SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  ------------

                                    FORM 10-K
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934
                    FOR THE FISCAL YEAR ENDED MARCH 31, 1999

                                       OR

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

         FOR THE TRANSITION PERIOD FROM __________ TO ___________

                        COMMISSION FILE NUMBER: 333-46197
                          ----------------------------
                            URSUS TELECOM CORPORATION
           (EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)

             FLORIDA                                   65-0398306
   (STATE OR OTHER JURISDICTION OF                 (I.R.S. EMPLOYER
   INCORPORATION OR ORGANIZATION)                  IDENTIFICATION NO.)

        440 SAWGRASS CORPORATE PARKWAY, SUITE 112, SUNRISE, FLORIDA 33325
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (954) 846-7887

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                            Name of each exchange
TITLE OF EACH CLASS:                        ON WHICH REGISTERED:

Common Stock, $.01 par value                Nasdaq National Market

          Securities registered pursuant to Section 12(g) of the Act: None

     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 for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _

     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 the 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. [X]

     The aggregate market value of the voting stock held by non-affiliates of
the Registrant on June 25, 1999, was $6,400,000 (based on the last trade on
June, 25 1999 at $4.00 per share). As of June 25, 1999, there were 1,000 shares
of Series A Preferred Stock, $.01 par value per share, issued and outstanding,
and 6,600,000 shares of common stock, $.01 par value per share ("Common Stock"),
issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
NONE.

<PAGE>
                            URSUS TELECOM CORPORATION

                                TABLE OF CONTENTS

                                     PART I


Item 1. Business.........................................................1

Item 2. Properties......................................................25

Item 3. Legal Proceedings...............................................25

Item 4. Submission of Matters to a Vote of Security Holders.............26


                                     PART II


Item 5. Market for our Common Equity and Related
        Shareholder Matters.............................................26

Item 6. Selected Consolidated Financial Data............................28

Item 7. Management's Discussion and Analysis of Financial Condition
         and Results of Operations......................................29

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk....38

Item 8.  Financial Statements and Supplementary Data....................38

Item 9.  Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure......................................38


                                    PART III

Item 10.  Directors and Executive Officers of the Registrant............39

Item 11.  Executive Compensation........................................41

Item 12.  Security Ownership of Certain Beneficial Owners and
           Management...................................................43

Item 13.  Certain Relationships and Related Transactions................44

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports
            on Form 8-K.................................................47

Glossary of Terms.......................................................48

<PAGE>
                                     PART I


     FOR YOUR CONVENIENCE, TECHNICAL TERMS AND ACRONYMS WHEN FIRST USED IN THIS
FORM 10-K ARE BOTH DEFINED WHEN FIRST USED AND DEFINED IN THE GLOSSARY
COMMENCING ON PAGE 45.

OUR REPORT ON THIS FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS MADE WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED ("THE "ACT")
AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"). WORDS SUCH AS "MAY," "WILL," "CONTINUE," "PROJECT,"
"ANTICIPATES," "EXPECTS," "INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES,"
AND SIMILAR EXPRESSIONS IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO KNOWN AND
UNKNOWN RISKS AND UNCERTAINTIES SUCH AS THOSE DISCUSSED IN THE SECTIONS ENTITLED
"FACTORS AFFECTING URSUS' BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION,"
"ITEM 1. BUSINESS," AND "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AS WELL AS RISKS FROM GENERAL
ECONOMIC FACTORS AND CONDITIONS. THESE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES
COULD CAUSE ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND
PROSPECTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR FORECASTED. YOU SHOULD
NOT RELY ON THESE FORWARD-LOOKING STATEMENTS, WHICH REFLECT ONLY OUR OPINION AS
OF THE DATE OF THIS FORM 10-K. WE DO NOT ASSUME ANY OBLIGATION TO REVISE
FORWARD- LOOKING STATEMENTS. YOU SHOULD ALSO CAREFULLY REVIEW THE RISK FACTORS
SET FORTH IN OTHER REPORTS OR DOCUMENTS WE FILE FROM TIME TO TIME WITH THE
SECURITIES AND EXCHANGE COMMISSION, PARTICULARLY THE QUARTERLY REPORTS ON FORM
10-Q AND ANY CURRENT REPORTS ON FORM 8-K.

ITEM 1.   BUSINESS

GENERAL

     We are an international telecommunications company that operates a digital,
switch-based telecommunications network (the "Network") from our primary
switching facility in Sunrise, Florida. The Network is used to originate and
terminate international calls for our own subscriber base. We exploit favorable
market niches by providing competitive and technologically advanced
telecommunications services. We focus on small and medium-sized businesses in
emerging or deregulating markets such as South Africa, Latin America, the Middle
East, primarily in Lebanon, Egypt, Germany, France and Japan.

     We operate through a network of independent agents and wholesalers that
allow us to maintain a significant competitive advantage. Each agent uses a
proprietary agent support system developed and provided by us to provide
marketing, customer support, billing and collections, in local language and
time. We supply each of our agents with near real time data for customer
management, usage analysis and billing from our local and wide area network.
Through our agent network, we are developing and maintaining close relationships
with vendors of telephone systems such as Siemens, Plessey and Alcatel in key
markets in order to promote our line of telecommunications services.

     Our strategy has been to enter a target market using call reorigination.
Call reorigination gives our overseas customers access to our U.S.-based
switching center which provides a U.S. dial tone. Our users access our Network
by placing a telephone call, hanging up and waiting for an automated call
reorigination. Call reorigination gives our users a dial tone so that they can
then initiate and complete a call. Call reorigination gives our customers the
convenience and rates provided by a U.S. dial tone. In contrast, locally imposed
international rates may be substantially higher. We derive approximately 79.3%
of our revenues from call reorigination.

     Call reorigination does not require substantial investment in equipment or
capital expenditures. Call reorigination allows the development of a viable
customer base by effectively exploiting the difference between the local
International Direct Dial ("IDD") rate and the generally more favorable rates in
the U.S. We have successfully used this strategy to develop foreign markets and
created a revenue stream with little more than marketing and incremental call
costs. We expect that call reorigination will continue to serve as a low cost
and profitable method of opening new markets. We will continue this method of
business development in certain regulated markets in Africa, the Middle East,
Europe and Asia.

     In addition, we provide an array of basic and value added services to our
customers, which include:

     o    long distance international telephone services

     o    direct dial access for corporate customers

     o    dedicated access via a leased line for high volume users

     o    calling cards

     o    abbreviated or speed dialing

     o    international fax store and forward

     o    switched Internet services

     o    itemized and multicurrency billing

     o    follow me calling or call forwarding

     o    enhanced call management and reporting services

     On September 17, 1998, we purchased all the issued and outstanding common
stock of Access Authority, Inc. ("Access") for $8 million in cash. Access
provides international long distance telecommunication services, including call
reorigination, domestic toll-free access and various value-added features to
small and medium sized businesses and individuals in over 38 countries. Access
markets its services through an independent and geographically dispersed sales
force consisting of agents and wholesalers. Access operated a switching facility
in Clearwater, Florida, which has since been integrated into our switch
facility in Sunrise, Florida.

     We believe that our proprietary software system provides an efficient
infrastructure for back room processing, gives us a strategic advantage over our
competitors and will facilitate the rapid and economical consolidation of
acquired competitors. To remain competitive and to mitigate the high proportion
of variable costs associated with call reorigination, we plan to expand by:

     o    Increasing sales to existing customers.

     o    Providing wholesale services to other carriers.

     o    Entering into selected acquisitions.

     o    Expanding the business generated by our existing agents.

     o    Using a portion of the initial public offering proceeds to expand our
          primary digital switching platform and network access "nodes" by using
          a hybrid network of Internet, Intranet and circuit-based facilities.

          o    A "node" is a specially configured multiplexer which provides the
               interface between the local public switched telephone network
               where the node is located and a switch. The local public switched
               telephone network can be accessed by the public through private
               lines, wireless systems and pay phones. A node collects and
               concentrates call traffic from its local area and transfers it to
               a switch via private line for call processing. Nodes permit us to
               extend our network into new geographic locations by accessing the
               local public switched telephone network without deploying a
               switch.

     o    Enhancing our capabilities as a "direct access" provider by locating
          switching platforms at network centers of major telecommunications
          providers, such as MCI WorldCom, Cable and Wireless and France
          Telecom, and by deploying smaller network access nodes in less
          populated service areas.

          o    Direct access is a means of accessing a network through the use
               of a permanent point-to-point circuit typically leased from a
               facilities-based carrier. The advantages of direct access include
               (1) simplified premises-to-anywhere calling, (2) faster call
               set-up times and (3) potentially lower access and transmission
               costs, provided there is sufficient traffic over the circuit to
               generate economies of scale.

     o    Exploiting our market penetration and technological sophistication by
          using internet protocol ("IP") telephony technology, which processes
          data and/or voice transmission over the Internet and Intranet.

          o    IP telephony creates the opportunity to bypass the switched
               telephone network by using cost-effective packet switched
               networks such as private Intranets and/or the public Internet for
               the delivery of fax and voice communications.

     o    Using IP telephony technology concurrently with call reorigination.

     o    Deploying IP telephony technology where feasible in order to create a
          hybrid network capable of carrying significant amounts of customer
          traffic on a low cost platform with a modest initial capital
          investment.

     In summary, we intend to become a significant provider of international
telecommunications services within emerging and deregulating markets. We plan to
maximize our profit potential by (1) leveraging our existing infrastructure and
market penetration, (2) expanding our customer base and (3) growing our U.S.
wholesale business. We believe that we can gain strategic advantages while
capitalizing on the opportunities presented by deregulation and technological
advances in the global telecommunications industry, by using our independent
agent network, efficient back office systems and favorable relationships with
some U.S. telecommunications carriers.

THE NETWORK

     The Network uses a high capacity, programmable switching platform designed
to deploy network-based intelligent services quickly and cost effectively. The
switches are modular and scaleable and incorporate advanced technologies such as
hierarchical call control and network management software. These types of
switches can also provide a bridge between various protocols and standards. As
the Network continues to evolve, the installed base of switches could be
upgraded easily to create a cost-effective, scaleable switching point in a
software intelligence-based network. The Network's "intelligent switches"
incorporate proprietary software to achieve least cost routing ("LCR"), the
process by which we optimize the routing of calls over the Network to every
directly dialable country in the world. LCR allows calls that are not routed
over the Network to be routed directly from our switch through the
infrastructure of contracting carriers to their destinations at the lowest
available rates. These switching capabilities also enable us to efficiently
perform billing functions and account activation and to provide value-added
services. We rely upon Synchronous Optical Network ("SONET") "fiber optic"
facilities to multiple carriers to provide redundancy in the event of technical
difficulties in the Network. Fiber-optic transmission mediums consist of
high-grade glass fiber through which light beams are transmitted carrying a high
volume of the communications traffic. We maintain a high level of redundancy at
our switching facilities in Sunrise, Florida to provide protection for our
switching operations. Our strategy is to monitor our anticipated traffic volume
on a regular basis and to increase carrier trucking capacity before reaching the
capacity limitations of such circuits.

     Our customers access our services either through "dial up access" or
"direct access." Dial up access is obtained via: (1) paid access, which requires
the customer to pay the local PTO for the cost of a local call, where
appropriate, in order to access our services; (2) call reorigination, which
enables the customer to receive a return call providing a dial tone originated
from our Sunrise, Florida switching center; (3) International Toll Free Service
(ITFS), which accesses the Sunrise, Florida switching center via a direct dial
number for which we pay the cost to the foreign carrier; (4) Dedicated Access
(Direct Access) from wholesale carrier customers in North America. Direct access
allows access to our network by using a permanent point-to-point circuit
typically leased from a facilities-based carrier. The advantages of direct
access include simplified premises-to-anywhere calling, faster call set-up times
and potentially lower access and transmission costs, provided there is an
adequate level of traffic over the circuit to generate economies of scale.
Direct access accounted for approximately 24% of our overall revenues for the
fiscal year ended March 31, 1998 and 21.5% for the year ended March 31, 1999.

     To reduce the variable telecommunications costs and improve usage, we are,
where regulations permit, in the process of changing our customer base from call
reorigination and ITFS access direct access. Until regulations permit, most
customers outside of Europe and other deregulating and liberalizing are expected
to continue to access our services through call reorigination or ITFS numbers.
See "Factors Affecting Ursus' Business, Operating Results and Financial
Condition-Business Risks-Government regulation-enforcement and interpretation of
telecommunication laws and regulations is unpredictable and subject to change."

     Currently, our Network is primarily used to originate and terminate
international long distance traffic for our own subscribed customer base. We
intend to further leverage our Network and foreign presence to take advantage of
anticipated settlement agreement obsolescence by offering other carriers and
ITOs an alternative to the traditional settlement process for origination and
termination of long distance traffic. This process is known as "Refiling." The
FCC issued directives in December 1996 encouraging circumvention of settlements
in the historic sense where possible. This change is likely to create new
opportunities with ITO partners in emerging markets. See "Factors Affecting
Ursus' Business, Operating Results and Financial Condition - Business Risks -
Government Regulation - enforcement and interpretation of telecommunication laws
and regulations is unpredictable and subject to change."

     The economic benefits to Ursus of owning and operating our own direct
access Network arise from reduced variable transmission costs. Calls not routed
through the Network generate significantly higher variable costs because they
are connected using relatively expensive ITFS numbers or call reorigination. In
contrast, because the Network has significant fixed costs associated with its
operations, consisting primarily of leased line rental charges, local
connectivity and facility/network management costs, calls routed through the
Network have lower variable costs than off-network traffic. However, for the
foreseeable future, Ursus will, for economic reasons, piggyback on the networks
of major global operators. Consequently, we will only install our own fixed
facilities when existing traffic on a carrier route is adequate to offset the
costs of installation.

     We plan, however, to deploy a network of IP telephony gateways in selected
countries by the end of 1999. To avoid the high fixed costs of a switched
telephone network we plan to develop a hybrid network of IP telephony technology
for the delivery of fax and voice transmissions.

TECHNOLOGY

     Deregulation of telecommunications markets throughout the world has
coincided with substantial technological innovation. The proliferation of
digital fiber-optic cable in and between major markets has significantly
increased transmission capacity, speed and flexibility. Improvements in computer
software and processing technology have enabled telecommunications providers to
offer a broad range of enhanced voice and data services. Advances in technology
also have created multiple ways for telecommunications carriers to provide
customer access to their networks and services. These include customer-paid
local access, international and national toll-free access, direct digital access
through a dedicated line, equal access through automated routing from the public
switched telephone system, IP telephony and call reorigination. The type of
access offered depends on the proximity of switching facilities to the customer,
customer needs, and the regulatory environment. Overall, these changes have
resulted in a trend towards bypassing traditional international long distance
operating agreements as international long distance companies seek to operate
more efficiently. As countries deregulate, the demand for alternative access
methods typically decreases because carriers are permitted to offer a wider
range of facilities-based services on a transparent basis. The most common form
of traditional alternative international access, call reorigination, avoids high
international rates offered by the ITO in a particular regulated country by
providing a dial tone from a deregulated country, typically the United States.
Technical innovations, ranging from inexpensive dialers to sophisticated
in-country switching platforms, have enabled telecommunications carriers, such
as Ursus, to offer a "transparent" form of call reorigination, thereby avoiding
complicated end-customer usage procedures. To place a call using traditional
call reorigination, a user dials a unique phone number to an international
carrier's switching center and then hangs up after it rings or alternatively, if
using a transparent processing method, a dialer automatically performs these
dialing functions. The user then receives an automated call reorigination
providing a dial tone from the U.S., which enables the user to complete the
call. For the fiscal year ended March 31, 1999, we derived approximately 79.3%
of our revenues from international call reorigination services.

     Our research and development efforts have been nominal and have focused
almost exclusively upon refining and upgrading our back office computer systems.
We have neither the resources nor the expertise to derive any significant
advantages from research or development into telecommunications equipment and
prefer to use the equipment developed by others. By devoting our resources to
our computer systems and back office procedures, we believe that we have
developed an efficient and flexible operating system, minimized its payroll and
maximized the efficiency of our back office operations. See "- Management
Information Systems."

MANAGEMENT INFORMATION SYSTEMS

     We have made significant investments developing and implementing
sophisticated information systems which enable us to: (1) monitor and respond to
customer needs by developing new and customized services; (2) manage LCR; (3)
provide customized billing information; (4) provide high quality customer
service; (5) detect and minimize fraud; (6) verify payables to suppliers; and
(7) rapidly integrating new customers. We believe that our network intelligence,
billing and financial reporting systems enhances our ability to competitively
meet the increasingly complex and demanding requirements of the international
long distance markets. We continuously provide enhancements and ongoing
development to maintain our state of the art switching, billing and information
service platforms.

     We currently have a turnaround time of approximately 24 hours for new
account entry. Our billing system provides multi-currency billing, itemized call
detail, city level detail for destination reporting and electronic output for
select accounts. We provide customers with several payment options, including
automated credit card processing and automated direct debiting.

     We have developed proprietary software, utilizing our own in-house staff of
programmers, to provide telecommunications services and render customer support.
In contrast to most traditional telecommunications companies, the software used
to support our enterprise resides outside of the switches and "canned" closed
systems and, therefore, does not currently rely on third party manufacturers for
upgrades. We believe our software configuration facilitates the rapid
development and deployment of new services and provides us with a competitive
advantage. Our Sunrise, Florida central switch has a call detail recording
function which enables us to: (1) achieve accurate and rapid collection of call
records; (2) detect fraud and unauthorized usage; and (3) permit rapid call
detail record analysis and rating.

     We also use our proprietary software in analyzing traffic patterns and
determining network usage, busy hour percentage, originating traffic by
switching center, terminating traffic by supplier and originating traffic by
customer. This data is utilized to optimize LCR, which may result in call
traffic being transmitted over our transmission facilities, other carriers'
transmission facilities or a combination of such facilities. If traffic cannot
be handled over the least cost route due to overflow, the LCR system is designed
to transmit the traffic over the next available least cost route.

INTERNET PROTOCOL (IP) TELEPHONY

     Virtually all of today's voice and fax traffic is carried over the public
switched telephone network. Phone switches either owned by the ITOs or other
enterprise common carriers and resellers allow ordinary telephones and fax
machines to reach one another anywhere in the world. The advent of IP telephony
has created the opportunity to bypass today's switched telephone network and use
cost-effective packet switched networks (Intranet) and/or the public Internet
for the delivery of voice and fax communications. Prior to 1995, the market for
IP telephony products was virtually nonexistent. It was commonly believed that
quality voice communications across the Internet/Intranet was impossible. This
situation dramatically changed with the introduction of a new class of products
which significantly enhanced voice transmissions over the Internet/Intranet. As
a class of products, this is referred to as IP telephony. As companies realized
that quality IP telephony communication was possible, they quickly joined the
race to capitalize on the opportunity. Desktop software offering computer-to-
computer communication flourished due in part to the explosive growth of the
Internet. The current generation of IP telephony applications allows users to
make calls using a standard telephone and a centralized Internet/Intranet
substituting for the public switched telephone system. This centralized IP
connection is accomplished via IP telephony gateway servers. The principle
behind such a system is similar to IP telephony desktop applications, but rather
than using the microphone and speakers connected to multimedia PCs, users speak
into a standard telephone connected to a public branch exchange ("PBX"). PBX is
switching equipment that allows connection of a private extension telephone to
the public switched telephone network or to a private line. To place a call, the
caller would dial the number of the party they are calling, just like making a
call-through the public switched telephone network. The PBX would then route the
call-through the IP telephony gateway via a programmed trunk interface and the
gateway contacts another gateway at the called site. Several companies have
developed and are currently using this technology. Furthermore, developments in
hardware, software and networks are expected to continue to improve the quality
and viability of IP telephony. In time, packet-switched networks may become less
expensive to operate than circuit-switched networks, primarily because carriers
can compress voice traffic and thereby can place more calls on a single line.

INDEPENDENT AGENTS

     From our inception in 1993 up until our acquisition of Access in September
1998, our sales and marketing efforts have been conducted through exclusive
independent agents in each of its markets. Each of these exclusive independent
agents operate in accordance with a model of practices and procedures developed
by us, and settle all customer invoices, net of the agency's commission share,
directly with us within a prescribed period. We have reduced our reliance upon
our existing exclusive independent agents by expanding our business through the
strategic acquisition of Access and through equity investments in France,
Argentina and Uruguay. Though this acquisition we have added approximately 170
new non exclusive agents located in various markets throughout the world.

     We require each new exclusive agent to submit a business plan and
demonstrate the financial resources and commitment required to carry out its
marketing and customer service plan approved by us prior to its appointment.
Each of these agents are licensed by and required to do business in the name of
Ursus and execute subscriber agreements with end users on behalf of and for the
benefit of us.

     We know of no competitor that operates in this manner. The success of this
program is due to strong market penetration, high degree of customer
satisfaction and rapid collections cycle. Most of the costs of marketing, sales
and customer service are paid from the commissions retained by each of these
agents.

     Our agreements with our independent exclusive agents typically provide for
a five-year term with an optional renewal for two additional terms of three
years and a two-year non-compete clause effective upon termination of the
agreement. Furthermore, the agreements require the agents to offer our services
at rates prescribed by us and to abide by our marketing and sales policies and
rules. Agent compensation is paid directly by us and is based exclusively upon
payment for our services by customer funds the agents obtain for us. The
commission paid to agents ranges between 15 to 20% of revenues received by us
and varies depending on individual contracts, the exclusivity of the agency and
the type of service sold. Commissions are paid each month based on payments
received during the prior month from receivables collected by the agent.
Revenues attributable to the four most significant agents for the fiscal years
ended March 31, 1999 and 1998, were approximately 44% and 65%, respectively.
Exclusive agents settle their accounts with us in U.S. Dollars and therefore
bear the risk of fluctuations in the exchange rates between the local currency
and the U.S. Dollar. Agents are held accountable for customer collections and
are responsible for bad debt attributable to customers they enroll. We may
record additional bad debt expense, however, based on increases in wholesale
business, consummation of acquisitions and equity investments in the agents.

     In mid-1997 we initiated discussions with certain of our exclusive agents
with regard to the acquisition of an equity interest in their agencies. We
believe that it would be beneficial to have an ownership interest in our key
marketing and customer service organizations while maintaining the benefits
derived from the local expertise of the exclusive agent, as well as the
productivity derived from local ownership and profit making. We believe that
this strategy will provide us with the benefits derived from direct ownership of
the local sales organization while retaining the benefits of the existing
entrepreneurial structure. Other than with respect to agreements in France,
Argentina and Uruguay, we have no agreement to purchase an interest in any of
our other agents.

CUSTOMER BASE

     Our target customers are small and medium-sized businesses with significant
international telephone usage (i.e., generally in excess of $500 in
international phone calls per month). We also provide our services to a growing
base of individual retail customers. The corporate market includes
manufacturers, distributors, trading companies, financial institutions, and
import-export companies, for which long distance telecommunications service
represents a significant business expense, and such customers are therefore
focused on value and quality. It is estimated that small and medium-sized
businesses account for the majority of all businesses, and we believe that in
most markets they account for a significant percentage of the international long
distance traffic originated in those markets. For example, the EU estimates that
in 1996 there were 15 million small and medium-sized businesses in the EU and
that these businesses accounted for more than one half of all jobs in the EU in
1996, almost half of all business revenue and about $30 billion per year in
total telecommunications revenue.

     We believe that small and medium-sized businesses have generally been
underserved by the major global telecommunications carriers and the ITOs, which
have focused on offering their lowest rates and best services primarily to
higher volume multinational business customers. We offer these small and
medium-sized companies significantly discounted international calling rates
compared to the standard rates charged by the major carriers and ITOs.

     We also offer international termination services to other carriers,
including resellers, on a wholesale basis, as a "carriers' carrier." Our carrier
customers as a group currently provide us with a relatively stable customer base
and thereby assist us in projecting potential utilization of our network
facilities. In addition, the potentially significant levels of traffic volume
that could be generated by such carrier customers may enable us to obtain larger
usage discounts based on potential volume commitments. We believe that revenues
from our carrier customers will represent a growing portion of our overall
revenues in the future.

     We also target residential customers with high international calling
patterns such as ethnic communities, military market and plan to increase the
marketing of prepaid calling cards.

     Currently, no end retail customer individually accounts for more than 1% of
our revenue.

EXPANSION PLANS

     We expect to use a significant portion of the remaining proceeds of the
initial public offering to expand and proliferate our Network and our services
on a more rapid basis by deploying additional switches and points of presence
("POPs") and installing fixed facilities to interconnect POPs and nodes, in
addition to deploying our IP telephony based fax and voice services.

     Pursuant to our formation of a joint venture with our French agent, we
installed a switch in Paris with inter-connectivity to some of the major
carriers operating in the Paris marketplace.

     We intend to enter additional markets and expand our operations through
acquisitions, joint ventures, strategic alliances and the establishment of new
operations. We will consider acquisitions of certain competitors which have a
high quality customer base and which would, upon consolidation with our
operations, become profitable. In addition, we may acquire equity interests in
our existing agents and may pursue partnership arrangements in emerging and
maturing markets with existing sales organizations and other non-defined
telecommunications entities.

     We are developing an e-commerce site known as thestream.com. Our goal for
thestream.com is for it to become a leading communications portal on the
Internet and a one-stop e-commerce shop for global telecommunications services.
The site will run on an IBM RS/6000 server system, which is expected to
incorporate a series of high quality and client-friendly service options, such
as, voice over the Internet (VOIP), PC to phone and other sophisticated
web-centric applications. The site will facilitate access to a host of
value-added telecommunications products and services.


FORMATION OF FRENCH SUBSIDIARY

     On November 20, 1997, we entered into a letter of intent with respect to a
proposed joint venture with our French agents, Central Call and Mondial Telecom
and two of their principals. Pursuant to the letter of intent, we organized
Ursus Telecom France as a limited liability company. Under the original letter
of intent we held 50.4% of the shares of Ursus Telecom France. The remaining
shares were held by Central Call, Mondial Telecom and the two principals. The
letter of intent and subsequent agreement on April 17, 1998, required Ursus to
buy out the remaining 49.9% of the shares at a later date.

