================================================================================

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-K

                    ANNUAL REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2001

                           COMMISSION FILE NO. 1-13830


                                 TELESOFT CORP.
                (Name of Registrant as specified in its charter)

               ARIZONA                                86-0431009
     (State of Incorporation)               (IRS Employer Identification No.)

     3443  NORTH CENTRAL AVENUE #1800
           PHOENIX, ARIZONA                             85012
 (Address of principal executive offices)            (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (602) 308-2100

         SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:

      Title of Class                  Name of each exchange on which registered
      --------------                  -----------------------------------------
 COMMON STOCK, NO PAR VALUE                 PACIFIC STOCK EXCHANGE, INC.


      SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT : NONE

Indicate  by check mark whether the Registrant (1) filed all reports required to
be  filed  by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12
months (or for such shorter period that the Registrant was required to file such
reports),  and  (2) has been subject to such filing requirements for the past 90
days.
                                    YES  X   NO
                                        ---

Indicate by check mark if there is no disclosure of delinquent filer in response
to  Item  405 of Regulation S-K contained in this form and no disclosure will 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  of  this  Form  10-K   X
                                          ---

     Registrant's revenues from continuing operations for its most recent fiscal
year  were  $20,167,847.

As  of  February  22  2002, the number of shares of Common Stock outstanding was
1,415,833  and  the  aggregate  market  value  of the Common Stock (based on the
closing  price  on  that  date)  held  by  non-affiliates  of the Registrant was
$1,403,992.


================================================================================

<PAGE>
                                     PART I

ITEM 1.  BUSINESS.

GENERAL

     Telesoft  Corp. (the "Company" or "Telesoft") provides billing and customer
care  solutions  to  educational  institutions,  corporations  and  government
agencies.  The  Company offers the following integrated hardware and proprietary
software  systems  and services: the STS Outsourcing Program, Customized Billing
Outsourcing  Services,  TelMaster  Telemanagement  System,  Telesoft  Recovery
Services  (TRS)  and  Distribution  Control  System.

HISTORICAL  HIGHLIGHTS

     The  Company  was  incorporated in Arizona in May 1982.  From 1982 to 1986,
the  Company  focused primarily on its Distribution Control System product line.
In  1986,  the  Company  began  to  shift  its focus to developing and marketing
proprietary  software  and  integrated  systems  to  serve  the  long  distance
telecommunications  and  data  management  and  call  processing  needs  of  the
university  and  college  market.  In  April 1996, the Company acquired Telesoft
Acquisition  Corp  II,  d.b.a.  GoodNet  ("GoodNet"),  an Arizona-based internet
service  provider,  to  deploy  a  nationwide  ATM  network  to  sell high-speed
connectivity to high-bandwidth users.  In January 1998, the Company sold GoodNet
to  Winstar  Communications, Inc. ("Winstar").  See "Management's Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations  - Discontinued
Operations".  During fiscal 1999, the Company began redirecting its focus to the
TelMaster  Telemanagement  System product.  Also during fiscal 1999, the Company
established  a  new division, Telesoft Recovery Services.  This division assists
large  organizations  in  analyzing,  recovering  and  optimizing  their
telecommunications expenditures.  The Company's executive offices are located at
3443 North Central Avenue, Suite 1800, Phoenix, Arizona 85012, and its telephone
number is (602) 308-2100.  The Company's website is located at www.telesoft.com.

PRODUCTS  AND  SERVICES

The Company's products and services are broken down as follows:


(1)  System  Sales  and  Maintenance
          (a)  TelMaster  Telemanagement  System
          (b)  Distribution  Control  System
          (c)  Software  and  Hardware  Recurring  Maintenance
(2)  Telesoft  Recovery  Services
(3)  STS  Outsourcing  Program
(4)  Customized  Billing  Outsourcing  Services


                                      -2-
<PAGE>
                          SYSTEM SALES AND MAINTENANCE

     The  Company  offers  the  following  integrated  hardware  and proprietary
software  systems  and  services:  the  Telecommunications  Management  System,
TelMaster  and  the  Distribution  Control  System.

     Telecommunications Management System and TelMaster.  The Telecommunications
Management  System ("TMS") is a proprietary text-based software solution used by
universities, Fortune 1000 companies and the health care and governmental agency
markets to manage telephony data for billing and ad-hoc reporting purposes.  TMS
is  comprised of a series of software modules and is typically sold in a package
including  hardware,  software, installation, training and on-going hardware and
software  maintenance.

     TelMaster  is  Telesoft's third generation telemanagement system.  Based on
client  server  technology,  this  product was released in the fourth quarter of
1996.  During  fiscal  1999,  the  Company began developing a custom convergence
billing,  reporting  and  support  system for Pacific Bell and MCI customer care
services  in connection with the long-term contract between Pacific Bell and MCI
and  the  State  of  California  to  supply telecommunications services to state
government  agencies  ("CALNET  contract").  Since  the  CALNET contract between
Pacific  Bell,  MCI and the State of California was terminated in April 2001 the
Company  is  no  longer  developing  this  system.

     TelMaster  Web is Telesoft's fourth generation telemanagement system, which
was  first  released  and  implemented  in  March  2000.  TelMaster  Web  is  an
integrated  suite  of  products,  including  secured  web  based  budget  center
reporting,  enterprise  directory  and administration, trouble ticketing, change
management,  and  a  powerful ad-hoc reporting tool and scheduler.  The products
billed  encompass  all  forms  of telecommunication expenditures, including long
distance,  cellular,  pagers  and  local  calls.

     Invoice  Processing  System  (IPS)  is  a  TelMaster  product  that enables
customers  who  utilize the program to quickly detect billing errors and realize
immediate  cost  savings.  This  module-based  system  streamlines  tracking,
validating  and  processing  large  volumes of telecommunications invoices.  IPS
empowers businesses to manage their invoices effectively across locations with a
customizable,  adaptable  and  user-friendly  tool.

     During  2001,  TelMaster  product implementations were initiated for 35 new
customers  including  Delta  Airlines, Compaq Computer Corporation, GE Financial
Assurance,  Johns  Hopkins  University,  Wellpoint  Health  Networks,  State  of
Wyoming,  and  White  Sands  Missile  Range  in  conjunction with Harris Network
Support.

     Distribution  Control System. The Company has offered the DCS product since
1982.  DCS  is  an  automated  control  solution  for the wholesale distribution
industry.   The  Company  includes  extensive  on-site  training and maintenance
services  as part of its DCS package.  The fully integrated software package has
a  modular  design,  which  includes  applications  for  sales order processing,
inventory  control, accounts receivable and sales analysis.  DCS runs on the IBM
RS6000  server  family.  DCSWEB  is  a  newly  introduced  Java-based
business-to-business  software  module.  This  fully  integrated  web  offering
provides  electronic  catalog  publishing with real time inventory control and a
flexible  pricing  shopping-cart  system.

                           TELESOFT RECOVERY SERVICES

     During  the second quarter of fiscal 1999, the Company hired two executives
to  run  its  Telesoft  Recovery  Services ("TRS") division headquartered in New
Jersey.  These  individuals have 21 years of combined industry experience in two
leading  companies.  The  TRS division assists large organizations in analyzing,
recovering  and  optimizing their telecommunications expenditures.  TRS revenues
are  generated  on  a  contingency  basis, whereby fees are earned only when TRS
customers  obtain refunds or realize cost savings.  The customers that generated
the  most  TRS  revenues  during  fiscal  2001  were  Bank  of  New York, Ixnet,
Telecheck,  First  Union,  and  North  Shore  LIJ  Health  System.


                                      -3-
<PAGE>
              STUDENT TELEPHONE SERVICES (STS) OUTSOURCING PROGRAM

     The Company provides an outsourcing program to universities and colleges to
establish  long  distance resale programs to residence hall students, off-campus
students,  administrative  staff  and  faculty.  Through  its  Student Telephone
Services  Outsourcing  Program  ("STS  Program"),  the Company offers a complete
billing  solution  which  includes  the  following services:  (1) production and
distribution  of  marketing literature for the program, (2) on-site solicitation
and  registration  of  program  participants,  (3)  installation of hardware and
billing  software,  (4)  collection,  costing  and  processing  of long-distance
billing  data,  (5) production and distribution of individual bills, (6) on-site
or  remote  customer  service  center, (7) management of accounts receivable and
collections, (8) clearing-house services for the various suppliers involved with
the  program,  and (9) financial reporting services to the university or college
on  the  performance  of  the  program.

     Telesoft  administers and operates its STS Program on a turnkey basis on 52
university and college campuses of various sizes, including Rutgers College, the
University  of  Southern  California,  Fordham  University  and  Long  Island
University.

     Telesoft  also  has  sold  the  system,  software  and services required to
administer  the  STS  Program  to  approximately  75  campuses  of various sizes
nationwide,  including  Yale University, State University of New York at Oswego,
Case  Western  Reserve University, the University of Oklahoma, Auburn University
and  Fairfield  University.   Once  a sale is consummated, the Company maintains
and  services  the  hardware  and  software under renewable one-year maintenance
contracts.

                     CUSTOMIZED BILLING OUTSOURCING SERVICES

     The Company provides customized billing outsourcing applications to Fortune
1000 companies and governmental agencies in conjunction with large interexchange
carriers  and  RBOCs.  The Company also provides customized billing services for
Verizon  Data  Solutions,  Adelphia,  and  McGraw  Hill.



                                      -4-
<PAGE>
COMPETITION

     The  telecommunications industry is highly competitive and subject to rapid
technological  change.  Failure  to  keep pace with technological advances could
adversely  affect  the  Company's competitive position and future prospects.  In
order  to maintain or improve its position, the Company must continue to enhance
its  current products and develop new products and services in a timely fashion.

     In connection with its telemanagement system division, the Company competes
with  Peregrine  Systems,  Telco  Research,  Stonehouse  Technologies, Inc., ISI
Infortext and Pinnacle products, all of which provide telemanagement systems and
services  to  the  university,  health  care,  government  and  general business
markets.

     In  connection  with  its  recovery services division, the Company competes
with  Profit  Recovery  Group  and  Teldata  Control Inc., both of which provide
recovery  services  to  the  Fortune  1000  market.

     In  connection  with its STS Program, the Company competes with AT&T, which
provides  long  distance  telephone  service  on  a resale basis and offers long
distance  billing  services  to universities. The Company also competes with MCI
WorldCom,  Sprint  and  other long distance providers which market long distance
services  to  the  public and directly to college campuses. The STS product also
competes  with  calling  cards,  prepaid  cards  and  cellular/wireless service.

     The  Company  believes  that  the  factors for its success include quality,
technical  capability,  reliability, price and promptness of performance.  While
the  Company has competed successfully against the foregoing companies, most, if
not  all,  of  the  Company's  existing  and  potential  competitors have longer
operating  histories  and  significantly  greater  financial,  technical, sales,
marketing  and human and other resources than the Company.  Most, if not all, of
these  companies  have greater name recognition and a larger installed base than
the Company.  The Company's competitors could, in the future, introduce products
and  services with more features and lower prices than the Company's product and
service offerings.  These companies also could fund existing or new products and
services with other products or services to compete with the Company.  While the
Company  has  operated  successfully against such competition in the past, there
can  be  no  assurance  that  it  will  be  able  to  do  so  in  the  future.

MAJOR  CUSTOMERS  AND  SUPPLIERS

     Prior  to  December  1,  2000,  one telecommunications company provided the
Company  with  a  significant  portion  of  its long distance telecommunications
services.  For  fiscal  2001  and  2000,  multiple  telecommunication  companies
provided  long  distance services to the Company, and, accordingly, there was no
supplier  that  accounted  for  greater  than  10%  of  the  Company's expenses.

     During the fiscal years ended November 30, 2001, 2000 and 1999, the Company
did  not have any customers that accounted for greater than 10% of its revenues.

SALES  AND  MARKETING

     The  Company's  sales staff consists of nine people who are responsible for
all  of  the Company's marketing and sales efforts.  Sales personnel are paid on
both  a  salary  and  commission  basis.  The  Company's executive officers also
devote a substantial amount of their time to developing and maintaining personal
relationships  with  the Company's customers and with prospective new customers.


                                      -5-
<PAGE>
RESEARCH AND DEVELOPMENT

     The Company conducts an active and ongoing research and development program
that  focuses on developing new and improved software products, and particularly
those  that  are  compatible  with  or  enhance existing programs.  Research and
development  costs  for the fiscal years ended November 30, 2001, 2000, and 1999
were  $528,000, $1,168,000, and $1,424,000, respectively.  These costs have been
expensed  during  their respective fiscal years.  Research and development costs
have  a  current  annual  run-rate  of  approximately  $609,000.

REGULATION

     The Company's business is subject to various federal and state regulations.
Commencement  of new services frequently requires licenses from public utilities
commissions.  There  is  no  assurance  that  the  Company  or its customers, if
required,  will  be  successful in their efforts to obtain necessary licenses or
regulatory  approvals.  The Company's inability to secure any necessary licenses
or  approvals could have a material adverse effect on its business.  In addition
to  specific regulations, the Company is subject to all federal, state and local
rules and regulations imposed upon businesses generally.  The cost of regulatory
compliance is an additional cost of doing business for the Company.  The Company
cannot  predict the impact, if any, that future regulation or regulatory changes
may  have  on  its  business.

WARRANTIES

     The  Company  offers  a  90-day  warranty  on  hardware and software and an
extended  warranty  program  in  connection  with  the  Company's  service  and
maintenance  programs.  The  Company  has not had any material claims made under
its  warranty  program.

PATENTS, TRADEMARKS, LICENSES AND COPYRIGHTS

     The  Company regards its software as proprietary and attempts to protect it
with  copyrights,  trademarks,  and  though  the  use  of  trade secret laws and
restrictions  on  disclosure,  copying and transferring title.  The Company also
attempts  to  preserve  its  proprietary  rights  by  contractual non-disclosure
safeguards  and  restrictions  on  transferability  in  its  software  license
agreements.  Additionally, the Company does not provide the source codes for its
products  to its customers.  The Company's products are not patented and are not
the subject of any current patent application, nor is it anticipated that any of
its  products  will  be  patented.  Existing  copyright laws afford only limited
practical  protection  for its software.  Accordingly, despite precautions taken
by  the  Company,  it  may  be  possible  for unauthorized third parties to copy
certain  portions  of  the  Company's products and to obtain and use information
that  the  Company  regards  as  proprietary.

     Key  officers  and employees have assigned to the Company certain technical
and  other  information and patent rights, if any, acquired by them during their
employment  by  the  Company  and after termination of their employment with the
Company, if such information or rights arose out of information obtained by them
during  their employment.  They also have agreed not to use or disclose any such
information for a period of two years following termination of their employment.

     In  spite of these precautions, it may be possible for competitors or users
to  copy  aspects  of  the  Company's products or to obtain information that the
Company regards as trade secrets.  However, the Company believes that due to the
rapid  pace of innovation within its industry, factors such as technological and
creative  skills  of  its  personnel  are  more  important  to  establishing and
maintaining  a  technology  leadership position within the industry than are the
various  legal  protections  of  its  technology.  The Company believes that its
products  and  technology  do  not infringe on any proprietary rights of others,
although  there  can  be  no  assurance  that  third  parties  will  not  assert
infringement  claims  in  the  future.

     The  Company  has  not obtained trademark or trade name registration on the
use  of the names "TelMaster," "TRS," "Student Telephone Services," "STS Service
Bureau,"  "SunDial Program," "DCS" or "Sunbelt Business Computers."  The Company
is  in the process of investigating the feasibility and protection that might be
afforded  by  registration  of these names, or as trademarks or trade names on a
national,  regional  or  local  basis.


