UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES AND EXCHANGE ACT
     OF 1934

                   For the fiscal year ended December 31, 2000

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

          For the transition period from ____________ to _____________

                         Commission File Number 0-22282.

                                  USCI, INC. .
                ------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                        13-3702647
 ------------------------------                 --------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

        Waterford Centre, 5555 Triangle Parkway, Norcross, Georgia 30092
        ----------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code   (678) 268-2300

Securities registered pursuant to Section 12(b) of the Act:

          Title of each class      Name of each exchange on which registered
          -------------------      -----------------------------------------

                     None                            None

Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, par value $.0001 per share
                    ----------------------------------------
                                (Title of class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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

         Based on the  average  of the  closing  bid and ask  price on March 13,
2001, the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the Registrant was approximately $844,000.

         At March 13, 2001,  98,525,029 shares of the Registrant's  Common Stock
were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
None

<PAGE>
                                   USCI, INC.

                                TABLE OF CONTENTS
                                                                            Page
PART I

      Item 1   Business....................................................  1
      Item 2   Properties..................................................  8
      Item 3   Legal Proceedings...........................................  8
      Item 4   Submission of Matters to a Vote of Security Holders.........  8

PART II

      Item 5   Market for Registrant's Common Equity and Related
               Stockholder Matters.........................................  9
      Item 6   Selected Financial Data.....................................  9
      Item 7   Management's Discussion and Analysis of Financial Condition
               and Results of Operations................................... 12
      Item 7A  Quantitative And Qualitative Disclosures About Market Risk.. 19
      Item 8.  Financial Statements and Supplementary Data................. 19
      Item 9.  Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosure.................................... 19

               PART III

      Item 10. Directors and Executive Officers of the Registrant.......... 20
      Item 11. Executive Compensation...................................... 21
      Item 12. Security Ownership of Certain Beneficial Owners and
               Management.................................................. 25
      Item 13. Certain Relationships and Related Transactions.............. 26

PART IV

      Item 14. Exhibits, Financial Statement Schedules and Reports
               on Form 8-K................................................. 26

      Signatures........................................................... 29

      Index to Financial Statements........................................ 30

<PAGE>

                                     PART I

ITEM 1.  BUSINESS

General Development of Business

     USCI, Inc.  ("USCI") is a holding  company  organized under the laws of the
State of Delaware  with  principal  offices  located at Waterford  Centre,  5555
Triangle  Parkway,  Norcross,  Georgia 30092,  telephone  number (678) 268-2300.
Through   our   subsidiaries,   we  are   engaged  in  (1)  the   marketing   of
telecommunications  products  and  services  with an emphasis  on two  principal
markets: (a) Internet telephony products and services ("IP Telephony"),  and (b)
wireless  services  ("Wireless  Services"),  and (2) the  delivery of  web-based
accounts   receivable   management  and  recovery   services  ("A/R   Management
Services").

     USCI is the result of a merger, in May 1995,  between U.S.  Communications,
Inc. and Trinity Six, Inc. Since 1996, we have been engaged in wireless services
marketing through our wholly-owned  subsidiary,  Ameritel  Communications,  Inc.
("Ameritel").  As a result of ongoing losses, during 1999, Ameritel restructured
certain loan provisions, converted certain preferred stock into common stock and
filed a voluntary  petition  under  Chapter 11 of the United  States  Bankruptcy
Code.

     In conjunction with the restructuring of Ameritel, during 1998 and 1999, we
restructured  our  management  team and board of directors and adopted a revised
operating  strategy.  See "Ameritel  Bankruptcy and Restructuring" and "Business
Strategy".

     Pursuant to our ongoing efforts to improve operating  results,  in 1999, we
entered  the  IP   Telephony   marketing   business   with  the   formation   of
AmericomOnline.com.  ("Americom").  During  2000,  we  formed  TelCollect,  Inc.
("TelCollect")  to  deliver  specialized  A/R  Management  Services  based  on a
developed IT platform.

     Business Overview

     Since the fourth quarter of 1997, our operations  have consisted  primarily
of the resale of wireless  services in the United States.  We purchase  cellular
telephone access and airtime from  facilities-based  carriers at wholesale rates
and resell  cellular  services to  subscribers at retail rates.  Previously,  we
acted as an agent for major United  States  cellular and paging  carriers in the
sale of cellular and paging services through national distribution channels.

     In 1999 and the first  quarter of 2000,  with the formation of Americom and
the  conclusion of a marketing and  distribution  agreement with  Net2Phone,  we
established a nationwide sales and marketing organization,  and began building a
network of distribution channels for IP Telephony services and products.  Online
marketing efforts and the establishment of relationships with retail outlets for
IP Telephony  services and products  began in the second quarter of 2000 and the
commencement  of delivery of those  services  and  products  began in the fourth
quarter of 2000.

     In the  fourth  quarter  of 2000,  with the  formation  of  TelCollect,  we
launched our web-based A/R Management  Services built upon internally  developed
web-based  software  to  offer  technologically   advanced  accounts  receivable
management and recovery solutions.

     We have never operated  profitably since  inception.  In the second half of
1999,  we  substantially   altered  our  operations  in  an  effort  to  achieve
profitability.  These efforts  included  establishing an e-commerce  platform to
market services and products,  downsizing of staff and facilities and other cost
cutting  efforts to reduce  overhead and  adoption of our IP  Telephony  and A/R
Management  Services  initiatives.  While we  expect  that  those  efforts  will
position us favorably to grow revenues,  improve  operating margins and minimize
operating  costs,  there  can be no  assurance  that we will  be  successful  in
implementing  IP  Telephony  marketing  services  and A/R  Management  Services,
growing revenues or operating profitably.


