                               6,131         105,954          16,889         239,627
   Net gain on joint venture transaction                       --              --              --        24,362,406
                                                       ------------    ------------    ------------    ------------
               Net loss                                $(18,927,580)   $(30,396,369)   $(42,330,200)   $(61,013,064)
                                                       ============    ============    ============    ============
Basic and diluted loss per share                       $      (1.49)   $      (2.33)   $      (3.35)   $      (4.69)
                                                       ============    ============    ============    ============
Weighted average shares outstanding used in
    per share calculations basic and diluted             12,683,654      13,057,633      12,651,034      13,001,224
                                                       ============    ============    ============    ============
</TABLE>



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       5
<PAGE>
                       TELEHUB COMMUNICATIONS CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                        Nine Months Ended
                                                                    September 30,   September 30,
                                                                         1998            1999
                                                                    ------------    ------------
Cash flows from operations
<S>                                                                 <C>             <C>
      Net Loss                                                      $(42,330,200)   $(61,013,064)
      Adjustments to reconcile net loss to net cash
         used in operating activities
         Gain on joint venture transaction (note 4)                         --       (24,362,406)
         Depreciation and amortization                                 3,270,855       4,309,492
         Revenue recognized from Star Telecom agreement (note 5)            --          (134,270)
         Provisions for bad debts                                         48,401      10,532,279
         Amortization of debt issuance costs                                --           651,580
         Amortization of deferred compensation                           575,701          88,816
         Amortization of debt discount                                 1,999,137       2,396,677
         Accretion of debt                                             1,964,449       9,377,876
         Items settled through issuance of stock and
         other equity transactions                                     1,694,452          63,429
         Other non-cash credits                                          (99,821)         46,105
         Changes in operating assets and liabilities:
          (Increase) decrease in assets:
             Accounts receivable                                      (1,383,259)     (8,046,804)
             Due from TeraBridge                                            --          (136,729)
             Prepayments on leases                                       518,169         233,211
             Other assets                                               (375,121)       (259,036)
          Increase (decrease) in liabilities:
             Accounts payable                                          1,441,956      13,851,053
             Accrued liabilities                                       4,056,504        (257,259)
             Deferred gain from sale and lease-back                       48,628         (13,588)
                                                                    ------------    ------------
             Net cash used in operating activities                   (28,570,149)    (52,672,638)

Cash flows from investing activities:
      Payments for property and equipment                             (4,387,757)     (7,629,410)

      Proceeds from sale and lease-back of equipment                   1,220,697            --
      Proceeds received on joint venture transaction (note 3)               --        26,812,136
      Restricted cash                                                  1,137,498         126,693
                                                                    ------------    ------------
             Net cash provided by (used in) investing activities      (2,029,562)     19,309,419

Cash flows from financing activities:
      Proceeds from debt issue                                        77,727,084          36,208

      Proceeds from exercise of common stock options                   1,000,000         416,849
      Payment on note receivable - related party                        (635,340)           --
      Repayment on note receivable - related party                       250,000            --
      Payments on capital lease obligations and loans                 (1,706,225)     (2,103,602)
      Proceed from loans                                              12,000,000            --
      Repayment of loan                                              (12,000,000)           --
                                                                    ------------    ------------
              Net cash provided by (used in) financing activities     76,635,519      (1,650,545)
                                                                    ------------    ------------

Net decrease in cash and cash equivalents                             46,035,808     (35,013,764)
Cash and cash equivalents balance - beginning of period                9,380,320      36,727,589
                                                                    ------------    ------------
Cash and cash equivalents balance - end of period                   $ 55,416,128    $  1,713,825
                                                                    ============    ============
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       6
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       (Information as of and relating to the three and nine months ended
                   September 30, 1998 and 1999, is unaudited)


1.  Basis of Presentation:

         The financial  statements  included  herein are unaudited and have been
prepared in accordance with generally accepted accounting principles for interim
financial  reporting and Securities  Exchange  Commission  ("SEC")  regulations.
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted  pursuant to such rules and  regulations.  In the
opinion of management,  the financial  statements  reflect all adjustments (of a
normal and recurring nature) which are necessary to present fairly the financial
position,  results of operations and cash flows for the interim  periods.  These
financial statements should be read in conjunction with the annual report on the
Form 10-K of TeleHub Communications  Corporation ("TCC"or "the Company") for the
year ended  December 31, 1998.  The results for the  three-month  and nine-month
periods ended September 30, 1999 are not  necessarily  indicative of the results
that may be expected for the year ending December 31, 1999.


2.  Stock Options:

         Under variable stock option  accounting  rules,  the Company recorded a
compensation  charge  of  $1,711,342  in the  first  quarter  of 1999 due to two
employees  exercising  stock options through the issuance of notes receivable to
the Company when the Company's shares were priced at $14.58 per share.  Based on
the decline in the Company's stock price from the issuance date to September 30,
1999, the Company reversed the compensation  charge. The compensation charge and
subsequent  reversal was recorded in research  and  development  and general and
administration expenses in the amounts of $872,635 and $838,707, receptively.


3.  Segment Information:

The  Company had  operated  in two  business  segments:  (i)  telecommunications
software  products;  and (ii)  telecommunications  network services.  On May 19,
1999,  the Company  formed a new venture  with  Newbridge  Networks  Corporation
("Newbridge").   The  joint  venture  entity  is  named  TeraBridge   Technology
Corporation   ("TeraBridge").   At  closing,  TeleHub  Technologies  Corporation
("TTC"), which comprised the company software products segment,  contributed all
of its  assets  and  liabilities  to the joint  venture.  The joint  venture  is
accounted  for under the equity method of  accounting.  As a result of the joint
venture, the software products segment ceased operations as of May 19, 1999, and
after that date, is no longer an operating segment of the Company.