                                      -6-
<PAGE>
SEASONALITY

     The  Company  generally  completes  the sale of the majority of STS Program
system installations in the university market during the spring and early summer
months.  The  implementation  and  installation  of  these  systems and services
typically  occurs  during the summer months.  Revenues derived from STS Programs
begin  in  the  fall and weaken during winter holiday and the summer months when
students are on vacation.  As a result, the Company's revenues have consistently
been  highest  during  the  second  and  fourth  quarters.

BACKLOG

     For  the  TelMaster  and  related  products, backlog arises due to software
customization  and implementation, which may not be completed for several months
after  a  sales  contract is signed.  As of November 30, 2001, systems sold, but
not  yet  recognized  as  revenue,  totaled  approximately  $1,230,000.

     Backlog  is  not  material  to any other segments of the Company's business
since  the  Company  ships  and  installs its software and systems promptly upon
receipt  of  customers'  orders.  While  the  Company tends to experience higher
installation  activity  on  university campuses during the summer months for its
STS  division,  it has not historically had problems installing its products and
performing  its  services  in  a  timely  fashion.

EMPLOYEES

     As  of  February 22, 2002, the Company had 124 full-time employees, five of
which  are in executive positions, 16 are engaged in sales and marketing, 30 are
in  software development and support, 29 are in customer service and the balance
are  in  various  administrative and support positions.  The Company's employees
are not covered by a collective bargaining agreement.  The Company considers its
employee  relations  to  be  satisfactory.

ITEM  2.  PROPERTIES.

     In  January  1998,  the  Company  signed a ten-year lease for approximately
30,000  square  feet  of  office  space  in  Phoenix,  Arizona.  The  Company's
obligations under the terms of this lease were approximately $452,000, $421,000,
and  $392,000  for  the  fiscal  years  ended November 30, 2001, 2000, and 1999,
respectively.

     In  July  1999,  the  Company  entered into a lease for approximately 2,100
square  feet  of office space in Cranford, New Jersey, which housed its Telesoft
Recovery  Services  operations.  This lease expired in July 2001.  The Company's
obligations  under  the  terms of this lease were approximately $25,000, $44,000
and  $15,000  for  fiscal  2001,  2000  and  1999,  respectively.

     In  June  2001,  the  Company  entered into a lease for approximately 5,500
square  feet  of office space in Cranford, New Jersey, which houses its Telesoft
Recovery  Services  operations.  This  lease  expires  in  November  2002.  The
Company's obligation under the terms of this lease was approximately $68,000 for
fiscal  2001.  There were no obligations under this lease during fiscal 2000 and
1999.


                                      -7-
<PAGE>
ITEM 3.  LEGAL PROCEEDINGS.

     The  Company is not involved as a party to any legal proceedings other than
various  claims  and lawsuits arising in the normal course of its business, none
of  which,  in  the  opinion  of  the  Company's management, are individually or
collectively  material  to  the  Company's  business.

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

     No  matter  was  submitted  to security holders through the solicitation of
proxies  or  otherwise  during  the fourth quarter of the fiscal year covered by
this  report.



                                      -8-
<PAGE>
                                    PART II

ITEM 5.  MARKET  FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The  following  table  sets  forth,  for  the  fiscal  periods  shown,
representative high and low bid prices of the Company's common stock as reported
by  the  Nasdaq  SmallCap Market.  The prices represent inter-dealer quotations,
which  do  not  include  retail  mark-ups, mark-downs or commissions and may not
necessarily  represent  actual  transactions.

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 2001    HIGH     LOW
----------------------------  -------  -------
<S>                           <C>      <C>

     First Quarter            $2.2500  $0.9375
     Second Quarter            6.0000   1.5800
     Third Quarter             2.4700   1.8600
     Fourth Quarter            2.4500   1.3100

YEAR ENDED NOVEMBER 30, 2000    HIGH     LOW
----------------------------  -------  -------

     First Quarter            $7.0000  $3.7500
     Second Quarter            6.7500   2.0000
     Third Quarter             2.6250   1.3125
     Fourth Quarter            1.7188   0.7500
</TABLE>

     As  of February 22, 2002, there were 379 holders of record of the Company's
common  stock.  Although  the  Company  has  no  limitations  or restrictions on
declaring  dividends,  the  Company  has  not  declared or paid dividends on its
Common  Stock  and  does  not expect to declare or pay dividends in fiscal 2002.

RECENT  SALES  OF  UNREGISTERED  SHARES

     During  the  quarter  ended November 30, 2001, the Company did not make any
sales  of  unregistered  securities.


                                      -9-
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

     The  following  selected  financial  data  are  derived  from the financial
statements  of  the  Company  which  have  been audited by Semple & Cooper, LLP,
independent  certified public accountants, for the years ended November 30, 2001
and  2000 and by BDO Seidman, LLP, independent certified public accountants, for
the  years ended November 30, 1999, 1998 and 1997.  Such selected financial data
should  be  read  in  conjunction  with "Management's Discussion and Analysis of
Financial  Condition  and  Results  of  Operations"  and the Company's financial
statements  and  related  notes  set  forth  in  Item  8  herein.

<TABLE>
<CAPTION>
                                                            For the years ended November 30,
                                        ------------------------------------------------------------------------
STATEMENT OF OPERATIONS DATA (1):              2001           2000           1999           1998           1997
                                        ------------  -------------  -------------  -------------  -------------
<S>                                     <C>           <C>            <C>            <C>            <C>
   Net sales                            $20,167,847   $ 24,613,309   $ 29,377,592   $ 28,250,373   $ 22,593,450
   Cost of sales                         (8,799,831)   (12,826,565)   (16,780,838)   (18,033,402)   (14,330,388)
                                        ------------  -------------  -------------  -------------  -------------
   Gross profit                          11,368,016     11,786,744     12,596,754     10,216,971      8,263,062
   Income (loss) from operations            322,698       (629,250)     1,261,686      1,544,157        561,191
   Other income (expense)                    (6,327)       538,529        567,157        332,012        163,094
   Income (loss) from continuing
       operations                           174,001        (50,121)     1,249,043      1,089,578        402,985
   Diluted earnings (loss) per share-
       continuing operations            $      0.12   $      (0.02)  $       0.33   $       0.28   $       0.11
   Weighted average number of
       shares outstanding-diluted         1,406,278      2,123,879      3,832,067      3,888,033      3,802,874


                                                                  As of November 30,
                                        ------------------------------------------------------------------------

BALANCE SHEET DATA:                            2001           2000           1999           1998           1997
                                        ------------  -------------  -------------  -------------  -------------
   Cash and investments                 $   540,726   $     41,434   $ 14,425,071   $ 17,677,008   $  3,821,784
   Working capital                        1,353,643        710,284     18,452,329     16,970,488      4,080,013
   Total assets                           6,725,241     10,222,057     26,862,937     27,620,329     17,640,850
   Short-term debt                                -      1,375,000              -              -         90,523
   Long-term debt                                 -              -              -              -        371,551
   Total stockholders' equity             2,364,152      2,191,695     19,990,765     18,395,164      8,906,507
</TABLE>

------------------------
     (1)  Figures reflect results from continuing operations.


                                      -10-
<PAGE>
ITEM  7.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION
AND  RESULTS  OF  OPERATIONS.

FORWARD  LOOKING  INFORMATION

     This  report  contains  forward-looking  statements  within  the meaning of
section  27A  of  the  Securities  Act of 1933 and Section 21E of the Securities
Exchange  Act  of 1934.  Such statements involve certain risks and uncertainties
that  could  cause  actual  results  to  differ  materially  from  those  in the
forward-looking  statements  including uncertainties regarding the effectiveness
of  initiatives  to  sell,  introduce and implement the TelMaster product and to
maintain  our  Student  Telephone Services customer base.  Certain factors which
may  cause such a difference include, but are not limited to, the following: the
impact  of  increased  competition  from  competitors with significant financial
resources  and  market  share;  and the amount and rate of growth in general and
administrative  expenses  associated  with  building  a  strengthened  corporate
infrastructure  to  support  operations.

BACKGROUND

     The  Company  began as a value-added reseller in the wholesale distribution
of accounting software (Distribution Control System) in 1982.  During the fiscal
year  ended  November  30,  2001,  the  Company derived approximately 54% of its
revenues from its STS Outsourcing Program.  The balance of revenues were derived
from  hardware,  software,  maintenance  and  other  services in the university,
Fortune  1000,  governmental  and  wholesale  distribution  markets.

     The  Company  has  adapted  to  fast-paced  market  changes by shifting its
resources  from  providing  generic  or  general system hardware and software to
providing  a  full  range  of  services in its specialty niches.  The Company is
continuously  developing  new  products  and services to maintain and expand its
market  share.

     The  core  focus  of the Company is its TelMaster software suite of modules
and  its recovery services division. Both segments are geared primarily to large
entities  including  Fortune  1000  corporations,  governmental  agencies  and
educational  institutions.


                                      -11-
<PAGE>
<TABLE>
<CAPTION>
Results of Operations by Product Line for the Fiscal Years ended November 30, 2001 and 2000
(in  thousands  except  per  share  items)

                                           Year  ended  November  30,  2001              Year  ended  November  30,  2000
                                     -------------------------------------------  --------------------------------------------
                                     System                                       System
                                      Sales    TRS      STS      CBS     Total     Sales     TRS      STS      CBS     Total
                                     -------  ------  --------  ------  --------  --------  ------  -------  -------  --------
<S>                                  <C>      <C>     <C>       <C>     <C>       <C>       <C>     <C>      <C>      <C>
Sales, net                           $6,007   $2,395  $10,884   $ 882   $20,168   $ 6,302   $1,360  $15,991  $  960   $24,613
Cost of sales                         1,398        -    7,397       5     8,800     1,332        -   11,440      54    12,826
                                     -------  ------  --------  ------  --------  --------  ------  -------  -------  --------
Gross profit                          4,609    2,395    3,487     877    11,368     4,970    1,360    4,551     906    11,787
                                     -------  ------  --------  ------  --------  --------  ------  -------  -------  --------
General & administrative
    expenses:
General                               4,757    1,760    2,822     476     9,815     6,048    1,027    3,486     722    11,283
Depreciation                             35        4      113      11       163       132        3      161      19       315
Bad debt                                  1        1      442       -       444        12        -      230       -       242
Corporate allocations:
General                                 159        5      149       7       320        87        6      151      27       271
Depreciation                            181        8       90      24       303       136        -      136      33       305
                                     -------  ------  --------  ------  --------  --------  ------  -------  -------  --------
                                      5,133    1,778    3,616     518    11,045     6,415    1,036    4,164     801    12,416
                                     -------  ------  --------  ------  --------  --------  ------  -------  -------  --------

Operating income (loss)                (524)     617     (129)    359       323    (1,445)     324      387     105      (629)

Other income (expense)                                                       (7)                                          538
                                                                        --------                                       -------

Pretax income                                                               316                                           (91)

Income tax provision                                                       (142)                                           41
                                                                        --------                                       -------
Income (loss) from continuing
    operations                                                            $ 174                                        $  (50)
                                                                        ========                                       =======
Diluted earnings (loss) per share-
continuing operations
                                                                          $0.12                                        $(0.02)
                                                                        ========                                       =======
</TABLE>

RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2001 COMPARED TO
THE FISCAL YEAR ENDED NOVEMBER 30, 2000

     Revenues  decreased  to  $20,167,847 for the fiscal year ended November 30,
2001,  compared to $24,613,309 for the fiscal year ended November 30, 2000.  The
Company's  revenue  is  derived  from four principal product lines and services:
System Sales and Maintenance, TRS, STS Outsourcing Programs (STS) and Customized
Billing  Outsourcing  Services.

     Revenues  from  System Sales and Maintenance were $6,006,768 for the fiscal
year  ended  November  30, 2001 compared to $6,302,107 for the fiscal year ended
November  30,  2000, a decrease of 4.7%. TelMaster sales and maintenance related
revenues  increased  by  $1,072,036, or 27.5%, to $4,966,652 for the fiscal year
ended  November  30,  2001  compared  to  $3,894,616  for  the fiscal year ended
November  30,  2000.   The  increase  in  TelMaster revenues from fiscal 2000 to
fiscal  2001  was  related  to  a  $1,524,000  increase in revenues from general
TelMaster system sales, offset by a $329,500 decrease in revenues related to the
CALNET  contract, which was terminated in April 2001.  Additionally, maintenance
revenue  decreased  by  $122,000  due  to  many customers transitioning from the
Company's  prior  telemanagement  software  product  to  TelMaster.  The Company
anticipates  that  maintenance  revenues  for  the TelMaster product may replace
maintenance  revenues  lost from the prior contracts and revenues will return to
prior  levels.  However,  there  can  be  no  assurance  that  this will happen.


                                      -12-
<PAGE>
     The DCS product revenues declined 10.1%, or $112,762, to $1,003,744, due to
a decrease in demand for its text-based software. The Company expects this trend
to continue in fiscal 2002.  In December 2000, the Company completed the sale of
the  RATEX  division,  and  as  a  result,  RATEX  revenues  declined  97.2%, or
$1,254,613,  to  $36,372 for the fiscal year ended November 30, 2001 compared to
$1,290,985  for  the  fiscal  year  ended  November  30,  2000.

     Revenues  from  TRS, which are generated through the Company's wholly-owned
subsidiary, Telesoft Recovery Corp., increased 76%, or $1,034,532, to $2,394,996
for  the  year ended November 30, 2001 from $1,360,464 for the fiscal year ended
November  30,  2000.  We  expect  TRS revenues to continue to increase at a more
moderate  level.

     STS  Program  revenues  were $10,884,348 for the fiscal year ended November
30,  2001 compared to $15,990,614 for the fiscal year ended November 30, 2000, a
31.9%  decrease.  This  decrease  was  primarily  due  to  market  pressure from
competing  long-distance  communications  products,  including  calling  cards,
wireless services and the Internet.  During fiscal 2000, the Company adjusted to
these  market  pressures  by  lowering  its  retail  rates and renegotiating its
wholesale rates with its suppliers.  Based on declining revenue, the Company has
reduced  selling,  general and administrative expenses, including a reduction in
staff  to  adjust  to  the  reduction  in subscribers, traffic and revenues. The
Company  expects STS Program revenues to decrease in the 2001-2002 and 2002-2003
academic  year, based on decreases in long distance usage and its customer base.

     For  the  fiscal  years  ended  November  30,  2001 and 2000, revenues from
Customized  Billing  Outsourcing  Services  were  $881,735  and  $960,124,
respectively.  This  decrease  is primarily a result of lower billing volume for
one  of  the  Company's  primary  customers.