                                       1
<PAGE>


         Ameritel Bankruptcy and Restructuring

         In order to  provide  a  national  footprint  for the sale of  wireless
services, between 1996 and 1998, our subsidiary,  Ameritel, negotiated contracts
with more than 20 cellular  carriers.  Ameritel also developed  software systems
and  processes to permit our customers to promptly and  efficiently  process the
subscriber  applications  necessary  to activate  cellular  and paging  services
purchased through these national channels of distribution.

         In October 1997, Ameritel entered into an agreement with RadioShack,  a
division of Tandy  Corporation,  under  which we were  appointed  the  exclusive
provider of cellular communications  services to RadioShack's  approximately 250
retail locations in the greater New York metropolitan  area.  Subsequently,  the
agreement was amended to cover Puerto Rico and the Virgin  Islands.  In order to
fulfill its business strategy,  the company hired outside  consultants to assist
in analyzing and developing  business plans and cash flow projections  necessary
to undertake this business. Thereafter such consultants were engaged to identify
and  negotiate  different  terms with trade vendors and to create a strategy for
the  profitability of the Company and to stem its operating losses. In addition,
a  restructuring  of its debt and the creation of a business plan was instituted
in order to make the company viable on a go forward basis.  Customer service was
bolstered to service the RadioShack  clientele,  as well as the other clients of
Ameritel who were in need of customer  relations.  In October  1998,  RadioShack
summarily  terminated  its agreement  with Ameritel and  instituted a lawsuit in
which they  claimed to be owed $11.2  million  in  commissions  and other  fees.
Ameritel  filed  an  answer  denying   RadioShack's  claims  and  also  filed  a
counterclaim  against  RadioShack/Tandy  in which we claimed that, through their
actions and conduct, we incurred  substantial damages in excess of their claims.
Amongst myriad other problems both in the industry and at the company,  Ameritel
and the Company were forced to seek financing necessary to support the servicing
of cellular subscriber clients.

         RadioShack's   termination   of  the  Ameritel   contract   contributed
significantly  to an  inability  on our part to secure  financing  necessary  to
support the servicing of our cellular  subscriber  base. The  termination of the
RadioShack contract also created defaults under our loan agreement with Foothill
Capital Corp

                  On April 14,  1999,  we entered  into an Amended and  Restated
Loan and Security  Agreement  with Foothill  Capital Corp. in which the original
Loan  and  Security  Agreement  entered  into on June 5,  1998  was  amended  to
restructure the existing credit facility by reducing the total facility to $17.5
million from which an  additional  multiple draw term loan in an amount up to $7
million  was made  available.  The $7 million  was funded into escrow by certain
preferred  shareholders  and  others  through  a  participation  agreement  with
Foothill.

         Following the closing of the Foothill  Amended Loan  Agreement,  all of
the holders of our preferred  shares entered into an agreement  under which they
converted $1.5 million stated value of preferred  stock for 75 million shares of
our common stock at $0.02 per share, agreed to waive all future dividends on the
outstanding  preferred  shares,  waived  all  defaults  under  the  terms of the
preferred  shares,  and cancelled all  outstanding  options and warrants held by
them  covering  4,485,707  shares of common  stock.  The Company had  previously
issued 5,000,000 shares of common stock to the consultant for services  rendered
to the Company.

         In  conjunction  with our ongoing  efforts to  restructure  outstanding
indebtedness, in May 1999, our then current Board of Directors resigned and were
replaced by three new  directors.  Mr.  Bruce A. Hahn,  our former  Chairman and
Chief  Executive  Officer,  resigned  as an officer of USCI and  entered  into a
consulting  agreement with  Americom,  effective  December 1, 1999,  pursuant to
which he provides sales,  marketing and strategic planning services, and in July
1999,  Mr. Lee Feist joined USCI as Chairman of the Board,  President  and Chief
Executive Officer.

         In October 1999,  Ameritel filed a voluntary  petition under Chapter 11
of U.S.C.  Title 11 with the United  States  Bankruptcy  Court for the  Southern
District  of New York (Case No.  99-11081)(the  "Bankruptcy  Court").  Since the
filing  date,  Ameritel  has  operated  its  business as a  debtor-in-possession
subject to the  jurisdiction of the Bankruptcy  Court. Any  reorganization  plan
submitted by Ameritel will be subject to approval of the Bankruptcy Court.

                                       2
<PAGE>

         On April 28, 2000, Tranche B, Inc., the Company,  Ameritel and Foothill
Capital Corp.  entered into a Purchase and Assignment  Agreement  which assigned
all  rights,  title  and  interest  in and to the  claims  of  Foothill  against
Ameritel,  the Company and guarantors to Tranche B, Inc.  Tranche B is owned and
controlled  by  shareholders  who hold a  controlling  interest in the  Company.
Concurrent  with  this  agreement,  Tranche  B  released  the  Company  from all
obligations related to the revolving credit and term loan facility, but retained
its rights against  Ameritel.  The Company issued 4,000,000 shares of its common
stock to Foothill as consideration for release from its guarantees, and could be
required  to issue up to an  additional  2,000,000  shares  of  common  stock to
Foothill, depending upon the market price of the stock eighteen months after the
transaction.

         In June 2000,  the RadioShack  litigation  was settled  pursuant to the
terms of a Compromise  Settlement  Agreement and Mutual Release  Agreement under
which  the  Company   issued   500,000   shares  of  common  stock  to  Ameritel
Communications,  Inc. and each party was released with no further obligations or
liability,  except  that the  Company  could be  required to issue up to 250,000
additional  shares of common stock to Ameritel,  depending upon the market price
of the stock eighteen months after the transaction.
         Business Strategy

         Beginning in October 1998,  and  continuing  through 2000, we adopted a
major shift in strategy, emphasizing (1) entry into the IP Telephony market, (2)
implementation  of an  e-commerce  platform  to  supplement,  and  reduce  costs
associated  with our  marketing,  distribution,  customer  service  and  related
activities,  and (3)  implementation of various cost control measures to improve
profitability of our historical Wireless Services.