                                       7
<PAGE>


                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


<TABLE>
<CAPTION>
                                              Software       Network
                                               Products      Services    Consolidated
                                             -----------   -----------   -----------
THREE MONTHS ENDED SEPTEMBER 30, 1999
<S>                                                        <C>           <C>
   Revenues                                         --     $ 7,691,683   $ 7,691,683
   Operating loss                                   --      26,066,212    26,066,212
   Identifiable assets                              --      39,312,353    39,312,353
   Depreciation and amortization                    --       1,390,415     1,390,415
   Capital expenditures                             --       2,980,413     2,980,413

THREE MONTHS ENDED SEPTEMBER 30, 1998
   Revenues                                         --     $ 1,454,103   $ 1,454,103
   Operating loss                            $ 4,915,645    10,879,892    15,795,537
   Identifiable assets                        19,271,369    67,791,433    87,062,802
   Depreciation and amortization                 240,652       932,685     1,173,337
   Capital expenditures                          562,758     1,835,766     2,398,524




                                              Software       Network
                                               Products      Services    Consolidated
                                             -----------   -----------   -----------

NINE MONTHS ENDED SEPTEMBER 30, 1999
   Revenues                                         --      20,700,281   20,700,281
   Operating loss                             12,094,935    60,901,429   72,996,364
   Identifiable assets                              --      39,312,353   39,312,353
   Depreciation and amortization                 572,183     3,737,309    4,309,492
   Capital expenditures                        1,360,574     7,168,836    8,529,410

NINE MONTHS ENDED SEPTEMBER 30, 1998
   Revenues                                    3,000,000     1,613,368     4,613,368
   Operating loss                              9,019,565    28,105,668    37,125,233
   Identifiable assets                        19,271,369    67,791,433    87,062,802
   Depreciation and amortization                 608,084     2,662,771     3,270,855
   Capital expenditures                        1,250,578     4,025,358     5,275,936

</TABLE>

Identifiable  assets are those assets used exclusively in the operations of each
business segment, or which are allocated when used jointly.  All of the Software
Products revenues were generated from one customer.




                                       8
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)



4. Joint Venture Agreement:

         On May 19, 1999,  the Company formed a new joint venture with Newbridge
to further develop the Company's Virtual Access Services  Platform  ("VASP(TM)")
technology and related  products that are essential to  world-wide,  end-to-end,
service-rich  communications ("Newbridge  Transaction").  Under the terms of the
agreement,  the Company's  wholly owned  subsidiary,  TTC, formed a wholly owned
subsidiary, TeraBridge, incorporated in the State of Nevada. TTC contributed all
of its assets and  liabilities and TCC contributed all of its assets relating to
its  VASP(TM)  technology,   including  all  intellectual  property  rights,  to
TeraBridge.  Assets  contributed  by TCC had a book value of zero on the date of
the  transfer.  The  following  is a summary of the assets and  liabilities  TTC
contributed to TeraBridge.

<TABLE>
<CAPTION>
                            Assets                                             Liabilities
    ------------------------------------------------------- --------------------------------------------------
<S>                                                 <C>                                           <C>
    Accounts Receivable                             35,198    Accounts Payable                    (1,345,301)
    Allowance for Doubtful Accounts                (35,198)   Accrued Liabilities                 (1,054,529)
    Prepayments on Leases Current                  132,625    Current Portion Capital Lease          (26,734)
    Other Assets                                   323,444    Deferred Gain                          (24,054)
    Fixed Assets                                 6,134,559    Long Term Capital Lease                (56,255)
    Accumulated Depreciation                    (1,574,838)   Long Term Accrued Liabilities         (163,469)
    Prepayments on Leases Long Term                 31,377
    Other Long Term Assets                          72,905
                                           ----------------                                   ----------------
           Total Assets                          5,120,072        Total Liabilities               (2,670,342)
                                           ================                                   ================
</TABLE>

         Newbridge  contributed $52 million  directly to TeraBridge.  TeraBridge
immediately  remitted $22 million of this amount to TTC. TTC then  remitted this
$22  million  to the  Company  as a  partial  payment  against  an  intercompany
liability.  Newbridge  also  remitted  $8  million  directly  to the  Company in
exchange  for  19% of  the  common  stock  of  TeraBridge.  Under  terms  of the
Agreement, Newbridge has an option to purchase up to a 50% ownership interest in
TeraBridge in exchange for a $10 million contribution to TeraBridge  ("Newbridge
Option").  The  Newbridge  Option  expires  on May 19,  2000.  The net  proceeds
received by the Company  were $26.8  million,  which  represents  $30 million of
payment  remitted by Newbridge  less $3.2 million of costs  associated  with the
transaction.  The  Company  recorded  a total gain on the  transaction  of $24.4
million,  which is equal to the total amount of cash  received of $26.8  million
less the net assets contributed by TTC to TeraBridge of $2.4 million.


     The Company and Newbridge each have the right to appoint three  individuals
to the  Board of  Directors  of  TeraBridge.  A  seventh  board  member is to be
appointed by mutual  agreement  between the Company and Newbridge.  Accordingly,
TCC is accounting  for  TeraBridge  under the equity method of  accounting.  The
Company has recorded a full valuation allowance against their equity interest in
the net assets of  TeraBridge  due to the  uncertainty  of  realization  of this
investment  amount.  Accordingly,  the  investment  is  recorded  at zero on the
September 30, 1999 financial statements.  Further, the Company's equity interest







                                       9
<PAGE>


                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


in the net loss of TeraBridge for the period from May 19, 1999  (commencement of
operations)  to  September  30,  1999  is  not  reflected  in the  statement  of
operations  for the quarter  ended and nine months  ended  September  30,  1999.
Recognition of these losses would reduce the Company's  investment in TeraBridge
below zero,  and the Company has no  obligation to fund  TeraBridge  losses or a
TeraBridge deficit.

The Company  provides  management  and  accounting  services to  TeraBridge.  In
exchange  for these  services  TeraBridge  pays the  Company  a  monthly  fee of
$75,000. Additionally,  Newbridge provides management services to TeraBridge for
a monthly fee of $25,000.

The following is a summary of  TeraBridge's  financial  statement  amounts as of
September  30,  1999 and for the  period  from  May 19,  1999  (commencement  of
operations) to September 30, 1999.