<TABLE>
<CAPTION>
                      Fiscal Year Ended November 30,
REVENUE              2001         2000         1999         1998         1997
                  -----------  -----------  -----------  -----------  -----------
<S>               <C>          <C>          <C>          <C>          <C>
Telemanagement    $ 4,966,652  $ 3,894,616  $ 3,652,921  $ 1,526,959  $ 1,368,985
DCS                 1,003,744    1,116,506    1,393,617    1,606,088    1,684,631
RATEX                  36,372    1,290,985    2,809,994    2,436,686    1,143,864
System Sales        6,006,768    6,302,107    7,856,532    5,569,733    4,197,480
                  ---------------------------------------------------------------

STS                10,884,348   15,990,614   19,815,617   21,460,885   17,430,383
Custom Billing        881,735      960,124    1,404,230    1,219,755      965,587
TRS                 2,394,996    1,360,464      135,778            -            -
Network Services            -            -      165,435            -            -
                  ---------------------------------------------------------------
                  $20,167,847  $24,613,309  $29,377,592  $28,250,373  $22,593,450
                  ===============================================================
</TABLE>


     Total  gross profit decreased 3.6% to $11,368,016 for the fiscal year ended
November  30, 2001 from $11,786,744 for the fiscal year ended November 30, 2000.
Cost  of  goods  sold  was approximately 68.0% and 71.5% of STS revenues for the
fiscal  years  ended  November  30,  2001 and 2000, respectively.  The increased
emphasis  on  fixed fee structures resulted in a more moderate decrease in gross
profits  of 23.4% compared to the 31.9% decrease in revenues from this division.
Cost of goods sold as a percentage of system sales and maintenance revenues were
23.3%  and  21.1%  for  the  fiscal  years  ended  November  30,  2001 and 2000,
respectively.  This  increase  was  due  to  a higher proportion of professional
services-related  revenue,  which  have  a  lower  gross  profit  margin.

     General  and  administrative expenses decreased by 11.0%, or $1,370,676, in
fiscal  2001  to $11,045,318 from $12,415,994 in fiscal 2000.  This decrease was
primarily  due  to a reduction in human resources and other cost-cutting efforts
implemented  by  the Company during the last two fiscal quarters of 2000 and the
first and fourth fiscal quarters of 2001.  Also contributing to the decrease was
the  decrease  in  human  resource  costs  resulting  from the sale of the RATEX


                                      -13-
<PAGE>
division.  The  $286,000  gain  from  the  sale of RATEX was largely offset by a
$290,000  charge taken for the issuance of common stock to the TRS executives in
lieu  of  cash  compensation  under  their employment agreements.  RATEX related
expenses  for  fiscal  2001  and 2000 were approximately $50,000 and $1,010,000,
respectively.  TRS  had  operating  expenses of $1,778,183 and $1,036,676 during
fiscal  2001  and  2000, respectively.  The Company's general and administrative
expenses  as  a percentage of gross profit were 97.2% and 105.3% for fiscal 2001
and 2000, respectively.  The Company expects general and administrative expenses
as  a percentage of gross profit to decrease over time as revenues for TelMaster
systems  and  TRS  increase.

     Other  income  decreased to $1,214 for fiscal 2001 from $319,406 for fiscal
2000.  This  decrease  was  attributable  to  the sale of 7,434 shares of common
stock of Amdocs Ltd. for $296,439, through which the Company realized a $145,189
gain  on  the sale in fiscal 2000.  Additionally during fiscal 2000, the Company
realized  a  $168,782  return  of  premium  on  a  key-person  insurance policy.

     There was a $142,370 provision for income taxes for fiscal 2001 compared to
a  $40,600  benefit  from  income  taxes  for  fiscal  2000.

     Fiscal  2001  resulted  in net income of $174,001 compared to a net loss of
$50,121  in  fiscal  2000.



                                      -14-
<PAGE>
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS BY PRODUCT LINE FOR THE FISCAL YEARS ENDED NOVEMBER 30, 2000 AND 1999
(in thousands except per share items)

                               Year ended November 30, 2000                   Year ended November 30, 1999
                         -----------------------------------------  -----------------------------------------------------
                         System                                     System                            Network
                          Sales     TRS      STS    CBS     Total    Sales   TRS      STS     CBS     Services    Total
                         -----------------------------------------  -----------------------------------------------------
<S>                      <C>       <C>     <C>      <C>   <C>       <C>     <C>     <C>      <C>     <C>         <C>
Sales, net               $ 6,302   $1,360  $15,991  $960  $24,613   $7,857  $ 136   $19,816  $1,404  $     165   $29,378
Cost of sales              1,332        -   11,440    54   12,826    1,980      -    14,766      35          -    16,781
                         --------  ------  -------  ----  --------  ------  ------  -------  ------  ----------  --------
Gross profit               4,970    1,360    4,551   906   11,787    5,877    136     5,050   1,369        165    12,597
                         --------  ------  -------  ----  --------  ------  ------  -------  ------  ----------  --------
General &
administrative
   expenses:
General                    6,048    1,027    3,486   722   11,283    4,901    453     3,563   1,046        285    10,248
Depreciation                 132        3      161    19      315      137      -       160      21          -       318
Bad debt                      12        -      230     -      242        7      -       215      53          -       275
Corporate
  allocations:
General                       87        6      151    27      271       52      1       195      17          1       266
Depreciation                 136        -      136    33      305       99      -       101      23          5       228
                         --------  ------  -------  ----  --------  ------  ------  -------  ------  ----------  --------
                           6,415    1,036    4,164   801   12,416    5,196    454     4,234   1,160        291    11,335
                         --------  ------  -------  ----  --------  ------  ------  -------  ------  ----------  --------

Operating income (loss)   (1,445)     324     387    105     (629)     681   (318)      816     209       (126)    1,262
Other income                                                  538                                                    567
                                                          --------                                               --------

Pretax income                                                 (91)                                                 1,829
Income tax
   Provision                                                   41                                                   (580)
                                                          --------                                               --------

Income (loss)
  from continuing
  operations                                              $   (50)                                               $ 1,249
                                                          ========                                               ========

Diluted earnings
  (loss) per share-
  continuing
  operations
                                                          $ (0.02)                                               $  0.33
                                                          ========                                               ========
</TABLE>

RESULTS  OF  OPERATIONS  FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2000 COMPARED TO
THE  FISCAL  YEAR  ENDED  NOVEMBER  30,  1999

     Revenues  decreased  to  $24,613,309 for the fiscal year ended November 30,
2000,  compared to $29,377,592 for the fiscal year ended November 30, 1999.  The
Company's  revenue  is  derived  from four principal product lines and services:
System Sales and Maintenance, TRS, STS Outsourcing Programs (STS) and Customized
Billing  Outsourcing  Services.  The  Company's Network Services division, which
began  operations  in  December  1998,  was  discontinued  in August 1999 due to
unsatisfactory  performance.

     Revenues  from  System Sales and Maintenance were $6,302,107 for the fiscal
year  ended  November  30, 2000 compared to $7,856,532 for the fiscal year ended
November  30, 1999, a decrease of 19.8%. TelMaster sales and maintenance related
revenues  increased  by  $241,695,  or  6.7%,  to  $3,894,616 for the year ended


                                      -15-
<PAGE>
November  30,  2000 compared to $3,652,921 for the year ended November 30, 1999.
The  increase  in TelMaster revenues from fiscal 1999 to fiscal 2000 was related
to  a  $430,000  increase  in  revenues from the ongoing development of a custom
convergence  billing,  reporting  and  support  system  for Pacific Bell and MCI
customer care services for the State of California's CALNET contract, and offset
by  a  $190,000  decrease  in  other  TelMaster  system  sales.

     The  DCS  product  revenues  declined 19.9%, or $277,111, to $1,116,506 and
RATEX  product  revenues declined 54.1% or $1,519,009 to $1,290,985 for the year
ended  November  30,  2000  compared  to  the year ended November 30, 1999.  The
decline in revenues in these segments was the result of a decrease in demand for
these text-based software products.  In December 2000, the Company completed the
sale  of  the  RATEX  division.

     TRS,  which  began operations in March 1999, had revenues of $1,360,464 and
$135,778  during  fiscal  2000  and  1999,  respectively.

     STS  Program  revenues  were $15,990,614 for the fiscal year ended November
30,  2000 compared to $19,815,617 for the fiscal year ended November 30, 1999, a
19.3%  decrease.  This  decrease  was primarily a result of market pressure from
competing  means of communication including pre-paid cards, other calling cards,
wireless  services and the Internet. During fiscal 2000, the Company adjusted to
these  market  pressures  by  lowering  its  retail  rates and renegotiating its
wholesale  rates  with its suppliers. The impact of these new rates began during
the fourth fiscal quarter (September-November), which represents the first three
months of the 2000-2001 academic year. Revenues for the fourth quarter of fiscal
2000  were 23.2% lower than the fourth quarter of fiscal 1999. Historically, the
calling  patterns  during  September  through November are indicative of calling
patterns for the balance of the academic year. Based on this decline in revenue,
the  Company  has  attempted  to  reduce  selling,  general  and  administrative
expenses,  including  a  reduction  in  staff  to  adjust  to  the  reduction in
subscribers,  traffic,  and  revenues.

     For  the  fiscal  years  ended  November  30,  2000 and 1999, revenues from
Customized  Billing  Outsourcing  Services  were  $960,124  and  $1,404,230,
respectively.

     In  December  1998,  the Company formed a Network Services division to sell
telecommunication services, including dial tone and data transport services, via
strategic  agent  relationships  with  Regional  Bell Operating Companies.  This
division  was  discontinued  in  August  1999 due to unsatisfactory performance.
Network  Services  had  revenues  of  $165,435  during  fiscal  1999.

     Total  gross profit decreased 6.4% to $11,786,744 for the fiscal year ended
November  30, 2000 from $12,596,754 for the fiscal year ended November 30, 1999.
Cost  of  goods  sold  was approximately 71.5% and 74.5% of STS revenues for the
fiscal  years ended November 30, 2000 and 1999, respectively.  This decrease was
primarily  due to continued pressure on the price of long distance services from
the Company's suppliers.  Cost of goods sold as a percentage of system sales and
maintenance  revenues  were  21.1% and 25.2% for the fiscal years ended November
30,  2000  and  1999,  respectively.  This  improvement  was  due  to  a  higher
percentage  of  TelMaster  sales, which have a higher gross profit rate than the
RATEX  and  DCS  products.

     General  and  administrative  expenses increased by 9.5%, or $1,080,926, in
fiscal  2000  to $12,415,994 from $11,335,068 in fiscal 1999.  This increase was
primarily  due  to  an  increase  in  human  resources in the areas of TelMaster
research  and  development, implementation, sales, and support services, as well
as  the  addition  TRS  division.  Research  and  development costs incurred and
expensed  during  the  fiscal  years  ended  November  30,  2000  and  1999 were
$1,168,000  and  $1,424,000,  respectively.  Sales  and support related expenses
increased $1,090,000 from fiscal 1999 to fiscal 2000. TRS had operating expenses
of  $1,036,000  and $454,000 during the fiscal years ended November 30, 2000 and
1999,  respectively.  The  Network  Services  division  contributed  $291,000 to
operating  expenses  in  fiscal  1999.  General and administrative expenses as a
percentage  of  revenues  were  50.4%  and  38.6%  for  fiscal  2000  and  1999,
respectively.  The  Company  expects  general  and  administrative expenses as a
percentage  of revenues to decrease over time, as revenues for TelMaster systems
increase. During the fourth quarter of fiscal 2000 and into the first quarter of
fiscal  2001,  the  Company  has  attempted  to  reduce  selling,  general  and


                                      -16-
<PAGE>
administrative  expenses,  including  a  reduction  in staff.  These adjustments
resulted  in  a  decrease  in general and administrative expenses of $303,000 to
$3,031,000  for  the  fourth  quarter  fiscal 2000 compared to $3,334,000 in the
fourth  quarter  of  fiscal  1999.

     Other  income  increased  to $319,406 for fiscal 2000 from $2,623 in fiscal
1999.  This  increase  was  attributable  to  the sale of 7,434 shares of common
stock of Amdocs Ltd. for $296,439, through which the Company realized a $145,189
gain  on  the  sale.  Additionally,  the  Company  realized a $168,782 return of
premium  on  a  key-person  insurance  policy.

     There was a $40,600 benefit from income taxes for fiscal 2000 compared to a
provision  for  income  taxes  of  $579,800  for  fiscal  1999.

     Fiscal  2000  resulted  in  a  loss  from  continuing operations of $50,121
compared  to  income  from  continuing  operations of $1,249,043 in fiscal 1999.
This was primarily attributable to increased investments made during fiscal 2000
in human resources supporting the TelMaster product line, coupled with decreased
revenues  for  the DCS, RATEX and STS product lines.  These declines were offset
by  growth  in  the TRS division, resulting in $324,000 of operating income from
this  division  in  fiscal  2000 compared to a $318,000 operating loss in fiscal
1999.

DISCONTINUED  OPERATIONS

     Effective  January  12,  1998,  the  Company,  together  with  the minority
shareholders  of  GoodNet,  entered  into  an agreement with Winstar to sell the
Company's  Internet  services  subsidiary  for  approximately  $22.0  million,
consisting  of $3.5 million cash and shares of common stock of Winstar having an
aggregate  market  value  of  approximately  $18.5  million.

     Under  the  terms  of  the  agreement,  the  Company received approximately
$3,500,000 in cash plus 479,387 shares of Winstar restricted common stock, which
had  an  aggregate  fair  market  value of approximately $13.9 million as of the
close  of  business  on  January  12, 1998.  After commissions and related legal
expenses,  the  Company realized an approximate $13.2 million pretax gain on the
sale  in  the  first quarter of fiscal 1998.  Additionally, the Company received
$235,000  in  cash  to offset GoodNet's net cash disbursements from December 12,
1997  through  the  date  of  the  sale.


                                      -17-
<PAGE>
MATERIAL  CHANGES  IN  FINANCIAL  POSITION

     Cash  and  cash equivalents increased to $540,726 at November 30, 2001 from
$41,434  at  November  30,  2000.  During  fiscal  2001,  the  Company  used
approximately  $81,800  in  cash  to  purchase  property  and  equipment for its
continuing  operations  compared  to $598,000 during fiscal 2000.  Additionally,
the  Company used $146,575 in cash to purchase treasury stock during fiscal 2001
compared  to  $298,061  during  fiscal  2000.

     Accounts  receivable  decreased  to $4,952,652 as of November 30, 2001 from
$8,160,650  as of November 30, 2000 ($4,567,380 and $7,737,213, net of allowance
for  uncollectibles  as  of  November  30,  2001  and 2000, respectively).  This
$3,207,998  decrease  was primarily due to an approximate $3,208,000 decrease in
overall  revenues  for  the fourth quarter of fiscal 2001 compared to the fourth
quarter  of  fiscal  2000.

     Accounts payable and accrued liabilities decreased $2,414,066 to $2,696,839
as  of November 30, 2001 from $5,110,905 as of November 30, 2000.  This decrease
was  primarily  due  to  an approximate $2,229,000 decrease in STS cost of sales
from  the  fourth  quarter  of fiscal 2000 to the fourth quarter of fiscal 2001.

LIQUIDITY  AND  CAPITAL  RESOURCES

     At  November  30,  2001,  the  Company's  balance  sheet  reflected cash of
$540,726.  The  Company  believes  that anticipated cash flows from its business
will  be adequate to supply currently anticipated operating requirements for the
Company  for  the  next  12 months.  However, there can be no assurance that the
Company will not require additional funding within this time frame.  The Company
may  be  required to raise additional funds through public or private financing,
strategic  relationships, or other arrangements.  There can be no assurance that
such additional funding, if needed, will be available on terms attractive to the
Company,  or  at  all.  Furthermore,  any  additional  equity  financing  may be
dilutive  to  existing  stockholders.

ACCOUNTING  PRONOUNCEMENTS

     In  August  2001,  the Financial Accounting Standards Board issued SFAS No.
144  "Accounting  for the Impairment or Disposal of Long-Lived Assets.  SFAS No.
144  addresses financial accounting and reporting for the impairment or disposal
of long-lived assets and supersedes SFAS No. 121, "Accounting for the Impairment
of  Long-Lived  Assets  and  for  Long-Lived  Assets to be Disposed of", and the
accounting  and  reporting  provisions  of  APB  Opinion  No. 30, "Reporting the
Results  of  Operations for the disposal of a segment of a businessSFAS No. 144
is  effective  for  fiscal years beginning after December 15, 2001.  The Company
expects  to  adopt  SFAS No. 144 December 1, 2002.  The Company does not believe
the  adoption  of  SFAS  No.  144  will have a material impact on its results of
operations.