         Our  objective  is to (1)  become a leading  marketer  of IP  Telephony
products and services,  including  prepaid long distance calling cards utilizing
IP  Telephony  technology  and related  equipment  necessary  to  facilitate  IP
Telephony, (2) become a leading provider of specialized A/R Management Services,
and (3) improve profitability and subscriber retention rates within our Wireless
Services   business   through   improved   customer   service  and  adoption  of
technologies,  processes and systems designed to reduce  operating costs.  Among
the  specific  steps  taken to date,  or  planned  to be taken,  to  attain  our
objectives are:

*    adoption,in  October  1998,  of a freeze in  marketing  efforts  to add new
     Wireless  Service  subscribers in order to focus our resources on servicing
     and preserving the existing subscriber base and lowering the operating cost
     of that business.

*    sale, in November 1998, subject to certain  conditions,  of the bulk of our
     paging services  subscriber base, to Metrocall for cancellation of the debt
     to Metrocall in the amount of $876,000  representing the sums due and owing
     for paging services previously purchased from Metrocall.

*    launch,     in    January    2000,    of    our    e-commerce     platform,
     www.AmericomOnline.com,  as a principal marketing tool for our products and
     services.

*    execution,  in April 2000, of a Marketing and  Distribution  Agreement with
     Net2Phone  to market IP  Telephony  products  and  services  of  Net2Phone,
     including Internet telephone and prepaid long distance calling cards.

*    launch, in October 2000, of our web-based  accounts  receivable  management
     and recovery platform.

     The specific steps taken to date have been supplemented by, and will in the
future be supplemented  by: (1) efforts to expand our electronic  media channels
and link our new internet  e-commerce  site to other strategic sites to increase
site traffic and promote our products and  services,  (2) efforts to expand into
new specialized  distribution  channels, and (3) implementation of a centralized
order  processing  platform and the  development of browser based  technology to
improve customer service and reduce operating costs.


                                       3
<PAGE>


Wireless Services

     Historically  our  core  operations  were  in  the  marketing  of  wireless
services.  From 1992 to 1997,  our  subsidiary,  Ameritel  acted as an agent for
major United  States  cellular  and paging  carriers in the sale of cellular and
paging services through national distribution  channels.  Since 1997, Ameritel's
wireless services  operations have consisted primarily of the resale of wireless
services.

     -- Carrier Relationships. Ameritel provides cellular services by purchasing
access  and  airtime  from  facilities-based  carriers  at  wholesale  rates and
reselling  those  services at retail  rates.  In the past,  Ameritel was able to
negotiate   favorable  carrier  agreements  that  provided  coverage  throughout
substantially  all of  the  United  States  and  did  not  require  "take-or-pay
conditions."  These multiple carrier  agreements have given Ameritel the ability
to control the structure of national rate plans and distribute  services through
national distribution channels.

     Ameritel  presently  has  carrier   agreements  with  three   nonaffiliated
facilities-based  cellular service providers which authorize  Ameritel to resell
the cellular  service provided by these carriers for existing  subscribers:  (1)
AT&T  Wireless  Services,  (2) Celulares  Telephonica,  (3) GTE Mobilnet and (4)
Verizon Wireless.

     -- Marketing and Customer  Support.  Since October 1998, we have undertaken
no marketing  efforts to add Wireless  Service  customers.  We do not  presently
intend  to  commence  any such  marketing  efforts  in the  foreseeable  future.
Instead,  our efforts have been,  and are expected to continue to be, focused on
improving our customer support in order to retain and improve the  profitability
of Ameritel's existing Wireless Service subscriber base. At March 2001, Ameritel
had approximately 4,100 Wireless Service subscribers.

Internet Telephony

     In 1999,  we formed  AmericomOnline.com  ("Americom")  for the  purpose  of
commencing  marketing of IP  Telephony  products and services as well as prepaid
communications products and services through our proprietary e-commerce platform
and through mass market general  merchandise  retailers,  grocery  stores,  drug
stores and TV direct response.

     IP Telephony is a service that enables users to make high quality, low-cost
telephone  calls over the  Internet.  In April 2000,  Americom  entered  into an
agreement  with  Net2Phone,  a leading  provider of IP  Telephony  services  and
products,  to be the  exclusive  marketer of  Net2Phone  services  and  products
throughout the United States to selected general  merchandise mass marketers and
to all convenience stores and supermarkets.

     In the  fourth  quarter  of 2000,  we began  offering  web-based  telephony
services which enable customers to make calls using their personal  computers as
well as basic IP Telephony  devices  which enable  customers to make calls using
traditional  telephones.  In  addition we market long  distance  calling  cards,
powered by the Net2Phone  Internet  Telephony Network which may be used from any
private or public phone in the United States.

     --  Development  of IP  Telephony.  IP Telephony  has emerged as a low-cost
alternative to traditional long distance calls.  International  Data Corporation
projects that the IP Telephony market will grow from  approximately $100 million
in 1998 to more than $11.9 billion in 2003.  Internet  telephone  calls are less
expensive than traditional long distance calls primarily because these calls are
carried  over the  Internet  and  therefore  bypass  a  significant  portion  of
traditional  long distance  tariffs.  This is especially true for  international
calls where international long distance tariffs can be significant.