     Revenues               $         0
     Assets                 $24,912,459
     Liabilities            $ 4,073,739
     Stockholders' equity   $20,838,720
     Operating loss         $12,016,891
     Net loss               $11,611,011


5.   Star Telecom Agreement:

      On June 30, 1999, the Company  entered into an agreement with Star Telecom
Network Inc. ("Star Telecom") whereby Star Telecom will use the Company as their
primary   domestic   carrier  for  the  purpose  of  terminating   domestic  and
international traffic into the United States. In connection with this agreement,
Star  Telecom has agreed to pay a minimum of $8 million  over a two-year  period
ending August 2001. The Company began  terminating  long-distance  minutes under
this  agreement  in August  1999.  The  Company  recorded $8 million as deferred
revenue and has realized revenue of $134,270 as of September 30, 1999.

     Under a separate agreement,  the Company has obtained an indefeasible right
of usage ("IRU"), pursuant to a twenty-year lease with Star Telecom, to backbone
facilities  provided through Star Telecom.  Star Telecom will provide 4,800 OS-3
miles of fiber  capacity  between the  Company's  switch sites and its points of
presence  (`POP's").  The  total  cost  of  the  contract  is  estimated  to  be
approximately $8 million, which was recorded as a fixed asset.



                                       10

<PAGE>


                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


6.   Supplemental Cash Flow Disclosure:

     Pursuant to the Initial Note Offering  dated July 30,1998,  the Company was
required to issue to existing  bondholders an additional  1,084,756 common stock
warrants  with an exercise of $.01.  These  warrants  were required to be issued
since the Company did not undertake an initial public offering by July 30, 1999.
The Company  valued these warrants under the  Black-Scholes  Valuation  model at
$417,769. This amount was capitalized as debt issuance costs at July 30, 1999.


7.   Subsequent Events:

     On October  27,  1999  ("Petition  Date"),  co-Registrant  TeleHub  Network
Services  Corporation  ("TNS")  filed  a  voluntary  petition  ("Petition")  for
reorganization under the federal bankruptcy laws. In re TeleHub Network Services
Corporation, No. 99-B-33272 (N.D. Ill., filed October 27, 1999) (the "Bankruptcy
Case"). TNS is currently operating its business as debtor-in-possession pursuant
to Bankruptcy  Code sections 1107 and 1108. The Bankruptcy  Court approved a few
preliminary  matters but the Bankruptcy Case is still in the initial  stages.  A
creditors committee has been appointed, but a trustee and receiver have not been
appointed.

     TNS  determined  that a  financial  restructuring  was  necessary  for  its
long-term  survival because the ATM network did not generate  sufficient revenue
to fund its operations at a sustainable  level.  TNS's  backbone  network leased
telecommunications  capacity from MCI Worldcom.  Partly due to problems with the
adequacy and timeliness of telecommunications services provided by MCI Worldcom,
TNS could not provision  sufficient  customers  onto its network to generate the
revenue necessary to sustain  operations and to pay the monthly charges from MCI
Worldcom.  The  average  monthly  charges of  approximately  $3.5  million  were
purportedly  secured by TNS's accounts  receivables and related  collateral.  At
September  30, 1999,  the  outstanding  amounts  billed by MCI Worldcom  reached
approximately  $9.5  million,  which TNS disputes.  On September  30, 1999,  TNS
terminated  the agreement with MCI Worldcom for cause;  MCI Worldcom  terminated
service to TNS when TNS did not provide  adequate  assurances  of its ability to
pay the disputed balance. TNS accordingly ceased network operations on September
30, 1999. Given this situation, TeleHub Communication Corporation ("Registrant")
could not obtain additional financing to fund TNS's operations.  The Company had
received  inquiries about selling TNS, but potential buyers were concerned about
TNS's outstanding  obligations.  After unsuccessful  attempts to renegotiate its
principal obligations, TNS concluded that the petition was necessary to preserve
the value of its assets while it attempted to restructure.







                                       11
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


          Until a plan of  reorganization is approved by creditors and confirmed
by the Bankruptcy Court, the Company's long term business plan, liquidity and
adequacy of capital  resources  cannot be determined.  TNS cannot predict when a
plan  will  be  approved  and  confirmed  due to the  preliminary  stage  of the
Bankruptcy Case. In particular, the creditors' committee has the right to review
and  object  to  certain  business  transactions  and  will  participate  in the
negotiation of TNS's reorganization plan.

         TNS's  Petition  constitutes  a  default  under  Section  6.1(8) of the
Indenture  governing  the Company's  13.875%  Senior  Secured  Notes  ("Bonds").
Indenture  section  6.2 further  provided  that the Bonds  automatically  became
immediately due and payable when TNS filed the Petition. The Company is pursuing
a bondholders waiver to rescind acceleration of indebtedness. As of November 15,
1999,  the Company has not obtained  this waiver.  Additionally,  as a result of
non-payment on the company's capital lease and other long-term debt obligations,
this indebtedness also became immediately due and payable.

          As a result of TNS's Petition, the Company has reclassed all long-term
and capital  lease  obligations  as current on the Balance Sheet as of September
30, 1999. Since TNS's network was shutdown as of September 30, 1999, the Company
was unable to continue to provide service to its customers,  and accordingly the
Company has reserved against  substantially all of the of account receivables at
September 30, 1999.

         On November 4, 1999,  the Company  and FDN,  Inc.  ("FDN")  executed an
Agreement and Plan of Share Exchange  ("Plan") to transfer all TNS capital stock
to FDN in  exchange  for FDN  capital  stock.  Closing of the Plan is subject to
customary conditions,  especially obtaining all regulatory approvals,  receiving
the consent of the holders of Company's  13.875%  Senior  Secured Notes due 2005
("Bonds"),  and approval from the Bankruptcy  Court.  The Bond  Indenture  would
require  the Company to redeem the Bonds if it sells TNS;  since the  Registrant
will not receive cash  consideration  in the Plan,  the Company will request the
Bondholders  to waive the  redemption  obligation.  The  Company and FDN closing
would occur after the Bankruptcy court approves the Plan.

         Pending closing,  FDN intends to supervise TNS's operations pursuant to
a  Management  and  Operating  Agreement  ("TNS  Management  Agreement");   this
arrangement  requires  approval from the Bankruptcy  Court.  TNS has applied for
such  approval on November 5, 1999.  If the  Bankruptcy  Court  approves the TNS
Management  Agreement,  FDN will contribute working capital to TNS, which should
permit TNS to recommence operations.