                                      -18-
<PAGE>
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     As  of  November  30,  2001,  the  Company  has  no  derivative  financial
instruments,  other  financial  instruments,  or  long-term  debt  obligations.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The  financial  statements  and  supplementary  financial  information  are
included  herewith  commencing  on  page  F-1.

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

     Not  applicable.


                                      -19-
<PAGE>
                                    PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  following sets forth certain information with respect to the Company's
directors  and  executive  officers.

<TABLE>
<CAPTION>
NAME                                      AGE  POSITION
----                                      ---  --------
<S>                                       <C>  <C>

Michael F. Zerbib (2) . . . . . . . . . .  35  President, Chief Executive Officer, Chief Financial
                                               Officer, Treasurer and Director

Joseph W. Zerbib. . . . . . . . . . . . .  66  Chairman of the Board of Directors

Thierry E. Zerbib . . . . . . . . . . . .  40  Vice President-Technologies, Secretary and Director
                                               Vice President and Director

Brian H. Loeb  . . . . . . . . . . .  . .  40

Cecile Silverman(1)(2). . . . . . . . . .  77  Director

Kalvan Swanky(1)(2) . . . . . . . . . . .  38  Director

Todd P. Belfer (1). . . . . . . . . . . .  34  Director
</TABLE>

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

(1)   Member  of  Audit  Committee.
(2)   Member  of  Compensation  Committee.


     Michael  F.  Zerbib  has  been President and Chief Executive Officer of the
Company  since  February  2000  and  Chief  Financial  Officer,  Treasurer and a
director  of  the  Company since 1990.  He holds a Bachelor of Science degree in
finance  and a Master's degree in taxation and financial accounting from Arizona
State  University.  Mr. Zerbib also holds a certification from the Arizona State
Board  of  Accountancy.

     Joseph  W.  Zerbib  has been Chairman of the Board of Directors since 1982.
From  1982  to February 2000, he served as President and Chief Executive Officer
of  the  Company.

     Thierry  E.  Zerbib  has  been Vice President-Technologies, Secretary and a
director  of  the Company since 1982.  He holds dual degrees in computer science
and  math  from  Tel  Aviv  University,  Israel.

     Brian  H.  Loeb  has  been  Vice President since 1982 and a director of the
Company  since  1992.

     Cecile  Silverman  has been a director of the Company since June 1995.  Ms.
Silverman  is  a  certified  public  accountant and has been self-employed since
1989.  From 1975 to 1989, she was a partner at the firm of Schwartz, Cohen & Co.
Ms.  Silverman  specializes in tax planning for corporations and individuals, as
well  as  representing  clients  before  various  governmental  agencies.  She
graduated  from  Syracuse  University  with  a  degree  in  accounting.


                                      -20-
<PAGE>
     Kalvan  Swanky  has  been a director of the Company since June 1995.  Since
1986,  he  has  been  employed  by Storage Technology Corporation ("STC"), which
develops,  manufactures and distributes computer memory devices.  Mr. Swanky has
held  a  number of positions with STC, most recently as Direct Sales Manager for
Arizona  and  Nevada.  He  received  a  Bachelor  of  Science  degree  from  the
University  of  Colorado.

     Todd  P.  Belfer  has been a director of the Company since April 2001.  Mr.
Belfer  has  served as a director of Vitrix Inc. (OTCBB: VTTX) since April 1999,
as chairman of the board of directors of Vitrix Inc. since November 1999, and as
a  director  of  its  wholly-owned  subsidiary since April 1996.  Since February
1994,  Mr.  Belfer  also  has served as a director of M.D. Labs, Incorporated, a
private  Arizona-based  company.  Mr. Belfer also co-founded Employee Solutions,
Inc. in May 1990, and served as its executive vice president and a director from
1991  to  1996.  Mr. Belfer received a Bachelor of Science degree in Finance and
Economics  from  the  University  of  Arizona.

     Joseph  W.  Zerbib is the father of Thierry E. Zerbib and Michael F. Zerbib
and  the  father-in-law  of  Brian  H. Loeb.  Accordingly, Thierry E. Zerbib and
Michael  F.  Zerbib  are  brothers  and  Brian  H. Loeb is the brother-in-law of
Thierry  E.  Zerbib  and  Michael  F.  Zerbib.

BOARD  MEETINGS  AND  COMMITTEES

     During the fiscal year ended November 30, 2001, the Board of Directors held
four  meetings.  All  directors  attended  these  meetings.

     Audit  Committee.  The  Board  of  Directors  maintains an Audit Committee,
which  currently is composed of Cecile Silverman, Kalvan Swanky and Todd Belfer.
The  responsibilities  of the Audit Committee include, in addition to such other
duties as the Board of Directors may specify, (i) receiving reports with respect
to  loss contingencies, the public disclosure or financial statement notation of
which  may  be  legally  required,  (ii)  annually reviewing and examining those
matters  that relate to a financial and performance audit of the Company's stock
option  plans,  (iii)  recommending  to  the  Board  of Directors the selection,
retention  and  termination  of  the  Company's  independent  accountants,  (iv)
reviewing  the  professional  services,  proposed  fees and independence of such
accountants,  and  (v)  providing  for  the  periodic  review and examination of
management  performance  in  selected  aspects of corporate responsibility.  The
Audit  Committee  held  three meetings during the fiscal year ended November 30,
2001.

     Compensation  Committee.  The  Board  of Directors maintains a Compensation
Committee,  which  currently  is composed of Cecile Silverman, Kalvan Swanky and
Michael  Zerbib.  The responsibilities of the Compensation Committee include, in
addition  to  such  other  duties  as  the  Board  of Directors may specify, (i)
reviewing  and recommending to the Board of Directors the salaries, compensation
and  benefits  of  the  Company's  executive  officers  and  key employees, (ii)
reviewing  any  related  party  transactions  on  an ongoing basis for potential
conflicts  of  interest, and (iii) administering the Company's stock plans.  The
Compensation  Committee  held  one meeting during the fiscal year ended November
30,  2001.


                                      -21-
<PAGE>
COMPENSATION  OF  DIRECTORS

     The  members of the Board of Directors do not receive any cash compensation
for  serving  as  directors.  However,  the  Company  reimburses the independent
directors  for  their reasonable out-of-pocket expenses in connection with their
attendance  at  meetings.  In  April  1996,  the  Company  granted  immediately
exercisable  options  to  purchase  1,000  shares of Common Stock to each of Ms.
Silverman  and Mr. Swanky.  The options were exercisable at a price of $4.75 per
share  through  April  2001.  In  October  1996, the Company granted each of Ms.
Silverman  and  Mr.  Swanky  immediately  exercisable  options to purchase 1,000
shares  of  Common Stock at a price of $3.00 per share through October 2001.  In
October  1997,  the  Company  granted  each  of  Ms.  Silverman  and  Mr. Swanky
immediately  exercisable  options  to purchase 1,000 shares of Common Stock at a
price  of  $2.9375  per share through October 2002.  None of the options granted
were  pursuant  to  any  stock  option plan.  During the year ended November 30,
2000, both Ms. Silverman and Mr. Swanky exercised 1,792 options, including 1,000
and  792  options  with  an  exercise  price $2.9375 and $3.00, respectively, in
connection  with  the Company's self-tender offer.  They each received $7,679 of
net  proceeds.

SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE

     Section  16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who beneficially own more than ten
percent  of  the Company's Common Stock to file reports of ownership and changes
in  ownership with the Commission.  These reporting persons also are required to
furnish  the  Company  with copies of all Section 16(a) forms they file.  To the
Company's  knowledge,  based  solely  on  its review of the copies of such forms
furnished  to  it  and  representations that no other reports were required, the
Company  believes  that  all  Section 16(a) reporting requirements were complied
with  during  the  fiscal  year  ended  November  30,  2001.


                                      -22-
<PAGE>
ITEM  11.     EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

     The following table sets forth the total compensation received by the chief
executive  officer  and  each  additional  executive  officer whose compensation
exceeded  $100,000,  paid  to the named individuals for services rendered in all
capacities  to  the  Company  and  its  subsidiaries  for the fiscal years ended
November  30,  2001,  2000  and  1999.

<TABLE>
<CAPTION>
                                                                       Long Term Compensation
                                                             ---------------------------------------
                                      Annual Compensation             Awards             Payouts
                                ---------------------------  ----------------------  ---------------
                                                     Other               Securities             All
                                                    Annual   Restricted  Underlying            Other
Name and                                            Compen-    Stock      Options/    LTIP    Compen-
Principal Position        Year   Salary    Bonus    sation     Awards       SARs     Payouts  sation
------------------------  ----  --------  --------  -------  ----------  ----------  -------  -------
<S>                       <C>   <C>       <C>       <C>      <C>         <C>         <C>      <C>
Michael F. Zerbib (1)     2001  $ 44,000  $ 20,000      -0-         -0-         -0-      -0-      -0-
President, Chief          2000  $123,000       -0-      -0-         -0-         -0-      -0-      -0-
Executive Officer,        1999  $144,000       -0-      -0-         -0-         -0-      -0-      -0-
Chief Financial Officer
and Treasurer
------------------------  ----  --------  --------  -------  ----------  ----------  -------  -------
Thierry E. Zerbib         2001  $144,000  $ 20,000      -0-         -0-         -0-      -0-      -0-
Vice President -          2000  $182,000       -0-      -0-         -0-         -0-      -0-      -0-
Technologies and          1999  $154,000       -0-      -0-         -0-         -0-      -0-      -0-
Secretary
------------------------  ----  --------  --------  -------  ----------  ----------  -------  -------
Brian H. Loeb             2001  $ 99,000  $ 20,000      -0-         -0-         -0-      -0-      -0-
Vice President -          2000  $129,000       -0-      -0-         -0-         -0-      -0-      -0-
Marketing, Sales and      1999  $144,000  $150,000      -0-         -0-         -0-      -0-      -0-
Operations
------------------------  ----  --------  --------  -------  ----------  ----------  -------  -------
Joseph W. Zerbib (2)      2001  $ 93,000  $ 20,000      -0-         -0-         -0-      -0-      -0-
Chairman of the Board     2000  $129,000       -0-      -0-         -0-         -0-      -0-      -0-
                          1999  $144,000  $150,000      -0-         -0-         -0-      -0-      -0-
------------------------  ----  --------  --------  -------  ----------  ----------  -------  -------
</TABLE>

(1)  Michael  Zerbib  acted  as  Chief  Financial  Officer  and  Treasurer until
     February 1, 2000. Since February 1, 2000, he has served as President, Chief
     Executive  Officer,  Chief  Financial  Officer  and  Treasurer.

(2)  Joseph  Zerbib  acted as President and Chairman of the Board until February
     1,  2000.  Since  February 1, 2000, he has served as Chairman of the Board.

     The  executive  officers of the Company named above routinely receive other
benefits  from  the Company, the amounts of which are customary in the industry.
The  Company has concluded, after reasonable inquiry, that the aggregate amounts
of such benefits during the years ended November 30, 2001, 2000 and 1999 did not
exceed  the  lesser  of $50,000 or 10% of the compensation set forth above as to
any  named  individual.


                                      -23-
<PAGE>
OPTION  GRANTS  AND  EXERCISES  IN  FISCAL  2001

     No options were granted to or exercised by the Company's executive officers
during  fiscal  2001.

STOCK  OPTION  PLANS

     1995  and 1996 Incentive Stock Option Plans. The Board of Directors adopted
the  1995  Incentive Stock Option Plan ("1995 ISO Plan") on February 1, 1995 and
the  1996  Incentive  Stock Option Plan ("1996 ISO Plan") on April 15, 1996. The
shareholders  subsequently  approved  these  plans.  The terms and conditions of
these plans are substantively similar.  Each of the plans authorizes the Company
to  grant  to  key  employees  both nonqualified options and options intended to
qualify  as  incentive  options  under Section 422 of the Internal Revenue Code.
The  plans  are  administered  by  the  compensation  committee,  which  has the
authority  to interpret their provisions, to establish and amend rules for their
administration, to determine the types and amounts of awards to be made pursuant
to  the plans, subject to the plans' limitations, and to approve recommendations
made  by  management  of the Company as to who should receive awards.  There are
264,000 shares authorized for grant under the 1995 ISO Plan.  As of November 30,
2001,  there  were  no common stock options outstanding under the 1995 ISO Plan.
There  are  260,000  shares authorized for grant under the 1996 ISO Plan.  As of
November  30,  2001,  options  to  purchase  4,000  shares  of common stock were
outstanding  under  the  1996  ISO  Plan.  These  options  are  held  by certain
employees  of  the  Company  at  an  exercise  price  of  $5.875  per  share.

     1997  Performance Equity Plan ("1997 Plan").  On October 2, 1997, the board
of  directors  adopted  the  1997 Plan.  On May 15, 1998, the board of directors
amended  the  1997  Plan.  The shareholders subsequently approved the 1997 Plan.
The  board of directors has authorized 1,000,000 shares for grant under the 1997
Plan.  Awards  consist  of  stock options (both nonqualified options and options
intended to qualify as incentive stock options under Section 422 of the Internal
Revenue  Code  of  1986,  as  amended),  restricted stock awards, deferred stock
awards,  stock appreciation rights and other stock-based awards, as described in
the  1997  Plan.  The  1997  Plan is administered by the compensation committee,
which  determines  the  persons  to  whom  awards will be granted, the number of
awards to be granted and the specific terms of each grant, including the vesting
thereof,  subject  to the provisions of the 1997 Plan.  As of November 30, 2001,
options  to  purchase  136,719 shares of common stock were outstanding under the
1997  Plan.  These  options  are  held  by  certain  employees of the Company at
exercise  prices  ranging  from  $1.3125  to  $4.875  per  share.


                                      -24-
<PAGE>
ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth certain information as of February 22, 2002,
with respect to (i) those persons or groups known to the Company to beneficially
own  more  than 5% of the Company's Common Stock, (ii) each director, (iii) each
executive  officer whose compensation exceeded $100,000 in the fiscal year ended
November  30,  2001,  and  (iv) all directors and executive officers as a group.
The  information  is  determined in accordance with Rule 13d-3 promulgated under
the  Securities  Exchange  Act  of  1934 ("Exchange Act") based upon information
furnished  by  the  persons listed or contained in filings made by them with the
Securities  and  Exchange Commission ("Commission").  Except as indicated below,
the shareholders listed possess sole voting and investment power with respect to
their  shares.

<TABLE>
<CAPTION>
Name and Address of Beneficial Owner(1)
---------------------------------------------------------    Amount and Nature of    Percent
                                                            Beneficial Ownership(2)  of Class
                                                            -----------------------  ---------
<S>                                                         <C>                      <C>
Michael F. Zerbib . . . . . . . . . . . . . . . . . . . .           230,603            16.3%

Thierry E. Zerbib . . . . . . . . . . . . . . . . . . . .           232,617            16.4%

Brian H. Loeb . . . . . . . . . . . . . . . . . . . . . .           232,617            16.4%

Joseph W. Zerbib  . . . . . . . . . . . . . . . . . . . .              0                 *

Cecile Silverman  . . . . . . . . . . . . . . . . . . . .              0                 *
66 West State Avenue
Phoenix, Arizona  85021

Kalvan Swanky . . . . . . . . . . . . . . . . . . . . . .              0                 *
6634 East Calle Redondo
Scottsdale, Arizona  85251

Todd P. Belfer  . . . . . . . . . . . . . . . . . . . . .           6,975(3)             *
5450 East Arcadia Lane
Phoenix, Arizona  85018

Nicolas Zerbib  . . . . . . . . . . . . . . . . . . . . .           118,322             8.4%
20 Horseneck Lane
Greenwich, Connecticut  06830

Mark Gordon . . . . . . . . . . . . . . . . . . . . . . .         150,660(4)           10.9%

All executive officers and directors
as a group (seven persons)  . . . . . . . . . . . . . . .         702,812(5)           49.6%
</TABLE>

----------------------------------
 *   Less  than  1%.