     Historically the communications services industry has transmitted voice and
data over separate networks using different  technologies.  Traditionally,  long
distance  carriers  have built a telephone  network  based on  circuit-switching
technology, which establishes and maintains a dedicated path for each call until
the call is terminated.  Although a  circuit-switch  system  reliably  transmits
voice   communications,   circuit   switching  does  not   efficiently   utilize
transmission capacity.  When a telephone call is placed, a circuit connection is
established, and the circuit remains dedicated for transmission of that call and
is unable to transmit any other call.

                                       4
<PAGE>

     Data  networks  have  typically  been  built   utilizing   packet-switching
technology  which divides  signals into packets that are  simultaneously  routed
over different channels to a final destination where they are reassembled in the
original order in which they were transmitted. Packet-switch technology provides
for a more efficient use of the capacity  because the network does not establish
dedicated  circuits  and does not  require  the same  amount of band width to be
reserved for each transmission.  As a result,  substantially greater traffic can
be transmitted over  apacket-switch  system,  such as the Internet,  than over a
circuit-switch network.

     IP  Telephony  uses   packet-switching   technology   whereas   traditional
telecommunications    carriers   have   historically    avoided   the   use   of
packet-switching  for  transmitting  voice  calls  due  to  poor  sound  quality
attributable  to delays and lost packets which  prevent real time  transmission.
However,  recent  improvements  in  packet-switching,  compression  and improved
hardware as well as the use of privately  managed  networks  have  significantly
improved  the  quality of  packet-switched  voice calls  allowing  for real time
transmission.

     As a  result,  packet-switching  technology  is now  allowing  services  to
converge their traditional voice and data networks and more efficiently  utilize
their  networks by carrying  voice,  fax and data traffic over the same network.
These improved  efficiencies in  packet-switching  technologies have resulted in
network  cost savings that can be passed on to the consumer in the form of lower
long distance rates. In addition, international telephone calls carried over the
Internet or private IP networks are less  expensive  than similar  calls carried
over circuit-switched networks, primarily because they by-pass the international
settlement process which represents a significant  portion of international long
distance tariffs.

     -- Marketing  Agreement with  Net2Phone.  In April 2000, we entered into an
agreement  with  Net2Phone  to market IP  Telephony  services  and  products  of
Net2Phone.  Pursuant to the terms of that  agreement,  Americom was appointed as
exclusive  marketing  representative  for the sale of  Net2Phone's  IP Telephony
products  and  services  to  selected  mass  merchandise  retailers  and  to all
convenience stores and supermarkets.

     -- The Net2Phone  Network.  Through an agreement  with its  affiliate,  IDT
Corporation,  Net2Phone  leases  capacity on an Internet  network  comprised  of
leased  high-speed  fiber optic lines  connecting  eight major cities across the
United States, and leases high-speed fiber optic lines connecting smaller cities
to the network. Net2Phone has a right to use network capacity leased by IDT. The
network  backbone uses  state-of-the-art  hardware  including  Cisco Series 7000
routers and Nortel Passport switches. Their high-speed backbone connects traffic
at four major  public  Internet  exchange  points with other  networks.  Through
peering  arrangements,  Net2Phone exchanges Internet traffic with numerous other
Internet backbone  providers at these points.  Net2Phone operates IDT's network,
one of the largest Internet access networks, providing local dial-up access. The
IDT network also includes hundreds of additional  network access locations owned
by local and regional Internet service providers.

     Net2Phone  is able to  provide  service  in  areas  where  they do not have
dial-up  equipment  by  utilizing  call-forwarding  technology  to expand  their
coverage areas by increasing the total number of local access numbers. They have
been closing  multiple  network  access points in a number of states in order to
consolidate  their  equipment into central "Super Point of Presence"  locations.
For  example,  one Super Point of Presence in New Jersey can supply local access
for the entire state of New Jersey.

     Net2Phone  manages its network hardware  remotely.  It is compatible with a
variety of network systems around the world.  They have stated that they believe
that their IP  Telephony  network can  currently  support  approximately  12,000
simultaneous  calls and that their systems are scalable to 4 times their current
capacity through the purchase and installation of certain additional hardware.

                                       5
<PAGE>

A/R Management Services

     In 2000,  we formed  TelCollect  to develop  and offer  web-based  accounts
receivable management and recovery services.

     TelCollect's  A/R  Management  Services are  delivered  through a web-based
software  platform  which  provides to clients a variety of accounts  receivable
management and recovery services including fraud detection and management, third
party collections, skip tracing, consumer payment arrangement monitoring and fee
collection  services.  Initial marketing efforts for A/R Management Services are
directed  to  the  financial   services,   telecommunications,   and  bank  card
industries.  A/R Management  Services are offered  throughout the United States,
Puerto Rico and Mexico and include multi-lingual capabilities.

Marketing and Distribution Channels

     With the changes in our business  strategy  implemented  between the fourth
quarter of 1998 and 2000,  we have  refined our  strategies  and  channels  with
respect to the marketing and distribution of products and services.  Our current
strategy  with  respect to  marketing  and  distribution  channels  includes the
following:  (1) implementation of a e-commerce platform to market and distribute
products   and  services   from  our   www.AmericomOnline.com   web  site,   (2)
establishment of a national sales organization to sell to mass market retailers,
and (3) the launch of a major campaign  directed towards the  telecommunications
industry to market our A/R Management Services. All of our marketing efforts are
presently focused on, and for the foreseeable future are expected to continue to
focus on, IP Telephony products and services and A/R Management Services. We are
continuing our current policy of undertaking no active marketing  efforts to add
new Wireless Service subscribers.