         The liquidity and capital  resources of the Company and TNS may also be
affected by decisions made in the Bankruptcy  Case with respect to its equipment
and real property  leases,  and expenses  incurred in the  Bankruptcy  Case. For
example, TNS must pay legal and other advisory fees and expenses associated with
the  Bankruptcy  Case.  In  order  for TNS to  reorganize  and  emerge  from the
Bankruptcy Case, the court must confirm a plan of reorganization.  If TNS cannot
obtain  confirmation of a reorganization  plan, its creditors or equity security
holders may seek a  liquidation  of the Company by  conversion  to a liquidation
proceeding.  In that event, TNS expects the assertion of additional  liabilities
and  claims  which  are  not  presently  reflected  in the  Company's  condensed
consolidated  financial statements.  In the event of a liquidation,  the amounts
reflected in the condensed consolidated financial statements would be subject to
adverse adjustments in amounts which, while not presently determinable, could be
material.


                                       12
<PAGE>


                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)




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

         The  following  discussion  should  be read  in  conjunction  with  the
Consolidated  Financial  Statements and related notes thereto included elsewhere
in this report.  The results shown herein are not necessarily  indicative of the
results  to  be  expected  in  any  future  periods.  This  discussion  contains
forward-looking  statements based on current  expectations,  which involve risks
and  uncertainties.  Actual  results  and  timing of  certain  events may differ
significantly from those projected in such  forward-looking  statements due to a
number of factors, including those set forth in this report.

Overview
         After three years of research and  development,  the Company was formed
in January  1996.  The  Company  has  developed  what it  believes  is the first
universal  ATM-based  network with the  potential  to integrate  the delivery of
voice,  data and video on one network.  The Company  launched  commercial  voice
services  on its  network  in  December  1997 and since  then has  entered  into
thirty-nine  contracts,  ranging  from one to three year terms,  to provide long
distance services. As customers transition their traffic onto TeleHub's network,
the Company expected  significant growth in revenues.  However, on September 30,
1999, TNS  terminated  the agreement  with MCI Worldcom for cause.  MCI Worldcom
terminated  service to TNS when TNS did not provide  adequate  assurances of its
ability to pay the disputed balance.  TNS accordingly  ceased network operations
on September 30, 1999. On October 27, 1999,  TNS filed a voluntary  petition for
reorganization  under  the  federal  bankruptcy  laws.  TNS  determined  that  a
financial restructuring was necessary for its long-term survival because the ATM
network  did not  generate  sufficient  revenue  to  fund  its  operations  at a
sustainable  level.

         On November 4, 1999,  the Company  and FDN,  Inc.  ("FDN")  executed an
Agreement and Plan of Share Exchange  ("Plan") to transfer all TNS capital stock
to FDN in  exchange  for FDN  capital  stock.  Closing of the Plan is subject to
customary conditions,  especially obtaining all regulatory approvals,  receiving
the consent of the holders of Company's  13.875%  Senior  Secured Notes due 2005
("Bonds"),  and approval from the Bankruptcy  Court.  The Bond  Indenture  would
require  the Company to redeem the Bonds if it sells TNS;  since the  Registrant
will not receive cash  consideration  in the Plan,  the Company will request the
Bondholders  to waive the  redemption  obligation.  The  Company and FDN closing
would occur after the Bankruptcy court approves the Plan.

         Pending closing,  FDN intends to supervise TNS's operations pursuant to
a  Management  and  Operating  Agreement  ("TNS  Management  Agreement");   this
arrangement  requires  approval from the Bankruptcy  Court.  TNS has applied for
such  approval on November 5, 1999.  If the  Bankruptcy  Court  approves the TNS
Management  Agreement,  FDN will contribute working capital to TNS, which should
permit TNS to recommence operations.



Results of Operations

         The following table sets forth-certain  unaudited financial information
from the Statements of Operations as a percentage of total revenues.






                                       13
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)

                                          Three Months Ended  Nine Months Ended
                                              September 30      September 30
Statement of Operations Data:                1998     1999     1998     1999
                                             ----     ----     ----     ----
Revenue                                       100%     100%     100%     100%
Operating expenses other than
     depreciation and amortization           1105%     421%     834%     432%
Depreciation and amortization                  81%      18%      71%      21%
                                             ----     ----     ----     ----
                 Total operating expenses    1186%     439%     905%     453%
                                             ----     ----     ----     ----
                 Operating loss             (1086%)   (339%)   (805%)   (353%)
                                             ----     ----     ----     ----
Amortization of debt discount                 (71%)    (10%)    (43%)    (12%)
Interest  expense, net                       (145%)    (47%)    (70%)    (49%)
Other income                                    0%       1%       0%     119%
                                             ----     ----     ----     ----
Net Loss                                    (1302%)   (395%)   (918%)   (295%)
                                             ====     ====     ====     ====



  Comparison of Three Months Ended September 30, 1999 and September 30, 1998
         On March 31,  1999,  the Company  signed a  definitive  agreement  with
Newbridge  Networks  Corporation  ("Newbridge") to form a new venture to further
develop the Company's Virtual Access Services Platform  ("VASP(TM)")  technology
and related products that are essential to world-wide, end-to-end,  service-rich
communications ("Newbridge Transaction").  Under the terms of the agreement, the
Company's  wholly owned subsidiary  TeleHub  Technologies  Corporation  ("TTC"),
formed a wholly owned  subsidiary  ("TeraBridge"),  incorporated in the State of
Nevada.  At  closing  (May 19,  1999),  TTC  contributed  all of its  assets and
liabilities  and TCC  contributed  all of it  assets  relating  to its  VASP(TM)
technology,  including all intellectual property rights, to Terabridge.  The new
joint venture is accounted for under the equity method,  beginning May 19, 1999.
A comparison of the three and nine months ended September 30, 1999 and September
30, 1998 are affected by this transaction.