(1)  Unless  otherwise  indicated,  the address of each of the persons listed is
     c/o Telesoft Corp., 3443 North Central Avenue, Suite 1800, Phoenix, Arizona
     85012.

(2)  A person is deemed to be the beneficial owner of voting securities that can
     be  acquired  by such person within 60 days from February 22, 2002 upon the
     exercise  of  options,  warrants or convertible securities. Each beneficial
     owner's  percentage  ownership  is  determined  by  assuming  that options,


                                      -25-
<PAGE>
     warrants  or  convertible  securities that are held by such person (but not
     those held by any other person) and which are exercisable within 60 days of
     February  22,  2002,  have  been  exercised.

(3)  Represents  shares  of  common  stock  owned  by  T.P.B. Investment Limited
     Partnership,  an  Arizona  limited  partnership  of which Mr. Belfer is the
     general  partner.

(4)  Includes  57,270 shares of common stock issuable upon exercise of currently
     exercisable  options.

(5)  Includes  those  shares  of  common  stock  deemed  to  be  included in the
     respective  beneficial  ownership  of Michael F. Zerbib, Thierry E. Zerbib,
     Brian  H.  Loeb,  Joseph W. Zerbib, Kalvan Swanky, Ms. Cecile Silverman and
     Todd  Belfer.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     In March 2000, in connection with his retirement as the Company's President
and  Chief  Executive  Officer,  Joseph  Zerbib,  who  currently  serves  as the
Company's Chairman of the Board, sold all of his 293,750 shares of the Company's
common stock back to the Company at a price of $7.25 per share, for an aggregate
of  $2,129,688.

     In  April  2000, the Company entered into an agreement with each of Michael
Zerbib,  Thierry Zerbib and Brian Loeb, pursuant to which each of them agreed to
make available to the Company up to $1,000,000 at the Company's request.  In May
2000,  their agreements were amended to increase the amount to $1,350,000.  Draw
downs were payable on May 31, 2001 and had an annual interest rate of 10%.  Each
loan  was  secured  by  the Company's assets.  Pursuant to a second amendment to
their  agreements  in April 2001, each of the officers agreed to extend $350,000
of  their loans until August 31, 2001.  A third amendment to their agreements in
July  2001  extended their loans until November 30, 2001. During the years ended
November  30, 2001 and 2000, interest expense in connection with these notes was
$41,089  and  $115,754,  respectively.  As  of  November 30, 2001, there were no
amounts  outstanding  under  the  notes  and  no  interest  was  due  thereon.

     The  Board  of  Directors  has  adopted  a  policy that all future material
transactions  and  loans  between  the  Company  and  its  executive  officers,
directors,  employees  and  affiliates  will  be  subject to the approval of the
majority  of  independent and disinterested directors and that such transactions
and  loans,  and  any  forgiveness  of  loans, will be on terms that are no less
favorable  to  the  Company  than  those  that  are  generally  available  from
unaffiliated  third  parties.


                                      -26-
<PAGE>
<TABLE>
<CAPTION>
                                     PART IV

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

(a)  Exhibits

 NO.                                   DESCRIPTION                                            REFERENCE
-----                                  -----------                                            ---------

<S>    <C>                                                                                     <C>
  3.1  Amended and Restated Articles of Incorporation of the Company dated April 13, 1995         (1)

  4.1  Form of Common Stock Certificate                                                           (1)

 10.1  1995 Incentive Stock Option Plan                                                           (1)

 10.2  1995 Restricted Stock Plan                                                                 (1)

 10.3  Asset Purchase Agreement between Telesoft Acquisition Corp., Uniquest                      (1)
       Incorporated and CSI Acquisition Corp. dated March 13, 1995

 10.8  Contract between the Company and the University of Delaware                                (1)

 10.9  1996 Incentive Stock Option Plan                                                           (2)

10.10  1996 Restricted Stock Plan                                                                 (2)

10.11  1997 Performance Equity Plan                                                               (3)

10.12  Form of Promissory Note between the Company and each of Michael Zerbib, Thierry            (4)
       Zerbib and Brian Loeb, dated April 3, 2000

10.13  Form of Amendment to the Promissory Note dated April 3, 2000 between the Company           (4)
       and each of Michael Zerbib, Thierry Zerbib and Brian Loeb, dated May 24, 2000

10.14  Form of Second Amendment to the Promissory Note dated April 3, 2000, as amended on         (4)
       May 24, 2000, between the Company and each Michael Zerbib, Thierry Zerbib and
       Brian Loeb, dated April 9, 2001

10.15  Form of Third Amendment to the Promissory Note dated April 3, 2000, as amended on          (5)
       May 24, 2000 and April 9, 2001, between the Company and each Michael Zerbib,
       Thierry Zerbib and Brian Loeb, dated July 23, 2001

   21  Subsidiaries of Registrant                                                                  *
</TABLE>

      *      Filed  herewith
     (1)     Filed  with Registration Statement No. 33-91234-LA, dated
             June 30, 1995.
     (2)     Filed  with  Form  10-KSB/A  for the fiscal year ended
             November 30, 1996
     (3)     Filed with Definitive Proxy Statement dated June 16, 1998
     (4)     Filed with Form  10-Q for the quarter ended May 31, 2001
     (5)     Filed with Form  10-Q for the quarter ended August 31, 2001


                                      -27-
<PAGE>
<TABLE>
<CAPTION>
(b)   Financial Statement Schedules

SCHEDULE II.     VALUATION AND QUALIFYING ACCOUNTS.

Years ended November 30, 2001, 2000 and 1999

                                         BALANCE AT    CHARGED TO  WRITE-OFFS   BALANCE AT
                                        BEGINNING OF   COSTS AND     NET OF     END OF THE
                                          THE YEAR      EXPENSES   RECOVERIES      YEAR
                                        -------------  ----------  -----------  -----------
Allowance for doubtful accounts:
<S>                                     <C>            <C>         <C>          <C>
      2001                              $     423,437     443,547    (481,712)  $   385,272
      2000                              $     452,601     242,359    (271,523)  $   423,437
      1999                              $     502,095     275,194    (324,688)  $   452,601
</TABLE>

(c)  Reports  on  Form  8-K

     There  were  no  Current Reports on Form 8-K filed during the quarter ended
November 30, 2001.


                                      -28-
<PAGE>
                                   SIGNATURES

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

                                 TELESOFT CORP.


Dated:  February 25, 2002        By  /s/  Michael F. Zerbib
                                   -------------------------------------
                                   Michael F. Zerbib,
                                   President and Chief Executive Officer

     In  accordance  with  the  Securities Exchange Act of 1934, this report has
been  signed  below  by the following persons on behalf of the Registrant and in
the  capacities  and  on  the  dates  indicated.

Signature  and  Title                                               Date
---------------------                                               ----


/s/ Michael F. Zerbib                                          February 25, 2002
-------------------------------------------------------
Michael F. Zerbib, President, Chief Executive Officer,
Chief Financial Officer, Treasurer and Director (and
principal accounting officer)

/s/ Joseph W. Zerbib                                           February 25, 2002
-------------------------------------------------------
Joseph W. Zerbib, Chairman of the Board of Directors

/s/ Thierry E. Zerbib                                          February 25, 2002
-------------------------------------------------------
Thierry E. Zerbib, Vice President - Technologies,
Secretary and Director

/s/ Brian H. Loeb                                              February 25, 2002
-------------------------------------------------------
Brian H. Loeb, Vice President and Director

/s/ Cecile Silverman                                           February 25, 2002
-------------------------------------------------------
Cecile Silverman, Director

/s/ Kalvan Swanky                                              February 25, 2002
-------------------------------------------------------
Kalvan Swanky, Director

/s/ Todd P. Belfer                                             February 25, 2002
-------------------------------------------------------
Todd P. Belfer, Director


                                      -29-
<PAGE>
TELESOFT  CORP.  AND  SUBSIDIARIES


INDEX  TO  THE  FINANCIAL  STATEMENTS


                                                                 PAGE

Report of Independent Certified Public Accountants             F-2 -  F-3

Consolidated Balance Sheets as of November 30, 2001 and
          2000                                                    F-4

Consolidated Statements of Operations for the years ended
     November 30, 2001, 2000 and 1999                          F-5 -  F-6

Consolidated Statements of Changes in Stockholders'
     Equity for the years ended November 30, 2001,
     2000 and 1999                                                F-7

Consolidated Statements of Cash Flows for the years ended      F-8 -  F-9
     November 30, 2001, 2000 and 1999

Notes to the Consolidated Financial Statements                F-10 - F-27



                                      F-1
<PAGE>
REPORT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS



The  Board  of  Directors  and  Stockholders
Telesoft  Corp.  and  Subsidiaries

We  have  audited the accompanying consolidated balance sheets of Telesoft Corp.
and  Subsidiaries  as of November 30, 2001 and 2000 and the related consolidated
statements  of  operations,  stockholders'  equity, and cash flows for the years
then  ended.  These financial statements are the responsibility of the Company's
management.  Our  responsibility  is  to  express  an opinion on these financial
statements  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  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
presentation  of the financial statements.  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 financial position of Telesoft Corp. and
Subsidiaries  at  November 30, 2001 and 2000 and the results of their operations
and  their  cash  flows  for  the years then ended in conformity with accounting
principles  generally  accepted  in  the  United  States  of  America.

/s/  Semple & Cooper, L.L.P.


Phoenix, Arizona
 January 18, 2002


                                      F-2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



The  Board  of  Directors  and  Stockholders
Telesoft  Corp.  and  Subsidiaries

We have audited the consolidated statements of operations, stockholders' equity,
and  cash  flows  of Telesoft Corp. and Subsidiaries for the year ended November
30,  1999.  These  financial  statements are the responsibility of the Company's
management.  Our  responsibility  is  to  express  an opinion on these financial
statements  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  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
presentation  of the financial statements.  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 results of operations and cash flows of
Telesoft  Corp.  and  Subsidiaries  for  the  year  ended  November  30, 1999 in
conformity with accounting principles generally accepted in the United States of
America.

/s/  BDO  Seidman,  LLP


Los  Angeles, California
January 14, 2000


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
TELESOFT  CORP.  AND  SUBSIDIARIES
CONSOLIDATED  BALANCE  SHEETS
NOVEMBER  30,  2001  AND  2000


ASSETS                                                                        2001        2000 (1)
                                                                           -----------  ------------
<S>                                                                        <C>          <C>

Cash and cash equivalents (Note 2)                                         $  540,726   $    41,434
Restricted cash (Note 4)                                                       19,390             -
Accounts receivable, net of allowance for uncollectibles of $385,272 and
 $423,437, respectively (Note 5)                                            4,567,380     7,737,213
Inventory (Note 6)                                                             83,542       208,325
Income taxes receivable                                                       112,305       349,364
Deferred taxes (Note 10)                                                      173,400       188,400
Other                                                                         101,589        94,010
                                                                           -----------  ------------

          Total current assets                                              5,598,332     8,618,746

Property and equipment, net (Note 7)                                        1,032,860     1,407,118
Computer software costs, net (Note 8)                                               -        54,484
Other                                                                          94,049       141,709
                                                                           -----------  ------------

             Total assets                                                  $6,725,241   $10,222,057
                                                                           ===========  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Related party debt (Note 13)                                               $        -   $ 1,375,000
Accounts payable and accrued liabilities                                    2,696,839     5,110,905
Accrued compensation                                                          307,291        19,012
Customer deposits                                                             473,255        69,270
Income taxes payable                                                          127,519       203,900
Deferred revenue                                                              639,785     1,130,375
                                                                           -----------  ------------
Total current liabilities                                                   4,244,689     7,908,462

Deferred taxes (Note 10)                                                      116,400       121,900

          Total liabilities                                                 4,361,089     8,030,362
                                                                           -----------  ------------
Commitments and contingencies (Notes 12, 14, 15 and 16)
Stockholders' equity: (Note 11)
Preferred stock, no par value, 10,000,000 shares authorized; none
    issued and outstanding                                                          -             -
Common stock, no par value, 50,000,000 shares authorized;
    1,684,934 issued and 1,415,833 and 1,376,828 outstanding,
respectively                                                                  956,731       665,125
Retained earnings                                                           2,219,121     2,191,695
                                                                           -----------  ------------
                                                                            3,175,852     2,856,820
Less: Treasury stock, 269,101 and 178,106  shares, at cost                   (811,700)     (665,125)
                                                                           -----------  ------------
Total stockholders' equity                                                  2,364,152     2,191,695
                                                                           -----------  ------------

Total liabilities and stockholders' equity                                 $6,725,241   $10,222,057
                                                                           ===========  ============
</TABLE>

(1)  As  restated  for  comparative  purposes  only.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
TELESOFT  CORP.  AND  SUBSIDIARIES
CONSOLIDATED  STATEMENTS  OF  OPERATIONS
FOR THE YEARS ENDED NOVEMBER 30, 2001, 2000 AND 1999

                                                         2001          2000          1999
                                                     ------------  ------------  ------------
<S>                                                  <C>           <C>           <C>
Sales, net                                           $20,167,847   $24,613,309   $29,377,592
Cost of sales (Note 2)                                 8,799,831    12,826,565    16,780,838
                                                     ------------  ------------  ------------
Gross profit                                          11,368,016    11,786,744    12,596,754
General and administrative expenses (Note 17)         11,045,318    12,415,994    11,335,068
                                                     ------------  ------------  ------------
Operating income (loss)                                  322,698      (629,250)    1,261,686
                                                     ------------  ------------  ------------
Other income (expense):
Interest income                                           38,345       347,361       564,804
Interest expense                                         (45,886)     (128,238)         (270)
Other income                                               1,214       319,406         2,623
                                                     ------------  ------------  ------------

                                                          (6,327)      538,529       567,157
                                                     ------------  ------------  ------------
Income (loss) from continuing operations before          316,371       (90,721)    1,828,843
       (provision for) benefit from income taxes
(Provision for) benefit from income taxes (Note 10)     (142,370)       40,600      (579,800)
                                                     ------------  ------------  ------------
Income (loss) from continuing operations                 174,001       (50,121)    1,249,043

Discontinued operations (Note 18):
    Gain on disposal of GoodNet subsidiary (net of
         income taxes of $357,700 in 1999)                     -             -       549,309
                                                     ------------  ------------  ------------

Net income (loss)                                        174,001       (50,121)    1,798,352

Other comprehensive (loss) income, net of tax
   Unrealized holding losses arising during period             -       (66,120)      (18,446)
                                                     ------------  ------------  ------------

Comprehensive income (loss)                          $   174,001   $  (116,241)  $ 1,779,906
                                                     ============  ============  ============
</TABLE>


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
TELESOFT  CORP.  AND  SUBSIDIARIES
CONSOLIDATED  STATEMENTS  OF  OPERATIONS  (CONTINUED)
FOR THE YEARS ENDED NOVEMBER 30, 2001, 2000, AND 1999

                                       2001        2000         1999
                                    ----------  -----------  ----------
<S>                                 <C>         <C>          <C>