     --  Internet  Channels.  We plan to  market  and  distribute  IP  Telephony
products and services directly to consumers utilizing the Internet. Our web site
(www.AmericomOnline.com)  will serve to sell,  promote  and serve  customers  24
hours a day 7 days a week.  We intend to undertake  efforts to link our web site
to other strategic sites in order to increase site traffic to targeted consumers
and to promote our site through  specialized  distribution  channels,  which may
include  television,  radio and print  media,  all  intended to increase  public
awareness of our site and the products and services offered. As of May 2000, our
web site was fully operational.

     -- Retail Mass Merchandise Channels. Until the termination of the agreement
with our  principal  customer,  we utilized the retail mass market  channel as a
major source of Wireless  Service  distribution  and entered  into  distribution
agreements  with several  national and regional  retail  chains.  Following  the
termination  of the  RadioShack  agreement in October  1998, we did not have the
capital  to  fund  the  acquisition  of  new  wireless  subscribers  and  either
terminated  or  suspended  our  agreements  with the  national  chains  which we
previously serviced.

     We have resumed our  marketing  efforts to the retail mass market to market
products and services that we represent on behalf of  Net2Phone.  We assembled a
distribution  network to offer IP Telephony services and products through retail
mass  merchandisers  and,  as of the fourth  quarter of 2000,  commenced  actual
marketing efforts through those channels.

Research and Development

     We historically  conducted research and software development  activities to
support our  carriers,  our customers and our  distribution  channels.  With the
shift in our corporate  strategy,  during 2000 we conducted limited research and
development   activities  primarily  related  to  the  development  of  our  A/R
Management  Services software platform.  We do not presently plan to conduct any
material research and development activities in the foreseeable future. We will,
however,  continue to undertake  efforts to upgrade our  management  information
systems and customer  support and related  systems to assure that those  systems
meet the needs of our  clients  and  customers.  We do not have a  research  and
development budget.

                                       6
<PAGE>

Intellectual Property

     We do not own any  patents and have not filed any patent  applications.  We
rely,  primarily,  on  third  party  software  and  technology  to  support  our
operations

     On July 28,  1998,  "Ameritel"  became  registered  as a  service  mark for
cellular  telephone and pager services in the U.S. Patent and Trademark  Office.
We have filed trademark applications for "RAP," "Cellular on the Go" and "Family
Link." We expect to file additional trademark  applications from time-to-time in
the future as necessary.

Competition

     -- IP Telephony. The long distance telephony market and, in particular, the
IP Telephony  market, is extremely  competitive.  Our efforts in that market are
highly  dependent  upon the cost,  quality  and  features  of the  products  and
services of Net2Phone.  There are several large and numerous small  competitors,
and we  expect  to face  continuing  competition  based  on  price  and  service
offerings from existing  competitors and new market entrants in the future.  The
principal  competitive factors in the market include price,  quality of service,
breadth of geographic presence, customer service, reliability,  network capacity
and  the  availability  of  enhanced  communications   services.  The  principal
competitors in the IP Telephony  market include AT&T,  Deltathree,  MCI WorldCom
and  Sprint  in the  United  States  and  foreign  telecommunications  carriers.
Net2Phone recognizes the following as its competitors:

o    Internet Telephony Service Providers.  Internet telephony service providers
     such as  AT&T  Jens (a  Japanese  affiliate  of  AT&T),  deltathree.com  (a
     subsidiary of RSL  Communications),  I-Link,  iBasis (formerly known as VIP
     Calling),  ICG  Communications,  IPVoice.com,  ITXC and OzEmail  (which was
     acquired by MCI WorldCom) route voice traffic over the Internet.

o    Software/Hardware Providers. Companies such as VocalTec, Netspeak and e-Net
     produce  software and other  computer  equipment that may be installed on a
     user's computer to permit voice communications over the Internet.

o    Telecommunications  Companies.  A number of  telecommunications  companies,
     including  AT&T,  Deutsche  Telekom,  MCI  WorldCom  and  Qwest,  currently
     maintain, or plan to maintain,  packet-switched networks to route the voice
     traffic of other telecommunications companies.

o    Network  Hardware  Manufacturers.  A  number  of  large  telecommunications
     providers and equipment  manufacturers,  including Alcatel,  Cisco, Lucent,
     Northern Telecom and Dialogic (which was acquired by Intel), have announced
     that they intend to offer products  similar to  Net2Phone's.  Cisco Systems
     has also  taken  additional  steps by  recently  acquiring  companies  that
     produce devices that help Internet  service  providers carry voice over the
     Internet while maintaining traditional phone usage and infrastructure.

o    Voice-Enabled Online Commerce Providers.  Several companies,  including USA
     Global  Link and AT&T's  Inter@active  Communications,  have begun to apply
     Internet   telephony   technologies  in  connection  with  online  commerce
     transactions.  These  providers  compete with services of Net2Phone such as
     Click2Talk by integrating voice communications into commercial Web sites.

         Many  of our  competitors,  and  the  competitors  of  Net2Phone,  have
substantially  greater  financial,  technical  and marketing  resources,  larger
customer bases,  longer operating  histories,  greater name recognition and more
established  relationships  in the industry than we have or Net2Phone  has. As a
result,  certain  of  these  competitors  may be able to adopt  more  aggressive
pricing  policies,  which could  hinder our  ability to market the IP  Telephony
products and services of  Net2Phone.  One of the key  competitive  advantages of
Net2Phone  is the ability to route calls  through  Internet  service  providers,
which  allows  Net2Phone  to bypass the  international  settlement  process  and
realize substantial savings compared to traditional  telephone service. A change
in the  regulation  of Internet  service  providers,  which is  currently  being
considered by a number of regulators and  legislatures  around the world,  could
force  Net2Phone  to  increase  prices and offer  rates that are  comparable  to
traditional telephone call providers.