     On March 5, 1999, we entered into a modification agreement with Central
Call, Mondial Telecom, the two principals and Ponthieu Ventures, a French
corporation, and new joint venture partner, which made several changes
including: (1) we reduced our ownership to 50% from 50.4%, (2) Ponthieu Ventures
now shares the remaining 50% of the ownership with Central Call, Mondial Telecom
and the two principals and (3) Ursus agreed to repurchase certain switch
equipment from Ursus Telecom France at recorded book value.

     We committed 500,000 FF or approximately $90,000 to the joint venture for
the period April 1, 1999 through December 31, 1999. Commencing March 5, 1999,
the results of Ursus Telecom France are no longer consolidated, as a subsidiary,
with those of Ursus because Ursus now has only a 50% non-controlling ownership
interest in Ursus Telecom France.

PURCHASE OF THE URUGUAYAN AGENT

     On August 17, 1998, we entered into an asset purchase agreement with our
agent in Uruguay. The agreement provided that we pay in consideration for the
agency assets the sum of $132,988. A $72,988 accounts receivable balance from
this agent has been converted into a deposit on the purchase price by us. The
acquisition closed during the fourth quarter of fiscal 1999 and has been
accounted for using the purchase method of accounting.

ACQUISITION OF ACCESS AUTHORITY, INC.

     On September 17, 1998, pursuant to a Stock Purchase Agreement (the
"Agreement') dated as of September 15, 1998, we purchased all the issued and
outstanding common stock of Access. Pursuant to the Agreement, the shareholders
of Access received aggregate consideration of $8 million in cash. The terms of
the Agreement, including the purchase price, were negotiated by the parties on
an arms length basis.

     Access is a provider of international long distance telecommunication
services, including call reorigination, domestic toll-free access and various
value-added features to small and medium sized business and individuals in over
38 countries throughout the world. Access markets its services through
independent and a geographically dispersed sales force consisting of agents and
wholesalers. Access operates a switching facility in Clearwater, Florida.

     The purchase price of $8 million plus approximately $150,000 in acquisition
costs were funded by a portion of the proceeds of our initial public offering.

PURCHASE OF STARCOM S.A. AND OUR ARGENTINE AGENT

     On January 22, 1999, we acquired the operations of Starcom S.A., an
Argentine corporation and Rolium S.A., a Panamanian corporation (our agent). In
accordance with the stock purchase agreements, we paid $183,000 and issued
50,000 shares of unregistered common stock to the seller. The stock purchase
agreements contain provisions which call for additional consideration of
$267,000 to be paid in equal installments of $133,500 on January 22, 2000 and
2001. An additional 50,000 shares of our common stock have been placed in escrow
and will be released on July 22, 1999 if the seller adheres to the covenants,
indemnities and obligations of the agreements. The fair market value of our
common stock was valued at $425,000 at the date of acquisition. In addition,
$100,000 was placed in escrow to pay certain liabilities of Starcom S.A.
resulting in total consideration of $975,000.

<PAGE>
                          FACTORS AFFECTING URSUS'
              BUSINESS, OPERATING RESULTS, AND FINANCIAL CONDITION

     IN ADDITION TO OTHER INFORMATION IN THIS FORM 10-K, THE FOLLOWING RISK
FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING URSUS AND OUR BUSINESS
BECAUSE SUCH FACTORS CURRENTLY MAY HAVE A SIGNIFICANT IMPACT ON OUR BUSINESS,
OPERATING RESULTS, AND FINANCIAL CONDITION. AS A RESULT OF THE RISK FACTORS SET
FORTH BELOW AND ELSEWHERE IN THIS 10-K, ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE PROJECTED IN ANY FORWARD-LOOKING STATEMENTS.

                                 BUSINESS RISKS

OUR BUSINESS DEPENDS SUBSTANTIALLY UPON INDEPENDENT EXCLUSIVE AGENTS.

     We provide our services through a network of independent exclusive and
non-exclusive agents which market our services on a commission basis. Our
international market penetration primarily reflects the marketing, sales and
customer service activities of our agents. We enter into exclusive relationships
with some of our agents. The success of our business within the exclusive
territory largely depends on the effectiveness of the local agent in conducting
its business.

     As of March 31, 1999, we had approximately 185 agents operating in
approximately 44 countries. Of our 185 agents, 11 were exclusive agents which
operate in 25 countries. The use of agents exposes us to significant risks. We
depend on the continued viability and financial stability of our agents. In the
fiscal years ended March 31, 1999 and 1998, four major agents generated
approximately 44% and 65% of our revenues, respectively. One single South
African agent accounted for approximately 22% of our revenues during the fiscal
year ended March 31, 1999 and 29% for the year ended March 31, 1998. The
reduction in dependence on these major agents is the result of our acquisition
of Access.

     Our continuing success depends in substantial part on our ability to
recruit, maintain and motivate our agents. We are subject to competition in the
recruiting of agents from other organizations that use agents to market their
products and services. We could lose one or more significant agents in the
future. Our business may be harmed if one or more of these agents suffered
financial problems, terminated its relationship with us, or could not satisfy
customers. We could be exposed to lost revenues, bad debt expense, lost
customers, potential liability under contracts the agents commit us to perform,
and damage to our reputation.

     Under certain local laws our exclusive arrangements with an agent might be
difficult or expensive to terminate. We have entered into non-compete agreements
with our agents which prohibit their competition with us during their engagement
and for a period of time after termination. However, we cannot assure you that
any particular non-compete agreement will be enforceable as a practical matter
or under the applicable laws of the jurisdiction in which an agent operates. See
"Use of Proceeds," "-Our exposure to credit risk and bad debt will increase as
we grow," and "-Expansion by acquisitions, strategic alliances and other
business combinations could adversely impact our operating results."

INCREASED COMPETITION AND DEREGULATION MAY LEAD TO LOWER PROFITS.

     Historically, we have derived a significant portion of our revenues by
providing call reorigination services. We believe that our industry has reached
a stage of development where the higher gross profit margins associated with our
early stages have moved to more moderate gross profit margins. Deregulation and
increased competition may cause the pricing advantage of call reorigination
relative to conventional international long distance service to diminish and
disappear in certain markets. Increased competition is likely to cause
international rates to decrease.

     We may respond to the changing competitive environment by making certain
pricing, service or marketing decisions or entering into acquisitions or
strategic alliances. These actions could have a material adverse effect on our
business, financial condition and results of operations. To maintain our
customer base and attract new business we may have to offer direct access
services to certain destinations at prices significantly below the current
prices charged for call reorigination. In some markets, we may try to maintain
our existing call reorigination customers and attract new customers through the
use of direct access "call-through access methods," including IP telephony.
Call-through access methods provide international long distance service through
conventional long distance on "transparent" call origination. Transparent call
origination allows a call to be automatically processed through a programmed
switch without the usual "hang up" and "call back."

     Our overall gross profit margins may fluctuate in the future based on (1)
our mix of minutes sold to other carriers and international long distance
services sold directly to end-user customers and (2) our percentage of calls
using direct access compared to call reorigination. As a result of the foregoing
factors, we may experience materially adverse circumstances that could harm our
business and reduce our common stock price. See " - Expansion by acquisitions,
strategic alliances and other business combinations could adversely impact our
operating results," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

POLITICAL, ECONOMIC AND LEGAL RISKS IN EMERGING MARKETS COULD MATERIALLY AND
ADVERSELY EFFECT OUR OPERATIONS.

     We derived significant amount of our revenues from operations in emerging
markets. Our business is subject to numerous risks and uncertainties, including
political, economic and legal risk in these markets. These risks include:

     o    unexpected changes in regulatory requirements and telecommunication
          standards

     o    tariffs, customs, duties and other trade barriers

     o    technology export and import restrictions or prohibitions

     o    delays from customs brokers or government agencies

     o    seasonal reductions in business activity

     o    difficulties in staffing and managing foreign operations

     o    problems in collecting accounts receivable

     o    foreign exchange controls which restrict or prohibit repatriation of
          funds

     o    potentially adverse tax consequences resulting from operating in
          multiple jurisdictions with different tax laws

     o    the sensitivity of our revenues and cost of long distance services to
          changes in the ratios between outgoing and incoming traffic, and our
          ability to obtain international transmission facilities

     POLITICAL RISK

     The political systems of many of the emerging market countries in which we
operate or plan to operate are slowly emerging from a legacy of totalitarian
rule. Political conflict and, in some cases, civil unrest and ethnic strife may
continue in some of these countries for a period of time. Many of the economies
of these countries are weak, volatile and reliant on substantial foreign
assistance. Expropriation of private businesses in such jurisdictions remains a
possibility. Expropriation can occur by an outright taking or by confiscatory
taxes or other policies. Our operations could be materially and adversely
impacted by these factors.

     LEGAL RISK

     Legal systems in emerging market countries frequently have little or no
experience with commercial transactions between private parties. The extent to
which contractual and other obligations will be honored and enforced in emerging
market countries is largely unknown. Accordingly, we cannot assure you that we
can protect and enforce our rights in emerging market countries. If we cannot
protect our rights, it may have a material adverse effect upon our operations.
Additionally, we operate in uncertain regulatory environments. The laws and
regulations applicable to our activities in emerging market countries are in
general, new, in some cases, incomplete, and subject to arbitrary change. The
local laws and regulations may not become stable in the future and any changes
could harm our business, financial condition or results of operations.

WE FACE COMPETITORS WITH GREATER RESOURCES IN MARKETS WITH LOW BARRIERS TO
ENTRY.

     Many current or potential competitors have substantially greater financial,
marketing and other resources than us. If our competitors devote significant
additional resources to targeting our customer base in our geographic markets,
then our business, financial condition and results of operations could be
harmed.

     The call reorigination business has minimal capital requirements.
Regulatory limitations are usually the most significant barrier to entry. We
anticipate that the markets in which we operate or plan to operate will continue
to deregulate. Competitors with greater resources than us could enter these
markets and acquire our customers. We may have to (1) reduce our prices to
maintain our customer base, (2) increase our investments in telecommunications
infrastructure and (3) increase marketing expenditures to address the increased
competition. Competition could increase our operating costs in these markets and
adversely impact our business.

     We offer or intend to offer new services or services that have previously
been provided only by the incumbent telecommunications operators ("ITOS"). The
ITO is the dominant carrier and is often government owned or protected. We may
be unable to react to any significant international long distance rate
reductions imposed by ITOs to counter external competitive threats. We may also
be unable to increase our traffic volume or reduce our operating costs
sufficiently to offset any resulting rate decreases. This may negatively impact
our business and profitability.

     Our other competition and potential competition includes:

     o    various independent providers similar to us in size and resources

     o    to a lesser extent, major international carriers and their global
          alliances.

     o    cable television companies

     o    wireless telephone companies

     o    Internet access providers

     o    large-end users which have dedicated circuits or private networks.

We cannot assure you that we will be able to compete successfully against new or
existing competitors. See " - Increased competition and deregulation may lead to
lower profits."

RAPID CHANGES IN TECHNOLOGY AND CUSTOMER REQUIREMENTS COULD PLACE US AT A
COMPETITIVE DISADVANTAGE.

     Rapid and significant technological advancements and introductions of new
technological products and services characterize our industry. As new
technologies develop, we may be placed at a competitive disadvantage.
Competitive pressures may force us to implement new technologies at substantial
cost. In addition, competitors may implement new technologies before we do or
provide enhanced services at more competitive costs. We may not be able to
implement technologies on a timely basis or at an acceptable cost. One or more
of the technologies we currently use or implement in the future, may not be
preferred by customers or may become obsolete. If we cannot (1) respond to
competitive pressures, (2) implement new technologies on a timely basis, or (3)
offer new or enhanced services, then our business, financial condition and
results of operations could be harmed. See " - Increased competition and
deregulation may lead to lower profits," and " - We face competitors with
greater resources in markets with low barriers to entry."

A NETWORK FAILURE THAT INTERRUPTS OPERATIONS COULD HAVE A MATERIAL ADVERSE
EFFECT ON US.

     Our success largely depends upon our ability to deliver high quality,
uninterrupted telecommunication services. We must protect our software and
hardware from loss and damage. A systems or hardware failure that interrupts our
operations could have a material adverse effect on our business. We currently
operate our primary switching facility in Sunrise, Florida. Physical damage to
the switch facility could not be remedied by using other facilities in a
different location. This could have a material adverse effect on our operations.

     As we expand and call traffic grows, there will be increased stress on our
hardware, circuit capacity and traffic management systems. Our operations also
require us to successfully expand and integrate new and emerging technologies
and equipment. This may also increase the risk of system failure and result in
further strains. We cannot guarantee that system failures will not occur. We
attempt to mitigate customer inconvenience in the event of a system disruption
by routing traffic to other circuits and switches which may be owned by other
carriers. We also maintain insurance in commercially reasonable amounts.
However, significant or prolonged system failures, or difficulties for customers
in accessing and maintaining connection would result in uninsurable damage.
Damage may include: harm to our reputation, attrition and financial loss.

OUR EXPOSURE TO CREDIT RISK AND BAD DEBTS WILL INCREASE AS WE GROW.

     As we expand our business and move into new territories our exposure to
credit risk will increase. Many of the foreign countries that we operate in do
not have established credit bureaus. This makes it more difficult to determine
the creditworthiness of potential customers and agents. Under our exclusive
agency arrangements, the agent is responsible for analyzing the creditworthiness
of the customer and assuming the credit risk. We believe that this minimizes our
direct credit risk, and our bad debt expenses have historically been minimal.
However, in certain circumstances we have supported our agency relationships by
bearing some credit losses. In addition, the agent, and not the ultimate user of
our services, is responsible for payment to us. We cannot assure you that our
bad debt expense will not rise significantly above historic or anticipated
levels. Our experience indicates that a certain portion of past due receivables
will never be collected and that bad debt is a necessary cost of conducting
business in the telecommunications industry. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

OUR ABILITY TO MANAGE AND RESPOND TO GROWTH WILL BE CRITICAL FOR SUCCESS.

     Recently, we have experienced significant growth. Our ability to manage and
respond to growth will be critical to our success. Interruptions of or a decline
in the quality of our services because of expansion difficulties or an inability
to effectively manage expanding operations could materially harm our business.
We plan to grow by expanding our service offerings in deregulating markets in
Africa, the Middle East, Latin America and targeted areas of Asia and Europe. We
anticipate that future growth will depend on a number of factors, including (1)
the effective and timely development of customer relationships, (2) the ability
to enter new markets and expand in existing markets, and (3) the recruitment,
motivation and retention of qualified agents. Our continued growth requires
greater management, operational and financial resources. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."

     As we grow, we may have difficulty accurately forecasting our
telecommunications traffic. Inaccurate forecasts may cause us to:

     o    make investments in insufficient or excessive transmission facilities

     o    incur disproportionate fixed expenses

     o    force us to route excessive overflow traffic to other carriers where
          the quality of services may not be commensurate with the transmission
          quality we provide

     We cannot assure you that we can add services or expand our geographic
markets. Existing regulatory barriers to our current or future operations may
not be reduced or eliminated. Even if we add services or expand into new
markets, our administrative, operational, infrastructure and financial resources
and systems may not sustain our growth and success. See " - Rapid changes in
technology and customer requirements could place us at a competitive
disadvantage."

EXPANSION BY ACQUISITIONS, STRATEGIC ALLIANCES AND OTHER BUSINESS COMBINATIONS
ADVERSELY IMPACT OUR OPERATING RESULTS.

     We plan to reduce our exposure to risks associated with the use of
exclusive independent agents in existing and new markets by entering into
acquisitions, joint ventures, strategic alliances and other types of business
combinations with agents and other strategic partners that complement our
business. If our investments in or alliances with third parties do not result in
a controlling interest or are nonexclusive arrangements, we may be subject to
additional business and operating risks that we cannot control. In addition, we
may face the following risks with any business combination:

     o    the difficulty of identifying appropriate acquisition candidates or
          partners

     o    the difficulty of assimilating the operations of the respective
          entities

     o    the potential disruption of our ongoing business

     o    possible costs associated with the development and integration of such
          operations

     o    the potential inability to maximize our financial and strategic
          position by successfully incorporating licensed or acquired technology
          into our service offerings

     o    the failure to maintain uniform standards, controls, procedures and
          policies

     o    the impairment of relationships with employees, customers and agents
          as a result of changes in management

     o    higher customer attrition with respect to customers obtained through
          acquisitions

     o    diversion of management resources

     o    difficulty in obtaining any required regulatory approvals

     o    increased foreign exchange risk

     o    risks associated with entering new markets

     Additionally, business combinations may not:

     o    result in increased sales or an expanded customer base

     o    give us a presence in new territories

     o    allow us to effectively penetrate our target markets

     We may not be successful in overcoming these risks or any other problems
encountered with business combinations. Our acquisitions could also involve
issuances of our equity securities, which could dilute the value of shares
already issued and create significant transaction expenses. This could have a
material adverse effect on our operating results.

     We have not entered into any investments or alliances, except with (1)
respect to Ursus Telecom France, (2) our Uruguayan agent, (3) our Argentine
agent and (4) our acquisition of Access. See "Business - Formation of French
Subsidiary," "Business - Purchase of Uruguayan Agency," "Business - Purchase of
Argentine Agency" and "Business - Acquisition of Access Authority, Inc."

TERMINATION OF SALE ARRANGEMENTS OR OPERATING AGREEMENTS WITH CARRIERS COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

     We obtain most of our transmission capacity under volume-based resale
arrangements with facilities-based and other carriers, including ITOs. Two
carriers provide the majority of our transmission capacity. Under these
arrangements, we are subject to the risk of unanticipated price fluctuations,
service restrictions and cancellations. With the exception of the Bahamas, we
have not experienced sudden or unanticipated price fluctuations, service
restrictions or cancellations. We believe that our relationships with our
carriers are generally satisfactory. However, the deterioration or termination
of our arrangements, or our inability to enter into new arrangements with one or
more of carriers, could have a material adverse effect upon our cost structure,
service quality, network coverage, results of operations and financial
condition.

     Our growth strategy in new markets is based to some extent on our ability
to enter into "operating agreements" with domestic and foreign carriers.
Operating agreements typically provide for the exchange of international long
distance traffic between correspondent international long distance providers
that own facilities in different countries. These agreements provide for the
termination of traffic in, and return from, the international long distance
providers' respective countries at a negotiated per minute rate. This is also
called the "accounting rate." Operating agreements can be terminated on short
notice. Deregulation of telephone communications in many countries or a
significant reduction in outgoing traffic carried by us, could cause foreign
partners to decide to terminate their operating agreements, or could cause the
operating agreements to have substantially less value to us. Termination of
operating agreements could have a material adverse effect on our business,
results of operations and financial condition.

WE RELY ON UNPATENTED TECHNOLOGY.

     We rely on unpatented proprietary know-how and continuing technological
advancements to maintain our competitive position. A failure to protect our
rights to unpatented trade secrets and know-how could negatively impact our
business. We have entered into confidentiality and invention agreements with
certain of our employees and consultants. However, we cannot assure you that the
agreements will be honored or that we will be able to effectively protect our
rights to our unpatented trade secrets and know-how. We cannot assure you that
our competitors will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to our trade
secrets and know-how. See "Business - The Network" and "Business - Management
Information Systems."

     We have not registered or trademarked "Ursus" and our logo in any
jurisdiction. We are filing registrations of our name and logo in the United
States. We may not obtain adequate trademark, service mark or similar protection
of our name and logo.

GOVERNMENT REGULATION, ENFORCEMENT AND INTERPRETATION OF TELECOMMUNICATION LAWS
AND REGULATIONS IS UNPREDICTABLE AND SUBJECT TO CHANGE.

     Our business may be harmed if we do not obtain or retain the necessary
governmental approvals for our services and transmission methods. Regulatory
compliance problems could adversely impact our business. Our interstate and
international facilities-based and resale services are regulated by the Federal
Communications Commission ("FCC"). Regulations promulgated by the FCC could
change. In addition, the international telecommunications industry is subject to
international treaties and agreements, and to laws and regulations that vary
from country to country. Enforcement and interpretation of these laws and
regulations can be unpredictable and are often subject to informal views of
government officials and ministries in each country. In some cases, government
officials and ministries may be influenced by ITOs.

     We may be presented with the following potential risks and problems:

     o    In some countries, we may need government approval to provide
          international telecommunications service that will compete with
          state-authorized carriers.

     o    Our operations may be affected by increased regulatory requirements in
          a foreign jurisdiction.

     o    Transit agreements or arrangements may be affected by laws or
          regulations in either the transited or terminating foreign
          jurisdiction.

     o    Future regulatory, judicial, legislative or political changes could
          prohibit us from offering services.

     o    Regulators or third parties could raise material questions about our
          compliance with applicable laws or regulations.

     We have pursued, and expect to continue to pursue, a strategy of providing
our services to the maximum extent we believe to be permissible under applicable
laws and regulations. To the extent that the interpretation or enforcement of
applicable laws and regulations is uncertain or unclear, our aggressive strategy
may result in our (1) providing services or using transmission methods that are
found to violate local laws or regulations or (2) failing to obtain required
approvals in violation of local laws and regulations. If we believe we will be
subject to enforcement actions by the FCC or the local authority, we will seek
to modify our operations or discontinue operations to comply with laws and
regulations. However, even if violations are corrected, we may be subject to
fines, penalties or other sanctions. If our interpretation of applicable laws
and regulations proves incorrect, we could lose, or be unable to obtain,
regulatory approvals necessary to provide certain of our services or to use
certain of our transmission methods. We could also have substantial monetary
fines and penalties imposed against us.

WE ALSO FACE THE FOLLOWING SPECIFIC REGULATORY RISKS:

     RESTRICTION OF CALL REORIGINATION BY CERTAIN COUNTRIES MAY PREVENT US FROM
PROVIDING SERVICES.

     Some countries restrict or prohibit call reorigination. A substantial
number of countries have prohibited certain forms of call reorigination. These
prohibitions have caused us to stop providing call reorigination services in the
Bahamas and may require us to do so in other jurisdictions in the future. As of
November 20, 1997, reports had been filed with the FCC and/or the ITU stating
that the laws of 79 countries prohibit call reorigination.

     If a foreign jurisdiction expressly prohibits call reorigination using
uncompleted call signaling, and has attempted but failed to enforce its laws
against U.S. service providers, the FCC may require U.S. carriers to stop
providing call reorigination services. In extreme circumstances, the FCC may
revoke the U.S. carrier's authorization. To date, the FCC has ordered carriers
to cease providing call reorigination using uncompleted call signaling to
customers in the Philippines. It is expected that the FCC will also take this
action with respect to carriers in Saudi Arabia. Except as discussed in this
Form 10-K, we have not been notified by any regulator or government agency that
we are not in compliance with applicable regulations. See "Business - Government
Regulation."

     THE PROVISION OF CALL ORIGINATION IN SOUTH AFRICA WITHOUT A LICENSE MAY
VIOLATE THE TELECOMMUNICATIONS ACT OF 1996.

     For the fiscal year ended March 31, 1999, South Africa comprised our most
significant single market and accounted for approximately 24% of our total
revenues. In South Africa, our agent's provision of certain services will be,
and its provision of call reorigination services may be, subject to the
Telecommunications Act of 1996 (the "SA Telecommunications Act") and the Post
Office Act of 1958. The SA Telecommunications Act permits a party, who is issued
a telecommunications license, to provide services other than public switched
services. We believe that our agent may provide call reorigination services to
customers in South Africa without a license. However, the telecommunications
regulator in South Africa ("SATRA") has ruled that the provision of call
reorigination services to customers in South Africa without a license violates
the SA Telecommunications Act. Several entities, including our agent, filed a
lawsuit to stay and reverse SATRA's ruling on the basis that SATRA lacks the
authority to issue such a ruling and that the SA Telecommunications Act does not
prohibit the provision of call reorigination services. SATRA has agreed not to
prosecute any person in the call reorigination industry unless the South African
courts rule that it may. It is anticipated that final adjudication of this
lawsuit could take up to four years. If our agent is found to be providing
telecommunications service without a required license, it could be subject to
(1) fines, (2) termination of its call reorigination service to customers in
South Africa and (3) possible denial of license applications to provide
services. We cannot guarantee that the courts in South Africa will not rule that
call reorigination is illegal, or that the South African legislature will not
promulgate an explicit prohibition on call reorigination. Any adverse legal
action could harm our business.

     THE FCC MAY LIMIT REFILING.

     The FCC is currently considering a 1995 request (the "1995 Request") to
limit or prohibit the practice where a carrier routes traffic originating from
Country A and destined for Country B through its facilities in Country C. The
FCC has permitted third country calling where all countries involved consent to
the routing arrangements. This is called "transiting." Under certain
arrangements referred to as "refiling," the carrier in Country B does not
consent to receiving traffic from Country A and does not realize the traffic it
receives from Country C is originating from Country A. While our revenues
attributable to refiling arrangements are minimal, refiling may constitute more
of our operations in the future. The FCC has not stated whether refiling
arrangements are inconsistent with U.S. or International Telecommunications
Union ("ITU") regulations. If the FCC determines that refiling violates U.S.
and/or international law, it could negatively impact our future operations.

     WE COULD FACE PENALTIES IF WE VIOLATE THE FCC'S INTERNATIONAL SETTLEMENTS
POLICY.

     We are also required to conduct our facilities-based international business
in compliance with the FCC's international settlements policy (the "ISP"). The
ISP establishes the permissible arrangements for facilities-based carriers that
are based in the U.S. and their foreign counterparts for the termination of
traffic over each respective network. Although not yet effective, the FCC
recently adopted new rules that remove the ISP for arrangements between U.S.
carriers and non-dominant foreign carriers (I.E., foreign carriers that lack
market power). In addition, the FCC removed the ISP for arrangements with any
carrier (dominant or non-dominant) to certain competitive routes, where
settlement rates are at least 25 percent below the FCC's applicable benchmark
settlement rates. These routes currently include Canada, the United Kingdom,
Sweden, Germany, Hong Kong, the Netherlands, Denmark and Norway. Certain
confidential filing requirements still apply to dominant carrier arrangements.
Several of our arrangements with foreign carriers are subject to the ISP. The
FCC could take the view that one or more of these arrangements do not comply
with the existing ISP rules. A traffic arrangement that does not comply with the
ISP may need FCC approval. If the FCC, on its own initiative or in response to a
challenge filed by a third party, determines that our foreign carrier
arrangements do not comply with FCC rules, it may (1) issue a cease and desist
order, (2) impose fines or (3) in extreme circumstances, revoke or suspend our
FCC authorizations. This could have a material adverse effect on our business,
financial condition and results of operations.