Basic earnings (loss) per share
  Continuing operations             $     0.12  $    (0.02)  $     0.33
  Sale of discontinued operations            -           -         0.15
                                    -----------------------------------
  Net income (loss)                 $     0.12  $    (0.02)  $     0.48
                                    ===================================

Diluted earnings (loss) per share
  Continuing operations             $     0.12  $    (0.02)  $     0.33
  Sale of discontinued operations            -           -         0.14
                                    -----------------------------------
  Net income (loss)                 $     0.12  $    (0.02)  $     0.47
                                    ===================================

Weighted average number
   of shares outstanding
     - basic                         1,398,510   2,123,879    3,713,601
                                    ===================================
     - diluted                       1,406,278   2,123,879    3,832,067
                                    ===================================
</TABLE>


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-6
<PAGE>
<TABLE>
<CAPTION>
TELESOFT  CORP.  AND  SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED NOVEMBER 30, 2001, 2000 AND 1999


                                     Common  Stock
                               --------------------------                             Accumulated
                                Number of                               Additional       other                         Total
                                  shares                    Treasury     paid-in     comprehensive    Retained     stockholders'
                               outstanding      Amount       stock       capital        income        earnings        equity
                               ------------  ------------  ----------  ------------  -------------  -------------  -------------
<S>                            <C>           <C>           <C>         <C>           <C>            <C>            <C>

Balance, November 30, 1998       3,748,500   $ 7,286,159   $(182,759)  $    80,069   $     84,566   $ 11,127,129   $ 18,395,164
Treasury stock acquired
  (Note 11)                        (37,000)            -    (184,305)            -              -              -       (184,305)
Change in unrealized gain on
    investment securities                -             -           -             -        (18,446)             -        (18,446)

Net income                               -             -           -             -              -      1,798,352      1,798,352

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

Balance, November 30, 1999       3,711,500     7,286,159    (367,064)       80,069         66,120     12,925,481     19,990,765
Treasury stock acquired
  (Note 11)                       (102,106)            -    (298,061)            -              -              -       (298,061)
Common stock acquired           (2,232,566)   (6,621,034)          -       (80,069)             -    (10,683,665)   (17,384,768)
  from stock redeemed
  (Note 11)
Change in unrealized gain
  on investment securities               -             -           -             -        (66,120)             -        (66,120)

Net loss                                 -             -    (665,125)            -              -        (50,121)       (50,121)
                               ------------  ------------  ----------  ------------  -------------  -------------  -------------

Balance, November 30, 2000       1,376,828       665,125                         -              -      2,191,695      2,191,695
Treasury stock acquired
  (Note 11)                        (90,995)      146,575    (146,575)            -              -       (146,575)      (146,575)

Stock compensation                 130,000       145,031           -             -              -              -        145,031

Net income                               -             -           -             -              -        174,001        174,001

                               ------------  ------------  ----------  ------------  -------------  -------------  -------------
Balance, November 30, 2001       1,415,833   $   956,731   $(811,700)  $         -   $          -   $  2,219,121   $  2,364,152
                               ============  ============  ==========  ============  =============  =============  =============
</TABLE>


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-7
<PAGE>
<TABLE>
<CAPTION>
TELESOFT  CORP.  AND  SUBSIDIARIES
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
FOR THE YEARS ENDED NOVEMBER 30, 2001, 2000 AND 1999


                                                            2001           2000           1999
                                                        -------------  -------------  -------------
<S>                                                     <C>            <C>            <C>
Increase (decrease) in cash and cash equivalents:

Cash flows from operating activities:
  Cash received from customers                          $ 22,807,528   $ 26,489,044   $ 26,737,413
  Cash paid to suppliers and employees                   (20,770,715)   (24,938,451)   (28,989,264)
  Interest paid                                              (45,886)      (128,238)          (270)
  Interest received                                           38,345        508,731        506,597
  Income tax refund                                          214,480        598,947              -
  Income taxes paid                                         (186,672)      (148,785)      (817,965)
                                                        -------------------------------------------
    Net cash provided (used) by operating activities
       of continuing operations                            2,057,080      2,381,248     (2,563,489)
                                                        -------------------------------------------
Cash flows from investing activities:
  Purchase of property and equipment                         (81,776)      (597,558)      (578,912)
  Cash received from sale of equipment                        45,563         11,433          7,653
  Disbursements for notes receivable from related
    parties                                                        -       (450,000)       (50,000)
  Collection of notes receivable                                   -        500,000        373,153
  Purchase of investment securities                                -     (1,500,000)    (6,616,250)
  Sale of investment securities                                    -     13,846,439      4,874,232
                                                        -------------------------------------------

    Net cash (used) provided by investing activities
       of continuing operations                              (36,213)    11,810,314     (1,990,124)
                                                        -------------------------------------------

Cash flows from financing activities:
  Purchases of treasury stock                               (146,575)      (298,061)      (184,305)
  Proceeds from debt - related parties                       300,000      2,825,000              -
  Repayment of debt - related parties                     (1,675,000)    (1,450,000)             -
  Stock redemption                                                 -    (17,384,768)             -
                                                        -------------------------------------------

    Net cash used in financing activities of
       continuing operations                              (1,521,575)   (16,307,829)      (184,305)
                                                        -------------------------------------------

Cash provided (used) by continuing operations                499,292     (2,116,267)    (4,737,918)

Cash used in discontinued operations, including income
  taxes paid in the amount of $844,600 in 1999                     -              -       (844,600)
                                                        -------------------------------------------

Net increase (decrease) in cash and cash equivalents         499,292     (2,116,267)    (5,582,518)

Cash and cash equivalents at beginning of fiscal year         41,434      2,157,701      7,740,219
                                                        -------------------------------------------

Cash and cash equivalents at end of fiscal year         $    540,726   $     41,434   $  2,157,701
                                                        ===========================================
</TABLE>


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-8
<PAGE>
<TABLE>
<CAPTION>
TELESOFT  CORP.  AND  SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED NOVEMBER 30, 2001, 2000 AND 1999


                                                        2001        2000(1)      1999(1)
                                                    ------------  -----------  ------------
<S>                                                 <C>           <C>          <C>
Reconciliation of net income (loss) to net cash
  provided (used) by operating activities from
  continuing operations:

Net income (loss)                                   $   174,001   $  (50,121)  $ 1,798,352
                                                    ---------------------------------------
Adjustments to reconcile net income (loss) to net
  cash provided (used) by operating activities
  from continuing operations:

  Gain on sale of discontinued operations                     -            -      (549,309)
  Income taxes payable and deferred taxes
    related to sale of discontinued operations                -            -       486,900
  Depreciation and amortization                         466,169      619,660       545,590
  Gain on sale of fixed assets                           (1,214)      (5,224)       (2,516)
  Gain on sale of investment securities                       -     (145,189)            -
  Interest income included with note receivable               -            -        (2,294)
  Stock compensation                                    145,031            -             -

Changes in assets and liabilities:
  Restricted cash                                       (19,390)           -             -
  Accounts receivable                                 3,169,833    1,747,723    (2,551,847)
  Inventory                                             124,783      158,469       259,376
  Other current assets                                   (7,579)     157,764        38,853
  Deferred taxes                                          9,500       92,400      (115,200)
  Other assets                                           47,660      (30,986)      (20,675)
  Accounts payable and accrued liabilities           (2,414,066)    (475,326)   (2,174,351)
  Accrued compensation                                  288,279     (199,745)       75,811
  Customer deposits                                     403,985       (6,717)       70,931
  Deferred revenue                                     (490,590)     201,378       186,755
  Income taxes payable                                  (76,381)     203,900      (147,239)
  Income taxes receivable                               237,059      113,262      (462,626)
                                                    ---------------------------------------

                                                      1,883,079    2,431,369    (4,361,841)
                                                    ---------------------------------------

Net cash provided (used) by operating activities
  from continuing operations                        $ 2,057,080   $2,381,248   $(2,563,489)
                                                    =======================================
</TABLE>


(1)  As restated for comparative purposes only.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-9
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

     Telesoft  Corp.  (the "Company" or "Telesoft"), an Arizona corporation, was
     incorporated on May 4, 1982. The Company provides four principal continuing
     product  lines and services: long distance and telecommunications division,
     d.b.a.  Student  Telephone  Services  (STS); Customized Billing Outsourcing
     Services;  computer  software  and  hardware sales, d.b.a. Sunbelt Business
     Computers  (SBC);  and  its  telecommunications  audit subsidiary, Telesoft
     Recovery  Corp  (TRC). The long distance and telecommunications division is
     primarily  involved  in  long  distance  and  telecommunication services to
     higher  education  institutions.  The  software  and  hardware  division is
     primarily  involved  in  the  design,  distribution,  installation,  and
     maintenance  of computer hardware and software systems. The Company markets
     its  products  throughout  the  United  States.

     The Company originally operated as B.P. & J Investors, Ltd., d.b.a. Sunbelt
     Business  Computers. Effective April 12, 1995, the Company changed its name
     to  Telesoft  Corp.

     PRINCIPLES  OF  CONSOLIDATION

     The  consolidated  financial  statements  include  the accounts of Telesoft
     Corp.,  together  with  its wholly owned subsidiaries, Telesoft Acquisition
     Corp  and  Telesoft  Recovery  Corp.,  and its former 71% owned subsidiary,
     Telesoft  Acquisition  Corp  II,  d.b.a. GoodNet ("GoodNet"). (See Note 18)

     All  significant  intercompany  accounts  and  transactions  have  been
     eliminated.

     USE  OF  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 assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and  the  reported  amounts of revenues and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     CASH  AND  CASH  EQUIVALENTS

     The  Company  considers  all  highly  liquid  investments purchased with an
     original  maturity  of three months or less to be cash and cash equivalents
     for  the  purposes  of  reporting  cash  flows.

     FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

     The  Company  has  cash and cash equivalents, receivables, accounts payable
     and  accrued liabilities for which the carrying value approximates the fair
     value  due  to  the  short-term  nature  of  these  instruments.

     LONG-LIVED  ASSETS

     Statement  of  Financial  Accounting  Standards No.121, "Accounting for the
     Impairment  of  Long-Lived  Assets and for Long-Lived Assets to Be Disposed
     Of"  ("SFAS  121")  issued  by  the  Financial  Accounting  Standards Board
     ("FASB")  is  effective for financial statements for fiscal years beginning
     after December 15, 1995. The standard establishes guidelines regarding when
     impairment  losses on long-lived assets, which include plant and equipment,
     and  certain  identifiable  intangible assets, should be recognized and how
     impairment  losses  should be measured. The Company adopted SFAS 121 during
     the  year  ended November 30, 1997. The Company does not believe any assets
     are  impaired  as  of  November  30,  2001.

     INVENTORY

     Inventory  is  stated  at  the  lower  of  cost, first-in, first-out (FIFO)
     method,  or  market.  Inventory  quantities  are  reviewed periodically for
     obsolescence.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-10
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:  (CONTINUED)

     PROPERTY  AND  EQUIPMENT

     Property  and  equipment are recorded at cost. Depreciation is provided for
     on  the straight-line method over the estimated useful lives of the assets.
     The  average  lives  range  from  three to seven years. The gain or loss on
     disposal  of  assets  is  reflected  in  earnings, and the cost and related
     accumulated  depreciation  are  removed  from the accounts. Maintenance and
     repairs  that  neither  materially  add  to  the  value of the property nor
     appreciably  prolong  its  life  are  charged  to  expense  as  incurred.
     Betterments  or  renewals  are  capitalized  when  incurred.  Leasehold
     improvements  are  recorded  at  cost and amortized over the shorter of the
     lives  of  the  leases  or  estimated  useful  lives.

     COMPUTER  SOFTWARE  COSTS

     The  Company  capitalizes  software  development  costs  in accordance with
     Financial  Accounting Standards Board Statement No. 86 ("FASB 86"). FASB 86
     requires  software  development  costs to be capitalized when technological
     feasibility is reached and discontinued when the product is ready for sale.
     Software  development  costs not qualifying for capitalization are expensed
     as  research  and  development  costs.  Capitalized  costs are amortized on
     product-by-product basis using the greater of the straight line method over
     the product's remaining estimated economic life or the ratio of the current
     year's  gross  revenues  to  the  total  of  a  product's  current year and
     anticipated  revenues.  The  Company evaluates the estimated net realizable
     value  of  each  software  product  at  each balance sheet date and records
     write-downs  for  any products for which net book value is in excess of net
     realizable  value.

     REVENUE  RECOGNITION

     The  Company recognizes revenues as follows: Revenue from computer software
     sales  is recognized upon delivery if no customization is necessary, and on
     the  percentage-of-completion  method  if  customization  is  needed,  in
     accordance  with  Statement  of  Position  (SOP)  97-2,  Software  Revenue
     Recognition.  The  Company  uses  the  contract phases completed to measure
     progress  towards  completion,  each contract is divided into four distinct
     phases,  each  valued  at  25%  of  the  total  contract. Revisions in cost
     estimates and recognition of losses on these contracts are reflected in the
     accounting  period  in  which  the facts become known. Maintenance contract
     revenue  is  recognized ratably over the life of the contract. Revenue from
     telecommunication recovery services is recognized when the service has been
     performed  and  the  customer  has  received  their  refund.  Revenue  from
     collection  of  long-distance  charges  is  recognized  as  the charges are
     incurred.  The  Company  accrues  revenues from customers based upon actual
     usage  as  reported  on  billings  received from long-distance carriers and
     estimates  the amount of unbilled revenues based upon number of days in the
     billing  cycle and past usage by customers. Revenue from customized billing
     outsourcing  is  recognized  when  services  are  completed.

     DEFERRED  REVENUE

     Deferred revenue represents deferred income from maintenance contracts. The
     income  is  recognized  ratably over the applicable lives of the respective
     contracts.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-11
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

     INCOME  TAXES

     The  Company accounts for income taxes in accordance with the provisions of
     SFAS  No.  109, "Accounting for Income Taxes." Under SFAS No. 109, deferred
     income  taxes  are  recognized  for  the  tax  consequences  of  "temporary
     differences"  by  applying enacted statutory tax rates applicable to future
     years  to  differences between the financial statement carrying amounts and
     the  tax  bases  of  existing  assets  and  liabilities.

     STOCK  COMPENSATION

     In  October 1995, the Financial Accounting Standards Board issued Financial
     Accounting Standard No. 123, Accounting for Stock-Based Compensation ("SFAS
     No.  123"), which became effective during the year ended November 30, 1997.
     The  Company  has  adopted  the disclosure-only provisions of SFAS No. 123.

     WARRANTIES

     The  Company  offers  a warranty of 90 days on hardware and software and an
     extended  warranty  program  in  connection  with the Company's service and
     maintenance  programs.  The  Company  has  not had any material claims made
     under  its  warranty  program  to  date.

     EARNINGS  (LOSS)  PER  SHARE

     Basic  earnings  (loss) per share of common stock were computed by dividing
     net  earnings  (loss)  by  the  weighted  average  number of common shares.

     Diluted  earnings  (loss)  per  share  are  computed  based on the weighted
     average  number  of  shares  of  common  stock  and  dilutive  securities
     outstanding  during  the  period.  Dilutive securities are options that are
     freely  exercisable  into common stock at less than market exercise prices.
     Dilutive  securities  are  not  included  in the weighted average number of
     shares when inclusion would increase the earnings per share or decrease the
     loss  per  share.