                                       7
<PAGE>

         As consumers and telecommunications  companies have grown to understand
the benefits that may be obtained from transmitting  voice over the Internet,  a
substantial number of companies have emerged to provide voice over the Internet.
In addition,  companies currently in related markets have begun to provide voice
over the  Internet  services  or adapt their  products to enable  voice over the
Internet services.  These related companies may potentially  migrate into the IP
Telephony market as direct competitors.

         -- Accounts  Receivable  Management  Services.  The accounts receivable
management/collection  industry is highly  competitive and is  characterized  by
rapidly  changing  technologies.  Competitors  include  a wide  array  of  large
national  companies as well as local and regional  companies  many of which have
greater  experience,   financial  and  other  resources  and  name  recognition.
Competition in the A/R Management Service business is based primarily on quality
of service, price and effectiveness of services in maximizing collections.

                  -- Wireless Services. The wireless  communications industry is
highly competitive and is characterized by rapidly changing technologies. In the
cellular industry,  our principal  competitors are cellular and PCS carriers and
other resellers who market their services  directly to the public. In every area
where we offer our cellular  services,  we compete with incumbent local cellular
service  providers in the region,  as well as with PCS providers that operate on
both a local and a national basis.  Competition in the Wireless Service business
is based primarily on quality of service, coverage area and price.

Employees

         As of March 15, 2001, we employed a total of  approximately  45 people,
including  information  systems  personnel,  customer  service  and  collections
personnel,  clerical  and  administrative  staff.  None  of  our  employees  are
represented by a labor union or is subject to a collective bargaining agreement.
We believe that our relations with employees are good.

ITEM 2. PROPERTIES

Our executive offices and other facilities are located in Norcross,  Georgia,  a
suburb of Atlanta.  The premises,  comprising  approximately 12,000 square feet,
are  occupied  pursuant  to a lease  running  through  September  14,  2002  and
providing for current monthly rent payments of approximately $8,000. In addition
to our offices,  the facility  houses our customer  service  center and computer
facilities.

ITEM 3.  LEGAL PROCEEDINGS

         In  October  1999,  our  wholly-owned  subsidiary,  Ameritel,  filed  a
voluntary  petition  under Chapter 11 of U.S.C.  Title 11 with the United States
Bankruptcy Court for the Southern  District of New York (Case No.  99-11081)(the
"Bankruptcy  Court").  Since the filing date, Ameritel has operated its business
as a  debtor-in-possession  subject to the jurisdiction of the Bankruptcy Court.
As of March 15, 2001, all claims of Foothill Capital were resolved, whereby USCI
was released from its guarantees, but claims against Ameritel were preserved and
assigned  to  Tranche B, Inc.  Ameritel's  reorganization  plan with  respect to
claims of unsecured  creditors has not been completed and is subject to approval
by the Bankruptcy Court. No plan of reorganization has yet been submitted to the
court,  and  there  is no  assurance  that any  plan of  reorganization  will be
confirmed  by the  Court.  A motion is  currently  pending  before  the Court to
dismiss or convert the Ameritel case.

     As a result of our lack of capital following the termination our RadioShack
contract,  various vendors instituted lawsuits against our inactive  subsidiary,
U.S.  Communications,  Inc.,  some of which have been reduced to judgment.  U.S.
Communications  has been  inactive for a number of years and has no assets,  and
the  creditors  who have filed suit  against  U.S.  Communications  have been so
advised.

         We do not believe  that  failure to settle  these  matters  will have a
material  adverse effect on our business,  our financial  position or results of
operations.

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

         There were no matters  submitted  to a vote of the  Company's  security
holders during the fourth quarter of the fiscal year ended December 31, 2000.

                                       8
<PAGE>

                                    PART II

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

         (a) The Company's Common Stock was quoted on the Nasdaq National Market
System ("NNM") under the symbol "USCM" until November 13, 1998, at which time it
was delisted and began trading on the over-the-counter electronic bulletin board
("OTCBB").  The following  table sets forth the range of high and low bid prices
for each quarter during the past two fiscal years.

                                                     High              Low
                                                    ------            ------
Calendar Year 2000

         Fourth Quarter.....................       $0.0650           $0.0100
         Third Quarter......................        0.1400            0.0600
         Second Quarter.....................        0.3500            0.0900
         First Quarter......................        0.8000            0.2600

         Calendar Year 1999

         Fourth Quarter.....................       $0.5469           $0.0938
         Third Quarter......................        0.6250            0.2031
         Second Quarter.....................        0.9375            0.0938
         First Quarter......................        0.5000            0.0938


     The  quotations  reflect   inter-dealer   prices  without  retail  mark-up,
mark-down or commission and may not represent actual transactions.

     At March 13, 2001, the closing bid price of the Common Stock was $0.0156

     As of March 28,  2001,  there were 117  holders of record of the  Company's
Common  Stock.  The Company  believes  there were in excess of 3,000  beneficial
holders of the Common Stock as of such date.

     The Company has not  declared  any cash  dividends  on its Common Stock and
does not intend to pay cash  dividends on its Common  Stock for the  foreseeable
future.

         (b) Recent Sales of Unregistered Securities

         None


                                       9
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

         The  following  selected  financial  data  has  been  derived  from the
Company's consolidated financial statements.

         Because our wholly-owned  subsidiary,  Ameritel  Communications,  Inc.,
filed for  protection  under  Chapter  11 of the U.S.  Bankruptcy  Code in 1999,
financial  statements  for the year ended  December 31, 20000 and 1999 have been
presented  separately  for (1)  Ameritel  Communications,  Inc. and (2) USCI and
subsidiaries,  other than  Ameritel.  The financial  statements of USCI, and the
financial data which follows, reflects accounting for the operations of Ameritel
under the equity method and those operations are not consolidated with USCI.