     WE COULD FACE PENALTIES IF WE VIOLATE THE FCC'S TARIFF REQUIREMENTS FOR
INTERNATIONAL LONG DISTANCE SERVICES.

     We are required to file with the FCC a tariff containing the rates, terms
and conditions for our international telecommunications services. We are also
required to file with the FCC any agreements with customers that have rates,
terms, or conditions are different from our tariff. The FCC or a third party
could bring an action against us if we (1) charge rates other than those set
forth our tariff or a customer agreement filed with the FCC, (2) violate our
tariff or filed customer agreement or (3) fail to file with the FCC
carrier-to-carrier agreements. Any actions could result in fines, judgments or
penalties and could have a material adverse impact on our business, financial
condition and results of operation.

     RECENT AND POTENTIAL FCC ACTIONS MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS.

     Regulatory action that has been and may be taken in the future by the FCC
may enhance the intense competition faced by Ursus. The FCC has established
lower ceilings for the rates that U.S. carriers will pay foreign carriers for
the termination of international services. The FCC also recently changed its
rules to implement a World Trade Organization agreement, which in part allows
U.S. carriers to accept certain exclusive arrangements with certain foreign
carriers. The implementation of these changes could have a material adverse
effect on our business, financial condition and results of operations.

     WE COULD FACE PENALTIES IF WE VIOLATE U.S. DOMESTIC LONG DISTANCE SERVICE
REGULATIONS.

     Our ability to provide domestic long distance service in the United States
is regulated by the FCC and state Public Service Commissions ("PSCs"). The FCC
and PSCs regulate interstate and intrastate rates, respectively, ownership of
transmission facilities, and the terms and conditions under which our domestic
U.S. services are provided. In general, neither the FCC nor the relevant state
PSCs exercise direct oversight over prices charged for our services or our
profit levels. However, either or both may do so in the future. Federal and
state law and regulations require that we file tariffs listing the rates, terms
and conditions of services provided. Any failure to (1) maintain proper federal
and state tariffs or certifications (2) file required reports or (3) any
difficulties or delays in obtaining required authorizations could have a
material adverse effect on our business financial condition and results of
operations. The FCC also imposes some requirements for marketing of telephone
services and for obtaining customer authorization for changes in the customer's
primary long distance carrier. If these requirements are not met, we may be
subject to fines and penalties.

     POSSIBLE FCC REGULATIONS MAY PUT US AT A COST DISADVANTAGE.

     Long distance carriers, such as Ursus, may have to purchase access services
from local exchange carriers ("LECs") to originate and terminate calls in
connection their services. Access charges represent a significant portion of our
cost of U.S. domestic long distance services. Generally, access charges are
regulated by the FCC for interstate services and by PSCs for intrastate
services. The FCC is reviewing its regulation of LEC access charges to better
account for increasing levels of local competition. If these proposed rate
structures are adopted, we could be placed at a significant cost disadvantage
compared to larger competitors.

     The FCC has also adopted certain measures to implement the 1996
Telecommunications Act that will impose new regulatory requirements. One
requirement is the contribution of some portion of telecommunications revenues
to a universal service fund designated to fund affordable telephone service for
consumers, schools, libraries and rural healthcare providers. These
contributions became payable beginning in 1998 for all interexchange carriers
but not for providers of solely international services. We are a provider of
international services and are therefore, generally not subject to the
contribution requirements. However, with the acquisition of Access, some of our
business is subject to the contribution requirements at a rate of approximately
$10,000 per month.

     The FCC issued an order on October 9, 1997, concluding that interexchange
carriers must compensate payphone owners at a rate of $.284 per call for all
calls using their payphones. On January 28, 1999, the U.S. Court of Appeals for
the D.C. Circuit agreed with the ruling, but reduced the rate to $.24 per call.
As this ruling applies only to domestic payphones, our costs are not
significant.

     FCC APPROVAL FOR TRANSFERS OF CONTROL COULD DELAY OR PREVENT CHARGES OF
CONTROL.

     The FCC and certain state agencies must approve assignments and transfers
of control. An assignment is a transaction in which an authorization is moved
from one entity to another. A transfer of control is a transaction in which the
authorization remains held by the same entity, but there is a change in the
entities that control the authorized carrier. The approval requirements may
delay, prevent or deter a change in control or an acquisition of another
company. The FCC also imposes certain restrictions on U.S.-licensed
telecommunications companies that are affiliated with foreign telecommunications
carriers. The FCC could restrict our ability to provide service on certain
international routes if we (1) become controlled by or under common control with
a foreign telecommunications carrier or (2) obtain a greater than 25% interest
in or control over a foreign telecommunications carrier.

ACTIONS BY BATELCO BLOCK OUR ABILITY TO SERVICE BAHAMIAN CUSTOMERS.

     We entered into an operating agreement with the Bahamas Telephone Company
("Batelco") to provide international telecommunications services to customers in
the Bahamas. In the past, Batelco has taken several actions designed to block
our ability to offer services to customers in the Bahamas. We believe Batelco's
actions violate the terms of our operating agreement and are inconsistent with
U.S. policy. For the fiscal year ended March 31, 1999 and 1998, we derived
approximately 2.7% and 4.9% of our revenues, respectively from services we
provided in the Bahamas.

FRAUD LOSS COULD MATERIALLY HARM OUR BUSINESS.

     The telecommunications industry has historically been exposed to fraud
losses. We have implemented anti-fraud measures. In order to minimize losses
relating to fraudulent practices we (1) enter into employment agreements with
our employees, (2) limit and monitor access to our information systems and (3)
monitor use of our services. A failure to control fraud could materially harm
our business, financial condition and results of operations. Fraud has
historically been a more significant problem for large providers of
telecommunications services than it has for us, because our few employees and
switching facilities are relatively easier to monitor than those of the large
providers. As we continue to grow, our exposure to fraud losses will increase.

WE MAY HAVE DIFFICULTY ENHANCING OUR SYSTEMS OR INTEGRATING NEW TECHNOLOGY INTO
IT.

     We believe our information systems are sufficient for our current
operations. However, our systems will require enhancements, replacements and
additional investments to continue their effectiveness and enable us to manage
an expanded Network. We may have difficulty enhancing our systems or integrating
new technology into them. If we are unable to implement any required system
enhancement, acquire new systems or integrate new technology in a timely and
cost effective manner, it could have a material adverse effect on our business,
financial condition and results of operations. See "Business - Management
Information Systems."

THE LOSS OF KEY PERSONNEL COULD ADVERSELY EFFECT OUR BUSINESS.

     We depend on the efforts of our senior officers and on our ability to hire
and retain qualified management personnel. The loss of any key personnel could
materially and adversely effect our business and our future prospects. We have
entered into employment agreements with certain of our senior officers. We have
obtained key person life insurance, of which we are the beneficiary, on the
lives of each of Messrs. Giussani and Chaskin in the amount of $2 million. Our
future success will depend on our ability to attract and retain key personnel to
help us with the growth and development of our business. See "Management."

FOREIGN EXCHANGE RATE RISKS THAT ARE NOT OFFSET COULD HARM OUR BUSINESS.

     We bill primarily in United States Dollars and are generally paid by
customers outside of the United States either in United States Dollars or in
local currency at predetermined exchange rates. Substantially all of the costs
to develop and improve our operations have been, and will continue to be,
denominated in United States Dollars. Both increases and decreases in the United
States Dollar create risks for us that could harm our business. For example, if
the United States Dollar appreciates relative to the local currency, our
services will grow more expensive relative to our competitors, such as the ITOs,
that use the local currency. Any depreciation of the value of the United States
Dollar relative to the local currency increases the cost of our capital
expenditures made in the local currency.

     Our focus on emerging markets increases the risks that currency
fluctuations pose. Currency speculation and fluctuation could impact our
operations in Latin America, South Africa, the Middle East or our other emerging
markets. We monitor exposure to currency fluctuations, and may, as appropriate,
use certain financial hedging instruments in the future. However, we cannot
assure you that the use of financial hedging instruments will successfully
offset exchange rate risks, or that such currency fluctuations will not harm our
business and financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

WE MAY NOT BE ABLE TO RAISE ADDITIONAL MONEY IF WE NEED IT.

     We believe that the remaining proceeds of the initial public offering,
combined with other existing and anticipated sources of liquidity, will be
sufficient to fund our capital requirements for approximately 12 months. We
could however, require additional capital to implement our growth strategy. If
additional capital is required, we may be unable to raise it. In addition, even
if we can raise the capital, the terms of the financing may not be favorable to
us or could dilute our common stock. We may, in the near future seek, additional
equity or debt financing, which could include a high-yield debt offering, to
provide flexibility for potential acquisitions and network expansion. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources."

LEGAL PROCEEDINGS INVOLVING OUR CHIEF EXECUTIVE OFFICER.

     Mr. Luca Giussani, our chief executive officer, was the subject of a
criminal proceeding in Italy under Italian law. This proceeding was part of a
series of indictments issued against numerous people. Specifically, about May
1996, Mr. Giussani was charged with transmitting an invoice in 1991 to a
corporation for consulting services which it is alleged he did not perform. It
was alleged that the invoice was used to disguise an unlawful political
contribution made by that corporation. Mr. Giussani was not charged with making
an unlawful political contribution. Rather, it was alleged that through the use
of this invoice, Mr. Giussani facilitated the corporation's falsification of
corporate records to disguise the contribution. Mr. Giussani consistently denied
any improper conduct in connection with this matter and believed that he would
ultimately be vindicated. In October 1997, the trial judge dismissed the claim
against Mr. Giussani for lack of evidence and on February 19, 1999, the
investigating magistrates decided not to refile charges against Mr. Giussani
having determined that he had not committed improper conduct. There is currently
no criminal proceeding pending against Mr. Giussani. See "Management-Certain
Legal Proceedings."

WE MAY FACE AN INCREASED RISK OF VIOLATING THE FOREIGN CORRUPT PRACTICES ACT AS
WE FOCUS ON EMERGING MARKETS.

     We must comply with the Foreign Corrupt Practices Act ("FCPA"). The FCPA
generally prohibits U.S. companies and their intermediaries from bribing foreign
officials for the purpose of obtaining or keeping business. We may be exposed to
liability under the FCPA as a result of past or future actions taken without our
knowledge by agents, strategic partners or other intermediaries. Violations of
the FCPA may also call into question the credibility and integrity of our
financial reporting systems. Our focus on certain emerging markets may tend to
increase this risk. Liability under the FCPA could have a material adverse
effect on our business, financial condition and results of operation.

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS COULD MATERIALLY IMPACT
OUR STOCK PRICE.

     Our quarterly operating results have fluctuated and may continue to
fluctuate due to various factors. The factors include the following:

     o    the timing of investments

     o    general economic conditions

     o    specific economic conditions in the telecommunications industry

     o    the effects of governmental regulation and regulatory changes

     o    user demands

     o    capital expenditures

     o    costs relating to the expansion of operations

     o    the introduction of new services by us or our competitors,

     o    the mix of services sold and the mix of channels through which our
          services are sold

     o    changes in prices charged by our competitors.

     Variations in our operating results could materially affect the price of
our common stock. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

OUR CONTROLLING SHAREHOLDERS CAN ELECT A MAJORITY OF THE MEMBERS OF THE BOARD OF
DIRECTORS AND APPROVE FUNDAMENTAL CORPORATE TRANSACTIONS.

     A group of shareholders (the "Controlling Shareholders") beneficially own
an aggregate of 76.1% of the outstanding shares of our Common Stock and 100% of
our Series A Preferred Stock. The Controlling Shareholders can elect a majority
of the board of directors and approve certain fundamental corporate transactions
including mergers, consolidations and sales of assets. As long as the
Controlling Shareholders hold the shares of Ursus, third parties cannot gain
control of Ursus except through purchases of Common Stock beneficially owned or
otherwise controlled by the Controlling Shareholders.

     Owners of the Series A Preferred Stock have the exclusive right to elect
two (2) of the five (5) members of our board of directors, and one member less
than a numerical majority of any expanded board of directors. The Common Stock
votes cumulatively for the election of directors. Therefore, the Controlling
Shareholders can elect at least one member of the board of directors so long as
they control at least 33.3% of the outstanding Common Stock. A smaller
percentage would be required if the size of our board of directors is expanded.
Each of the Controlling Shareholders has advised us that their current intention
is to continue to hold all of the shares of Series A Preferred Stock and
substantially all of the Common Stock beneficially owned by them. However, we
cannot guarantee that any of the Controlling Shareholders will not decide to
sell all or a portion of their holdings at some future date. We also cannot that
holders of Common Stock, will be allowed to participate in a transfer by any of
the Controlling Shareholders of a controlling interest in the Ursus or will
realize any premium with respect to shares of Common Stock.

RISKS ASSOCIATED WITH THE YEAR 2000

OVERVIEW

     We are currently in the final stages of evaluating whether we will
encounter any problems related to the Year 2000. The impact of the Year 2000,
which has been widely reported in the media could cause malfunctions in certain
software and databases that use date sensitive processing relating to the Year
2000 and beyond. We have completed an evaluation of all our systems and found
that most of the computer systems, software and database which are proprietary
to Ursus are Year 2000 ready. We have also begun to evaluate third party
business entities with which we are engaged in business or for which we provide
services, to determine if there will be any unexpected interruptions. We have
requested representations from these third parties as to whether or not they
anticipate any difficulties in addressing Year 2000 problems and, if so, whether
or not we would be adversely affected by any of such problems. Our management
expects to have this process completed by the end of the third quarter of 1999.

     We have obtained representations from the manufacturer of the telephony
switches that they are Year 2000 ready. As these switches are critical to us,
they have been tested internally and found to be Year 2000 ready. Our billing
system, which was scheduled for an upgrade for operational reasons will be
upgraded to a Year 2000 ready version in the second quarter of fiscal 1999 at
minimal cost to us. We have received assurances from other software and
equipment manufacturers that their hardware and software are Year 2000 ready.

COSTS

     Our management has determined that costs to correct any problems
encountered with the Year 2000 will be immaterial. However, until such time as
the third parties with which we conduct business respond to us, the full impact
of the Year 2000 is not known. As a result, the impact on our business, results
of operations and financial condition cannot be assessed with certainty.

RISKS

     We believe that we will complete our goal of 100% readiness prior to
December 31, 1999. Consequently, we do not believe that the Year 2000 problem
will have a material adverse effect on the Company's business, cash flows, or
results of operations. However, if we do not achieve readiness prior to December
31, 1999, if management's plan fails to identify and remedy all critical Year
2000 problems or if major suppliers or customers experience material Year 2000
problems, our results of operations or financial condition could be materially
and adversely affected.

CONTINGENCY PLANS

     We have begun to develop appropriate contingency plans to mitigate, to the
extent possible, any significant Year 2000 noncompliance, if any. We expect to
complete our contingency plans by September 30, 1999. If we are required to
implement our contingency plans, the cost of Year 2000 readiness may be greater
than the amount referenced above and there can be no assurance that these plans
will be adequate.

GOVERNMENT REGULATION

     OVERVIEW

     Our provision of international and national long distance
telecommunications services is heavily regulated. Also, local laws and
regulations differ significantly among the jurisdictions in which we operate,
and, within such jurisdictions, the interpretation and enforcement of such laws
and regulations can be unpredictable. Many of the countries in which we provide,
or intend to provide, services prohibit, limit or otherwise regulate the
services which we can provide, or intend to provide, and the transmission
methods by which we can provide such services.

     We provide a substantial portion of our customers with access to our
services through the use of various call reorigination mechanisms. Revenues
attributable to call reorigination represented approximately 79.3% of our
revenues during the fiscal year ended March 31, 1999 and are expected to
continue to represent a substantial but decreasing portion of our revenues in
the medium to long-term. A substantial number of countries have prohibited
certain forms of call reorigination as a mechanism to access telecommunications
services. This may cause us to cease providing call reorigination in certain
jurisdictions where we currently operate. As of November 20, 1997, reports had
been filed with the FCC and/or the ITU that the laws of 79 countries prohibit
call reorigination. While we provide call reorigination services in some of
those countries, the only country on such list that accounts for a material
share of our total revenues is South Africa which accounted for approximately
22% of our revenues for the fiscal year ended March 31, 1999. To the extent that
a country that has expressly prohibited call reorigination using uncompleted
call signaling is unable to enforce its laws against call reorigination, it can
request that the FCC enforce such laws in the United States, by e.g., requiring
us to cease providing call reorigination services to such country or, in extreme
circumstances, by revoking our authorizations. The FCC is not required by law or
practice to make such an order, and to the best of our knowledge has never
instituted an enforcement proceeding resulting in the revocation of the
authority to operate based upon the request of any foreign jurisdiction.

     A summary discussion of the regulatory frameworks in certain geographic
regions in which we operate or which we have targeted for penetration is set
forth below. This discussion is intended to provide a general outline of the
more relevant regulations and current regulatory posture of the various
jurisdictions and is not intended as a comprehensive discussion of regulations
or regulatory posture.

     UNITED STATES

     Our provision of international service to, from, and through the United
States is subject to regulation by the FCC. Section 214 of the Communications
Act requires a company to obtain authorization from, the FCC to resell
international telecommunications services of other US carriers or to own or
lease and operate international telecommunication facilities. The FCC has
authorized us, pursuant to the Section 214, to provide international
telecommunications services, to resell public switched international
telecommunications services of other U.S. carriers and to own or lease
international facilities. The Section 214 authorization requires, among other
things, that services be provided in a manner consistent with the laws of
countries in which we operate. As described above, our regulatory strategy could
result in us providing services that ultimately may be considered to be provided
in a manner that is inconsistent with local law. If the FCC finds that the we
have violated the terms of our Section 214 authorization, it could impose a
variety of sanctions on us, including fines, additional conditions on our
Section 214 authorization, cease and desist or show cause orders, or, in extreme
circumstances, the revocation of our Section 214 authorization, the latter of
which is usually imposed only in the case of serious violations.

     In particular, if it is demonstrated that the law of a foreign jurisdiction
expressly prohibits call reorigination, i.e. call re-origination, using
uncompleted call signaling, and that the foreign government attempted but failed
to enforce its laws against U.S. service providers, the FCC may require U.S.
carriers to cease providing call reorigination services using uncompleted call
signaling. To date, the FCC has only ordered carriers to cease providing call
reorigination using uncompleted call signaling only to customers in the
Philippines, although it is expected that the FCC will take this action with
respect to carriers providing call reorigination using uncompleted call
signaling to customers in Saudi Arabia. Prior to taking such action, the FCC
permits countries to submit information to the FCC regarding the legal status of
call reorigination services in their respective countries. According to FCC
records, 30 countries thus far have submitted such information to the FCC,
including the Bahamas, Egypt, Lebanon and South Africa. Submission of this
information does not imply that the FCC believes that the country's laws
expressly prohibit call reorigination using uncompleted call signaling.

     We are required to file with the FCC a tariff containing the rates, terms
and conditions applicable to our international telecommunications services. We
are also required to file with the FCC any agreements with customers containing
rates, terms, and conditions for international telecommunications services, if
those rates, terms, or conditions are different than those contained in our
tariff. If we charge rates other than those set forth in, or otherwise violates,
our tariff or a customer agreement filed with the FCC, the FCC or a third party
could bring an action against us, which could result in a fine, a judgment or
other penalties against us.

     International telecommunications carriers must comply with the FCC's
International Settlements Policy ("ISP"), the rules that establish the
permissible boundaries for U.S.-based carriers and their foreign correspondents
to settle the cost of terminating each others' traffic over their respective
networks. Under the ISP, absent approval from the FCC, international
telecommunications services agreements with foreign carriers must provide that
settlement rates paid to each party are one-half of the accounting rate, and
U.S. carriers may not accept more than a proportionate share of return traffic.
The ISP also provides a mechanism by which the FCC can review the rates
contained in such foreign carrier agreements. Although not yet effective, the
FCC recently adopted new rules that remove the ISP for arrangements between U.S.
carriers and non-dominant foreign carriers (I.E., foreign carriers that lack
market power). In addition, the FCC removed the ISP for arrangements with any
carrier (dominant or non- dominant) to certain competitive routes, where
settlement rates are at least 25 percent below the FCC's applicable benchmark
settlement rates. These routes currently include Canada, the United Kingdom,
Sweden, Germany, Hong Kong, The Netherlands, Denmark and Norway. Certain
confidential filing requirements still apply to dominant carrier arrangements.
To the extent that the ISP still applies, the FCC could find that we do not meet
certain ISP requirements with respect to certain of our foreign carrier
agreements. Although the FCC generally has not issued penalties in this area, it
has recently issued a Notice of Apparent Liability to a U.S. company for
violations of the ISP and it could, among other things, issue a cease and desist
order, impose fines or allow the collection of damages if it finds that we are
not in compliance with the ISP.

     EUROPE

     In Europe, regulation of the telecommunications industry is governed at a
supra-national level by the EU, which is responsible for creating pan-European
policies and, through legislation, has developed a regulatory framework to
establish an open, competitive telecommunications market. In 1990, the EU issued
the Services Directive requiring each EU member state to abolish existing
monopolies in telecommunications services, with the exception of voice
telephony. The intended effect of the Services Directive was to permit the
competitive provision of all services other than voice telephony, including
value-added services and voice services to closed user groups. However, local
implementation of the Services Directive through the adoption of national
legislation has resulted in differing interpretations of the definition of
prohibited voice telephony and permitted value-added and closed user group
services. Voice services accessed by customers through leased lines are
permissible in all EU member states. The European Commission has generally taken
a narrow view of the services classified as voice telephony, declaring that
voice services may not be reserved to the ITOs if (1) dedicated customer access
is used to provide the service, (2) the service confers new value-added benefits
on users (such as alternative billing methods) or (3) calling is limited by a
service provider to a group having legal, economic or professional ties.

     In March 1996, the EU adopted the Full Competition Directive containing two
key provisions which required EU member states to allow the creation of
alternative telecommunications infrastructures by July 1, 1996, and which
reaffirmed the obligation of EU member states to abolish the ITOs monopolies in
voice telephony by 1998 and to institute mechanisms to prevent the ITOs from
acting anti-competitively toward new market entrants. To date, most EU member
states have liberalized facilities-based services to all routes. Certain EU
countries may delay the abolition of the voice telephony monopoly based on
exemptions established in the Full Competition Directive. These countries
include Portugal (January 1, 2000) and Greece (2003).

     FRANCE

     We currently provide call reorigination services to customers in France and
direct access through a joint venture with Ursus Telecom France, a 50% owned
subsidiary. Our joint venture partners Central Call and Mondial Telecom are
providing switch-based direct access services in France. We are permitted to
provide call reorigination in France without a license. We anticipate that our
subsidiary will provide a range of enhanced telecommunications services and
switched voice services to business users by routing traffic via the
international switched networks of competitors to the ITO.

     A new telecommunications law, passed in 1996 to implement the Full
Compensation Directive in France, establishes a licensing regime and an
independent regulator and imposes various interconnection and other requirements
designed to facilitate competition. We intend to expand our services to include,
for example, direct access and facilities-based services in France. If we decide
to provide switched voice services to the public, including direct access and/or
call-through services, or to own facilities, we will have to apply for a license
from the Minister of Telecommunications.

     GERMANY

     The regulation of the telecommunications industry in Germany is governed by
the Telekommunikations-Gesetz, the Telecommunications Act of 1996 ("TKG"),
which, with respect to most of its provisions, became effective in August 1996.
Under the TKG, a license ("TKG License") is generally required by any person
that (1) operates transmission facilities for the provision of
telecommunications services to the public; or (2) offers voice telephony
services to the public through telecommunications networks operated by such
provider. While TKG represents the final phase of the reform of the German
telecommunications industry, the law protected the monopoly rights of Deutsche
Telecom over the provision of the voice telephony until January 1, 1998.

     LATIN AMERICA

     We currently provide call reorigination to customers in many Latin American
countries, including Argentina, Brazil, Peru, Ecuador, Uruguay and Colombia. We
are subject to a different regulatory regime in each country in Latin America
where we conduct business. Local regulations determine whether we can obtain
authorization to offer the transmission of voice and voice band data directly or
through call reorigination, or for the provision of value-added services, such
as voicemail and data transmission. Regulations governing the latter are
generally more permissible than those covering voice telephony.

     Some countries in Latin America oppose the provision of call reorigination.
In Brazil, call reorigination is currently permissible. In Colombia, the
Ministry of Communications has stated that call reorigination access is
prohibited and has so notified the FCC. We do not believe that the Ministry of
Communications has the requisite authority to regulate in this area, which
authority is the subject of litigation brought by a third party in the Colombian
courts. At present, regulations appear to permit call reorigination access in
Argentina. We expect that continued deregulation in this market place.

     Various countries in Latin America have taken initial steps towards
deregulation in the telecommunications market during the last few years. In
addition, various Latin American countries have completely or partially
privatized their national carriers, including Argentina, Chile, Mexico, Peru and
Venezuela. Certain countries have competitive local and/or long distance
sectors, most notably Chile, which has competitive operators in all sectors.
Colombia is scheduled to grant several new concessions for national and
international long distance service providers in addition to its ITO by the end
of 1998. Venezuela has also legalized value-added services such as voicemail and
data transmission and has targeted January 1, 2000 as the date for full
deregulation. Brazil is in the process of opening its telecommunications market
to competition and privatizing its ITO, pursuant to its new law adopted in July
1997. Brazil established an independent regulator in October 1997, and
value-added and private network services, are already open to competition. In
Mexico, the former ITO has been privatized, its exclusive long distance
concession expired in August 1996 and it has been obligated to interconnect with
the networks of competitors since January 1997. Competition in Mexico has been
initiated and an independent regulator has been established. Three countries in
the region, Chile, Mexico and the Dominican Republic, have opened their long
distance telecommunications markets to competition.

     SOUTH AFRICA

     The telecommunications industry in South Africa is regulated under the Post
Office Act of 1958 (the "SA Post Office Act") and the SA Telecommunications Act.
Telkom SA Limited ("Telkom"), the state-owned ITO, has a statutory monopoly on
the construction, maintenance and use of any telecommunications lines, as well
as on the provision of public switched telecommunications services. The
government of South Africa has indicated that this monopoly will be phased out
over five to six years. Notwithstanding this monopoly, the SA Telecommunications
Act permits a party to provide a range of services other than public switched
services under, and in accordance with, a telecommunications license can be
issued to that party in accordance with the SA Telecommunications Act.