     ACCOUNTING  PRONOUNCEMENTS:

     In  August  2001,  the Financial Accounting Standards Board issued SFAS No.
     144  "Accounting  for the Impairment or Disposal of Long-Lived Assets. SFAS
     No.  144 addresses financial accounting and reporting for the impairment or
     disposal  of long-lived assets and supersedes SFAS No. 121, "Accounting for
     the  Impairment  of  Long-Lived  Assets  and  for  Long-Lived  Assets to be
     Disposed  of",  and  the accounting and reporting provisions of APB Opinion
     No.  30, "Reporting the Results of Operations for the disposal of a segment
     of  a  businessSFAS  No.  144 is effective for fiscal years beginning after
     December  15,  2001.  The Company expects to adopt SFAS No. 144 December 1,
     2002. The Company does not believe the adoption of SFAS No. 144 will have a
     material  impact  on  its  results  of  operations.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-12
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


2.   CONCENTRATION  OF  CREDIT  RISK:

     The  Company maintains cash balances at various financial institutions. The
     Federal  Deposit  Insurance  Corporation  insures deposits not in excess of
     $100,000  on deposit at each institution. At November 30, 2001, the Company
     had  uninsured  cash  and  cash  equivalent  bank balances of approximately
     $766,000.

     Suppliers

     Prior  to  December  1,  2000,  one telecommunications company provided the
     Company  with a significant portion of its long distance telecommunications
     services.  For  fiscal 2001 and 2000, multiple telecommunications companies
     provided  long  distance  services  to  the  Company  and,  accordingly, no
     supplier  accounted for greater than 10% of the Company's expenses. For the
     fiscal  year  ended  November  30,  1999, fees paid to this company totaled
     approximately  $2,323,000.  As of November 30, 2001, the outstanding amount
     due  to  this  service  provider  was  approximately  $44,700.

     Customers

     During  the  years  ended November 30, 2001, 2000 and 1999, the Company did
     not have any customers that accounted for greater than 10% of its revenues.


3.   Investment  Securities:

     As of November 30, 2001 and 2000, the Company had no investment securities.

     Investment  income  for  the  years ended November 30, 2001, 2000 and 1999:

<TABLE>
<CAPTION>
                                                  2001      2000       1999
                                                -----------------------------
<S>                                             <C>      <C>       <C>
Interest income                                 $38,345  $347,361  $  564,804

Gross realized gains, included with continuing
  operations                                          -   145,189         107

Gross realized gains, included with
  discontinued  operations                            -         -     607,009
                                                -----------------------------
                                                $38,345  $492,550  $1,171,920
                                                =============================
</TABLE>


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-13
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


4.   RESTRICTED  CASH:

     At  November  30,  2001,  restricted cash represents cash held in a savings
     account  in  lieu  of a security deposit for a TRS office lease. This lease
     expires  in  November  2002.

5.   ACCOUNTS  RECEIVABLE:

     At  November  30,  2001  and  2000,  accounts receivable include billed and
     unbilled  amounts,  as  follows:

<TABLE>
<CAPTION>
                                             2001         2000
                                          -----------  -----------
<S>                                       <C>          <C>
     Billed                               $4,208,967   $6,183,294
     Unbilled                                743,685    1,977,356
                                          ------------------------

                                           4,952,652    8,160,650
     Less:  allowance for uncollectibles    (385,272)    (423,437)
                                          ------------------------
                                          $4,567,380   $7,737,213
                                          ========================
</TABLE>

     Unbilled  accounts  receivable  represent amounts earned but not billed for
     long  distance  telephone  service.

     At  November  30,  2001, accounts receivable by product line is as follows:

<TABLE>
<CAPTION>
                 System Sales/   Recovery      STS         Custom     Network
                  Maintenance    Services   Outsourcing    Billing    Services      Total
                 -------------  ---------  -------------  ---------  ----------  -----------
<S>              <C>            <C>        <C>            <C>        <C>         <C>
     Billed      $  1,874,288   $ 307,503  $  1,936,377   $ 88,967   $   1,832   $4,208,967
     Unbilled         (39,744)          -       769,129     14,300           -      743,685
     Allowance        (19,387)          -      (336,559)   (27,494)     (1,832)    (385,272)
                 ---------------------------------------------------------------------------

     Total, Net  $  1,815,157   $ 307,503  $  2,368,947   $ 75,773   $       -   $4,567,380
                 ===========================================================================
</TABLE>

     At  November  30,  2000, accounts receivable by product line is as follows:

<TABLE>
<CAPTION>
                 System Sales/  Recovery        STS        Custom    Network
                  Maintenance   Services    Outsourcing    Billing   Services      Total
                 -------------  ---------  -------------  ---------  ---------  -----------
<S>              <C>            <C>        <C>            <C>        <C>        <C>
     Billed      $  2,433,330   $ 206,848  $  3,380,226   $161,058   $   1,832  $6,183,294
     Unbilled               -           -     1,967,706      9,650           -   1,977,356
     Allowance        (49,604)          -      (333,262)   (40,571)          -    (423,437)
                 --------------------------------------------------------------------------

     Total, Net  $  2,383,726   $ 206,848  $  5,014,670   $130,137   $   1,832  $7,737,213
                 ==========================================================================
</TABLE>

6.   INVENTORY:

     At  November  30,  2001  and 2000, inventory consists primarily of finished
     products.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-14
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.   PROPERTY  AND  EQUIPMENT:

     At November 30, 2001 and 2000, property and equipment consists of:

<TABLE>
<CAPTION>
                                                         2001          2000
                                                     ------------  ------------
<S>                                                  <C>           <C>
          Equipment                                  $ 2,460,151   $ 2,620,034
          Vehicles                                        28,458        28,458
          Furniture and fixtures                         543,685       560,834
          Leasehold improvements                          88,479        84,028
          Property leased to others                      220,000       351,518
                                                     --------------------------
                                                       3,340,773     3,644,872
          Accumulated depreciation and amortization   (2,307,913)   (2,237,754)
                                                     --------------------------
                                                     $ 1,032,860   $ 1,407,118
                                                     ==========================
</TABLE>

     Depreciation  and amortization expense was $415,844, $504,477, and $400,295
     for the fiscal years ended November 30, 2001, 2000, and 1999, respectively.

8.   COMPUTER  SOFTWARE  COSTS:

     At November 30, 2001and 2000, computer software costs capitalized are:

<TABLE>
<CAPTION>
                                       2001        2000
                                    ----------  ----------
<S>                                 <C>         <C>
          Computer software         $ 716,260   $ 987,885
          Accumulated amortization   (716,260)   (933,401)
                                    ----------------------
                                    $       -   $  54,484
                                    ======================
</TABLE>

     Amortization  expense  from  continuing  operations  related  to  computer
     software  cost during the years ended November 30, 2001, 2000, and 1999 was
     $50,325,  $115,183,  and  $145,295,  respectively.

9.   INTANGIBLES:

     At  November  30, 2001, there were no intangibles included in the Company's
     balance  sheet.  At  November  30,  2000,  intangibles  consisted  of:

<TABLE>
<CAPTION>
<S>                                      <C>
          Covenant not-to-compete-RATEX  $ 25,000

          Accumulated amortization        (25,000)
                                         ---------
                                         $      -
                                         =========
</TABLE>

     There was no amortization expense during the years ended November 30, 2001,
     2000  and  1999.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-15
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  INCOME  TAXES:

     The  components  of  the  provision for (benefit from) income taxes for the
     years  ended  November  30,  2001,  2000,  and  1999  consist  of:

<TABLE>
<CAPTION>
                                      2001        2000       1999
                                    ---------  ----------  ---------
<S>                                 <C>        <C>         <C>
     Current                        $146,000   $(133,000)  $764,718
     Deferred                         (3,630)     92,400    172,782
                                    --------------------------------
     Provision for (benefit from)
        income taxes                $142,370   $ (40,600)  $937,500
                                    ================================

     Provision for (benefit from)
        income taxes attributable
     to continuing operations       $142,370   $ (40,600)  $579,800

     Provision for income taxes
        attributable to Gain on
        disposal of GoodNet
        subsidiary                         -           -    357,700
                                    --------------------------------
     Provision for (benefit from)
        income taxes                $142,370   $ (40,600)  $937,500
                                    ================================
</TABLE>

     The  Company's  tax  expense  differs from the expense calculated using the
     statutory  federal  income  tax  rate  for  the  following  reasons:

<TABLE>
<CAPTION>
                                        2001      2000        1999
                                      --------  ---------  ----------
<S>                                   <C>       <C>        <C>
     Expected                         $107,600  $(30,800)  $ 621,800
     Tax exempt interest income              -   (31,100)   (148,400)

     Non deductible portion of
       meals and entertainment           8,000     9,300      10,200

     State taxes, net of federal
       benefit                          26,770    12,000      96,200
                                      -------------------------------
     Provision for (benefit from)
       income taxes attributable to
       continuing operations          $142,370  $(40,600)  $ 579,800
                                      ===============================
</TABLE>


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-16
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  INCOME  TAXES:  (CONTINUED)

     The  income  tax  effect of temporary differences between financial and tax
     reporting  gives  rise to the deferred income tax assets and liabilities as
     follows:

<TABLE>
<CAPTION>
     Current asset                              2001        2000
                                             ----------  ----------
<S>                                          <C>         <C>
          Allowance for uncollectibles       $ 173,400   $ 177,800
          Inventory allowance                        -      10,400
          Timing differences from IRS audit          -         200
                                             ----------------------

                                               173,400     188,400
                                             ----------------------
     Non-current liability
          Accumulated depreciation            (116,400)   (129,500)
          Accumulated amortization                   -       5,400
          Timing differences from IRS audit          -       2,200
                                             ----------------------

                                              (116,400)   (121,900)
                                             ----------------------

     Net deferred tax asset                  $  57,000   $  66,500
                                             ======================
</TABLE>

     The  Company  believes  that  it  is likely to realize the net deferred tax
     asset  subject  to the Company's ability to generate profits in the future.
     Accordingly,  no  valuation  allowance  has  been  provided.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-17
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11.  STOCKHOLDERS'  EQUITY:

     SERIAL  PREFERRED  STOCK

     The  Company  is  authorized to issue 10,000,000 shares of serial preferred
     stock, no par value. As of November 30, 2001 and 2000, there were no shares
     issued  or  outstanding.

     COMMON  STOCK  WARRANTS

     During  the year ended November 30, 1995, the Company issued 125,000 common
     stock warrants to the underwriters of the Company's initial public offering
     in  exchange  for  $100. The warrants were exercisable at $7.20 per warrant
     for a period of four years beginning July 1, 1996. As of November 30, 1999,
     125,000  common  stock  warrants were outstanding. As of November 30, 2000,
     these  common  stock  warrants  expired.

     DIVIDEND  POLICY

     The  Company has no limitations or restrictions for declaring dividends. As
     of  November  30,  2001,  no  dividends  have  been  declared.

     TREASURY  STOCK

     The  Board  of  Directors has authorized the repurchase of up to 10% of the
     Company's  outstanding  stock.  During  the  years ended November 30, 2001,
     2000,  and 1999, the Company repurchased 90,995, 102,106, and 37,000 shares
     of  its  common  stock  on  the  open  market  for  $146,575, $298,061, and
     $184,305,  respectively.

     SELF-TENDER  OFFER

     On February 3, 2000, the Company commenced an offer to repurchase up to 2.3
     million  shares  of  its  common  stock  pursuant  to  a  "Dutch  auction"
     self-tender offer. On March 24, 2000, the tender offer expired. Pursuant to
     the  tender offer, the Company repurchased a total of 2.3 million shares of
     its  common  stock.  The  purchase price for the shares of common stock was
     $7.25  per  share  and  the proration factor was 60.22 percent. The Company
     redeemed  1,938,816  common shares for $14,056,416 and 351,352 common stock
     options  for  $1,112,674.  Included  in  the  common  shares  redeemed were
     1,031,663  shares of the Company's common stock redeemed from affiliates of
     the  Company  for  an  aggregate  of  approximately  $7,480,000.

     Additionally,  the  Company  repurchased all 293,750 shares of common stock
     owned  by Joseph Zerbib for $2,129,688. As of November 30, 2001, affiliates
     of  the  Company  owned  695,837  shares or 49.1% of the outstanding common
     stock  of  the  Company.

     Expenses incurred related to the tender offer were $85,991.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-18
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12.  STOCK  PLANS:

     INCENTIVE  STOCK  OPTION  PLANS

     Effective  February  1,  1995,  the  Board  of  Directors  adopted the 1995
     Incentive Stock Option Plan (ISOP). Under the 1995 ISOP, a total of 264,000
     shares  are  reserved  for  issuance  at the discretion of the compensation
     committee.  As  of  November  30,  2001, there were no common stock options
     outstanding  under  the  1995  ISOP. Effective April 15, 1996, the Board of
     Directors adopted an additional stock plan, the 1996 ISOP. The shareholders
     approved  this  plan  on  August  7,  1996. Under the 1996 ISOP, a total of
     260,000  shares  are  reserved  for  issuance  at  the  discretion  of  the
     compensation  committee. As of November 30, 2001, options to purchase 4,000
     shares  of common stock were outstanding under the 1996 ISOP. These options
     are held by certain employees of the Company at an exercise price of $5.875
     per  share.  The  1995 ISOP and 1996 ISOP authorize the Company to grant to
     key  employees both nonqualified options and options intended to qualify as
     incentive options under Section 422 of the Internal Revenue Code. The plans
     are  administered  by  the  compensation  committee, which has authority to
     interpret  their  provisions,  to  establish  and  amend  rules  for  their
     administration,  to  determine  the  types and amounts of awards to be made
     pursuant  to  the  plans, subject to the plans' limitations, and to approve
     recommendations  made by management of the Company as to who should receive
     awards.

     On  October  2,  1997,  the board of directors adopted the 1997 Performance
     Equity Plan. On May 15, 1998, the board of directors amended the 1997 Plan.
     The  shareholders  subsequently  approved  the  1997  Plan.  The  board  of
     directors  has  authorized  1,000,000 shares for grant under the 1997 Plan.
     Awards  consist  of  stock  options  (both nonqualified options and options
     intended  to  qualify  as  incentive stock options under Section 422 of the
     Internal  Revenue  Code,  restricted  stock  awards, deferred stock awards,
     stock appreciation rights and other stock-based awards, as described in the
     1997  Plan.  The  1997  Plan is administered by the compensation committee,
     which  determines the persons to whom awards will be granted, the number of
     awards  to  be  granted and the specific terms of each grant, including the
     vesting thereof, subject to the provisions of the 1997 Plan. As of November
     30,  2001,  options  to  purchase  136,719  shares  of  common  stock  were
     outstanding  under  the  1997  Plan.  These  options  are  held  by certain
     employees  of the Company at exercise prices ranging from $1.3125 to $4.875
     per  share.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-19
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12.  STOCK  PLANS:  (CONTINUED)

     The  following  table  summarizes  stock  option  activity:

<TABLE>
<CAPTION>
                                               Number of  Weighted average
                                                shares    exercise price
                                               ---------  ---------------
<S>                                            <C>        <C>

     Outstanding at November 30, 1999           748,900   $          4.62

     Granted                                     59,157              3.40
     Exercised                                 (338,810)           4.1974
     Forfeited                                 (319,018)           5.2639
                                               ---------

     Outstanding at November 30, 2000           150,229            3.7301

     Granted                                     27,200            1.3125
     Exercised                                        -                 -
     Forfeited                                  (36,710)           3.9416
                                               ---------

     Outstanding at November 30, 2001           140,719            3.2076
                                               =========
     Options exercisable at November 30, 2001    96,351   $         3.119
                                               =========
</TABLE>

          Available for grant at: (a)
               November 30, 2000               1,373,771
               November 30, 2001               1,383,281

     (a)  Available  for  grant  includes  shares  that may be granted as either
          stock  options  or  restricted  stock, as determined by the Committee.