Revenue
         Revenue increased $6.2 million to $7.7 million from $1.5 million in the
three  months  ended  September  30,  1999  compared to the three  months  ended
September 30, 1998, respectively. TeleHub Network Services ("TNS") generated all
of the revenue from network  operations  during the three months ended September
30, 1999.  TNS had  thirty-nine  customers  contracts as of September  30, 1999,
compared to eighteen as of September 30, 1998.

  Operating expenses
         Operating  expenses increased $16.6 million to $33.8 million from $17.2
million for the three months ended  September  30, 1999 and 1998,  respectively.
Bad  debt  expense   increased  by  $9,783,000.   Bad  debt  expense   increased
significantly since  substantially all accounts  receivables were fully reserved
as a result of  TNS's  network being  shutdown  and it was unable to continue to
provide service to its customers. Network circuit costs increased $9,501,000 for
the three months  ended  September  30, 1999  compared to the three months ended
September 30, 1998.  Significant  operating  cost  increases  were  necessary to






                                       14
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


expand  the  network  to  efficiently  handle  anticipated  subscriber  traffic.
Slightly  offsetting  higher  operating  expenses was a  $2,828,000  decrease in
personnel  costs for the three months ended  September  30, 1999 compared to the
three months ended September 30, 1998.  Lower personnel costs reflect a decrease
in employees  from 207 as of September 30, 1998 to 186 as of September 30, 1999.
On May 19, 1999, 112 employees were  transferred from the Company to TeraBridge.
Operating expenses are primarily variable and are expected to increase in future
periods as revenue increases. Research and development decreased by $3.0 million
to ($0.7)  million from $2.3 million for the three  months ended  September  30,
1999 and 1998, respectively.  Research and development cost for the three months
ended September 30, 1999,  reflect a reversal of a compensation  charge recorded
in the first  quarter  of 1999,  under  variable  option  accounting  rules (see
footnote 2). Research and development  costs will be insignificant in the future
since these costs are primarily  incurred by the TTC Software  Products segment,
which ceased operations upon the closing of the Newbridge Transaction.

         Total TNS operating expenses increased  approximately  $21.5 million to
$33.8 million from $12.3  million for the three months ended  September 30, 1999
and 1998, respectively.  This increase related to the network and infrastructure
expansion.  Total TTC operating  expenses  decreased  approximately $4.9 million
since TTC did not  incur  expenses  after  May 19,  1999,  when all  assets  and
liabilities were contributed to TeraBridge as part of the Newbridge Transaction.

    Amortization of debt discount
         Amortization  of debt discount for the three months ended September 30,
1999 amounted to $807,000 in connection with notes issued by the Company.

  Interest income (expense), net
         Net interest  expense for the three months ended September 30, 1999 was
$3.6 million as compared to $2.1  million for the three  months ended  September
30, 1998.  Gross interest expense  increased  approximately $1 million since the
Initial  Note  Offering  was  consummated  on July  30,  1998.  Interest  income
decreased  $511,000  as a  result  of  decreased  cash and  equivalent  balances
available for short-term investments.

  Net loss
         The  Company  reported  a net loss of $30.4  million  and a net loss of
$18.9  million  for  the  three  months  ended  September  30,  1999  and  1998,
respectively.  The Company has not  recorded any benefit for income taxes due to
the  uncertainty  surrounding the realization of the favorable tax attributes in
future tax returns.  Accordingly, the Company has recorded a valuation allowance
against its total net deferred tax assets.





                                       15
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


Comparison of Nine Months Ended September 30, 1999 and September 30, 1998
Revenue
         Revenue  increased  $16.1 million to $20.7 million from $4.6 million in
the nine  months  ended  September  30, 1999  compared to the nine months  ended
September 30, 1998, respectively. TeleHub Network Services ("TNS") generated all
of the revenue from network  operations  during the nine months ended  September
30, 1999. TTC recorded no revenue for the nine months ended  September 30, 1999.
For the nine months ended  September 30, 1998, TTC accounted for the majority of
the revenue when they licensed  VASP(TM) software to Newbridge for $5.0 million,
$3.0  million of which was  recorded  in 1998 while $2 million  was  recorded in
1997.

  Operating expenses
         Operating  expenses increased $52.0 million to $93.7 million from $41.7
million for the nine months ended September 30, 1999 and 1998, respectively. The
majority of the expense  increase  related to: network  circuit costs,  bad debt
expense,  consulting fees, personnel costs, network equipment lease payments and
depreciation   expense  increased  by  $28,504,000,   $10,484,000,   $4,061,000,
$3,807,000, $1,629,000 and $1,039,000, respectively.  Significant operating cost
increases were necessary to expand the network to efficiently handle anticipated
subscriber traffic and to manage the financial and administrative aspects of the
business.  Bad debt expense  increased  significantly  since  substantially  all
accounts  receivables  were fully reserved as of a result of TNS's network being
shutdown  and it was unable to  continue  to provide  service to its  customers.
Increases  in personnel  costs were offset by the  transfer of 112  employees to
TeraBridge, whose expenses are no longer consolidated with TCC subsequent to May
19, 1999.  Research and development  expenses  decreased by $1.0 million to $4.9
million from $5.9 million for the nine months ended September 30, 1999 and 1998,
respectively.  Research and development  costs will decrease in the future since
these costs were primarily incurred by the TTC Software Products segment,  which
ceased operations upon the closing of the Newbridge Transaction.


         Total TNS operating expenses increased  approximately  $51.9 million to
$81.6  million from $29.7  million for the nine months ended  September 30, 1999
and 1998, respectively.  This increase related to the network and infrastructure
expansion.  Total TTC operating expenses increased approximately $0.1 million to
$12.1  million from $12.0  million for the nine months ended  September 30, 1999
and 1998, respectively.  This increase primarily related to accelerated research
and development efforts. TTC did not incur expenses after May 19, 1999, when all
assets and liabilities  were  contributed to TeraBridge as part of the Newbridge
Transaction.

                                       16

<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


    Amortization of debt discount
         Amortization  of debt discount for the nine months ended  September 30,
1999 amounted to $2.4 million in connection with notes issued by the Company.