     The SA Telecommunications Act established a new telecommunications
regulatory authority called SATRA, whose functions include the granting of
telecommunications licenses, applications for which are solicited by the South
African Minister of Telecommunications pursuant to the SA Telecommunications
Act. As an independent regulatory authority, SATRA is subject to common law
provisions and provisions in the SA Telecommunications Act that limit its
ability to act outside of its granted authority and without affording parties
due process. SATRA's members are appointed by the President on the advice of
Parliament's standing committees on communications. Although the SA
Telecommunications Act states that SATRA should be independent and impartial in
the performance of its functions, it must act in accordance with policy
directions issued by the South African Minister of Telecommunications.

     We seek to take advantage of gradual deregulation of the South African
telecommunications industry by offering permitted services to customers in South
Africa. Currently, we provide call reorigination services to customers in South
Africa and may, in the future, seek any necessary licenses to provide
liberalized services such as value added services. In August 1997, SATRA issued
a ruling that call reorigination operations are an offense under the SA
Telecommunications Act. Several entities, including our South African agent,
filed a lawsuit to stay and reverse SATRA's ruling on the basis that SATRA lacks
the authority to issue such a ruling and that the SA Telecommunications Act does
not prohibit the provision of call reorigination services. SATRA has agreed not
to prosecute any person in the call reorigination industry unless the South
African courts rule that it may. It is anticipated that final adjudication of
this lawsuit could take up to four years to occur, however, the South African
courts may rule sooner or the South African legislature may promulgate an
explicit prohibition on call reorigination. Although we believe that South
African law does not prohibit us or our agent from providing call reorigination
services to customers in South Africa without a license, if our agent is
determined to be providing a telecommunications service without a license, it
could be subject to fines, to the termination of its call reorigination service
to customers in South Africa and, potentially, to the denial of license
applications to provide liberalized services.

     Our South African agent was issued an interim "Value Added Network Service
License" by SATRA in early April 1998. This license allows us in conjunction
with our Agent to operate a data network system through which all data and
facsimile transmissions can be routed. Our South African agent estimates that
approximately 50% of current telecom revenues are generated by data and
facsimile traffic and plans to migrate this revenue segment over packet switched
networks within the next six to twelve months so that carriage of this traffic
will not involve call reorigination.

     MIDDLE EAST

     Our ability to provide services in the Middle East depends on the
regulatory environment in each particular country. In Lebanon, for example, the
telecommunications industry is regulated by the Ministry of Posts and
Telecommunications ("MPT"), which also operates the ITO-the General Directorate
of Telecommunications (the "GDT"). The GDT currently has a monopoly on the
provision of wireline telecommunications services in Lebanon. Although no
written text in Lebanon prohibits call reorigination and a number of carriers
are currently engaged in such activity, the MPT has stated that call
reorigination is illegal in Lebanon. In Egypt, the Ministry of Transport,
Communications and Civil Aviation regulates the telecommunications industry and
Telecom Egypt, formerly known as the Arab Republic of Egypt National
Telecommunications Organization ("ARENTO"), is the ITO. Although Telecom Egypt
currently has a monopoly on the provision of voice services, several U.S.
carriers are permitted to sell pre-paid phone cards and calling card services.
Egypt has announced that it will permit limited competition to Telecom Egypt in
the near future.

     INTERNET TELEPHONY

     The introduction of Internet telephony is a recent market development. To
our knowledge, there currently are no domestic and few foreign laws or
regulations that prohibit voice communications over the Internet. The FCC is
currently considering whether or not to impose surcharges or additional
regulation upon providers of Internet telephony. In addition, several efforts
have been made to enact U.S. federal legislation that would either regulate or
exempt from regulation services provided over the Internet. State public utility
commissions also may retain intrastate jurisdiction and could initiate
proceedings to regulate the intrastate aspects of Internet telephony. A number
of countries that currently prohibit voice telephony competition with the ITOs
have also prohibited Internet telephony. Several other countries permit but
regulate Internet telephony. If foreign governments, Congress, the FCC, or state
utility commissions prohibit or regulate Internet telephony, any such
regulations could materially affect our business, financial condition or results
of operation.

     VAT

     The EU imposes value-added taxes ("VAT") upon the sale of goods and
services within the EU. The rate of VAT varies among EU members, but ranges from
15% to 25% of the sales of goods and services. Under VAT rules, businesses are
required to collect VAT from their customers upon the sale to such customers of
goods and services and remit such amounts to the VAT authorities. In this regard
it is expected that non-EU based telecommunications providers will be required
to appoint a VAT agent and register for VAT in every EU member state in which it
has individual customers.

     France and Germany have adopted rules that, as of January 1, 1997, deem
telecommunications services provided by non-EU based companies to be provided
where the customer is located, thereby subjecting the telecommunications
services provided to customers in the EU by non-EU based companies to VAT. The
German and French rules impose VAT on both the residential and business
customers of non-EU based telecommunications companies. In the case of sales to
non-VAT registered customers, German and French rules require that the non-EU
based telecommunications carrier collect and remit the VAT. In the case of sales
by such providers to German VAT-registered customers, the German rules generally
require that such customers collect and remit the VAT. Under the so-called
"Nullregelung" doctrine, however, certain business customers that are required
to charge VAT on goods and services provided to their customers (generally,
companies other than banks and insurance companies) are entitled to an exemption
from VAT on telecommunications services. In the case of sales by such providers
to French VAT-registered customers, the French rules require that such business
customers collect and remit the VAT.

     The EU has adopted a proposed amendment to the Sixth Directive that, if
adopted in present form, would require all EU members to adopt legislation to
impose VAT on non-EU based telecommunications services provided to customers in
the EU by non-EU based companies, beginning as early as December 31, 1998. Under
the proposed amendment, non-EU based telecommunications companies would be
required to collect and remit VAT on telecommunications services provided to EU
businesses as well as to individuals.

     Our independent agents historically have collected, and will continue to
collect, VAT on services where it is offered in a VAT country. We believe that
whatever potential negative impact the amendment will have on our operations as
a result of the imposition of VAT on traditional call reorigination, such impact
will be partially mitigated by the customer migration towards and the higher
gross margins associated with direct access services.

EMPLOYEES

     As of March 31, 1999 we had 60 full-time employees. None of the our
employees are covered by a collective bargaining agreement. We believe that our
relationship with our employees is satisfactory.


TRADEMARKS

     We have traditionally relied upon the common law protection of our trade
name afforded under various local laws, including the United States. However, we
intend to file for trademark protection of its Ursus name in the United States.
It is possible that prior registration and/or uses of the mark or a confusingly
similar mark may exist in one or more of such countries, in which case the we
may be precluded from registering and/or using the Ursus mark and/or logo in
such countries.

ITEM 2.  PROPERTIES.

     We currently occupy approximately 8,087 square feet of office space in
Sunrise, Florida, which serves as our principal executive office and 6,000
square feet of office space in Clearwater, Florida, which we assumed upon our
acquisition of Access. The leases have total annual rental obligations of
approximately $224,000. The lease in Sunrise expires on April 30, 2003. The
lease in Clearwater has been extended on a month to month basis while we
determine the appropriateness of the space. We believe that our office space is
adequate for our current purposes.

ITEM 3.  LEGAL PROCEEDINGS.

     Access is involved as plaintiff and defendant in a legal action, as
described below, which is incident to its business. Our management does not
believe that this action will have a material impact on our financial condition.

     In February 1998, Access filed an action against Edwin Alley, d/b/a Phone
Anywhere ("Alley")in the United States District Court for the Middle District of
Florida claiming that Alley, a former sales agent for Access, breached his
agency agreement with Access, wrongfully diverted customers and business to
Access's competitors, misappropriated Access's trade secrets, breached fiduciary
and other duties owed to Access and engaged in unfair competition. Access seeks
compensatory damages, injunctive relief and a declaratory judgment. Alley
counter-claimed for breach of contract and quantum meruit, seeking damages and
injunctive relief to enjoin the Access from soliciting or providing services to
customers located by him. Discovery is proceeding on Access's claims. Alley has
moved for summary judgment on jurisdictional grounds and Access is responding to
the motion.

     Subsequent to the filing of Access's federal action, Alley commenced an
action against Access in the Circuit Court of the Sixth Judicial Circuit,
Pinellas County, Florida. In that action, Alley asserts essentially the same
claims and seeks the same relief as in his federal counterclaim. Access has
answered the complaint, denying the material allegations in the pleading, and
has asserted counterclaims against Alley based largely on the claims it asserted
in the federal proceeding commenced by it. The Pinellas County proceeding has
been stayed pending disposition of the federal action.

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

     Not applicable.


                                     PART II

ITEM 5.  MARKET FOR OUR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

     (a) Price Range of Common Stock.

     Our Common Stock began trading on the Nasdaq National Market on May 13,
1998 under the symbol "UTCC." Prior to such date, no public market for our
Common Stock existed. As of June 25, 1999 we had 1,000 shares of Series A
Preferred Stock issued and outstanding and 6,600,000 shares of Common Stock
issued and outstanding, which were held by 21 holders of record. Because many of
our shares of Common Stock are held by brokers on behalf of shareholders, we are
unable to estimate the total number of shareholders represented by these record
holders.

     The following table sets forth, for the periods indicated the high, low and
closing sales prices per share of Common Stock as reported by Nasdaq.

                                                            STOCK PRICES
                                                    HIGH       LOW       CLOSE
1999 Fiscal Year
Quarter (commencing May 13) ended June 30, 1998    $11.75     $8.3125    $ 8.50
Quarter ended September 30, 1998                    $8.875    $3.4375    $ 5.625
Quarter ended December 31, 1998                     $5.625    $2.625     $ 2.875
Quarter ended March 31, 1999                        $5.000    $2.75      $4.5625


     The above quotations represent inter-dealer prices without retail markups,
markdowns or commissions and may not necessarily represent actual transactions.

     We have not paid any cash dividends to our shareholders since inception and
we do not anticipate paying any cash dividends in the foreseeable future. Any
determination to pay dividends will depend on our financial condition, capital
requirements, results of operations, contractual limitations and any other
factors deemed relevant by the Board of Directors.

     (b) Use of Proceeds of Initial Public Offering

Effective Date of our Registration
 Statement:                             May 12, 1998

Commission File Number:                 333-46197

Date the Offering Commenced:            May 18, 1998

Names of Managing Underwriters:         Joseph Charles & Associates, Inc., Cohig
                                        & Associates, Inc., Kashner Davidson
                                        Securities Corporation, Chatfield Dean &
                                        Co. and J.W. Barclay & Company.

Class of Securities Registered:         Common Stock

Amount registered:                      1,500,000 shares of Common Stock(1)

Amount sold:                            1,500,000 shares of Common Stock

Aggregate price of offering amount
  registered:                           $14,250,000

Aggregate offering price of amount
  sold:                                 $14,250,000

Expenses: The expenses incurred in
connection with our public offering
are as follows:


Underwriting Discounts and Commissions                           $1,104,375
Non-accountable expense allowance                                   427,500
Professional fees                                                   556,350
Consulting fees                                                      72,000
Listing, printing and related fees                                  298,800
Other Expenses                                                      152,400
                                                                    -------
Total Expenses                                                   $2,601,425
                                                                 ==========

----------------
(1) Excludes 200,000 shares of Common Stock registered on behalf of certain
shareholders of Ursus. Ursus will not receive any proceeds upon the sale of
these securities.

     None of the expenses of the offering consisted of direct or indirect
payments to (i) directors, officers, general partners or affiliates of Ursus,
(ii) persons owning 10 percent or more of any class of equity securities of
Ursus, or (iii) affiliates of Ursus.

     Net proceeds to Ursus from the offering, after deducting the total
expenses described above, were approximately $11.7 million. In connection with
the acquisition of Access, we utilized $8.1 million, representing the purchase
price plus the costs of the transaction. In addition, we have utilized
approximately $0.3 million for the Starcom acquisition and $1.5 million for
working capital purposes. Consequently, approximately $1.7 million of the net
proceeds of such offering remain as of March 31, 1999.

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA

     The following selected financial data set forth below should be read in
conjunction with the Consolidated Financial Statements of Ursus and
related Notes thereto included elsewhere in this Form 10-K and with "Item 7-
Management's Discussion and Analysis of Financial Condition and Results of
Operations" included herein.

<PAGE>

<TABLE>
<CAPTION>
                                                                            YEAR ENDED MARCH 31,

                                                                1995          1996           1997          1998          1999
                                                                ----          ----           ----          ----          ----
                                                                           (in thousands, except for per share)

<S>                                                            <C>           <C>            <C>           <C>            <C>
Total revenues                                                 $ 6,291       $13,228        $20,838       $28,098       $34,326
Gross profit                                                     2,544         5,553          8,643         9,565        12,203
Operating income                                                   159         1,369          2,004         1,720            34
Net income                                                         382           790          1,253         1,074           194
Pro forma net income per share-basic and dilutive (1)              .08           .16            .25           .21           .03
Pro forma weighted average shares outstanding (1)                4,869         5,000          5,000         5,000         6,296
EBITDA (2)                                                         231         1,463          2,140         1,927         1,193

     Total current assets                                        1,273         2,363          4,566         5,502         8,641
     Working capital                                               150           811          1,646         1,092         2,135
     Total assets                                                1,720         2,797          5,243         7,718        23,043
     Total current liabilities                                   1,122         1,552          2,920         4,410         6,506
     Long term debt, less current portion                          730           580            425         -            -
     Total shareholders' equity (deficit)                         (162)          609          1,861         2,948        15,284

   -----------

(1)      Pro forma net income per common share -basic and dilutive is computed
         based on the pro forma weighted average number of common shares
         outstanding during each period and gives retroactive effect to the
         Stock Split and Recapitalization. See Note 2 to Consolidated Financial
         Statements.

2)       EBITDA represents net income plus net interest expense (income), income
         taxes, depreciation and amortization. EBITDA is not a measurement of
         financial performance under generally accepted accounting principles
         and should not be construed as a substitute for net income, as a
         measure of performance, or cash flow as a measure of liquidity. It is
         included herein because it is a measure commonly used by securities
         analysts.
</TABLE>

<PAGE>
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS.

THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
URSUS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND THE
RELATED NOTES AND OTHER INFORMATION REGARDING URSUS INCLUDED ELSEWHERE IN THIS
FORM 10-K.

     We are a facilities-based provider of international telecommunications
services. We offer a broad range of discounted international and enhanced
telecommunication services, including U.S. originated long distance service and
direct-dial international service, typically to small and medium-sized
businesses and travelers. Our primary service is call reorigination, which
accounted for approximately 79.3% of our revenues for the fiscal year ended
March 31, 1999. We also sell services to other carriers and resellers on a
wholesale basis. Our retail customer base, which includes corporations and
individuals, is primarily located in South Africa, Latin America, the Middle
East (Lebanon and Egypt), Germany, France and Japan. We operate a switched-based
digital telecommunications network. We installed our first switch in Sunrise,
Florida, which became fully operational in October 1993. As of March 31, 1999,
we operated six NACT-STX switches with a capacity of 8,064 ports out of our
central hub in Sunrise, Florida. We installed an additional switch in Paris,
France during the quarter ended March 31, 1998, which became operational on
March 1, 1998. On September 17, 1998, as described below, we acquired Access
Authority. This acquisition effectively tripled the number of minutes going
through our switches. From November 1993 until the current time, we have grown
by marketing our services through a worldwide network of independent agents
which now serves in the aggregate approximately 103,000 active registered
subscribers as of March 31, 1999. Usage of our services has increased from
552,374 minutes in the fiscal year ended March 31, 1994 to 70,674,514 minutes in
the fiscal year ended March 31, 1999.

     On September 17, 1998, we purchased all the issued and outstanding common
stock of Access for $8 million in cash. Access provides international long
distance telecommunication services, including call reorigination, domestic
toll-free access and various value-added features to small and medium sized
businesses and individuals in over 38 countries throughout the world. Access
markets its services through an independent and geographically dispersed sales
force consisting of agents and wholesalers. Access operated a switching facility
in Clearwater, Florida, which has now been fully integrated into our Sunrise,
Florida facility.

     We have accounted for the Access acquisition using the purchase method.
Accordingly, the results of operations of Access are included in our
consolidated results as of September 17, 1998, the date of acquisition. Under
the purchase method of accounting, we have allocated the purchase price to
assets and liabilities acquired based upon their estimated fair values.

     Our management believes that the funds raised by our initial public
offering has and will allow us to expand our customer base and the number of
markets we penetrate by:

     o    acquiring competitors using the remaining portion of the proceeds of
          our initial public offering as the cash component of the purchase
          price for strategic acquisitions and using debt as the other component
          of the purchase price. We believe such leveraged acquisitions will add
          additional annual revenues to our business. Deregulation and increased
          competition in the telecommunications industry have created a strong
          motivation to gain market share rapidly in selective markets through
          acquisitions.

     o    acquiring equity interests in our exclusive agents in selected markets
          to further solidify the contractual relationships with these agents
          and to expand our business in markets offering favorable opportunities
          and returns.

     o    deploying new technologies such as IP telephony technology to bypass
          today's switched telephone network by using cost-effective packet
          switched networks and/or the public Internet for the delivery of fax
          and some voice communications. We intend to deploy a number of fax
          servers and POP's in selected countries to exploit the opportunities
          provided by IP telephony technology. This strategy will allow for more
          aggressive market penetration in selected markets, particularly in
          regulated markets, and a possible reduction in transmission costs.

     o    purchasing telecommunications equipment, including switches, using
          financing arrangements in order to expand our direct access and IP
          Network.

     o    Developing an electronic commerce ("E-Commerce") internet site called
          "thestream.com", which will enable subscribers from around the world
          to enjoy a full array of our services on-line and in real time.
          Further, the site will incorporate a series of high quality and client
          friendly service options such as voice over the Internet, PC to phone
          and other sophisticated web-centric applications.

REVENUE

     The geographic origin of our revenues is as follows:

                                         YEAR ENDED MARCH 31,
                                         ----------------------
                                  1997              1998              1999
                                  ----              ----              ----
Africa                         $3,899,701       $8,346,025        $8,090,987
Europe                          4,252,104        3,857,504         8,818,687
Latin America                   7,265,473        6,523,384         6,131,277
Middle East                     3,741,890        4,721,592         4,077,678
Other                           1,363,852        1,719,272         1,850,736
United States                     315,407        2,930,547         5,356,781

                            -------------------------------------------------
                              $20,838,427      $28,098,324       $34,326,146
                            =================================================

     Our subscriber base has grown as follows:

          As Of:                                 Number of Subscribers (1)
          -----                                  ---------------------
      March 31, 1999                                    103,384
      March 31, 1998                                     30,850
      March 31, 1997                                     15,729


     (1) Subscribers are defined as the number of users of our network whether
     as a direct retail customer or through a wholesaler/reseller.


     The number of our independent agents has varied as follows:

     As Of:                                         Number of Independent Agents
     -----                                          ----------------------------
     March 31, 1999                                            185 (1)(2)
     March 31, 1998                                             14
     March 31, 1997                                             17


     (1) Of which 174 are non-exclusive.

     (2) The number of agents is based on the average number of active agents on
     a monthly basis.

     The percentage of retail (minutes sold to retail end users) and wholesale
(minutes sold to other telecommunication carriers and resellers) revenues has
been as follows:

     Period Ended                                  Retail %       Wholesale %
     ------------                                  --------       -----------

     Year Ended March 31, 1999                     76.5%            23.5%
     Year Ended March 31, 1998                     86.1%            13.9%
     Year Ended March 31, 1997                     98.5%            1.5%

     We expect that wholesale revenues will increase in the near term and may
become a more significant portion of our total revenue.

     We generate retail revenues primarily through our independent agents. No
single subscriber represents 1% or more of our revenue. Agency agreements can be
exclusive or non exclusive and typically have an initial term of five years with
two additional three-year renewal periods. The four largest independent agents
account for approximately 44% of our revenue for the year ended March 31, 1999.
Any material disruption in or termination of these agreements could have a
material adverse effect on our operations. An adverse economical and political
climate in Russia during fiscal year 1999 has contributed to a substantial slow
down in our business from this region and has resulted in the termination of our
agency agreement in Moscow. Similarly, our agency agreement in Ecuador was also
terminated and resulted in significant bad debt. The total revenues from these
regions in fiscal year 1999 amounted to approximately 4.5% of which
approximately 3.5% was from Russia and approximately 1% from Ecuador.

     We believe our retail services are priced below those of the ITOs in each
country in which we offer our services. Prices for telecommunications services
in many of our core markets have declined as a result of deregulation and
increased competition. We believe that worldwide deregulation and increased
competition are likely to continue to reduce our retail revenues per billable
minute. We believe, however, that any decrease in retail revenues per minute
will be at least partially offset by an increase in billable minutes by our
customers. In addition, our cost per billable minute has decreased as a result
of the deployment of direct access facilities, the application of IP telephony
technology particularly for fax transmissions, and our ability to exploit
purchasing discounts based on increased traffic volumes.

COST OF REVENUES AND GROSS MARGIN

     The most significant portion of our cost of revenues are transmission and
termination costs which vary based on the number of minutes used. We purchase
switched minutes from other carriers. We have historically purchased a portion
of the minutes subject to fixed volume commitments. Carriers have recently
reserved the right to terminate these agreements upon short notice. We have
historically been able to arrange favorable volume purchase arrangements based
upon our high usage and excellent credit history, and these arrangements
continue under more recent terminable agreements.

     During the last year, our segment of the international telecommunications
industry has experienced a continuing tightening of gross margins due to
declining retail and wholesale prices. Despite such adverse trends we were able
to increase, during fiscal year ended March 31, 1999, our gross margin by 1.6%
to a yearly average of 35.6%. Factors impacting our margin performance are
primarily the reduction of carrier costs as a percentage of revenues. This was
due to volume induced discounts resulting from the dramatic growth in traffic
due to the acquisition of Access, the deployment of the IP network and the
resulting increased utilization of fixed dedicated circuit facilities. The
reduction in retail prices reflects increased competition arising from
deregulation as well as our strategic decision to gain market share and increase
revenue through more competitive pricing. By increasing total minutes purchased
through aggressive retail and wholesale expansion, we expect to reduce the rates
we pay for switched minutes through volume discounts and other mechanisms. The
benefits of such cost reductions, however, can have a slower impact on our
operating results compared to the more immediate revenue reductions resulting
from price discounting.

     Our cost of providing telecommunications services to customers consists
largely of: (1) variable costs associated with origination, transmission and
termination of voice and data telecommunications services over other carriers'
facilities and (2) costs associated with owning or leasing and maintaining
switching facilities and circuits. Currently, the variable portion of our cost
of revenue predominates, based on the larger proportion of call reorigination
customers and the number of minutes of use transmitted and terminated over other
carrier's facilities. Thus, our existing gross profitability primarily reflects
the difference between revenues and the cost of transmission and termination
over other carriers' facilities.

     We are seeking to lower the variable portion of our cost of services by
eventually originating, transporting and terminating a higher portion of our
traffic over our own Network or via media such as the Internet and private data
networks and by increasing our purchasing power and volume discounts through an
increase in the number of minutes we purchase from other carriers. In addition,
we seek to reduce our cost of revenues by expanding and upgrading the Network,
by adding more owned and leased facilities and increasing the traffic volume
carried by these facilities. This should result in lower variable costs as a
percentage of our revenues, including the higher access costs associated with
call reorigination. This would allow us to spread the fixed costs over
increasing traffic volumes and negotiate lower cost of transmission over the
facilities owned and operated by other carriers, principally through increased
purchasing volumes and expanding our least cost routing choices and
capabilities.

     We realize higher gross margins from our retail services than from our
growing wholesale services which currently average about 20% margin.

     Our overall gross margins may, however, fluctuate in the future based on
the mix of wholesale and retail international long distance services and the
percentage of calls using private circuits, direct access and/or call-through
compared to call reorigination.

OPERATING EXPENSES

     Operating expenses include commissions, selling expenses, general and
administrative expenses and depreciation and amortization expenses.

     We pay commissions to our network of independent agents. Our decision to
use independent agents has been driven by the low initial fixed costs associated
with this distribution channel and the agents' familiarity with local business
and marketing practices. Commissions paid as a percentage of retail revenues
have been as follows:

Year Ended March 31, 1999............................................14.1%
Year Ended March 31, 1998............................................17.3%
Year Ended March 31, 1997............................................18.4%


     Because our contracts with agents are generally long-term, commissions have
remained stable as a percentage of revenue at least until the acquisition of
Access. Since the acquisition of Access, we have increased our wholesale
business and therefore have decreased commissions as a percentage of sales. We
do not pay commissions to generate wholesale sales. We expect that commissions
will continue to decline as a percentage of revenues as a result of increased
direct access traffic, which typically has lower commission rates and increased
wholesale traffic, which typically has no commissions.

     Selling expenses, exclusive of commissions, consist of selling and
marketing costs, including salaries and benefits, associated with attracting and
servicing independent agents. We perform standard due diligence prior to signing
agency agreements and then expend significant time training the agents in our
practices and procedures.

     Our general and administrative expenses consist of salaries, benefits and
corporate overhead, including bonuses paid to executive officers. We believe our
general, selling and administrative costs are lower relative to our competitors,
due to our agent network. We have achieved these results because of our ability
to attract, train and retain high quality independent agents and because the
independent agents contractually assume the risk of credit loss and the cost of
collection on the underlying sales. Our financial results may reflect higher
levels of bad debt losses as our wholesale and other lines of business expand
and as we make equity investments in our independent agents. We expect that
general and administrative expenses may increase as a percentage of revenues in
the near term as we incur additional costs associated with our development and
expansion, expansion of our marketing and sales organization, and introduction
of new telecommunications services such as internet-based web centric products.

     In addition to our efforts to reduce our cost of revenue sold by migrating
customers to direct access and by deploying IP telephony technology and
maximizing volume discounts, we are also actively seeking to reduce our selling,
general and administrative expenses. A major emphasis has been placed on
continuing to re-evaluate our consolidation program with Access. In keeping with
this focus of reducing selling and administrative expense, we have utilized our
network of exclusive independent agents to bear much of the marketing expenses
that our competitors may bear directly. Furthermore, our strategy of using our
competitors' infrastructure to carry our telecommunications traffic also limits
our fixed costs. We are aggressively managing our back office systems, by
developing and implementing efficient computerized systems in order to maximize
the efficiency of selling, general and administrative expenses and maximize our
existing productivity per employee.