         The comparability of our operating results over the past five years has
been materially  impacted by the change in accounting for Ameritel's  operations
to use the equity method instead of  consolidating  those operations with USCI's
other operating results.  For the convenience of readers and ease of comparison,
in addition to the five year  comparison  of results for USCI on a  consolidated
basis,  selected financial data relating to Ameritel for 2000 and 1999, has been
provided herewith along with pro forma combined financial data of USCI including
Ameritel for 2000 and 1999.

         The  following  data should be read in  conjunction  with the financial
statements and related notes appearing elsewhere in this report on Form 10-K.

                                       10
<PAGE>

<TABLE>

Statement of Operations Data:
-----------------------------

                                                                     Year Ended December 31,
                                   -----------------------------------------------------------------------
                                      2000          1999         1998             1997              1996
                                   ----------     ---------    ---------        --------          --------
<S>                               <C>            <C>         <C>             <C>                <C>


Total revenues                    $  114,726     $      -    $ 41,089,160     $ 9,811,890        $ 7,073,167

Operating Expenses:
  Commissions pass-through
  and other direct costs               9,858            -      24,694,501       5,052,205          3,598,952

  Selling, general and
  administrative                   1,674,597      764,088      32,791,669      18,967,189         12,128,111

  Restructuring and other
  charges                                  -    3,431,387               -       1,100,000                  -

  Subscriber acquisition and
  promotional costs                        -            -      18,920,271      12,385,662            114,986
                                  ----------   ------------  -------------    -------------     ------------

Operating loss                   (1,569,729)   (4,195,475)    (35,317,281)    (27,692,986)        (8,768,882)

Other income (expense):
  Gain on sale of subscribers             -             -         876,164               -                  -

Interest income (expense), net        1,269        12,310      (8,053,256)     (1,093,618)           985,169

Guarantor release expense          (717,159)            -               -               -                  -

Income (loss) from investment
  in Ameritel                              -  (10,406,884)              -               -                  -
                                 -----------  --------------  --------------  --------------    ------------

Net loss                       $  (2,271,360) $(14,590,049)  $(42,494,373)   $(28,786,604)     $  (7,783,713)
                                 ===========  ==============  =============== ===============   =============

Net loss per
common share-diluted           $        (.02) $       (.22)  $      (3.90)   $      (2.81)     $       (0.76)
                                 ===========  ==============  =============== ===============   =============


Basic and diluted weighted
average common shares
outstanding                      96,751,900     67,174,007       11,072,905       10,251,402       10,187,909
                                ============  ==============  ===============  ==============    =============


Balance Sheet Data:

                                                             Year Ended December 31,
                                   --------------------------------------------------------------------
                                     2000           1999           1998           1997         1996
                                   --------       ---------      --------       ---------    ----------
<S>                               <C>            <C>            <C>            <C>           <C>

Working capital (deficit)         $(5,599,229)   $(4,658,208)   $(11,567,863)  $(12,643,491) $13,177,931
Total assets                          466,500      1,152,491      12,411,881     13,594,047  26,394,982
Long term debt                              -              -      14,354,096              -           -
Investment in Ameritel                      -     30,592,037               -              -           -
Total stockholders'
equity (deficit)                  $(5,536,479)  $(35,088,771)   $(22,834,853)   $(6,312,978) $19,312,420

</TABLE>


                                       11
<PAGE>

<TABLE>

Ameritel and Pro Forma Combined
Statement of Operations Data
-----------------------------------------------
                                                                          Year ended December 31,
                                               ----------------------------------------------------------------------
                                                                2000                    1999
                                               ---------------------------------------  -----------------------------
                                                                   Unaudited                             Unaudited
                                                  Ameritel         Pro Forma            Ameritel         Pro Forma
                                               Communications,     Combined         Communications,      Combined
                                               Inc. Financial      Financial         Inc. Financial      Financial
                                                    Data             Data                 Data             Data
                                               ---------------   ---------------    ----------------    -------------
<S>                                            <C>               <C>                <C>                 <C>

Total Revenues                                 $   4,678,385      $ 4,793,111       $  15,360,812       $ 15,360,812


Operating Expenses

    Commission pass-through and
       other direct costs
                                                   2,052,716        2,062,574           7,847,964          7,847,964

    Selling,  general & administrative
                                                   4,156,521        5,831,118          13,765,016         14,529,104

    Subscriber acquisition and
       promotion costs                               522,153          522,153           1,617,913          1,617,913

    Restructuring and other charges                        -                -             395,164          2,107,087
                                              --------------   ----------------     ----------------   ---------------

Operating loss                                    (2,053,005)      (3,622,734)         (8,265,245)
                                                                                                        (12,460,720)

Interest income (expense)                              2,718            3,987         (2,141,639)        (2,121,329)

Guarantor release expense                                  -         (702,900)                 -                  -

Gain on settlement of liabilities                                                              -                  -
                                                   2,086,510        2,086,510
                                              --------------   ----------------    ----------------    ---------------

Net Income (loss)                              $     36,223     $ (2,235,137)     $  (10,406,884)     $ (14,590,049)
                                              ==============   ================    ================    ===============



Ameritel and Pro Forma Combined
Balance Sheet Data:
---------------------------------
                                                             December 31,
                                     -------------------------------------------------------------------------
                                                  2000                                     1999
                                     ---------------------------------  --------------------------------------
                                                           Unaudited                             Unaudited
                                         Ameritel          Pro Forma          Ameritel           Pro Forma
                                      Communications,      Combined        Communications,       Combined
                                      Inc. Financial       Financial       Inc. Financial        Financial
                                           Data              Data              Data                Data
                                     ----------------   ---------------    ----------------    ---------------
<S>                                  <C>                <C>                <C>                 <C>

Working Capital (deficit) (1)       $  (33,585,312)      $ (39,184,541)    $ (30,625,835)     $  (35,284,043)


Total Assets                        $       546,441      $   1,064,608     $   2,373,951      $    3,526,442
</TABLE>



(1)  Working capital (deficit) of Ameritel,  and on a pro forma basis,  excludes
     amounts  owed to USCI  and  affiliates  in the  amount  of  $18,854,608  at
     December 31, 2000 and $21,856,306 at December 31, 1999.