  Interest income (expense), net
         Net interest  expense for the nine months ended  September 30, 1999 was
$10.2  million as compared to $3.2 million for the nine months  ended  September
30, 1998.  Gross  interest  expense  increased  approximately  $6.8 million as a
result of the Initial Note Offering on July 30, 1999.  Interest income decreased
$0.2 million as a result of decreased cash and equivalent balances available for
short-term investments.

Net gain of the joint venture
         In the nine months ended  September  30, 1999,  the Company  recorded a
gain of $24.4 million on the Newbridge Transaction.

  Net loss
         The Company  reported a net loss of $61.0 million and $42.3 million for
the nine months ended September 30, 1999 and 1998, respectively. The Company has
not recorded any benefit for income taxes due to the uncertainty surrounding the
realization of the favorable tax attributes in future tax returns.  Accordingly,
the Company has  recorded a valuation  allowance  against its total net deferred
tax assets.


Liquidity and Capital Resources

         To fund its  operations,  the  Company  has raised  gross  proceeds  of
approximately  $42.5 million of equity  capital  through two private  placements
(the "Spring 1997 Offering" and the "Fall 1997  Offering") and in July 1998, the
Company  completed an initial note offering  ("Initial Note Offering")  yielding
$65.9 million in net proceeds after deducting  offering  expenses and repaying a
$11.4  million  bridge  loan.  The  Company  also  received a $1 million  equity
investment from the initial purchaser.

         On May 19, 1999,  the Company  received  $26.8  million of net proceeds
from Newbridge in conjunction with the TeraBridge joint venture transaction.

         To date the  Company  had  satisfied  its cash  requirements  primarily
through the sale of capital stock,  the Initial Note Offering,  lease  financing
and loans from  affiliates.  The Company's  principal  uses of cash were to fund
working capital  requirements and capital  expenditures and to service its lease
financing obligations.



                                       17
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


         For the  nine  months  ended  September  30,  1999,  net  cash  used in
operations  was  $52.7  million  primarily  related  to  net  losses,   accounts
receivable  growth  and  deduction  of the  gain  recognized  on  the  Newbridge
transaction,  and offset by bad debt expense, debt accretion and amortization of
debt discount which  requires no cash outlay and increases in accounts  payable.
Net cash provided by investing  activities was $19.3 million for the nine months
ended  September 30, 1999.  This primarily  related to proceeds  received on the
Newbridge  Transaction  offset by capital  expenditures  for network  equipment,
computer software and facility expansion.  Net cash used in financing activities
was $1.7 million for the nine months ended September 30, 1999, primarily related
to  payments  on capital  leases and  proceeds  received  from the  exercise  of
employee stock options.  The Company obtained additional capital lease financing
of approximately $1 million during the nine months ended September 30, 1999. The
Company is committed to make payments under various operating leases.

         As a result  of TSN's  filing  for  reorganization  under  the  Federal
Bankruptcy  Laws,  the Company can provide no assurance  that it can satisfy its
creditors  or fund its  other  liabilities  as they  come  due.  TNS's  Petition
constitutes  a default  under  Section  6.1(8) of the  Indenture  governing  the
Company's 13.875% Senior Secured Notes ("Bonds").  Indenture section 6.2 further
provided that the Bonds  automatically  became  immediately due and payable when
TNS filed the Petition.  The Company is pursuing a bondholders waiver to rescind
acceleration  of  indebtedness.  As of November  15,  1999,  the Company has not
obtained this waiver. Additionally,  as a result of non-payment on the company's
capital lease and other  long-term  debt  obligations,  this  indebtedness  also
became immediately due and payable.

         The liquidity and capital  resources of the Company and TNS may also be
affected by decisions made in the Bankruptcy  Case with respect to its equipment
and real property  leases,  and expenses  incurred in the  Bankruptcy  Case. For
example, TNS must pay legal and other advisory fees and expenses associated with
the  Bankruptcy  Case.  In  order  for TNS to  reorganize  and  emerge  from the
Bankruptcy Case, the court must confirm a plan of reorganization.  If TNS cannot
obtain  confirmation of a reorganization  plan, its creditors or equity security
holders may seek a  liquidation  of the Company by  conversion  to a liquidation
proceeding.  In that event, TNS expects the assertion of additional  liabilities
and  claims  which  are  not  presently  reflected  in the  Company's  condensed
consolidated  financial statements.  In the event of a liquidation,  the amounts
reflected in the condensed consolidated financial statements would be subject to
adverse adjustments in amounts which, while not presently determinable, could be
material.

         On November  4, 1999,  the  Company  and FDN Inc.  ("FDN")  executed an
Agreement and Plan of Share Exchange  ("Plan") to transfer all TNS capital stock
to FDN in exchange  for FDN capital  stock.  FDN would assume all the TNS assets
and  liabilities and be responsible for providing all working capital on a going
forward  basis.  Upon  completion  of this  transaction,  the Company  would own
approximately  40% of FDN's  capital  stock.  Closing  of the Plan is subject to
customary conditions,  especially obtaining all regulatory approvals,  receiving
the consent of the holders of Company's  13.875%  Senior  Secured Notes due 2005
("Bonds") and approval from the Bankruptcy Court.



 Year 2000 Readiness

         The term "Year 2000 Issue"  generally  describes  the various  problems
that  might  result  from  improper   processing  of  dates  and  date-sensitive
calculations  involving  dates in the Year 2000 and beyond.  The Year 2000 Issue
results  from  computer  programs  using two digits  rather  than four digits to
define the applicable  year, so that all dates are  interpreted as being between
1900  and  1999.   Computers  and  other  equipment  using  such  programs  will
incorrectly  interpret dates after the year 1999. Such  misinterpretation  might
cause system failures or  miscalculations  and thereby disrupt  operations,  for
example,  temporary inability to process  transactions,  to send invoices, or to
engage in other normal  business  activities.  Year 2000 issues could affect the
Company  through  the Year 2000 as it relates to its own  computer  systems  and
equipment  as well as that of  third  parties  with  whom the  Company  conducts
business.  On September 30, 1999, TNS ceased network  operations and dismissed a
majority of its personnel.  Although TNS's network was Year 2000 compliant as of
September  30,  1999,  since the  network  is no longer  operational  no further
evaluation is being performed. TeraBridge is a joint venture with Newbridge, its





                                       18
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


results are not c0nsolidated in TCC financial results.  The Company accounts for
TeraBridge  under the  equity  method of  accounting.  The  remaining  Year 2000
discussion solely pertains to TeraBridge.