     Depreciation and amortization expense consists primarily of the expenses
associated with our investments in equipment and the acquisition of Access. We
expect that depreciation and amortization will continue to increase
substantially as we install additional switches and other fixed facilities. We
expect these increased costs will be amortized over an increased revenue base,
resulting in stable percentage costs.

     Other income (expense) consists primarily of interest expense on long-term
debt and interest income earned in connection with short-term investments, loss
on equity investment and other non-recurring items.


                          SUMMARY OF OPERATING RESULTS
                      (STATED AS A PERCENTAGE OF REVENUES)


                                                     YEAR ENDED MARCH 31,

                                                  1997         1998      1999
                                                  ----         ----      ----

Revenues                                         100.0%      100.0%      100.0%

Cost of revenues                                  58.5         66.0        64.4
Gross profit                                      41.5         34.0        35.6
Operating expenses:
   Commission                                     18.1         14.9        10.8
   Selling, general and administrative            13.2         12.3        22.0
   Depreciation and amortization                   0.6          0.7         2.7
Total operating expenses                          31.9         27.9        35.5
Operating income                                   9.6          6.1         0.1
Other (income) expense                             0.1           --       (1.4)
Income before income taxes                         9.6          6.2         1.5
Income tax expense                                 3.5          2.5         0.9
Net income                                         6.0          3.8         0.6


RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1999 AS COMPARED TO THE YEAR
ENDED MARCH 31, 1998:

     REVENUES. Revenues increased $6.3 million (22.2%) from $28.1 million for
the year ended March 31, 1998 to $34.3 for the year ended March 31, 1999. The
revenue increase attributable to the Access acquisition amounted to $12.9
million for the year ended March 31, 1999. Ursus, on a consolidated basis, had a
39 million increase in minutes of traffic for a total of 70.7 million minutes
versus 31.7 million minutes over the same period last year. Access contributed
approximately 41.8 million minutes to Ursus on a consolidated basis since its
acquisition on September 17, 1998. Revenue per minute declined from $0.89 per
minute to $0.49 per minute or about 45% over the fiscal year period resulting
from the lower per minute rates generated by Access since October, 1998. The
decrease in revenue per minute is consistent with our entry into the more mature
markets of Germany and Japan and with an increase of 107.0% in wholesale sales
which traditionally generate lower revenues per minute.

     COST OF REVENUES. Cost of revenues increased $3.6 million (19.4%) from
$18.5 million for the year ended March 31, 1998 to $22.1 million for the year
ended March 31, 1999. Cost of revenues as a percentage of revenues decreased
from 66.0% to 64.4%. This decrease in our costs as a percentage of revenues
primarily reflects declining carrier cost per minute as the result of aggressive
rate negotiation, volume discounts, as well as the use of advanced least cost
routing techniques and the gradual deployment of the IP telephony network.

     GROSS PROFIT. Gross profit increased $2.6 million (27.1%) from $9.6 million
for the year ended March 31, 1998 to $12.2 million for the year ended March 31,
1999. As a percentage of revenue, gross profit increased 1.6% from 34.0% during
the year ended March 31, 1998 to 35.6% for the year ended March 31, 1999. Gross
profit increased as a result of a reduction in carrier costs as a percentage of
revenue, despite higher wholesale sales, which traditionally have lower margins.
The acquisition of Access more than tripled the number of minutes Ursus
purchased thereby increasing the likelihood of further volume based carrier
discounts. For the year ended March 31, 1999 as compared to the year ended March
31, 1998, the average cost per minute has decreased approximately 47% to an
average of $0.27 per minute.

     OPERATING EXPENSES. Operating expenses increased $4.3 million (55.1%) from
$7.8 million for the year ended March 31, 1998 to $12.2 million for the year
ended March 31, 1999. The increase was due primarily to the acquisition of
Access, which added approximately $3.3 million in operating expenses. In
addition, we had an increase in selling, general and administrative expenses
consisting primarily of salaries and benefits for executives, additional
marketing, customer service and accounting personnel and increased bad debt
expenses. As a percentage of revenues selling, general and administrative
expenses increased 9.7% from 12.3% to 22.0%. We have aggressively expanded our
personnel and operational infrastructure in anticipation of increased traffic
and revenues through the implementation of our acquisition program and other
marketing / sales programs, such as, the ongoing e- commerce initiative. We
expect that operating expenses as a percentage of revenue will decrease with the
final integration of the operations of Access, the start of the e-commerce site
and other potential future acquisitions.

     Depreciation and amortization expense increased approximately $718,000
(364.9%) from approximately $196,000 for the year ended March 31, 1998 to
approximately $914,000 for the year ended March 31, 1999 as a result of the
expansion of our infrastructure in connection with its acquisition program and
the deployment of our IP network. The increase is attributable to new switches,
upgrades to existing switches, the purchase of additional computer equipment and
software, and leasehold improvements. In addition, amortization of the
intangibles as a result of the acquisition of Access was approximately $302,000
as compared to zero amortization expense for the same period last year.

     OPERATING INCOME. Operating income decreased from $1.7 million for the year
ended March 31, 1998 to approximately $0.03 million for the year ended March 31,
1999 primarily as a result of a 123.5% increase in selling, general and
administrative expenses and a 364.9% increase in depreciation and amortization.

     OTHER INCOME (EXPENSE). Other income increased approximately by $459,000
from approximately $14,000 for the year ended March 31, 1998 to approximately
$473,000 for the year ended March 31, 1999. This increase was primarily due to
investment income derived from the invested proceeds of funds from our initial
public offering and the resolution of a carrier billing dispute.

     NET INCOME. As a result of all of the foregoing factors, particularly a
55.1% increase in operating expenses, and in light of our strategic decision to
increase our gross revenues and market share through price reductions, our net
income decreased approximately $0.9 million from approximately $1.1 million for
the year ended March 31, 1998 to approximately $0.2 million for the year ended
March 31, 1999. Net income has also been impacted by start up losses from our
subsidiaries in France and Argentina, which amounted to approximately $310,000
for the year ended March 31, 1999. Management believes that our current strategy
to actively implement new network while controlling selling, general and
administrative expenses, in addition to increasing the revenue base through
acquisition, aggressive pricing and the e-commerce initiative may result in
greater net income in the future.

YEAR ENDED MARCH 31, 1998 COMPARED TO MARCH 31, 1997

     REVENUES. Revenues increased $7.3 million (34.8%) from $20.8 million in the
fiscal year ended March 31, 1997 to $28.1 million in the fiscal year ended March
31, 1998. The increase in revenues reflects increased billed retail customer
minutes, particularly in the South African and Middle Eastern markets. In
addition, we earned $3.9 million of wholesale revenue in the fiscal year ended
March 31, 1998, as compared to $315,000 in the fiscal year ended March 31, 1997.

     COST OF REVENUES. Cost of revenues increased by $6.3 million (52%) from
$12.2 million in the fiscal year ended March 31, 1997 to $18.5 million in the
fiscal year ended March 31, 1998. The increase in cost of revenues primarily
reflects an increase in sales volume, based on number of minutes sold. Costs of
revenues as a percentage of sales increased from 58.5% to 66%, because selling
prices per minute decreased faster than costs per minute. This increase in our
costs as a percentage of revenues primarily reflects declining retail prices,
the growth of the less profitable wholesale business, and increasing incremental
non-billable access costs associated with our call reorigination business. As
discussed in "Cost of Goods Sold and Gross Margin" above, retail price
reductions tend to reduce gross revenues before the benefits of the negotiated
volume-based rate reductions by carriers can be realized, a fact which resulted
in a decline in the gross profit margin in the retail segment of revenues from
41.4% for the fiscal year ended March 31, 1997 to 37.9% for the fiscal year
ended March 31, 1998. Our margins for fiscal year ended March 31, 1998 reflected
this trend, despite the increased costs of revenues being in part mitigated by
the settlement of a dispute regarding a purchase contract from a supplying
carrier. The effect of such settlement was a one-time savings in cost of
revenues equal to 3.5%.

     GROSS PROFITS. Gross profit increased $1 million (10.7%) from $8.6 million
in the fiscal year ended March 31, 1997 to $9.6 million in the fiscal year ended
March 31, 1998. As a percentage of revenue, gross profit decreased 7.5% from
41.5% in the fiscal year ended March 31, 1997 to 34.0% in the fiscal year ended
March 31, 1998. Gross profit margin decreased because sales price per minute
decreased faster than cost price per minute, and we began our wholesale carrier
business which operates on much lower gross profit margins of 9.9% as compared
to 37.9% for the retail segment for the fiscal year ended March 31, 1998. The
reduction in prices reflects price competition from deregulation as well as our
strategic decision to gain market share and increase revenue through more
competitive pricing. By increasing total minutes purchased not only through
aggressive retail expansion, but also through expansion of our wholesale
business, we eventually expect to reduce the rates we pay for switched minutes
through volume discounts and other mechanisms.

     OPERATING EXPENSES. Operating expenses increased $1.2 million (18.2%) from
$6.6 million in the fiscal year ended March 31, 1997 to $7.8 million in the
fiscal year ended March 31, 1998. The increase was due to an increase in
commission expense of $0.4 million (reflecting increased gross revenues in spite
of a 1.1% decrease in total commission paid to agents as a percentage of retail
revenues), and increases in salaries and wages of $0.5 million and a general
SG&A expenses increase of $0.2 million. Operating expenses as a percentage of
revenues decreased by 4%, primarily because additional SG&A expenses were more
than offset by increased revenues in the fiscal year ended March 31, 1998, and
our SG&A expenses were absorbed by a larger base of revenues.

     Depreciation and amortization expense increased approximately $70,000 from
approximately $126,000 in the fiscal year ended March 31, 1997 to approximately
$196,000 in the fiscal year ended March 31, 1998 as a result of switch upgrades,
the purchase of additional computer equipment and software, and leasehold
improvements.

     INTEREST EXPENSE. Interest was approximately $39,000 in the fiscal year
ended March 31, 1997 and $24,000 in the fiscal year ended March 31, 1998,
reflecting a reduction in our outstanding long-term debt.

     OPERATING INCOME. Operating income decreased $0.3 million from $2.0 million
in the fiscal year ended March 31, 1997 to $1.7 million in the fiscal year ended
March 31, 1998 primarily as a result of decreased gross margin rates due to the
increase in cost of revenues from 58.5% to 66% of revenues, this despite the
fact that total operating expenses as a percentage of revenues decreased by 4%.
Other operating expenses did not change significantly.

     NET INCOME. As a result of all of the foregoing factors including a 26%
increase in SG&A, and in particular because of our strategic decision to
increase our gross revenues through price reductions, net income decreased
approximately $179,000 from approximately $1.3 million in the fiscal year ended
March 31, 1997 to approximately $1.1 million in the fiscal year ended March 31,
1998.

YEAR ENDED MARCH 31, 1997 COMPARED TO MARCH 31, 1996

     REVENUES. Revenues increased $7.6 million (57.6%), from $13.2 in 1996 to
$20.8 million in 1997. The increase in revenues primarily resulted from an
increase in billed customer minutes from retail sales, principally in the
international call reorigination business. This increase reflects our increased
market penetration, especially in the South African, Russian and Middle Eastern
markets. The total number of independent agents increased from 15 to 17. In
addition, we earned wholesale revenues of $0.3 million in 1997 with no
corresponding amount in 1996.

     COST OF REVENUES. Cost of revenues increased $4.5 million (58.9%) from $7.7
million in 1996 to $12.2 million in 1997, principally reflecting the increased
amount of traffic being handled by us. The slight (0.5%) increase in cost of
revenues as a percentage of revenues reflects our wholesale revenues in the
fiscal year ended March 31, 1998 (with a lower profit margin than retail
revenues) of $0.3 million, with no corresponding amount in the fiscal year ended
March 31, 1997.

     GROSS PROFIT. Gross profit increased $3.1 million (55.6%) from $5.5 million
in 1996 to $8.6 million in 1997 reflecting the increase in number of minutes
billed. As a percentage of revenue, gross profit decreased from 42.0% in 1996 to
41.5% in 1997. The gross profit margin on the retail segment of the business was
41.4% compared to 42% for the fiscal year ended March 31, 1997, while wholesale
revenues generated a 48% gross profit margin, which was unusually high due to a
one-time favorable rate arbitrage opportunity on a route to Thailand.

     OPERATING EXPENSES. Operating expenses increased $2.4 million (58.7%) from
$4.2 million to $6.6 million. This increase was due to an increase in commission
costs of $1.3 million attributable to the increased sales volume generated by
our independent agents. Bonuses paid to officers pursuant to their employment
agreements, additional consulting and travel expenses related to maintaining and
improving agency relations, additional legal and professional fees and travel
expenses related to the attempt by us to secure expansion financing and
negotiate strategic alliances resulted in increased costs of $0.5 million. In
addition, we increased staffing levels from 12 to 17 and secured additional
office facilities at our headquarters in Sunrise, Florida resulting in increased
costs of $0.2 million. The growth in other categories of operating expenses of
$0.4 million related primarily to our increased level of activity.

     Depreciation and amortization expense increased approximately $30,000 as a
result of switch upgrades, the purchase of additional computer equipment and
software, and leasehold improvements incurred in connection with the office
expansion.

     As a percentage of revenue, operating expenses increased slightly to 31.9%
in 1997 from 31.6% in 1996, as additional revenue offset the additional costs
and expenses.

     OPERATING INCOME. Operating income increased by $0.6 million (46.4%) from
$1.4 million in 1996 to $2.0 million in 1997. As a percentage of revenue,
operating income decreased by 0.7% to 9.6% in 1997 from 10.3% in 1996, primarily
reflecting a 0.5% reduction created by the impact of the commencement of the
lower margin wholesale business in 1997.

     INTEREST EXPENSE. Interest expense decreased to approximately $40,000 from
approximately $60,000, reflecting reductions in long-term debt.

     NET INCOME. As a result of these factors, and principally reflecting the
growth in our minutes billed to customers, net income increased to $1.3 million
from $0.8 million in 1996.


LIQUIDITY AND CAPITAL RESOURCES

     Our capital requirements consist of capital expenditures in connection with
the acquisition and maintenance of our switching capacity, e-commerce web site
and other and working capital requirements. Historically, our capital
requirements have been met primarily through funds provided by operations, term
loans funded or guaranteed by our majority shareholder and capital leases.

     Net cash provided by operating activities was $0.9 million in 1997 and $1.5
million in 1998. Net cash used in operating activities was $1.4 million in 1999.
The net cash provided by operating activities in 1997 and 1998 mainly reflects
net earnings offset by increases in accounts receivable relative to accounts
payable to carriers. For the fiscal year ended March 31, 1999, the net cash used
in operating activities was primarily the result of a reduction of carrier and
other payables subsequent to the acquisition of Access. The decrease also
resulted from a reduction in net income in fiscal 1999 as compared to fiscal
1998 and 1997.

     Net cash used in investing activities was $0.4 million in 1997, $0.3
million in 1998 and $9.1 million in 1999. The net cash used in investing
activities in 1997, and 1998 principally reflects an increase in equipment
purchases. In fiscal 1999 we made several acquisitions which resulted in cash
payments of approximately $7.9 million.

     Net cash used in financing activities was approximately $155,000 in 1997
and $944,000 in 1998. Cash provided by financing activities was $11.9 million in
1999. The activities consisted of debt repayment, primarily to our bank for
long-term financing obtained in 1993 and 1994. Net cash used in financing
activities for the fiscal year ended March 31, 1998 was approximately $944,000
reflecting debt repayment and deferred costs related to our initial public
offering. For the year ended March 31, 1998, the net cash provided by financing
activities resulted from the sale of our stock in the initial public offering
offset by lease payments.

     On May 18, 1998, we completed our initial public offering, which generated
net proceeds of approximately $11.7 million. Aggregate proceeds from the sale of
1,500,000 shares of Common Stock by us in the initial public offering were
$14,250,000. Net proceeds of the initial public offering, after deducting
underwriting discounts and commissions and professional fees, aggregated
approximately $11.7 million. In connection with the acquisition of Access, we
utilized $8.1 million, representing the purchase price plus the costs of the
transaction. In addition, we have utilized approximately $0.3 million for the
Starcom acquisition and $1.5 million for working capital purposes. Consequently,
approximately $1.7 million of the net proceeds from our initial public offering
remain as of March 31, 1999.

     We expect that the 1.7 million of net proceeds remaining from our initial
public offering, together with internally generated funds, will provide
sufficient funds for us to expand our business as planned and to fund
anticipated growth for the next 12 months. However, the amount of our future
capital requirements will depend upon many factors, including performance of our
business, the rate and manner in which we expand, staffing levels and customer
growth, as well as other factors not within our control, including competitive
conditions and regulatory or other government actions. If our plans or
assumptions change or prove to be inaccurate or the net proceeds of the initial
public offering, together with internally generated funds or other financing,
prove to be insufficient to fund our growth and operations, then some or all of
our development and expansion plans could be delayed or abandoned, or we may
have to seek additional funds earlier than anticipated. In order to provide
flexibility for potential acquisition and network expansion opportunities, we
may seek in the near future to enter into a financing arrangement. Other future
sources of capital for us could include public and private debt, including a
high yield debt offering, equipment leasing facilities, and equity financing.
There can be no assurance that any such sources of financing would be available
to us in the future or, if available, that they could be obtained on terms
acceptable to us. While such a financing may provide us with additional capital
resources that may be used to implement our business plan, the incurrence of
indebtedness could impose risks, covenants and restrictions on us that may
affect us in a number of ways, including the following: (1) a significant
portion of our cash flow from operations may be required for the repayment of
interest and principal payments arising from the financing, with such cash flow
not being available for other purposes; (2) such a financing could impose
covenants and restrictions on us that may limit our flexibility in planning for,
or reacting to, changes in our business or that could restrict our ability to
redeem stock, incur additional indebtedness, sell assets and consummate mergers,
consolidations, investments and acquisitions; and (3) our degree of indebtedness
and leverage may render us more vulnerable to a downturn in our business, in the
telecommunications industry or the economy generally.

     On December 18, 1998 and in connection with our growth strategy, we entered
into an equipment lease facility of up to $20 million, which provides for leases
of four to five years at market interest rates. The interest rates are fixed at
the inception of each lease, with subsequent leases based on the change in
five-year treasury securities.

SEASONALITY

     We have historically experienced, and expect to continue to experience, a
decrease in the use of our services in the months of August and December due to
the closing of many businesses for holidays in Europe and the United States
during those months.

RISKS ASSOCIATED WITH THE YEAR 2000


OVERVIEW

     We are currently in the final stages of evaluating whether we will
encounter any problems related to the Year 2000. The impact of the Year 2000,
which has been widely reported in the media, could cause malfunctions in certain
software and databases that use date sensitive processing relating to the Year
2000 and beyond. We have completed an evaluation of all our systems and found
that most of the computer systems, software and database which are proprietary
to Ursus are Year 2000 ready. We have also begun to evaluate third party
business entities with which we are engaged in business or for which we provide
services, to determine if there will be any unexpected interruptions. We have
requested representations from these third parties as to whether or not they
anticipate any difficulties in addressing Year 2000 problems and, if so, whether
or not we would be adversely affected by any of such problems. Our management
expects to have this process completed by the end of the third quarter of 1999.

     We have obtained representations from the manufacturer of the telephony
switches that they are Year 2000 ready. As these switches are critical to us,
they have been tested internally and found to be Year 2000 ready. Our billing
system, which was scheduled for an upgrade for operational reasons will be
upgraded to a Year 2000 ready version in the second quarter of fiscal 1999 at
minimal cost to us. We have received assurances from other software and
equipment manufactures that their hardware and software are Year 2000 ready.

COSTS

     Our management has determined that costs to correct any problems
encountered with the Year 2000 will be immaterial. However, until such time as
the third parties with which we conduct business respond to us, the full impact
of the Year 2000 is not known. As a result, the impact on our business, results
of operations and financial condition cannot be assessed with certainty.

RISKS

     We believe that we will complete our goal of 100% readiness prior to
December 31, 1999. Consequently, we do not believe that the Year 2000 problem
will have a material adverse effect on our business, cash flows, or results of
operations. However, if we do not achieve readiness prior to December 31, 1999,
if management's plan fails to identify and remedy all critical Year 2000
problems or if major suppliers or customers experience material Year 2000
problems, our results of operations or financial condition could be materially
and adversely affected.

CONTINGENCY PLANS

     We have begun to develop appropriate contingency plans to mitigate, to the
extent possible, any significant Year 2000 noncompliance, if any. We expect to
complete our contingency plans by September 30, 1999. If we are required to
implement our contingency plans, the cost of Year 2000 readiness may be greater
than the amount referenced above and there can be no assurance that these plans
will be adequate.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1998, the FASB issued SFAS No. 133 No. 133 "ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES." SFAS 133 established standards
for the accounting and reporting of derivative instruments and hedging
activities and requires that all derivative financial instruments be measured at
fair value and recognized as assets or liabilities in the financial statements.
Ursus expects to adopt the Statement during fiscal 2001. As Ursus currently does
not have any derivative instruments the impact of such adoption is not expected
to have a material impact on Ursus' financial position, results of
operations or cash flows.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We do not utilize futures, options or other derivative instruments. See
"Item 1- Foreign Exchange Rate Risks."

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The financial statements required pursuant to this item are included in
Part III, Item 14 of this Form 10-K and are presented beginning on page F-1.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

     Not Applicable.

<PAGE>
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The following set forth the executive officers and directors of the
Ursus:

NAME                     AGE   POSITION

Luca M. Giussani         45    Chief Executive Officer and Director
Jeffrey R. Chaskin       46    President, Chief Operating Officer and Director
Johannes S. Seefried     40    Chief Financial Officer and Director
Paul Biava               33    Senior Vice President
Richard C. McEwan        44    Executive Vice President of Marketing
Steven L. Relis          37    Chief Accounting Officer
Gregory J. Koutoulas     50    Vice President, Controller and Secretary
William Newport          63    Director, Chairman of the Board of Directors
Kenneth L. Garrett       56    Director


     Luca M. Giussani, a co-founder of Ursus, has served as Chief Executive
Officer and Director since our inception and as President from our inception
until October 1998. Mr. Giussani currently works full time for us in the United
States. Prior to co-founding Ursus with Mr. Chaskin, Mr. Giussani served as an
advisor to a number of developing countries for the restructuring of their
foreign debt, as well as a consultant to several public sector Italian
contractors specializing in the construction of power plants. Prior to 1993, Mr.
Giussani was an officer of Orient & China S.P.A., a trading company specializing
in transactions with China, and in the following concerns that provided
consulting services to Italian contractors: Intraco P.E.F., Balzar Trading Ltd.
and Ursus Finance Ltd.

     Jeffrey R. Chaskin is a co-founder of Ursus and has been our Chief
Operating Officer and a Director since our inception. Mr. Chaskin was named
President in October 1998. Mr. Chaskin has had a key role in the development of
various telecommunications companies, and has consulted to the industry since
1981 including consulting regarding call center and switched network operations
for CIL, Federal Express, CBN, ASCI and others.

     Johannes S. Seefried has been Chief Financial Officer and a Director of
Ursus since February 1997 and was our Chief Accounting Officer from February
1998 through April 1999. Prior to 1994, Mr. Seefried held executive positions in
corporate finance and securities sales with commercial and investment banking
organizations, both in the United States and Europe. From 1990 to 1993, Mr.
Seefried was employed by Banco Santander, a commercial and investment banking
group. Mr. Seefried's primary responsibilities at the Santander Group included
serving as a Vice President of corporate business development, including mergers
and acquisitions. From 1994 to 1996, Mr. Seefried served as Managing Partner of
Seefried Forstverwaltung, a privately-owned forestry and property management
company. Mr. Seefried is a graduate of the Stanford Graduate School of Business,
1994, and the School of Foreign Service at Georgetown University, 1983.

     Paul E. Biava has been Senior Vice President of Ursus since April 1999 and
was formally the Executive Vice President of Operation of Access Authority.
Prior to joining Access he held various positions with Cable & Wireless. While
at Cable & Wireless Mr. Biava had direct profit and loss responsibility for
their largest regional office. Mr. Biava graduated from Temple University with
honors.

     Richard C. McEwan has been recently named Executive Vice President of
Marketing and served as Vice president of Agency Relations since September 1,
1997. Prior to joining Ursus on a full-time basis, Mr. McEwan was a consultant
to Ursus from its inception. From 1990 until our inception, Mr. McEwen served as
the Director of International Development at Gateway USA. From 1988 to 1990 Mr.
McEwan was co-founder and Executive Vice President of Gateway Asia-Taiwan, the
first overseas agency of Gateway USA providing call reorigination services. Mr.
McEwan also provides consulting services to the Ursus's agent in the Bahamas.
Mr. McEwan received a B.A. from Brigham Young University in 1980 and a Masters
of International Management from the American Graduate School of International
Management (Thunderbird) in 1982.

     Steven L. Relis has been the Chief Accounting Officer of Ursus since April
1999. Mr. Relis joined Ursus in June of 1998 as the Vice President of
Finance. From 1993 to 1998, Mr. Relis was an audit manager with Deloitte and
Touche in New York and Ernst & Young in Miami. At Ernst & Young he was part of
the entrepreneurial services group, which specializes in supporting the needs of
aggressive growth companies. Mr. Relis received a B.S. in Business from Long
Island University in 1985 and is a licensed Certified Public Accountant with
over 12 years of audit and tax experience.

     Gregory J. Koutoulas has been Vice President, Controller and Secretary of
the Ursus since November 1994 From 1990 to 1994, Mr. Koutoulas served as
Controller of F.A.S.T., INC., a wholesale distributor of health and beauty aids.
Prior to his position with F.A.S.T., INC., from 1987 to 1989, Mr. Koutoulas was
employed by Bertram Yacht, a manufacturer of luxury yachts, as Manager of
Financial Analysis and Cost Accounting. Mr. Koutoulas received a B.S. in
Economics with a concentration in Accounting from Purdue University in 1971 and
is a licensed Certified Public Accountant.