     Following is a summary of the status of options outstanding at November 30,
     2001:

<TABLE>
<CAPTION>
                                      Outstanding Options          Exercisable Options
                                -------------------------------  -----------------------
                                  Weighted
                                   average          Weighted                 Weighted
     Exercise price               remaining          average                  average
         range        Number   contractual life  exercise price   Number  exercise price
     ---------------  -------  ----------------  ---------------  ------  ---------------
<S>                   <C>      <C>               <C>              <C>     <C>
           $ 5.88      4,000           5 years          $  5.88   4,000        $    5.88
           $ 2.94     27,084           6 years             2.94  27,084             2.94
           $ 4.25      3,208           7 years             4.25   3,208             4.25
           $ 4.88     20,070           8 years             4.88  20,070             4.88
           $ 3.40     59,157           9 years             3.40  14,789             3.40
           $ 1.31     27,200          10 years             1.31  27,200             1.31
     ------------------------------------------------------------------------------------

     1.31 - $5.88    140,719           8 years          $  3.21  96,351        $    3.12
     ====================================================================================
</TABLE>


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-20
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12.  STOCK  PLANS:  (CONTINUED)

     OTHER  OPTIONS

     No  other  options  were  granted during the years ended November 30, 2001,
     2000  and  1999.

     STOCK BASED COMPENSATION

     All  stock options issued to employees have an exercise price not less than
     the  fair  market value of the Company's common stock on the date of grant.
     In  accordance  with  accounting  for  such options utilizing the intrinsic
     value  method,  there  is  no  related compensation expense recorded in the
     Company's  financial  statements  for  the  fiscal years ended November 30,
     2001,  2000  and  1999.  Had compensation cost for stock-based compensation
     been  determined  based on the fair value of the options at the grant dates
     consistent with the method of SFAS 123, the Company's net income (loss) and
     diluted  earnings  (loss) per share for the fiscal years ended November 30,
     2001,  2000  and  1999  would  have  been  reduced to the pro-forma amounts
     presented  below:

<TABLE>
<CAPTION>
                                                2001      2000        1999
                                              --------  ---------  ----------
<S>                                           <C>       <C>        <C>
     Net income (loss) as reported            $174,001  $(50,121)  $1,798,353
     Pro-forma                                $158,481  $(67,453)  $1,636,018

     Net income (loss) per share as reported  $   0.12  $  (0.02)  $     0.47
     Pro-forma                                $   0.11  $  (0.03)  $     0.43
</TABLE>

     The  fair  value  of the option grants is estimated as of the date of grant
     utilizing  the  Black-Scholes  option-pricing  model  with  the  following
     weighted  average  assumptions  for grants in 2001, 2000 and 1999; expected
     life  of options of one to three years, expected volatility of 51% in 2001,
     64%  in  2000,  and  24%  in 1999, risk-free interest rates of 8%, and a 0%
     dividend  yield.  The  weighted  average  fair  value  at date of grant for
     options  granted during 2001, 2000, and 1999 approximated $0.44, $1.08, and
     $1.03,  respectively.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-21
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


13.  Related  Party  Transactions:

     Related  party  debt

     In  April  2000, the Company entered into an agreement with three executive
     officers,  pursuant  to  which each of them agreed to make available to the
     Company  up  to  $1,000,000  at  the  Company's request. In May 2000, their
     agreements  were  amended  to increase the amount to $1,350,000. Draw downs
     were  payable  on May 31, 2001 and had an annual interest rate of 10%. Each
     loan was secured by the Company's assets. Pursuant to a second amendment to
     their  agreements  in  April  2001,  each  of the officers agreed to extend
     $350,000  of  their loans until August 31, 2001. A third amendment to their
     agreements  in  July  2001  extended  their  loans until November 30, 2001.

     During  the  years  ended  November  30, 2001 and 2000, interest expense in
     connection  with  these notes was $41,089 and $115,754, respectively. As of
     November  30,  2000,  an  aggregate of $1,375,000 principal was outstanding
     under  the  notes and no interest was due thereon. As of November 30, 2001,
     there  were  no amounts outstanding under the notes and no interest was due
     thereon.

14.  Employee  Benefit  Plans:

     The  Company  maintains a 401(k) profit sharing plan covering substantially
     all  full-time  employees.  Under  the terms of the plan, the employees may
     elect  to  contribute  a  portion  of  their  salary  to  the  plan.

     The  Company  has  agreed  to  make  matching  contributions equal to fifty
     percent  of the first 6% in deferred compensation. In addition, the Company
     may make discretionary contributions to the plan. For the fiscal year ended
     November  30,  2001,  contributions  were  $81,850.

     During  the  fiscal  years  2000  and  1999,  the  Company  made  matching
     contributions  equal  to  fifty  percent  of  the  first  $500  in deferred
     compensation plus twenty-five percent of deferrals in excess of $1,000. For
     the  fiscal  years  ended  November  30, 2000, and 1999, contributions were
     $62,982  and  $46,878,  respectively.

15.  Commitments:

     Office  Lease  Commitments

     The  Company  is  obligated  under  long-term  operating  leases for office
     facilities  through  the  year  2007.

     As  of  November  30,  2001,  future  minimum  lease payments due under the
     non-cancelable  operating  lease  agreements  are  as  follows:

<TABLE>
<CAPTION>
          FISCAL YEAR ENDING
              NOVEMBER 30,      AMOUNT
          ------------------  ----------
<S>                           <C>
          2002                $  602,349
          2003                   478,809
          2004                   492,009
          2005                   505,209
          2006                   518,409
          Thereafter             544,809
                              ----------
          Total               $3,141,594
                              ==========
</TABLE>

     Rent expense under all operating leases amounted to approximately $547,674,
     $386,224,  and  $335,000  for  the years ended November 30, 2001, 2000, and
     1999,  respectively.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-22
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


16.  Operating  Leases:

     The  Company  was  the lessor of equipment under operating lease agreements
     that  expired  in  June  2000.  The equipment had an original cost basis of
     $220,000. Accumulated depreciation was $220,000 as of November 30, 2001 and
     2000. During the fiscal years ended November 30, 2000 and 1999, the Company
     received  rental  income  of  $47,587.

     The  Company  was also the sublessor of office space in Tempe, Arizona. The
     lease  agreement  expired  in  March  2000.  During  the fiscal years ended
     November  30,  2000  and  1999,  the  Company received $37,065 and $33,288,
     respectively  under  this  agreement.

17.  Research  and  Development:

     Research  and  development  costs  included  in  general and administrative
     expenses  for the fiscal years ended November 30, 2001, 2000, and 1999 were
     $528,000,  $1,168,000,  and $1,424,000, respectively. These costs have been
     expensed  during  their  respective  fiscal  years.

18.  Discontinued  Operations/Sale  of  GoodNet

     Effective  January  12,  1998,  the  Company  together  with  the  minority
     shareholders  of  GoodNet,  entered  into  an  agreement  with  Winstar
     Communications,  Inc.  ("Winstar")  to sell the Company's Internet services
     subsidiary,  GoodNet,  for  approximately $22.0 million, consisting of $3.5
     million  cash  and  shares  of  common stock of Winstar having an aggregate
     market  value  of  approximately  $18.5  million.

     Under  the  terms  of  the  agreement,  the  Company received approximately
     $3,500,000  in cash plus 479,387 shares of Winstar restricted common stock,
     which  had an aggregate fair market value of approximately $13.9 million as
     of the close of business on January 12, 1998. After commissions and related
     legal  expenses,  the  Company realized an approximate $13.2 million pretax
     gain  on  the  sale  in the first quarter of fiscal 1998. Additionally, the
     Company  received  $235,000  in  cash  to  offset  GoodNet's  net  cash
     disbursements  from  December  12,  1997  through  the  date  of  the sale.

     The  results  of  operations  of  GoodNet  have  been shown as discontinued
     operations  in  the  accompanying  financial  statements.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-23
<PAGE>
<TABLE>
<CAPTION>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


19.  Earnings  per  Share

     The following table reconciles the numerators and denominators of the basic and diluted
     earnings (loss) per share:

                                                                FOR THE YEAR ENDED NOVEMBER 30,
                                                                -------------------------------
                                                                 2001         2000         1999
                                                              -----------  -----------  ------------
<S>                                                           <C>          <C>          <C>
     BASIC EARNINGS (LOSS) PER COMMON SHARE:
     ---------------------------------------
       NUMERATOR
         Income (loss) from continuing operations              $  174,001   $  (50,121)  $1,249,043
         Gain on disposal of GoodNet                                    -            -      549,309
                                                               -------------------------------------
         Net earnings (loss) available to common shareholders  $  174,001   $  (50,121)  $1,798,352
                                                               =====================================
       DENOMINATOR

         Weighted average number of shares outstanding          1,398,510    2,123,879    3,713,601
                                                                ====================================

       PER SHARE AMOUNTS

         Income (loss) from continuing operations              $     0.12   $    (0.02)  $     0.33
         Gain on disposal of GoodNet                                    -            -         0.15
                                                               -------------------------------------
         Net earnings (loss) available to common shareholders  $     0.12   $    (0.02)  $     0.48
                                                               =====================================
     DILUTED EARNINGS (LOSS) PER SHARE
     ---------------------------------

       NUMERATOR
         Income (loss) from continuing operations              $  174,001   $  (50,121)  $1,249,043
         Gain on disposal of GoodNet                                    -            -      549,309
                                                               -------------------------------------

         Net earnings (loss) available to common shareholders  $  174,001   $  (50,121)  $1,798,352
                                                               =====================================
       DENOMINATOR

         Weighted average number of shares outstanding          1,398,510    2,123,879    3,713,601
         Effect of dilutive securities:
         Options and warrants                                      27,200            -      339,700
         Stock acquired with proceeds                             (19,432)           -     (221,234)
                                                               -------------------------------------
         Weighted average common shares and assumed
         conversions outstanding                                1,406,278    2,123,879    3,832,067
                                                               =====================================
       PER SHARE AMOUNTS

         Income (loss) from continuing operations              $     0.12   $    (0.02)  $     0.33
         Gain on disposal of GoodNet                                    -            -         0.14
                                                               -------------------------------------
          Net earnings (loss) available to common shareholders $     0.12   $    (0.02)  $     0.47
                                                               =====================================
</TABLE>


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-24
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


19.  Earnings  per  Share:  (Continued)

     At November 30, 2001, options to acquire 113,519 shares of common stock, at
     various  prices  per share, were not included in the computation of diluted
     EPS because the options' exercise price was greater than the average market
     price  of  the  common  shares.

     At  November  30,  2000,  warrants and options to acquire 150,229 shares of
     common  stock,  at  various  prices  per  share,  were  not included in the
     computation of diluted EPS because the options had an anti-dilutive effect.

     At  November  30,  1999,  warrants and options to acquire 535,200 shares of
     common  stock,  at  various  prices  per  share,  were  not included in the
     computation  of diluted EPS because the options' exercise price was greater
     than  the  average  market  price  of  the  common  shares.


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-25
<PAGE>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

20.  SEGMENT  INFORMATION

The Company's products and services are broken down as follows:

(1)  System  Sales  and  Maintenance
          (a)  TelMaster  Telemanagement  System  ("TMS")
          (b)  Distribution  Control  System  ("DCS")
          (c)  Software  and  Hardware  Recurring  Maintenance  Revenue
(2)  Telesoft  Recovery  Services  ("TRS")
(3)  STS  Outsourcing  Program  ("STS")
(4)  Customized  Billing  Outsourcing  Services  ("CBS")

Following is selected segment information (in thousands except per share items):

<TABLE>
<CAPTION>
                                           Year  ended  November  30,  2001             Year  ended  November  30,  2000
                                     -------------------------------------------  -------------------------------------------
                                     System                                       System
                                      Sales    TRS      STS      CBS     Total     Sales     TRS      STS      CBS     Total
                                     -------  ------  --------  ------  --------  --------  ------  -------  -------  --------
<S>                                  <C>      <C>     <C>       <C>     <C>       <C>       <C>     <C>      <C>      <C>
Sales, net                           $6,007   $2,395  $10,884   $ 882   $20,168   $ 6,302   $1,360  $15,991  $  960   $24,613
Cost of sales                         1,398        -    7,397       5     8,800     1,332        -   11,440      54    12,826
                                     -------  ------  --------  ------  --------  --------  ------  -------  -------  --------
Gross profit                          4,609    2,395    3,487     877    11,368     4,970    1,360    4,551     906    11,787
                                     -------  ------  --------  ------  --------  --------  ------  -------  -------  --------
General & administrative
    expenses:
General                               4,757    1,760    2,822     476     9,815     6,048    1,027    3,486     722    11,283
Depreciation                             35        4      113      11       163       132        3      161      19       315
Bad debt                                  1        1      442       -       444        12        -      230       -       242
Corporate allocations:
General                                 159        5      149       7       320        87        6      151      27       271
Depreciation                            181        8       90      24       303       136        -      136      33       305
                                     -------  ------  --------  ------  --------  --------  ------  -------  -------  --------
                                      5,133    1,778    3,616     518    11,045     6,415    1,036    4,164     801    12,416
                                     -------  ------  --------  ------  --------  --------  ------  -------  -------  --------

Operating income (loss)                (524)     617     (129)    359       323    (1,445)     324      387     105      (629)

Other income (expense)                                                       (7)                                          538
                                                                        --------                                      --------

Pretax income                                                               316                                           (91)

Income tax provision                                                       (142)                                           41
                                                                        --------                                      --------
Income (loss) from continuing
  operations                                                            $   174                                       $   (50)
                                                                        ========                                      ========
Diluted earnings (loss) per share-
continuing operations                                                   $  0.12                                       $ (0.02)
                                                                        ========                                      ========
</TABLE>


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-26
<PAGE>
<TABLE>
<CAPTION>
TELESOFT CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

21.  QUARTERLY  FINANCIAL  DATA

     (unaudited)/(in thousands except per share amounts)

                                                                      QUARTER ENDED
                                                ---------------------------------------------------------
                                                FEBRUARY 28 (29)     MAY 31      AUGUST 31   NOVEMBER 30
                                                ---------------------------------------------------------
<S>                                             <C>                <C>          <C>          <C>
2001
Net revenues                                    $           6,119  $    6,400   $    2,867   $      4,782

Gross profit                                                3,281       3,071        2,101          2,915
Income (loss) from continuing operations                      310         179         (314)             0
Income (loss) per share - continuing
   operations, diluted                          $            0.23  $     0.13       ($0.22)  $       0.00
Income (loss) per share - continuing
   operations, basic                            $            0.23  $     0.13       ($0.22)  $       0.00
Shares used in per share calculation - diluted          1,349,307   1,425,512    1,415,833      1,423,282
Shares used in per share calculation - basic            1,345,584   1,415,833    1,415,833      1,415,833

2000
Net revenues                                    $           7,022  $    6,485   $    3,116   $      7,990

Gross profit                                                3,396       2,677        2,061          3,653
Income (loss) from continuing operations                      378        (223)        (553)           348
Income (loss) per share - continuing
   operations, diluted                          $            0.10      ($0.11)      ($0.40)  $       0.25
Income (loss) per share - continuing
   operations, basic                            $            0.10      ($0.11)      ($0.40)  $       0.25
Shares used in per share calculation - diluted          3,829,204   2,030,721    1,377,728      1,377,085
Shares used in per share calculation - basic            3,711,500   2,030,721    1,377,728      1,377,085
</TABLE>


The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements


                                      F-27
<PAGE>