     Readiness Task Force
         Since the  TeraBridge's  formation,  management  has been aware of Year
2000  issues  and has  sought  Year 2000  compatibility  in the  development  of
VASP(TM)  and the TNS network.  TeraBridge  has created a task force to evaluate
its Year 2000 readiness as it may affect the TeraBridge's  operations.  The task
force  has  established  a  five-step  process  in order to  achieve  Year  2000
readiness. These steps are (1) identification,  (2) assessment, (3) remediation,
(4) implementation and (5) maintenance.

         Identification. The task force has inventoried all technologies used in
TeraBridge's  business.  These  technologies  include  hardware,   software  and
embedded  microchips.  The task force reviewed both internal systems  (including
VASP(TM),  information  technology  assets,  equipment and other  systems);  and
external  systems  (i.e.,   third-party   manufactured   products  used  by  the
TeraBridge, and issues with customers, vendors and suppliers).

         The task force  identified  eight major areas  (involving  71 different
products) in which TearBridge utilizes third party hardware and software.

         Assessment.  The inventory  disclosed  different  technologies  used by
TeraBridge,  the task force has  assessed  the Year 2000  compatibility  of each
inventoried item. The task force verifed Year 2000 compatibility through testing
or  from  the   manufacturer's   documentation.   To  obtain  such  manufacturer
documentation, the task force searched the manufacturer's web site or soliciting
an official Year 2000  compatibility  certificate.  Of particular  importance in
this  assessment  step  is  monitoring  the  Year  2000  readiness   efforts  of
TeraBridge's  critical  vendors and customers.  TearBridge  has compiled  enough
information to evaluate  whether  potential Year 2000 issues with  third-parties
might have a material  adverse effect on  operations.  The conclusion is that it
will not.

         The  task  force  assessed  the Year  2000  compliance  of third  party
hardware and software utilized in VASP(TM).  Such assessment included contacting
the vendor's  representatives and examining technical document for the products.
The task force has determined that, of the 71 different third party products, 43
products (60.6%) are Year 2000 compliant, 17 products (23.9%) are non-compliant,
7 products  (9.9%) do not use  date-sensitive  data,  and 4 products  (5.6%) are
still being assessed. More recent Year 2000 compliant versions are available for
15 of the non-compliant  products,  and compliant versions are under development
for the other two non-compliant  products.  The task force expects to test under
Year 2000 scenarios,  identify the extent of any  non-compliance  and assess the
possible financial consequences for the remainder of the year.





                                       19
<PAGE>
                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


         Remediation. When finding systems that are Year 2000 incompatible,  the
task force will then determine the appropriate  remedial action for that system;
this determination will be performed on a case-by-case  basis.  Remedial actions
could involve  replacement,  upgrading,  software patches, and substitution with
other products. TeraBridge anticipates that remedial actions will require use of
its internal  resources,  third-party  manufacturers,  suppliers and vendors and
potentially additional third-party  consultants,  as necessary.  The remediation
will  then be  performed  and  thoroughly  tested.  The task  force  has not yet
encountered any items requiring a major remediation effort. Since TeraBridge has
issued  only four  VASP  licenses  and  these  licenses  are not  producing  any
significant  revenue  to  the  licensee,  TeraBridge  does  not  anticipate  any
emergency remediation expenses or liabilities.

         Implementation.  TeraBridge  completed all implementations and is fully
Year 2000 ready.  However,  TeraBridge could encounter a significant internal or
external Year 2000 issues which,  if not  remediated in a timely  manner,  could
have a material adverse effect on Terabridge's business, financial condition and
results of operations.

         Maintenance.  To maintain Year 2000  compatibility  after completion of
the  compliance  plan,  the task force drafted Year 2000 business  rules.  These
rules   covered  both   internally   created   applications   and  purchases  of
technologies. TeraBridge's employees will be required to ensure the applications
they  create  are Year 2000  compatible,  with the  assistance  of  TeraBridge's
information systems department.  All future purchases of hardware,  software and
other technologies will require Year 2000 compatibility certification or similar
documentation.

     Contingency Planning.
         TeraBridge  continues  to address  contingency  planning as  situations
arise during the remainder of the year.  TeraBridge  currently  does not foresee
extensive  contingency  planning  efforts.  Principal  activities  will  include
backing up all  databases  and  keeping  the  information  systems  department's
schedule clear in January of 2000.


    Costs.
         The  total  costs for  becoming  100%  Year  2000  compatible  for both
TeraBridge  and TNS will not be  significant,  less  than  $100,000.  TeraBridge
believes that adequate  resources  have been allocated for this purpose and does
not  expect to incur  significant  expenditures  to  resolve  Year 2000  issues.
However,  there can be no assurance that  TeraBridge will identify all Year 2000
problems in its systems in advance of their  occurrence  or that the Company can
successfully   remedy  any  problems  that  are  discovered.   The  expenses  of
TeraBridge's efforts to address such problems, or the expenses or liabilities to
which  TeraBridge  may  become  subject  as a  result  of such  problems,  could
materially adversely affect TeraBridge's business, prospects, operating results,
financial condition.




                                       20
<PAGE>


                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)



                           PART II - OTHER INFORMATION

Item 1.       Legal Proceedings
              TNS Bankruptcy  Filing.  As reported in Registrants'  November 10,
              1999  Current  Report  on  SEC  Form  8-K,  on  October  27,  1999
              ("Petition   Date")   co-registrant   TeleHub   Network   Services
              Corporation  ("TNS") filed a voluntary  petition  ("Petition") for
              reorganization  under the federal  bankruptcy  laws. In re TeleHub
              Network  Services  Corporation,  No.  99-B-33272 (N.D. Ill., filed
              October 27, 1999) (the "Bankruptcy  Case").  That case is still in
              the preliminary stage.