     William M. Newport became a Director and Chairman of the Board of Directors
of Ursus in February 1998. Mr. Newport was Chief Executive Officer of AT&T's
cellular business from 1981 to 1983. In 1983, Mr. Newport joined the Bell
Atlantic Corporation when it was formed as a result of the AT&T divestiture and
retired in December 1992 from the Bell Atlantic Group as a Vice President for
Strategic Planning, after a 36-year career in the telecommunications industry.
Mr. Newport served as a director of Integrated Micro Products, a manufacturer of
fault tolerant computers for telecommunications equipment vendors, from 1994 to
1996, and currently serves as a director of the Corporation for National
Research Initiatives, a non-profit information technology research and
development company, Authentix Networks, Inc., a wireless roaming fraud
prevention and detection service provider and Condor Technology Solutions, a
publicly traded company that provides information technology services, such as
information systems development, networking, desk top computing systems and
design installations. Mr. Newport holds degrees in Electrical Engineering from
Purdue University and in Management from the Sloan School of Management at
M.I.T.

     Kenneth L. Garrett became a director of Ursus in April 1998. From 1994 to
present, Mr. Garrett is President of KLG Associates, Inc., a telecommunications
consulting firm specializing in the design and operations of networks, and was a
member of the executive committee of Tri State Investment Group II LLP, a group
providing venture capital based in North Carolina. From 1989 to 1994, Mr.
Garrett was a Senior Vice President in charge of AT&T's Network Services
Division, and from 1964 to 1989, he worked in a number of capacities in
operations, sales and marketing within the AT&T organization. Also, from 1971 to
1973, Mr. Garrett worked as district plant manager at Pacific Bell Telephone
Company in San Francisco. Mr. Garrett holds degrees in Chemical Engineering from
Iowa State University and in Management from the Sloan School of Management at
M.I.T.

     The directors are divided into three classes, denominated Class I, Class II
and Class III, with the terms of office expiring at the 1999, 2000 and 2001
annual meeting of shareholders, respectively. The directors have initially been
divided into classes as follows: Class I: Mr. Giussani and Mr. Chaskin, Class
II: Mr. Seefried and Mr. Newport and Class III: Mr. Garrett. At each annual
meeting following such initial classification and election, directors elected to
succeed those directors whose terms expire will be elected for a term to expire
at the third succeeding annual meeting of shareholders after their election. All
officers are appointed by and serve, subject to the terms of their employment
agreements, if any, at the discretion of the Board of Directors.

     SECTION 16A

     Not applicable.

<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION.

     The Summary Compensation Table below provides certain summary information
concerning compensation paid or accrued during the fiscal years ended March 31,
1999, 1998 and 1997 by Ursus to or on behalf of the Chief Executive Officer and
the three other executive officers of Ursus.


<TABLE>
<CAPTION>
                                                                ANNUAL COMPENSATION              LONG-TERM
                                                                                                COMPENSATION
                                                                                                 SECURITIES
             NAME AND                                                                            UNDERLYING      OTHER ANNUAL
        PRINCIPAL POSITION              YEAR           SALARY                BONUS            OPTIONS GRANTED    COMPENSATION

<S>                                    <C>            <C>                  <C>                    <C>            <C>
Luca M. Giussani........................1999          $230,769             $240,222               150,000        $33,876(1)
Chief Executive Officer                 1998          $187,615             $281,909                  -           $38,100(1)
                                        1997          $170,000             $251,405                  -           $8,200(1)


Jeffrey R. Chaskin (3)..................1999          $230,769             $240,222               150,000        $25,606(1)
President and Chief Operating           1998          $187,615             $281,909                  -           $32,516(1)
Officer                                 1997          $170,000             $251,405                  -           $4,583(1)


Johannes S. Seefried (4) ...............1999          $176,923              $75,000               150,000        $7,443(2)
Chief Financial Officer                 1998          $137,942              $75,000                  -           $1,490(2)
                                        1997           $61,981                 -                     -                 -

Richard McEwan (5)......................1999          $130,000                 -                  100,000                 -
Executive Vice President of             1998           $76,000              $40,000                  -           $20,962(6)
Marketing                               1997              -                    -                     -           $50,000(6)


-----------

(1)  Consists of the use of a company automobile, prepaid bonuses and vacation
     pay.

(2)  Consist of the use of a company automobile.

(3)  Does not include compensation paid to Mr. Chaskin's wife, Joanne M. Canter,
     an employee of Ursus. Ms. Canter's salary for 1997, 1998 and 1999 was
     $18,000, $18,069 and $21,885, respectively.

(4)  Mr. Seefried joined Ursus on July 8, 1996.

(5)  Mr. McEwan joined Ursus on September 1, 1997.

(6)  Consulting fees paid from April 1, 1997 to August 30, 1997.

</TABLE>

<PAGE>
LONG TERM COMPENSATION

     In connection with our initial public offering we established the 1998
Stock Incentive Plan, whereby 1,000,000 shares of Common Stock were authorized
for issuance. As of March 31, 1999, we granted 762,500 10-year options to
purchase Common Stock. The options granted during the last fiscal year to our
executive officers are as follows:



<TABLE>
<CAPTION>
                               NUMBER OF       PERCENTAGE OF TOTAL                                             POTENTIAL REALIZABLE
                               SECURITIES            OPTIONS                                                     VALUE AT ASSUMED
                               UNDERLYING           GRANTED TO                                                ANNUAL RATES OF STOCK
         NAME AND               OPTIONS        EMPLOYEES IN FISCAL      EXERCISE PRICE    EXPIRATION          PRICE APPRECIATION FOR
    PRINCIPAL POSITION          GRANTED                YEAR               PER SHARE             DATE             OPTION TERM (4)

------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 5%          10%
                                                                                                         ---------------------------
<S>                            <C>                     <C>                   <C>               <C>             <C>        <C>
Luca M. Giussani               150,000 (1)             19.67%                $9.50       April 8, 2008         897,750    2,265,750
Chief Executive Officer

Jeffrey R. Chaskin             150,000 (1)             19.67%                $9.50       April 8, 2008         897,750    2,265,750
President and
Chief Operating Officer

Johannes S. Seefried           100,000 (1)             13.11%                $9.50       April 8, 2008         598,500    1,510,500
Chief Financial Officer         50,000 (2)             6.56%                 $4.125      July 22, 2008         129,750      327,938

Richard McEwan                 100,000 (3)             13.11%                $9.50       April 8, 2008         598,500    1,510,510
Vice President of
Marketing


(1) One half of these stock options vested immediately upon the offering and one
half vested January 1, 1999.

(2) One half of these stock options vested immediately and one half vested on
January 1, 1999

(3) One half of these stock options vest one year after the offering and one
half vest on August 31, 1999.

(4) Under rules promulgated by the Commission, the amounts in these two columns
represent the hypothetical gain or "option spread" that would exist for the
options in this table based on assumed stock price appreciation from the date of
grant until the end of such options' ten-year term at assumed annual rates of 5%
and 10%. Annual compounding results in total appreciation of 63% (at 5% per
year) and 159% (at 10% per year). If the price of Ursus' Common Stock were to
increase at such rates from the price at fisca1 year end 1999 ($4.5625 per
share) over the next 10 years, the resulting stock price at 5% and 10%
appreciation would be $7.43 and $11.83, respectively. The 5% and 10% assumed
annual rates of appreciation are specified in the Commission rules and do not
represent Ursus' estimate or projection of future stock price growth. Ursus does
not necessarily agree that this method can properly determine the value of an
option.
</TABLE>


STOCK OPTION REPRICING

Ursus repriced a total of 160,000 employee stock options on October 23, 1998.
The stock option repricing acknowledged the importance to Ursus of its employees
and of the incentive to employees represented by stock options, especially in
considering alternative opportunities. In deciding the repricing, the Board of
Directors considered such factors as the competitive environment for obtaining
and retaining qualified employees and the overall benefit to the stockholders
from a highly motivated group of employees. None of the directors or executive
officers' stock options were repriced.

OPTION EXERCISES AND HOLDINGS

The following table sets forth, as to the Executive Officers, certain
information concerning the number of shares subject to both exercisable and
unexercisable stock options as of March 31, 1999. No options have been exersised
to date. Also reported are values for "in-the-money" options that represent the
positive spread between the respective exercise prices of outstanding stock
options and the fair market value of Ursus' Common Stock as of March 31, 1999.

<TABLE>
<CAPTION>
                                                                                           VALUE OF UNEXERCISED
                                 NUMBER OF SECURITIES UNDERLYING                           IN-THE-MONEY OPTIONS
                             UNEXERCISED OPTIONS AT FISCAL YEAR END                         AT FISCAL YEAR END
                        -------------------------------------------------    ------------------------------------------------
          NAME                  EXERCISABLE              UNEXERCISABLE             EXERCISABLE              UNEXERCISABLE
-----------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                       <C>                      <C>                       <C>
Luca M. Giussani                  150,000                      -                       -                         -
Jeffrey R. Chaskin                150,000                      -                       -                         -
Johannes S. Seefried              150,000                      -                     $21,875                     -
Richard McEwan                        -                     100,000                    -                         -
</TABLE>



ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth information as of June 29, 1999 relating to
the beneficial ownership of Common Stock by (i) those persons known to Ursus to
beneficially own more than 5% of our Common Stock, (ii) each of our directors
and executive officers and (iii) all of the our directors and executive officers
as a group.

<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER (9)                               NUMBER OF SHARES       PERCENT OF OWNERSHIP
----------------------------

<S>                                                            <C>                          <C>
Ben Christian Rispoli (1).....................                 375,000                      5.3%
Luca M. Giussani (1)(2).......................               4,350,000(4)                  61.6%
Jeffrey R. Chaskin............................                 650,000(4)                   9.2%
Johannes S. Seefried..........................                 150,000(5)                   2.1% (7)
Richard McEwan (3)............................                    -                           -
William Newport...............................                  20,000(6)                        (7)
Kenneth L. Garrett............................                  15,000(8)                        (7)
All Executive Officers and Directors
as a Group (7 Persons)........................               5,560,000(4)(5)(6)(8)         78.8%

-----------

(1)  Held by Fincogest S.A., a Swiss nominee entity, whose holdings of Common
     Stock are beneficially owned by Mr. Giussani (91.7%) and Ben Christian
     Rispoli (8.3%), residing at Corso Marconi 92, San Remo, Italy. Each of Mr.
     Giussani and Mr. Rispoli has sole voting and investment power with respect
     to his shares of Common Stock.

(2)  Fincogest, S.A. also owns 100% of the outstanding shares of Series A
     Preferred Stock of Ursus, all of which are beneficially owned by Mr.
     Giussani, who holds sole voting and investment power with respect to the
     Series A Preferred Stock.

(3)  Excludes 10-year options to purchase 100,000 shares of Common Stock granted
     to Mr. McEwan, one-half vesting one year after the Public Offering, and
     one-half vesting on August 31, 1999.

(4)  Includes 10-year options to purchase 150,000 shares of Common Stock.

(5)  Includes 10-year options to purchase 100,000 shares of Common Stock.

(6)  Includes 10-year options to purchase 20,000 shares of Common Stock.

(7)  Less than 1%.

(8)  Includes 10-year options to purchase 15,000 shares of Common Stock.

(9)  As used in this table, "beneficial ownership" means the sole or shared
     power to vote, or to direct the voting of a security, or the sole or shared
     investment power with respect to a security (i.e., the power to dispose, or
     direct the disposition, of a security). Accordingly, they may include
     shares owned by or for, among others, the wife, minor children or certain
     other relatives of such individual, as well as other shares as to which the
     individual has the right to acquire within 60 days after such date.
</TABLE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

LOANS AND ADVANCES TO EXECUTIVE OFFICERS

     Between December 26, 1995 and July 15, 1997, Ursus loaned an aggregate of
$127,000 to Luca Giussani, its Chief Executive Officer. The loans were evidenced
by unsecured notes bearing interest at 7.65% per annum. In addition, Ursus made
cash advances totaling $4,749 on behalf of Mr. Giussani during this period. At
March 31, 1999, Mr. Giussani owed Ursus $10,843. On April 30, 1999 the Board of
Directors approved a loan to Mr. Giussani in the amount of $30,000 evidenced by
a promissory note that bears interest at 6%.

BONUSES PAID TO EXECUTIVE OFFICERS

     Pursuant to the employment agreements effective January 1, 1998, all
bonuses, including any advance payments, paid to Messrs. Giussani and Chaskin
through December 1997 comprise the entire bonus to which each is entitled in
respect of the 1998 fiscal year. They also waived any other claims for
compensation from Ursus accruing prior to January 1, 1998. Messrs. Giussani and
Chaskin each received $240,222 and $281,909 in bonuses under these agreements
for fiscal year ended March 31, 1999 and 1998, respectively.

     On October 23, 1998 our Compensation Committee approved a special one-time
bonus of $120,000 to each of Messrs. Giussani and Chaskin to reward them for
their efforts in closing the acquisition of Access.


TERM LOANS AND GUARANTEE BY CHIEF EXECUTIVE OFFICER

     During 1993, Ursus entered into two term loan agreements with
Citibank-Zurich providing for an aggregate loan amount of $730,000. The due
dates of the two loans were May 20, 1996 and November 11, 1996, respectively.
During 1995 and through April 1996, Ursus repaid a total of $250,000 on the term
loans. In June 1996, Ursus replaced the two existing term loans with a new term
loan with the same lender in the amount of $500,000 due August 31, 1998. During
the fourth quarter of fiscal 1998 Ursus repaid the remaining balance of $85,000
and terminated the loan agreement.

     Luca Giussani, our Chief Executive Officer, provided security for these
term loans by pledging money-market accounts equal to 100% of the outstanding
loan balances.

AGREEMENTS WITH RISPOLI

     On November 1, 1995, we entered into a one-year consulting agreement with
Ben Rispoli, a minority shareholder of Ursus. The agreement automatically renews
for successive one-year terms unless either party provides written notice of
non-renewal. Pursuant to the agreement Mr. Rispoli will provide consulting
services to assist the our marketing efforts for a monthly retainer of $11,250,
plus reimbursement of reasonable travel expenses.

     On January 20, 1998, Messrs. Giussani, Rispoli and Ursus entered into an
agreement (the "January Agreement"). The January Agreement resolved the matter
of Mr. Rispoli's beneficial interest in Ursus's securities held in a fiduciary
capacity by Fincogest, S.A. ("Fincogest"). Fincogest is a nominee Swiss entity
that holds record title for Ursus' securities beneficially owned by Mr. Giussani
as well as Mr. Rispoli. Mr. Rispoli had a beneficial interest in the securities
held by Fincogest since Ursus' inception. The January Agreement resolves that
Mr. Rispoli beneficially owns 8.3% of the Common Stock held by Fincogest, and
that Mr. Giussani beneficially owns the remaining 91.7% of the Common Stock and
all of the Series A Preferred Stock. The January Agreement also extends Mr.
Rispoli's consulting agreement to December 31, 1998 and provides that the
consulting agreement cannot be terminated except for "cause" and modified the
agreement to include an additional payment of $15,000 upon consummation of the
initial public offering.

     Between December 21, 1995 and June 26, 1996, Ursus loaned $65,000 in the
aggregate to Ben Rispoli. The notes are unsecured and bear interest at the rate
of 7.65% per annum. Beginning in September of 1997, the consultant's monthly
retainer was offset by Ursus against the consultant's outstanding loan balance
and accrued interest. At March 31, 1998, all amounts due to Ursus by the
consultant have been offset against the consultant's retainer.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)  1.   Financial Statements.

          The following consolidated financial statements of Ursus Telecom
          Corporation are included herein:

                                                                        Page

          Report of Independent Certified Public Accountants            F-1
          Consolidated Balance Sheets                                   F-2
          Consolidated Statements of Income                             F-3
          Consolidated Statements of Shareholders'
          Equity                                                        F-4
          Consolidated Statements of Cash Flows                         F-5
          Notes to Consolidated Financial Statements                    F-7

     2.   Financial Statement Schedules
          Schedule II: Valuation and Qualifying Accounts                S-1
          (Schedules other than those listed above have
          been omitted since they are either not required,
          not applicable or the information is
          otherwise included herein)

     3.   Exhibits.  Reference is made to the Exhibit Index, which is found on
          page 49 of the Form 10-K.

<PAGE>
               Report of Independent Certified Public Accountants



Board of Directors
Ursus Telecom Corporation

We have audited the accompanying consolidated balance sheets of Ursus Telecom
Corporation as of March 31, 1998 and 1999, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended March 31, 1999. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Ursus
Telecom Corporation at March 31, 1998 and 1999, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended March 31, 1999, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

                                            /s/ Ernst & Young LLP

Miami, Florida
June 23, 1999

<PAGE>
                            URSUS TELECOM CORPORATION
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                           MARCH 31,
                                                                                      1998          1999
                                                                                ------------------------------------
ASSETS
Current assets:
<S>                                                                                 <C>              <C>
   Cash and cash equivalents                                                        $1,035,149       $2,406,643
   Accounts receivable, net                                                          4,183,750        4,960,510
   Advances and notes receivable--related parties                                       65,274           10,843
   Prepaid expenses                                                                     54,980          297,828
   Income taxes receivable                                                              60,430           27,889
   Deferred taxes                                                                       49,841          401,173
   Other current assets                                                                 52,944          535,726
                                                                                ------------------------------------
Total current assets                                                                 5,502,368        8,640,612
Equipment, net                                                                       1,258,074        3,677,059
Deposit on acquisition                                                                 377,141          -
Intangible assets, net                                                                    -          10,180,152
Deferred costs of public offering                                                      514,619          -
Investment in unconsolidated subsidiary                                                   -             207,754
Other assets, net                                                                       66,267          337,005
                                                                                ------------------------------------
Total assets                                                                        $7,718,469      $23,042,582
                                                                                ====================================
LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
   Accounts payable                                                                 $4,064,394       $4,401,216
   Accrued expenses                                                                     89,838          385,824
   Commissions payable                                                                  57,085        1,066,232
   Customer advances                                                                    90,000          158,731
   Current portion of capital lease obligations                                         48,835          324,166
   Other current liabilities                                                              -             133,500
   Deferred revenue                                                                     59,970           36,262
                                                                                ------------------------------------
Total current liabilities                                                            4,410,122        6,505,931
Long term portion of capital lease obligations                                         296,555          789,430

Deferred taxes                                                                          63,572          329,413
Other non-current liabilities                                                             -             133,500
Commitment and contingencies
Shareholders' equity:
   Preferred stock, $.01 par value, 1,000,000 shares authorized;
     1,000 shares issued and outstanding                                                    10               10
   Common stock, $.01 par value; 20,000,000 shares authorized, 5,000,000 and
       6,600,000 issued and outstanding at March 31, 1998 and 1999                      50,000           66,000
   Additional paid-in capital                                                          218,740       12,338,843
   Accumulated other comprehensive loss                                                 (5,873)          -
   Retained earnings                                                                 2,685,343        2,879,455
                                                                                ----------------------------------
Total shareholders' equity                                                           2,948,220       15,284,308
                                                                                ----------------------------------
Total liabilities and shareholders' equity                                          $7,718,469      $23,042,582


   SEE ACCOMPANYING NOTES.

</TABLE>

<PAGE>
                            URSUS TELECOM CORPORATION

                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                                YEAR ENDED MARCH 31,
                                                                      1997              1998            1999
                                                              -----------------------------------------------------
Revenues:
<S>                                                                <C>               <C>              <C>
   Retail                                                          $20,523,019       $24,198,629      $26,254,710
   Wholesale                                                           315,408         3,899,695        8,071,436
                                                              -----------------------------------------------------
Total revenues                                                      20,838,427        28,098,324       34,326,146

Costs of revenues                                                   12,195,672        18,532,695       22,122,909
                                                              -----------------------------------------------------

Gross profit                                                         8,642,755         9,565,629       12,203,237

Operating expenses:
   Commissions                                                       3,766,235         4,181,651        3,705,150
   Selling, general and administrative expenses                      2,746,379         3,467,585        7,550,743
   Depreciation and amortization                                       126,292           196,497          913,548
                                                              -----------------------------------------------------
Total operating expenses                                             6,638,906         7,845,733       12,169,441
                                                              -----------------------------------------------------

Operating income                                                     2,003,849         1,719,896           33,796

Other income (expense):
   Interest expense                                                    (39,363)          (23,747)         (74,594)
   Interest income                                                      16,271            26,752          301,835
   Equity in loss of unconsolidated joint venture                         -                 -            (129,188)
   Gain on disposition of investment in joint venture                     -                 -             142,173
   Gain (loss) on sale of equipment                                     9,644             10,584           (7,807)
   Other income                                                          -                 -              240,261
                                                              -----------------------------------------------------
                                                                      (13,448)            13,589          472,680
                                                              -----------------------------------------------------
Income before provision
   for income taxes                                                 1,990,401          1,733,485          506,476
Provision for income taxes                                            737,895            659,577          312,364
                                                              -----------------------------------------------------
Net income                                                       $  1,252,506       $  1,073,908        $ 194,112
                                                              =====================================================

Pro forma net income per common
   share-basic and dilutive (historical in 1999)                 $        .25       $        .21        $    .03
                                                              =====================================================

Pro forma weighted average shares outstanding
   (historical in 1999)                                             5,000,000          5,000,000       6,296,062
                                                              =====================================================

SEE ACCOMPANYING NOTES.
</TABLE>

<PAGE>
                            Ursus Telecom Corporation

                 Consolidated Statements of Shareholders' Equity

<TABLE>
<CAPTION>
                                                                                                              Accumulated
                                                                           Additional    Stock                Other
                        PREFERRED           Common Stock          Common    Paid-in   Subscription  Retained  Comprehensive
                          STOCK    Class A    Class B   Class C    Stock    Capital    Receivable   Earnings  Income ( loss)   Total
                      --------------------------------------------------------------------------------------------------------------
<S>                    <C>       <C>        <C>       <C>        <C>        <C>       <C>          <C>            <C>     <C>
BALANCE AT MARCH
 31, 1996              $  -      $ 25,000   $175,000  $ 68,750   $  -       $  -      $ (18,750)   $   358,929    $  -    $ 608,929
 Net income               -         -           -           -       -          -           -         1,252,506       -    1,252,506
                      --------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH
 31, 1997                 -        25,000    175,000    68,750      -       -           (18,750)     1,611,435       -    1,861,435
 Collection of
  stock subscription
   receivable             -          -          -         -         -       -            18,750           -          -       18,750
 Stock split and
   recapitalization      10       (25,000)  (175,000)  (68,750)   50,000     218,740      -               -          -          -
 Net income               -          -          -         -         -        -            -          1,073,908       -    1,073,908
 Translation adjustment   -          -          -         -         -        -            -               -        (5,873)   (5,873)
                       -------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH
 31, 1998                10          -          -         -       50,000     218,740      -          2,685,343     (5,873)2,948,220

 Net income               -          -          -         -         -        -            -            194,112        -     194,112
 Translation adjustment   -          -          -         -         -        -            -               -         5,873     5,873
 Issuance of common
   stock, net of
   offering costs
   of $514,619            -          -          -         -       15,000  11,696,103      -               -          -   11,711,103
 Issuance of 100,000
   shares of Common
   Stock in connection
   with the purchase of
   Starcom S.A.           -          -           -        -        1,000     424,000      -               -          -      425,000
                       -------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH
  31, 1999              $10        $ -      $    -     $  -      $66,000 $12,338,843  $   -        $2,879,455  $   -    $15,284,308
                       =============================================================================================================
</TABLE>


   SEE ACCOMPANYING NOTES.

<PAGE>
                            Ursus Telecom Corporation
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                               Year ended March 31,
                                                                    1997              1998            1999
                                                              ----------------------------------------------------
OPERATING ACTIVITIES
<S>                                                              <C>               <C>              <C>
Net income                                                       $1,252,506        $1,073,908       $ 194,112
Adjustments to reconcile net income to net
   cash provided by (used in) operating activities:
Depreciation and amortization                                       126,292           196,497         913,548
Allowance for doubtful accounts                                       3,619            50,964         504,821
(Gain) loss on sale of equipment                                     (9,644)          (10,584)          7,807
Gain on disposition of joint venture investment                        -                 -           (142,173)
Equity in loss from unconsolidated joint ventures                      -                 -            129,188
Deferred income taxes                                                (2,799)            3,346          41,659
Changes in operating assets and liabilities, excluding
  the effects of business acquisitions:
Accounts receivable                                              (1,647,068)       (1,232,969)        (60,465)
Prepaid expenses                                                    (33,155)          (34,564)        147,702
Other current assets                                                (38,716)          (43,250)       (522,737)
Income taxes receivable                                            (113,562)           26,854        (158,700)
Accounts payable                                                  1,268,595         1,349,605      (1,913,593)
Accrued expenses                                                     15,877            51,178        (620,008)
Commissions payable                                                  56,862           (28,431)         (4,241)
Customers advances                                                     -               90,000          68,731
Deferred revenue                                                     (2,308)           52,964         (23,710)
Deferred discounts                                                  (18,567)             -               -
                                                              ----------------------------------------------------
Net cash provided by (used in) operating activities                 857,932         1,545,518      (1,438,057)

INVESTING ACTIVITIES
    Purchase of equipment                                          (352,081)         (486,767)       (762,270)
    Sale of equipment                                                10,000              -               -
    (Increase) decrease in advances to related parties              (63,026)          180,597          25,408
    Investment in joint ventures                                       -                 -           (275,000)
    Cash used for acquisitions, net of cash acquired                   -                 -         (7,890,585)
    (Increase) decrease in other assets                             (33,976)            5,040        (190,786)
                                                              ----------------------------------------------------
    Net cash used in investing activities                          (439,083)         (301,130)     (9,093,233)

FINANCING ACTIVITIES
    Deferred costs of public offering                                  -             (514,619)           -
    Repayments of long-term debt                                   (155,000)         (425,000)           -
    Net proceeds from the sale of common stock                         -                 -         12,225,722
    Collection of stock subscription receivable                        -               18,750           -
    Repayments on capital leases                                       -              (23,262)       (322,938)
                                                              ----------------------------------------------------
    Net cash (used in) provided by financing activities           (155,000)          (944,131)     11,902,784
    Effect of foreign exchange rate changes on cash and cash
   equivalents                                                        -                (5,873)           -
                                                              ----------------------------------------------------
Net increase  in cash and cash equivalents                         263,849            294,384       1,371,494
Cash and cash equivalents at beginning of year                     476,916            740,765       1,035,149
                                                              ----------------------------------------------------
Cash and cash equivalents at end of year                       $   740,765         $1,035,149      $2,406,643
                                                              ====================================================

</TABLE>

<PAGE>
                            Ursus Telecom Corporation

                Consolidated Statements of Cash Flows (continued)


<TABLE>
<CAPTION>
                                                                                Year ended March 31,
                                                                       1997             1998             1999
                                                                -----------------------------------------------------

SUPPLEMENTAL CASH FLOW INFORMATION
<S>                                                             <C>               <C>              <C>
Cash paid for interest                                          $     38,838      $     26,915     $    74,594
                                                                =====================================================
Cash paid for income taxes                                      $    854,256       $   540,751      $  156,000
                                                                =====================================================
Trade-in allowance for used equipment                           $     60,000      $     67,500      $       -
                                                                =====================================================
Property and equipment acquired under capital leases            $       -         $   368,652       $  950,574
                                                                =====================================================
Receivable applied as a deposit on acquisition                  $       -         $   377,141      $  102,988
                                                                =====================================================
Common stock issued for acquisitions                            $       -         $      -         $  425,000
                                                                =====================================================
Note issued for acquisitions                                    $       -         $      -         $  267,000
                                                                =====================================================
SEE ACCOMPANYING NOTES.

</TABLE>
<PAGE>
                            URSUS TELECOM CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 1999


1. NATURE OF OPERATIONS

Ursus Telecom Corporation (the "Company") was incorporated in Florida on March
23, 1993. The Company is a provider of international telecommunications
services. The Company's revenues are derived from the sale of telecommunications
services to retail customers, who are typically small-to medium-sized businesses
and travelers; and to wholesale customers, who are typically telecommunications
carriers. The Company's customers are principally located in South Africa, Latin
America, the Middle East (primarily Lebanon and Egypt), Germany, France and
Japan.

The Company markets its services through a worldwide network of independent
agents and resellers. The Company extends credit to its sales agents and
wholesalers on an unsecured basis with the risk of loss limited to outstanding
amounts, less commissions payable to its agents. The Company has entered into
exclusive agency agreements with some of its current agents. The initial term of
the agreements has generally been for a period of five years. Provided that
agents are not in default, agents generally have the option of renewing their
agreements for two additional terms of three years each by notifying the Company
at least six months prior to the agreement's expiration date. See Note 13 -
Significant Customers, and Note 14- Business Risks.

On September 17, 1998 the Company purchased all the issued and outstanding
common stock of Access Authority, Inc. ("Access") for $8 million in cash. Access
is a provider of international long distance telecommunication services,
including call reorigination, domestic toll-free access and various value-added
features to small and medium sized businesses and individuals in over 38
countries throughout the world. Access markets its services through an
independent and geographically dispersed sales force consisting of agents and
wholesalers. Access operates a switching facility in Clearwater, Florida.

The Company has accounted for the Access acquisition using the purchase method.
Accordingly, the results of operations of Access are included in the
consolidated results of the Company as of September 17, 1998, the date of
acquisition. Under the purchase method of accounting, the Company has allocated
the purchase price to assets and liabilities acquired based upon their estimated
fair values. See Note 17-Acquisitions.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements of the Company include the accounts of the
following wholly owned subsidiaries:

         Access Authority Inc.
         Starcom S.A.
         Ursus Telecom Uruguay S.A.

All significant balances and transactions between the Company and its
subsidiaries have been eliminated in consolidation. For the year ended March 31,
1998, the consolidated financial statements of the Company also included its
50.4% owned subsidiary, Ursus Telecom France. However, on March 5, 1999 the
subsidiary was restructured with the acceptance of a new joint venture partner,
which effectively reduced the Company's ownership interest to a non-controlling
interest of 50%. The Company has accounted for the joint venture using the
equity method of accounting beginning on March 6, 1999. As a result of the
disposition of a portion of its investment the Company recorded a gain of
approximately $142,000 (see Note 7), which has been classified as other income.

REVENUE RECOGNITION

Revenues from retail telecommunication services are recognized when customer
calls are completed. Revenues from wholesale telecommunication services are
recognized when the wholesale carrier's customers' calls are completed. Unbilled
revenue represents calls that are completed but not invoiced at the balance
sheet date. Revenue from the sale of calling cards is deferred and recognized
when calling card calls are completed or when the cards expire.

COST OF REVENUES AND COMMISSIONS

Cost of revenues is based on the direct costs of fixed facilities and the
variable cost of transmitting and terminating traffic on other carriers'
facilities.

Commissions paid to sales agents are based on the traffic generated in their
respective territories and are expensed in the period when associated call
revenues are recognized.

CASH AND CASH EQUIVALENTS

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

INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

The Company's investments in affiliated companies which are not "majority-owned"
and controlled are accounted for using the equity method. Since March 6,
1999, Ursus Telecom France, a 50% owned subsidiary has been accounted for under
this method. Under this method the Company records its pro rata share of income
or loss of the entity as well as any distribution or contributions as either an
increase or decrease to the investment account.

FOREIGN CURRENCY TRANSLATION

The financial statements of the Company's French subsidiary have been translated
into U.S. dollars from their functional currency, French Francs, in the
accompanying statements in accordance with Statement of Financial Accounting
Standards (SFAS) No. 52 "FOREIGN CURRENCY TRANSLATION." Balance sheet amounts
have been translated at the exchange rate on the balance sheet date and income
statement amounts have been translated at average exchange rates in effect
during the period. The net translation adjustment is included in other
comprehensive income. Comprehensive income for the years ended March 31, 1997,
1998 and 1999 was $1,252,506, $1,068,035 and $199,985 respectively.

EQUIPMENT

Equipment is stated at cost. Depreciation is computed using the straight-line
method for financial reporting purposes over useful lives ranging from three to
seven years. Amortization of leasehold improvements is provided using the
straight-line method over the shorter of the estimated useful lives of the
assets or the lease term.

START UP AND ORGANIZATION COSTS

Start up and organizational costs incurred by the Company in establishing new
operations are expensed as incurred.

SOFTWARE DEVELOPMENT COSTS

The Company capitalizes software costs incurred in the development of software
for internal use in accordance with the American Institute of Certified Public
Accountants (AICPA) Statement of Position ("SOP") 98-1, ACCOUNTING FOR THE COSTS
OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE. Capitalization
begins when the implementation stage has begun and ends when the software is
placed in service. Amortization of capitalized software is provided using the
straight-line method over the software's estimated useful life. For the year
ended March 31, 1999, the Company has capitalized $139,995 of costs. There was
no amortization during the year as the software had not yet been placed in
service.

INTANGIBLE ASSETS

At March 31, 1999 intangible assets consists of goodwill of $9,885,194, net of
accumulated amortization of $199,658, customer lists of $590,661, net of
accumulated amortization of $102,545 and other intangibles of $6,500. Goodwill
is being amortized over a period of 15-25 years on straight-line basis and
customer lists over the estimated run-off of the customer bases not to exceed
five years. The Company periodically evaluates the realizability of intangible
assets. The carrying value of goodwill will be reviewed if the facts and
circumstances suggest that it may be impaired. If these reviews indicate that
intangibles assets, including goodwill will not be recoverable, as determined
based on the undiscounted cash flows of the assets over the remaining
amortization period, the Company's carrying value of the intangible assets will
be adjusted to fair value.

INCOME TAXES

Deferred income tax assets and liabilities are determined based upon differences
between the financial statement and income tax basis of assets and liabilities
using enacted tax rates in effect for the year in which the differences are
expected to reverse.

PRO FORMA NET INCOME PER SHARE

Pro forma basic and dilutive net income per share reflect pro forma weighted
average common shares outstanding for all periods presented assuming the stock
split and recapitalization, described in Note 8, occurred at the beginning of
the earliest year presented.

Following is a reconciliation of amounts used in the per share computations:

<TABLE>
<CAPTION>
                                                                 Year ended March 31,
                                                          1997             1998             1999
                                                  --------------------------------------------------

<S>                                                    <C>               <C>               <C>
Net income-numerator basic computation                 $1,252,506        $1,073,908        $ 194,112
Effect of dilutive securities-None                              -                 -                -
                                                  --------------------------------------------------
Net income as adjusted-numerator diluted
    computation                                        $1,252,506        $1,073,908        $ 194,112
                                                  ==================================================

Pro forma weighted average shares-
    denominator basic computation (historical           5,000,000         5,000,000        6,289,863
    in 1999)
Effect of dilutive securities                                   -                 -            6,199
                                                  --------------------------------------------------
Pro forma weighted average shares as
    adjusted-denominator (historical in 1999)           5,000,000         5,000,000        6,296,062
                                                  ==================================================

Pro forma net income per share:
Basic                                              $         0.25    $         0.21     $        .03
                                                  ==================================================

Dilutive                                           $         0.25    $         0.21     $        .03
                                                  ==================================================

</TABLE>

For the year ended March 31, 1999, options to purchase 750,000 shares of common
stock and warrants to purchase 150,000 shares of common stock, were not included
in the computation of dilutive net income per share, because the option price
was greater than the average market price of the common shares and, therefore,
the effect would be antidilutive.

LONG-LIVED ASSETS

During fiscal 1997, the Company adopted the provisions of SFAS No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
DISPOSED OF. SFAS No. 121 requires impairment losses to be recorded on
long-lived assets when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. The Company, based on current circumstances, does not believe
that any long-lived assets are impaired at March 31, 1999.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents, accounts receivable, advances
and notes receivable-related party, accounts payable, accrued expenses and
capital lease obligations approximate fair value due to the short maturity of
these items.

COMPREHENSIVE INCOME: FINANCIAL STATEMENT PRESENTATION

The Company has adopted the provisions of SFAS No. 130, "REPORTING COMPREHENSIVE
INCOME" in 1998 which is required for fiscal years beginning after December 15,
1997. The Statement requires the presentation of comprehensive income and its
components in the financial statements and the accumulated balance of other
comprehensive income separately from retained earnings and additional paid in
capital in the equity section of the balance sheet. The adoption of SFAS No. 130
had no impact on the Company's net income or shareholders' equity. The only
component of other comprehensive income reflected in the Company's balance sheet
is foreign currency translation adjustments.

DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

In June 1997, the FASB issued SFAS No. 131, "DISCLOSURE ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION,". This Statement supersedes SFAS No. 14,
"FINANCIAL REPORTING FOR SEGMENTS OF A BUSINESS ENTERPRISE," and amends SFAS No.
94, "CONSOLIDATION OF ALL MAJORITY-OWNED SUBSIDIARIES." This Statement requires
annual financial statements and interim reports to disclose information about
products and services, geographic areas and major customers based on a
management approach. This approach requires disclosing financial and descriptive
information about an enterprise's reportable operating segments based on
information management uses in making business decisions and assessing
performance. The Company has adopted SFAS No. 131 in the fiscal year ended March
31, 1999 with no impact on the Company's financial position, results of
operations or cash flows.

RECLASSIFICATIONS

Certain prior period balances have been reclassified to conform with the current
period presentation.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133 "ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES". SFAS 133 No. 133 established standards for
the accounting and reporting of derivative instruments and hedging activities
and requires that all derivative financial instruments be measured at fair value
and recognized as assets or liabilities in the financial statements. The Company
expects to adopt the Statement during fiscal 2001. As the Company currently does
not have any derivative instruments, the impact of such adoption is not expected
to have a material impact on the Company's financial position, results of
operations or cash flows.

3. ACCOUNTS RECEIVABLE

Accounts receivable consists of the following:


                                                          MARCH 31,
                                                     1998             1999
                                                ----------------------------

Billed services                                  $2,937,650       $4,594,294
Unbilled services                                 1,312,064          749,944
                                                ----------------------------
                                                  4,249,714        5,344,238
Allowance for doubtful accounts                    (65,964)        (383,728)
                                                ----------------------------
                                                 $4,183,750       $4,960,510
                                                ============================


4. EQUIPMENT

Equipment consists of the following:

                                        ESTIMATED             March 31,
                                       USEFUL LIVES       1998         1999
                                     ------------------------------------------

Switch equipment                         7 years         $934,693    $3,060,505
Computer equipment                       3 years          407,759     1,330,176
Computer software                        3 years           85,759       589,643
Office furniture and equipment           5 years          117,364       175,787
Leasehold improvements                   7 years          144,625       234,418
Internal use software                   1-5 years               -       139,995
                                                     --------------------------
                                                        1,690,200     5,530,524
Less accumulated depreciation
         and amortization                               (432,126)   (1,853,465)
                                                     --------------------------
                                                       $1,258,074    $3,677,059
                                                     ==========================

5. LONG-TERM DEBT

Long-term debt consisted of a term loan to a bank in the original amount of
$500,000 due August 31, 1998 at an approximate rate of 8.75%. The loan was
repaid in full prior to March 31, 1998.

6. CAPITAL LEASES

The Company leased certain switches and other equipment under capital leases. At
the inception of these agreements the assets had an aggregate carrying amount of
approximately $1,319,000. Depreciation on these assets is included with
depreciation expense on the income statement.

On December 18, 1998 the Company entered into a master equipment lease facility
of up to $20 million (approximately $19 million remains at March 31, 1999),
which provides for leases of 4 to 5 years at market interest rates. The interest
rates are fixed at the inception of each lease, with subsequent leases based on
the change in five-year treasury securities. As of March 31, 1999 the Company
has utilized the lease facility to finance the purchase of two switches and
other equipment with a cost of approximately $951,000. The Company has no
obligation to utilize the lease facility nor are there any fees in connection
with non- utilization of the lease facility.

The following is a schedule of future minimum lease payments under capital
leases as of March 31, 1999:

Fiscal year ended March 31,

2000                                                               $    451,685
2001                                                                    448,787
2002                                                                    364,211
2003                                                                    185,018
                                                                   -------------
                                                                      1,449,701
Less: Imputed interest at rates of 11-16%                              (336,105)
                                                                   -------------
  Present value of lease obligation (current portion $324,166)     $  1,113,596
                                                                   ============


7. OTHER INCOME AND SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

In March 1999, the Company notified a vendor of certain billing discrepancies
pertaining to Access's carrier costs for the period from January 1997 through
February 1999. On May 1, 1999, the vendor agreed to reimburse the Company
approximately $465,000 of which approximately $119,000 was in cash and $346,000
will be in future credits. Included in other income (expense) for the year ended
March 31, 1999 is $206,000 representing the portion of the reimbursement that
relates to the period prior to the September 17, 1998 acquisition of Access.
Cost of revenues for the year ended March 31, 1999, is net of a credit of
approximately $66,000 representing the remaining portion of the reimbursement,
which related to the period from September 18, 1998 through December 31, 1999.

The three month period ended March 31, 1999, included the following significant
adjustments:

Billing discrepancy reimbursement related to
periods prior to December 31, 1998 (see above)                $ 206,433
Gain on disposition of investment in joint venture
(see Note 2)                                                    142,173
                                                              ----------
Total                                                         $ 348,606
                                                              ==========

8. SHAREHOLDERS' EQUITY

Prior to the stock split and recapitalization, as discussed below, the Company
was authorized to issue three classes of common stock at a par value of $50.
Class A, Class B and Class C shares had the same dividend and liquidation
rights. Class A shares carried the sole right to elect the first three directors
of the Company, Class B shares were identical to Class A shares except for the
right to elect the first three directors, and Class C shares were nonvoting for
all purposes.

On February 6, 1998, the Board of Directors and shareholders approved (i) the
filing of amended and restated Articles of Incorporation that provided for,
among other things, the authorization of 20,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock, (ii) a 923.08 for 1 stock split of the
issued and outstanding Class C Common Stock, (iii) the reclassification and
split of every four shares of outstanding Class A and Class B Common Stock into
3,692.32 shares of Common Stock and 1 share of Preferred Stock, (iv) an option
plan reserving up to 1,000,000 shares of Common Stock options and other stock
awards, and (v) the granting of 150,000 warrants for the purchase of Common
Stock to the Company's underwriters. The stock split and reclassification became
effective on February 18, 1998. The issuance of the warrants and stock option
plan became effective May 18, 1998 (the effective date of the Company's initial
public offering).

The 1,000 shares of Series A Preferred Stock are owned by the Company's
principal shareholder. The Preferred Stock has the exclusive right to elect one
less than a majority of the members of the Board of Directors, and is entitled
to a $1.00 per share liquidation preference over the Common Stock. The Series A
Preferred Stock does not participate in dividends and it is not redeemable or
convertible into Common Stock. The holders of 66 2/3 of the outstanding shares
of Series A Preferred Stock must consent to the creation or issuance of any
class or series of new Preferred Stock that has greater or equal voting right
with respect to the election of directors.

INITIAL PUBLIC OFFERING

Effective May 18, 1998, the Company sold 1,500,000 shares of its common stock in
an initial public offering (the "Offering"). Net proceeds of the Offering, after
deducting underwriting discounts and commissions, and professional fees
aggregated approximately $11.7 million. Through March 31, 1999, the net proceeds
have been used to fund acquisitions and for general working capital purposes.

WARRANTS

At the time of the offering, the Company sold to the underwriter for an
aggregate purchase price of $150, warrants to purchase 150,000 shares of Common
Stock at a price equal to 160% ($15.20) of the Offering price.

The underwriter's warrants contain anti-dilution provisions for stock splits,
stock dividends, re-combinations and reorganizations, a one-time demand
registration provision (at the Company's expense) and piggyback registration
rights (which registration rights will expire five (5) years from the date of
the Offering).

On April 30, 1999 the Board of Directors granted the underwriter 5 year warrants
to purchase 54,000 shares of Common Stock at $5 per share. As a result, the
Company will record compensation expense for the fair market value of the
warrants on the date of the grant.

9. STOCK OPTION PLAN

On February 12, 1998 the Company's Board of Directors and shareholders adopted
the "1998 Stock Incentive Plan" (the "Stock Incentive Plan" or the "Plan"). All
employees and directors of and consultants to the Company are eligible to
receive "Incentive Awards" under the Stock Incentive Plan. The Stock Incentive
Plan allows the Company to issue Incentive Awards of stock options (including
incentive stock options and non-qualified stock options), restricted stock and
stock appreciation rights.

A total of 1,000,000 shares of Common Stock are authorized for issuance under
the Stock Incentive Plan. In connection with their respective employment
agreements and the initial public offering, the Board of Directors granted the
Company's Chief Executive, Chief Operating and Chief Financial Officers, 10-year
stock options exercisable at the Offering Price ($9.50) covering 150,000,
150,000 and 100,000 shares of Common Stock, respectively. Half of these options
vested upon the effective date of the Offering and the balance vested on January
1, 1999.

The Company accounts for stock options issued to employees pursuant to APB
Opinion 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES", and related
Interpretations. Under APB Opinion 25, because the exercise price of the
employee stock options described above equals the market price of the underlying
stock on the date of grant, no compensation cost is recognized.

On April 8, 1998, the Board of Directors, subject to the consummation of the
Offering, granted a vice president 10-year stock options exercisable at $9.50
(the "Offering Price"), covering 100,000 shares of Common Stock, granted to a
number of employees 10-year stock options exercisable at the Offering Price
covering a total of 102,000 shares and granted the non-employee directors
10-year stock options exercisable at the Offering Price covering an aggregate
25,000 shares, of which half vested on the effective date of the offering and
half vested on January 1, 1999. Half of the vice president's options vest one
year after the effective date of the Offering, and the other half vest on August
31, 1999. The 102,000 options granted to employees vest one year after the
Offering.

Subsequent to the Offering the Board of Directors granted the following 10 year
options:

<TABLE>
<CAPTION>
                                                                 # of            Exercise
          DATE                      Option Grant                Options           Price         Vesting Schedule
-------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                                  <C>             <C>            <C>
July 23, 1998              Chief Financial Officer              50,000          $ 4.125        Vested by January 1,1999
July 23, 1998              Various employees                     8,000          $ 4.125        One year vesting
September 14, 1998         Chief Accounting Officer             12,500          $ 3.375        One year vesting
November 16, 1998          2 key Access employees               40,000          $ 4.125        One year vesting
March 24, 1999             New employee                         25,000          $ 4.625        One year vesting
April 30, 1999             Chief Accounting Officer             12,500          $ 4.000        One year vesting
April 30, 1999             Outside Directors                    10,000          $ 4.000        One year vesting

</TABLE>

In connection with the stock options granted to oustide directors, the Company
will record compensation expense for the fair market value of the options on
the date of the grant.

On October 23, 1998 the Board of Directors repriced certain previously issued
stock options aggregating 160,000 shares to the market value on the date of the
repricing or an exercise price of $4.125 per share.

A summary of stock option activity for the year ended March 31, 1999 is as
follows:
                                                                    Weighted
                                                                     Average
                                                                    Exercise
                                                    SHARES            Price
                                             -----------------------------------
Options outstanding- beginning of year                -              $     -
Granted                                             762,500             7.83
Exercised                                             -                    -
Forfeitures                                           -                    -
                                             -----------------------------------
Options outstanding -end of year                    762,500          $  7.83
                                             -----------------------------------

Eligible for exercise-end of year                   475,000          $ 8.93
                                             ===================================

The following table summarizes information about stock options outstanding at
March 31, 1999:

<TABLE>
<CAPTION>
                                         OPTIONS OUTSTANDING                                        OPTIONS EXERCISABLE
                      ----------------------------------------------------------          ---------------------------------------
                                                  WEIGHTED
                            OPTIONS               AVERAGE                WEIGHTED              OPTIONS                WEIGHTED
     RANGE OF OPTION     OUTSTANDING AT          REMAINING               AVERAGE            EXERCISABLE AT            AVERAGE
          PRICES           MARCH 31,            CONTRACTUAL              EXERCISE             MARCH 31,            EXERCISE PRICE
                              1999                  LIFE                  PRICE                  1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                      <C>                  <C>                   <C>                    <C>
      $3.38 to $4.63      237,500                  9.32                 $ 4.14                50,000                 $ 4.13
          $9.50           525,000                  9.14                 $ 9.50               425,000                 $ 9.50

</TABLE>


The weighted average fair value at date of grant for options granted during the
year ended March 31, 1999 was $1.76. The fair value of each option grant is
estimated on the date of grant using the Black-Scholes option pricing model with
the following assumptions:

Expected dividend yield                   0%
Expected stock price volatility           32%
Risk-free interest rate                   5.5%
Expected option term                      2 years


If compensation cost for the Company's grants for stock-based compensation had
been recorded consistent with the fair value-based method of accounting per SFAS
No.123, the Company's pro forma net loss, and pro forma basic and diluted net
loss per share for the year ending March 31, 1999 would be as follows:

                                                          MARCH 31, 1999
                                                        ------------------------
Net income (loss)
    As reported                                             $  194,112
    Pro forma                                               $ (514,382)
Basic and diluted net income (loss) per share
    As reported                                             $      .03
    Pro forma                                               $     (.08)

10. INCOME TAXES

The components of the income tax provision (benefit) are as follows:

                                              YEAR ENDED MARCH 31,
                                     1997           1998          1999
                                 --------------------------------------------
Current - Federal                  $632,434      $560,316      $127,317
          State                     108,260        95,915        26,295
Deferred                             (2,799)        3,346       158,752
                                 --------------------------------------------
Total                              $737,895      $659,577      $312,364
                                 ============================================

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's net deferred income taxes are as follows:

<TABLE>
<CAPTION>
                                                                      MARCH 31,
                                                                1998             1999
                                                   -----------------------------------
Deferred tax assets:
<S>                                                           <C>             <C>
Accounts receivable                                           $24,822         $144,397
Accrued expenses                                               25,019          121,882
Amortization                                                    3,393                -
Deferred rent                                                  10,649           10,649
Loss from foreign subsidiaries                                      -           29,439
Investment in unconsolidated subsidiaries                           -          102,113
NOL carryforward                                                    -          126,927
Tax credits                                                         -           22,093
                                                   -----------------------------------
  Deferred tax assets                                          63,883          557,500
  Less: valuation allowance                                         -         (29,439)
                                                   -----------------------------------
Total deferred tax assets                                      63,883          528,061
                                                   -----------------------------------


DEFERRED TAX LIABILITIES:
Depreciation                                                   65,161          216,705
Internal use software                                               -           52,680
Identifiable intangibles                                            -          183,679
Prepaid bonus                                                  11,723                -
Other                                                             730            3,237
                                                   -----------------------------------
Total deferred tax liabilities                                 77,614          456,301
                                                   -----------------------------------
Total net deferred tax assets                                 $13,731          $71,760
                                                   ===================================

</TABLE>

The reconciliation of the effective income tax expense (benefit) to federal
statutory rates is as follows:

<TABLE>
<CAPTION>
                                                             YEAR ENDED MARCH 31,
                                                        1997          1998          1999
                                            -------------------------------------------
<S>                                                   <C>          <C>           <C>
Tax at federal statutory rate                         34.00%       34.00%        34.00%
State taxes, net of federal benefit                     3.63         3.63          3.63
Goodwill                                                   -            -         14.83
Change in valuation allowance                              -            -          5.81
Other                                                  (.56)          .42          3.40
                                            -------------------------------------------
                                                      37.07%       38.05%        61.67%
                                            ===========================================
</TABLE>

SFAS No. 109 requires a valuation allowance to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management has
determined that a $29,000 valuation allowance at March 31, 1999 is necessary to
reduce the deferred tax assets to the amount that will more likely than not be
realized. The change in the valuation allowance for the current year is $29,000.

At March 31, 1999, the Company has available net operating loss carryforwards of
$337,302 which will expire in 2013. Certain of the Company's net operating loss
carryforwards may be subject to limitation under the change in control
provisions of IRC section 382.

11. RELATED PARTY TRANSACTIONS

Advances and notes receivable--related parties consist of the following:

<TABLE>
<CAPTION>
                                                                         MARCH 31,
                                                                    1998           1999
                                                          -----------------------------
<S>                                                              <C>           <C>
Cash advances--officer                                           $     465     $       -
Prepaid bonuses--officers                                           31,154             -
Advances receivable--affiliates, unsecured, non-
interest bearing                                                    33,655        10,843
                                                          -----------------------------
                                                                  $ 65,274       $10,843
                                                          =============================
</TABLE>

On November 1, 1995, the Company entered into a one-year consulting agreement
with a minority shareholder of the Company. The agreement automatically renewed
for successive one-year terms unless either party provided written notice of
non-renewal. This agreement provided for a monthly retainer of $11,250 plus
reimbursement of reasonable travel expenses. On January 20, 1998, the Company
extended this consulting agreement to December 31, 1998 and modified the
agreement to include an additional payment of $15,000 upon consummation of a
successful initial public offering of the Company's securities during the term
of the consulting agreement. The consulting agreement was terminated effective
December 31, 1998.