                  TNS    is    currently     operating     its    business    as
              debtor-in-possession pursuant to Bankruptcy Code sections 1107 and
              1108. On November 2, 1999, the Bankruptcy Court approved:

                o TNS employing legal counsel; and

                o an extension of time for TNS to file  schedules,  statement of
                  financial affairs and other required documents.

              TNS has also requested the court's  approval of the TNS Management
              Agreement  (see Current  Report on SEC Form 8-K filed November 10,
              1999).



              MCI/Worldcom  Dispute.  TNS's  telecommunications  network  leased
              capacity  from  MCI/Worldcom.   The  average  monthly  charges  of
              approximately   $3.5  million  were  secured  by  TNS's   accounts
              receivables  and related  collateral.  Partly due to problems with
              the adequacy and timeliness of MCI/Worldcom's  service,  TNS could
              not provision  sufficient  customers  onto its network to generate
              the revenue  necessary to pay the monthly charges to MCI/Worldcom.
              At  September  30,  1999,  the  outstanding  amounts  had  reached
              approximately  $9.5 million.  When TNS could not provide  adequate
              assurances  of  its  ability  to  pay  the  outstanding   balance,
              MCI/Worldcom  terminated  service to TNS. TNS  accordingly  ceased
              network operations on September 30, 1999.

                  MCI/Worldcom  has not yet asserted  any claims  against TNS or
              Registrant.  Due to the  automatic  stay in the  Bankruptcy  Case,
              MCI/Worldcom  must initiate any litigation  against TNS as part of
              the Bankruptcy Case. TNS believes that it has meritorious defenses
              to any claims by  MCI/Worldcom,  especially  the inadequacy of the
              services provided to TNS.







                                       21
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


Item 2.       Changes in Securities.

       (a)    None of the  constituent  instruments  defining  the rights of the
              holders  of any  class of  registered  securities  was  materially
              modified.

       (b)    Not Applicable.

       (c)    Issuance of Unregistered Securities. During the three months ended
              September   30,   1999,   TeleHub    Communications    Corporation
              ("Registrant")  issued a total of 3,360 common shares and warrants
              to purchase  1,234,756 common shares and no debt securities.  None
              of  those  securities  were  sold  in  registered   offerings  and
              Registrant  did not  utilize an  underwriter  when  issuing  those
              securities.  The following  tables  summarize  all  non-registered
              sales of  securities  during the three months ended  September 30,
              1999:
<TABLE>
<CAPTION>
                                Equity Securities

Date                  Title               Amount     Type of Issuance          Consideration     Exemption
----                  -----               ------     ----------------          -------------     ---------
<C>                                        <S>                                    <S>
8/15/99      Common Shares                 1,020     Option Exercise              $5,100         Sec. 4(2)

8/16/99      Common Shares                 2,340     Option Exercise             $11,700         Sec. 4(2)
</TABLE>


<TABLE>
<CAPTION>
                       Warrants to Purchase Common Shares

                                      Per Share
Date         Shares Purchasable       Exercise Price          Class of Holder                    Exemption
----         ------------------       --------------          ---------------                    ---------
<C>                                        <S>
7/31/99              1,084,756*             $0.01             Accredited Investors               Sec. 4(2)

9/3/99                 150,000              $0.01             Vendor                             Sec. 4(2)
</TABLE>

     * Represents  increase in number of shares  purchasable  under the warrants
       issued  July 30,  1998;  those  warrants  required  this  increase if the
       Company's common shares were not trading on a securities exchange by July
       30, 1999.

Item 3.       Defaults Upon Senior Securities.
       (a)    TNS's  Petition  constitutes a default under Section 6.1(8) of the
              Indenture  governing the Company's  13.875%  Senior  Secured Notes
              ("Bonds").  Indenture  section 6.2 further provides that the Bonds
              automatically  became  immediately  due and payable when TNS filed
              the Petition.  On the Petition Date, the aggregate  accreted value
              of the Bonds was  approximately  $98.8 million [13.875%  interest,
              computed  daily  and  compounded  on  January  31  and  July  31].
              Registrant  has not yet repaid the Bond's  accreted  value,  which
              increases   by   approximately   $37,000  per  day,   and  reached
              approximately $99.3 million by November 12, 1999.

       (b)    Not Applicable.






                                       22
<PAGE>

                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


Item 4.       Submission of Matters to a Vote of Security Holders.
              No matters were submitted for a vote of Security Holders.

Item 5.       Other Information
              Certain  material  matters were recently  reported on Registrant's
              Current  Report on SEC Form 8-K dated  November  10,  1999.  These
              matters included:

                o The Bankruptcy Case;

                o The proposed sale of TNS to FDN, Inc.; and

                o Changes in the officers and directors for Registrant and
                  co-Registrants.

                These events occurred after September 30, 1999.

Item 6.       Exhibits and Reports on Form 8-K.
       (a)    Exhibits. No exhibits are filed with this Quarterly Report.

       (b)    Reports on Form 8-K.  During the three months ended  September 30,
              1999,  Registrants  did not file any  Current  Reports on SEC Form
              8-K.










                                       23
<PAGE>


                       TELEHUB COMMUNICATIONS CORPORATION
                         (Commission File No. 333-61441)


                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrants  have duly  caused  this  report  to be signed on its  behalf by the
undersigned, thereunto duly authorized.

                          TELEHUB COMMUNICATIONS CORPORATION
                          TELEHUB NETWORK SERVICES CORPORATION
                          TELEHUB TECHNOLOGIES CORPORATION
                          TELEHUB LEASING CORPORATION

November 12, 1999         By:    /s/ CARL ALU
                             ---------------------------------------------------
                              Carl Alu, President of:
                              TeleHub Communications Corporation
                              TeleHub Technologies Corporation
                              TeleHub Leasing Corporation


November 12, 1999         By:    /s/ TERRY DIDARDICHUK
                             ---------------------------------------------------
                              Terry Didardichuk
                              President of TeleHub Network Services Corporation


November 12, 1999         By:    /s/ JOHN R. LAWSON
                              --------------------------------------------------
                              John R. Lawson, Chief Financial Officer
                              of Registrants

















                                       24