On April 30, 1999 the Board of Directors approved an interest-bearing note to
the Company's Chief Executive Officer in the amount of $30,000.

12. COMMITMENTS AND CONTINGENCIES

The approximate annual minimum lease payments under the non-cancelable operating
leases as of March 31, 1999 are:


2000                                         $  244,599
2001                                            209,393
2002                                            188,818
2003                                            187,718
2004                                             15,814
                                     ------------------

                                              $ 846,342
                                     ==================

On October 27, 1997, the Company amended the terms of its office lease to extend
it through April 30, 2003 at an aggregate monthly base rent of $13,292 per
month, subject to a 3% base rent adjustment each year. The Company also
maintains office space in Clearwater, Florida which was assumed upon the
acquisition of Access, which is rented on month to month basis. Rent expense for
the years ended March 31, 1999, 1998 and 1997 amounted to $207,802, $121,532 and
$113,716, respectively.

The Company enters into various contracts which require it to purchase
telecommunications services. The approximate minimum purchase commitments under
these contracts as of March 31, 1999 is approximately $2,056,000.

On March 1, 1993, the Company entered into a ten-year employment agreement with
a minority shareholder/Chief Operating Officer that provides for an annual base
salary of $170,000 plus a bonus equal to 10% of the Company's pre-tax profits.
On July 1, 1994, the Company entered into a ten-year employment agreement with
its Chief Executive Officer that provides for an annual base salary of $170,000
plus a bonus equal to 10% of the Company's pre-tax profits. On January 1, 1998
and February 9, 1998 the Company amended its employment agreements with its
Chief Executive Officer and Chief Operating Officer whereby for a term of five
calendar years they will each receive a base salary of $225,000 with increases
of $25,000 in each of years 2 through 5 of the agreements and a guaranteed bonus
of $45,000 per calendar year. The agreements provide for additional bonuses at a
rate of 4.5% of earnings before interest, taxes, depreciation, amortization and
such bonuses (EBITDAB) greater than $1 million, as defined, up to $4 million.
The agreements provide for additional bonuses of 20% of base salary for
achievement of $4 million EBITDAB and up to 5% of base for each $1 million of
EBITDAB in excess of $4 million on a pro rata basis.

On September 1, 1997, the Company entered into an employment agreement with its
then Vice President of agent relations for a two-year period providing a base
annual salary of $130,000 and a $40,000 one-time sign- up bonus.

On January 1, 1998, as amended on February 9, 1998, the Company entered into a
two-year employment agreement with its Chief Financial Officer providing for a
base salary of $170,000 in calendar year 1998 and $200,000 in calendar year
1999. In accordance with the agreement, the Company paid a $50,000 bonus upon
signing of the agreement and paid, in May 1998, a $75,000 bonus upon the
completion of the Company's Offering. The agreement further provides for
additional bonuses based upon the Company's operating results, as defined
therein.

In connection with the acquisition of Access, the Company has obligations under
existing employment contracts for two key Access employees. The contracts had
base annual salaries of $125,000 per year and expired on January 31, 1999. On
December 4, 1998 the Company amended these agreements to provide for annual base
salaries of $150,000 plus incentive bonuses based on sales and profitability.

On March 24, 1999, the Company entered into a one year employment agreement with
its Director of Internet based services. The contract has a base salary of
$128,000 per annum.

For the years ended March 31, 1999, 1998 and 1997, bonuses of $315,444,
$588,096, and $501,350, respectively, were paid under the employment agreements.

In fiscal 1998, the Company entered into a letter of intent with respect to the
formation of Ursus Telecom France, a joint venture telecommunication company.
The joint venture began operations in fiscal 1999 and incurred operating losses
during the initial start up phase. On March 5, 1999, the Company entered into a
modification agreement with its joint venture partners, which made several
changes including: (1) reducing the Company's ownership to 50% from 50.4%, (2)
introduction of a new joint venture partner and (3) Ursus agreed to repurchase
certain switch equipment from Ursus Telecom France at recorded book value.

As of March 5, 1999, the results of Ursus Telecom France were no longer
consolidated with those of the Company because the Company now has only a 50%
non-controlling ownership interest in Ursus Telecom France. The Company recorded
a gain of approximately $142,000 relating to the sale of its 0.4% controlling
vote to the joint venture partners.

In the ordinary course of business, the Company has disputes with carriers over
billing discrepancies. Although management has historically been successful in
resolving these disputes, there can be no assurance that ongoing disputes will
be resolved as anticipated. In the event that an ongoing dispute results in an
additional liability, the Company believes that such amounts will not have a
material adverse affect on the Company's financial condition or results of
operations.

LEGAL PROCEEDINGS

In February 1998, Access filed an action against Edwin Alley, d/b/a Phone
Anywhere ("Alley")in the United States District Court for the Middle District of
Florida claiming that Alley, a former sales agent for Access, breached his
agency agreement with Access, wrongfully diverted customers and business to
Access's competitors, misappropriated Access's trade secrets, breached fiduciary
and other duties owed to Access and engaged in unfair competition. Access seeks
compensatory damages, injunctive relief and a declaratory judgment. Alley
counterclaimed for breach of contract and quantum meruit, seeking damages and
injunctive relief to enjoin the Access from soliciting or providing services to
customers located by him. Discovery is proceeding on Access's claims. Alley has
moved for summary judgment on jurisdictional grounds and Access is responding to
the motion.

Subsequent to the filing of Access's federal action, Alley commenced an action
against Access in the Circuit Court of the Sixth Judicial Circuit, Pinellas
County, Florida. In that action, Alley asserts essentially the same claims and
seeks the same relief as in his federal counterclaim. Access has answered the
complaint, denying the material allegations in the pleading, and has asserted
counterclaims against Alley based largely on the claims it asserted in the
federal proceeding commenced by it. The Pinellas County proceeding has been
stayed pending disposition of the federal action.

The Company is unable to predict the ultimate outcome of this matter.

13. SIGNIFICANT CUSTOMERS

The Company has a number of significant (greater than 10% of revenues)
independent agents. Net revenues from the significant independent agents were in
the following percentages of total net revenues:

                                                 MARCH 31,

                                           1997        1998         1999
                                    --------------------------------------
Customer 1                                  11%          11%            -
Customer 2                                  15%          15%          11%
Customer 3                                  19%          29%          22%
Customer 4                                  12%            -            -
Customer 5                                    -          10%            -


Accounts receivable as a percentage of total accounts receivable due from the
significant independent agents noted above were as follows:

                                                  MARCH 31,

                                           1997        1998          1999
                                    ---------------------------------------
Customer 1                                   9%           7%             -
Customer 2                                  21%          25%           20%
Customer 3                                  28%          24%           21%
Customer 4                                  10%            -             -
Customer 5                                    -           7%             -



14. BUSINESS RISKS

RISKS AND UNCERTAINTIES--The Company's operating results and financial condition
may vary in the future depending on a number of factors. The following factors
may have a material adverse effect upon the Company's business, results of
operations and financial condition.

ESTIMATES--The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of certain assets and liabilities
at the date of the financial statements and the reported amounts of certain
revenue and expenses during the reporting period. Accordingly, actual results
could differ from those estimates.

RELIANCE UPON INDEPENDENT AGENTS--The Company provides telecommunications
services to customers obtained by independent sales agents that operate under
exclusive and non-exclusive agent agreements. Although the Company believes that
alternate agents could be found, loss of an agent in one of the Company's
primary geographical areas could have a negative effect on the Company's
operating results (see Note 13).

LAWS AND REGULATION--A substantial portion of the Company's customers are
located in emerging markets with various political, economic, regulatory,
customs and other trade factors. The Company is also subject to various laws and
regulations of the U.S. Department of Commerce, the U.S. Federal Communications
Commission (FCC) and various state Public Service Commissions. Changes in
enforcement or interpretation of local laws and regulations are unpredictable
and could lead to the Company's inability to retain the appropriate approvals to
continue operations in certain markets.

SOUTH AFRICA REGULATION--The telecommunications regulatory authority in South
Africa has ruled that the Company's services are illegal in that country. The
Company's agent, as well as agents for certain of the Company's competitors,
have filed a lawsuit to stay and reverse the ruling and the regulatory authority
has agreed not to prosecute any of the agents in the industry pending final
rulings by the South African courts. The Company is unable to predict the
ultimate outcome of that decision. The Company's customers in South Africa
represented approximately 21.9% of the Company's revenues in fiscal 1999.

SERVICES IN THE BAHAMAS--During fiscal 1998 the Bahamas Telephone Company
(Batelco), which is owned and operated by the local governmental authority, has
taken certain actions to block the Company's ability to offer services to
customers in that country. The Company is currently working with the FCC and the
U.S. Embassy in the Bahamas to restore the Company's ability to provide
services. At present, the Company is unable to predict the outcome of this
matter. The Company's customers in the Bahamas represent approximately 2.9% of
the Company's revenues in fiscal 1999.

UNINSURED CASH BALANCES--At March 31, 1999 and 1998, the Company had
approximately $2,207,000 and $922,000, respectively, in cash and cash
equivalents that were either not federally insured or invested in U.S.
Treasury Obligations.

RELIANCE ON SUPPLIERS--A majority of the Company's transmission and switching
facilities are provided by two telecommunications carriers. For the years ended
March 31, 1999 and 1998 approximately $8,239,000 and $10,063,000, respectively,
of costs was incurred to these carriers or approximately 37% and 54% of total
cost of sales, respectively. Under the terms of the supplier agreements, the
Company purchases long distance service at certain per-minute rates, which vary
based on the time, distance and type of call. Several carriers may exercise
their right to terminate service agreement upon 30 day notice. Although
management believes that alternative carriers could be found in a timely manner,
disruption of these services for more than a brief period of time would have a
negative effect on the Company's operating results.

15. SEGMENT INFORMATION

The Company operates in one single industry segment, the international long
distance telecommunications industry. For the years ended March 31, 1997, 1998
and 1999, substantially all of the Company's revenues were derived from traffic
transmitted through its primary switch facilities located in Sunrise, Florida.
Beginning in March 1998, the Company began operating a switch in Paris, France
and with the acquisition of Access, in Tampa, Florida, and Frankfurt, Germany.
The geographic origin of the revenue is as follows:



                                              YEAR ENDED MARCH 31,
                                    1997              1998              1999
                          ------------------------------------------------------
Africa                         $  3,899,701       $ 8,346,025        $ 8,090,987
Europe                            4,252,104         3,857,504          8,818,687
Latin America                     7,265,473         6,523,384          6,131,277
Middle East                       3,741,890         4,721,592          4,077,678
Other                             1,363,852         1,719,272          1,850,736
North America                       315,407         2,930,547          5,356,781
                          ------------------------------------------------------
Total revenues                  $20,838,427       $28,098,324        $34,326,146
                          ======================================================

All of the Company's physical assets are primarily located in the United States,
with the exception of switching equipment with a book value of approximately
$347,000 as of March 31, 1999 located in Frankfurt, Germany, which was acquired
in connection with the Company's acquisition of Access. Accounts receivable is
primarily due from independent agents in various geographical areas and
customers in the United States, as follows:

<TABLE>
<CAPTION>
                                                      MARCH 31,
                                             1997            1998            1999
                                   ------------------------------------------------
<S>                                       <C>             <C>            <C>
Africa                                    $822,731        $994,793       $1,148,384
Europe                                     694,461         709,598          893,804
Latin America                              798,428         905,223          636,113
Middle East                                698,842       1,110,904        1,219,752
Other                                      109,481         134,232          374,051
North America                              269,943         394,964        1,072,134
Less: Allowance for doubtful
         accounts                         (15,000)        (65,964)        (383,728)
                                   ------------------------------------------------
Total accounts receivable               $3,378,886      $4,183,750       $4,960,510
                                   ================================================
</TABLE>



16. DEPOSIT ON ACQUISITION

On August 12, 1997, the Company entered into an agreement with its largest
independent agent (in South Africa- see Note 13) to acquire an approximate 9%
interest in the agency. The Company applied accounts receivable of approximately
$377,000 due from this agent as payment for the equity interest stated above. On
August 18, 1998, the Company and its agent in South Africa mutually rescinded
the above agreement and the agent has repaid the accounts receivable.

17. ACQUISITIONS

ACCESS AUTHORITY INC.

On September 17, 1998, the Company purchased all the issued and outstanding
common stock of Access for $8 million in cash. Access is a provider of
international long distance telecommunication services, including call
reorigination, domestic toll-free access and various value-added features to
small and medium sized businesses and individuals in over 38 countries
throughout the world. Access markets its services through an independent and
geographically dispersed sales force consisting of agents and wholesalers.
Access operates a switching facility in Clearwater, Florida.

The Company has accounted for the Access acquisition using the purchase method
of accounting. Accordingly, the results of operations of Access are included in
the consolidated results of the Company as of September 17, 1998, the date of
acquisition. Under the purchase method of accounting, the Company has allocated
the purchase price to assets and liabilities acquired based upon their estimated
fair values as follows:

Current assets                                                $ 2,567,520
Property and equipment, net                                     1,422,509
Intangibles                                                     9,271,208
Current liabilities                                           (4,929,913)
Deferred tax liability                                          (222,266)
                                                    -----------------------
Total purchase price including closing costs                  $ 8,109,058
                                                    =======================

Pro forma operating results for the year ended March 31, 1998 and 1999, as if
the Access acquisition had occurred at the beginning of the respective periods
is as follows:

<TABLE>
<CAPTION>
                                                    YEAR ENDED             YEAR ENDED
                                                     MARCH 31,               MARCH 31,
                                                       1998                   1999
                                         ------------------------------------------------

<S>                                                <C>                     <C>
Total revenue                                      $ 75,652,207            $ 51,863,073
Net income (loss)                                     1,866,549               (599,203)
Basic and diluted net income
  (loss) per common share                         $        0.38           $       (.10)
</TABLE>


This pro forma is presented for informational purposes only and is not
necessarily indicative of future operations.

URUGUAY AGENT

On August 17, 1998, the Company entered into an asset purchase agreement to
acquire its agent in Uruguay for $132,988. The acquisition has been accounted
for using the purchase method of accounting, as such, the results of operations
subsequent to the closing have been included in the consolidated financial
statements of the Company. Under the purchase method of accounting, the Company
has allocated the purchase price to assets and liabilities acquired based upon
their estimated fair values as follows:

Property and equipment                                 $  12,300
Intangibles                                              137,871
                                                 -----------------
Total purchase price including closing costs            $150,171
                                                 =================

ARGENTINE AGENT AND STARCOM S.A.

On January 22, 1999, the Company acquired the operations of Starcom S.A. an
Argentine Corporation and Rolium S.A. a Panamanian Corporation. For an aggragate
purchase price of $975,000. In accordance with the Stock Purchase Agreement the
aggregate consideration for the two entities was $550,000 and 100,000 shares of
the Company's unregistered Common Stock (50,000 shares have been placed in
escrow and will be released in six months if the seller adheres to the
covenants, indemnities and obligations of the Agreement). The fair market value
of the Company's Common Stock was valued at $425,000 at the date of acquisition.
At the date of the closing the Company paid $183,000 of the cash consideration
and $267,000 to be paid in equal installments of $133,500 on January 22, 2000
and 2001. In addition, at the closing date $100,000 was placed in escrow to pay
certain liabilities of Starcom S.A. The acquisitions have been accounted for
using the purchase method of accounting, as such, the result of operations
subsequent to the January 22, 1999 closing have been included in the
consolidated financial statements of the Company. Under the purchase method of
accounting, the Company has allocated the purchase price to assets and
liabilities acquired based upon their estimated fair values as follows:

Current assets                                               $     29,097
Property and equipment, net                                        22,641
Intangibles                                                     1,066,774
Current liabilities                                               (51,101)
                                                     ----------------------
Total purchase price including closing costs                   $1,067,411
                                                     ======================

The Company utilized certain net proceeds of the Company's Offering to pay for
the above acquisitions.



                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                  Balance
                                                     At                                                             Balance
                                                 Beginning    Cost and            Other           Deductions/       At End
                                                 of period    Expenses          Additions         Write-offs          of
                                                                                                                    Period
----------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>            <C>               <C>                 <C>            <C>
Year ended March 31,1999
   Allowance for doubtful accounts               $65,964        $  504,821        $456,507(1)         $(643,564)     $383,728
------------------------------------------------------------------------------------------------------------------------------
Year ended March 31, 1998
   Allowance for doubtful accounts               $15,000          $103,616     $            -          $(52,652)      $65,964
------------------------------------------------------------------------------------------------------------------------------
Year ended March 31, 1997
   Allowance for doubtful accounts               $11,381         $  84,258     $            -          $(80,639)      $15,000
------------------------------------------------------------------------------------------------------------------------------

(1) Other additions represent allowances for doubtful accounts that were
recorded in connection with business acquisitions.
</TABLE>

<PAGE>

GLOSSARY

     As used in this document, the capitalized and other terms listed below have
the meanings indicated.

     ACCOUNTING OR SETTLEMENT RATE-The per minute rate negotiated between
carriers in different countries for termination of international long distance
traffic in, and return traffic to, the carriers' respective countries.

     CALL REORIGINATION (ALSO KNOWN AS "CALLBACK")- A form of dial up access
that allows a user to access a telecommunications company's network by placing a
telephone call, hanging up, and waiting for an automated call reorigination. The
call reorigination then provides the user with a dial tone which enables the
user to initiate and complete a call.

     CAGR-Compound Annual Growth Rate.

     CALL-THROUGH-The provision of international long distance service through
conventional long distance or "transparent" call reorigination.

     CLEC-Competitive Local Exchange Carrier.

     CUG (CLOSED USER GROUP)-A group of specified users, such as employees of a
company, permitted by applicable regulations to access a private voice or data
network, which access would otherwise be denied to them as individuals.

     DIRECT ACCESS-A means of accessing a network through the use of a permanent
point-to-point circuit typically leased from a facilities-based carrier. The
advantages of direct access include simplified premises-to-anywhere calling,
faster call set-up times and potentially lower access and transmission costs
(provided there is sufficient traffic over the circuit to generate economies of
scale).

     DIAL-UP ACCESS-A form of service whereby access to a network is obtained by
dialing an international toll-free number or a local access number.

     EUROPEAN UNION OR EU-Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and
the United Kingdom.

     FACILITIES-BASED CARRIER-A carrier which transmits a significant portion of
its traffic over owned transmission facilities.

     FCPA-Foreign Corrupt Practices Act.

     FIBER-OPTIC-A transmission medium consisting of high-grade glass fiber
through which light beams are transmitted carrying a high volume of
telecommunications traffic.

     IPLC (INTERNATIONAL PRIVATE LINE CIRCUITS)-Point-to-point permanent
connections which can carry voice and data. IPLCs are owned and maintained by
ITOs or third party resellers.

     INTERNET PROTOCOL (IP)-A class of product that uses data and/or voice
transmission over the Internet/Intranet.

     IDD-International Direct Dial.

     ISDN (INTEGRATED SERVICE DIGITAL NETWORK)-A hybrid digital network capable
of providing transmission speeds of up to 128 kilobits per second for both voice
and data.

     ISP-International Settlements Policy. The ISP establishes the permissible
arrangements between facilities-based carriers based in the U.S. and their
foreign counterparts for terminating each other's traffic over their respective
networks.

     IRU-Indefeasible Right of Use.

     ISR (INTERNATIONAL SIMPLE RESALE)-The use of international leased lines for
the resale of switched telephony services to the public, by passing the current
system of accounting rates.

     ITO (INCUMBENT TELECOMMUNICATIONS OPERATOR)-The dominant carrier or
carriers in each country, often, but not always, government-owned or protected
(alternatively referred to as the Postal, Telephone and Telegraph Company, or
PTT).

     ITU-International Telecommunications Union-International Telecommunications
Association headquartered in Geneva, Switzerland.

     LCR-Least Cost Routing.

     LEC (LOCAL EXCHANGE CARRIER)-Companies from which the Company and other
long distance providers must purchase "access services" to originate and
terminate calls in the U.S.

     LOCAL CONNECTIVITY-Physical circuits connecting the switching facilities of
a telecommunications services provider to the interexchange and transmission
facilities of a facilities-based carrier.

     LOCAL EXCHANGE-A geographic area determined by the appropriate regulatory
authority in which calls generally are transmitted without toll charges to the
calling or called party.

     NODE-A specially configured multiplexer which provides the interface
between the local PSTN where the node is located and a switch. A node collects
and concentrates call traffic from its local area and transfers it to a switch
via private line for call processing. Nodes permit a carrier to extend its
network into new geographic locations by accessing the local PSTN without
requiring the deployment of a switch.

     OPERATING AGREEMENTS-An agreement that provides for the exchange of
international long distance traffic between correspondent international long
distance providers that own facilities in different countries. These agreements
provide for the termination of traffic in, and return traffic from, the
international long distance providers' respective countries at a negotiated
"accounting rate." Under a traditional operating agreement, the international
long distance provider that originates more traffic compensates the
corresponding long distance provider in the other country by paying an amount
determined by multiplying the net traffic imbalance by the latter's share of the
accounting rate.

     PBX (PUBLIC BRANCH EXCHANGE)-Switching equipment that allows connection of
a private extension telephone to the PSTN or to a Private Line.

     POPS-Points of Presence. An interlinked group of modems, routers and other
computer equipment, located in a particular city or metropolitan area, that
allows a nearby subscriber to access the Network through a local telephone call.

     PSCS-Public Service Commissions.

     PRIVATE LINE-A dedicated telecommunications connection between end user
locations.

     PSTN (PUBLIC SWITCHED TELEPHONE NETWORK)-A telephone network which is
accessible by the public through private lines, wireless systems and pay phones.

     REFILE-Traffic originating from one country (original country) and destined
to another country (receiving country) is routed through a third country without
the knowledge of the receiving country. The receiving country has only
identified the third country and assumes the traffic originated from the third
country only.

     RESALE-Resale by a provider of telecommunications services of services sold
to it by other providers or carriers on a wholesale basis.

     SWITCHING FACILITY-A device that opens or closes circuits or selects the
paths or circuits to be used for transmission of information. Switching is a
process of interconnecting circuits to form a transmission path between users.

     TRANSIT-Traffic originating from one country and destined to another
country is routed through a third country with the full knowledge and consent of
all countries and carriers concerned.

     TRANSPARENT CALL REORIGINATION-Technical innovations have enabled
telecommunications carriers to offer a "transparent" form of call reorigination
without the usual "hang up" and "callback" whereby the call is automatically and
swiftly processed by a programmed switch.

     VALUE-ADDED TAX (VAT)-A consumption tax levied on end-consumers of goods
and services in applicable jurisdictions.

     VOICE TELEPHONY-A term used by the EU, defined as the commercial provision
for the public of the direct transport and switching of speech in real-time
between public switched network termination points, enabling any user to use
equipment connected to such a network termination point in order to communicate
with another termination points.

     WTO-World Trade Organization (based in Geneva, Switzerland).

<PAGE>
                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                             URSUS TELECOM CORPORATION

                                             By:      /S/ LUCA M. GIUSSANI
                                                      Luca M. Giussani
                                                      Chief Executive Officer

Dated: JUNE 29, 1999


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K has been signed below by the following persons in the
capacities and on the date indicated.

SIGNATURE                     TITLE                                 DATE

                              Chief Executive Officer, and
/S/ LUCA M. GIUSSANI          Director (principal executive      JUNE 29, 1999
-----------------------       officer)
Luca M. Giussani

/S/ JEFFREY R. CHASKIN        President, Chief Operating         JUNE 29, 1999
-----------------------       Officer and Director
Jeffrey R. Chaskin

/S/ JOHANNES S. SEEFRIED      Chief Financial Officer            JUNE 29, 1999
-----------------------        and Director
Johannes S. Seefried


/S/ STEVEN L. RELIS           Chief Accounting Officer           JUNE 29. 1999
-----------------------
Steven L. Relis

/S/ WILLIAM NEWPORT           Director, Chairman of the          JUNE 29, 1999
-----------------------       Board of Directors
William Newport


/S/ KENNETH L. GARRETT        Director                           JUNE 29, 1999
-----------------------
Kenneth L. Garrett

<PAGE>
                                  EXHIBIT INDEX



EXHIBIT                                                               Sequential
NUMBER                                                                 PAGE NO.

3.1+     -   Articles of Incorporation of the Company
3.2+     -   Form of Amended and Restated Articles of Incorporation
             of the Company
3.3+     -   Bylaws of the Company
3.4+     -   Form of Amended and Restated Bylaws of Company
4.1+     -   Specimen of Certificate for Common Stock
10.1+    -   Employment Agreement between the Company and Luca M.
             Giussani
10.2+    -   Amendment to Employment Agreement with Luca M. Giussani
10.3+    -   Employment Agreement between the Company and Jeffrey
             R. Chaskin
10.4+    -   Amendment to Employment Agreement with Jeffrey R.
             Chaskin
10.5+    -   Employment Agreement between the Company and Johannes
             S. Seefried
10.6+    -   Amendment to Employment Agreement with Johannes
             S. Seefried
10.7+    -   Employment Agreement between the Company and Richard
             C. McEwan
10.8*    -   Employment Agreement between the Company and Paul Biava
10.9+    -   Lease Agreement
10.10+   -   Form of 1998 Stock Incentive Plan
10.11+   -   Form of Financial Consulting Agreement
10.12+   -   Form of Agency Agreement
10.13+   -   Agreement regarding formation of Ursus Telecom France
10.14+   -   Agreement regarding purchase of interest in South
             African Agency
10.15+   -   Agreement dated January 20, 1998 among Messrs.
             Giussani, Rispoli and the Company
10.16+   -   Form of Representative's Warrant
10.17+   -   Form of Lock Up Letter
21.1*    -   List of Subsidiaries
23.1*    -   Consent of Ernst & Young LLP
27*      -   Financial Data Schedule


-----------
+    Previously filed as an exhibit to the Company's Registration Statement
     on Form S-1 (File No. 333-46197) and incorporated herein by reference.

*    Filed herewith.