                                       12
<PAGE>


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

         This Form 10-K 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. The Company's actual results could differ  materially from
those set forth in the  forward-looking  statements.  Certain factors that might
cause such a difference are discussed herein.

Bankruptcy of Ameritel

         During  1999,  Ameritel  Communications,  Inc.,  our primary  operating
subsidiary,  substantially  downsized its operations,  restructured certain loan
provisions,  converted  certain  preferred stock into common stock and filed for
protection  under  Chapter 11 of the U.S.  Bankruptcy  Code.  As a result of the
bankruptcy  filing,  operations of Ameritel have been presented under the equity
method and are not included in the  consolidated  financial  statements of USCI.
For the convenience of readers and ease of comparison,  selected  financial data
of Ameritel and pro forma combined financial data of USCI including Ameritel for
1999 and 2000 has been presented in Selected Financial Data appearing herein.

Overview

         Historically,  our revenues consisted of commissions earned by Ameritel
as an  activation  agent for cellular and paging  carriers  and,  since the last
quarter of 1996, revenues from the resale of cellular and paging services. Since
completion  of our  transition  in 1998 to  becoming  a  reseller,  we have  not
received  material  revenues  from  agency  commissions.   Other  than  revenues
generated  by  Ameritel,  we have  historically  generated  no  other  operating
revenues.

         Ameritel  bills its  customers  for  monthly  access to the  underlying
carrier's  cellular  network,  cellular  usage  based  on the  number,  time and
duration  of  calls,  the  geographic  location  of  both  the  originating  and
terminating phone numbers,  extra service features, and the applicable rate plan
in effect.

         The wholesale cost of subscriber service includes monthly access, usage
(home and roaming, long distance) and special features charges paid by us to the
cellular carriers.

         Subscriber  acquisition  and  promotional  costs  includes  commissions
earned by  Ameritel's  channels of  distribution  (or to equipment  suppliers on
their behalf) for each  activation by their  customers of a cellular  telephone,
certain advertising costs incurred by Ameritel or its distribution  channels and
reduced access and/or free airtime for a limited  period to Ameritel's  cellular
subscribers. In view of the substantial reduction in Ameritel's subscriber base,
only a small part of these costs may be recoverable  from the long-term  revenue
stream created by the continuation of subscribers  services.  Ameritel's ability
to capture such revenue streams has been substantially  reduced by early service
cancellations, known as churn, and by losses caused by fraudulent use of service
by third persons which are not  recoverable  from  subscribers.  Under  existing
agreements  with the carriers  which provide  Ameritel  with  cellular  service,
Ameritel  has  recovered  access  fraud  in some  instances  and,  although  not
generally  recoverable,  subscriber  fraud  is also  recoverable  under  certain
circumstances. It should be noted that Ameritel has already suffered substantial
losses in subscriber fraud, which materially contributed, to our deficit.

         Selling,  general and  administrative  expense  include  all  personnel
related costs of both USCI and Ameritel, including Ameritel's costs of providing
sales  and  support  services  for  customers,  personnel  required  to  support
Ameritel's   operations,   and  commissions  to  Ameritel's   independent  sales
representatives.  It also  includes  the costs of the  billing  and  information
systems,  other administrative  expenses,  bad debt expense,  facilities related
expenses,   travel,   professional   fees,  as  well  as  all  depreciation  and
amortization expenses.

                                       13
<PAGE>

         We,  have  experienced  and will  continue  to  experience  significant
operating  and net losses and negative cash flow from  operations.  Ameritel has
generally been unprofitable,  (2000 being the exception with a small profit) and
has generated  negative cash flows from  operations.  The loss of the RadioShack
account  in 1998  further  accelerated  our losses and  negative  cash flow.  In
response to the RadioShack termination,  Ameritel reduced its workforce from 280
to 115 employees,  which included a substantial  number of customer  service and
collection  personnel and reduced its leased  facilities from 23,000 square feet
to 18,000 square feet.  Since that time, we have made further  reductions in our
leased  facilities  to  approximately  12,000  square feet as well as  personnel
reductions in which our executive staff has been reduced to 1 individual and our
employee roster  consists of 45 employees.  The reductions in both executive and
other personnel have resulted in reduced  effectiveness  of Ameritel's  customer
service and collection departments causing higher churn rates.

         In the  second  half of 1999 and 2000,  we  substantially  altered  our
operations  in an effort to achieve  profitability,  including  establishing  an
e-commerce  platform to market  services and  products,  downsizing of staff and
facilities and other cost cutting efforts to reduce overhead and adoption of our
IP Telephony and A/R Management Services initiatives. While we expect that those
efforts will position us favorably to grow revenues,  improve  operating margins
and minimize  operating costs, those operations began on a limited scale in 2000
and there can be no assurance that we will be successful in growing  revenues or
operating profitably within those markets.

Results of Operations

         Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Revenues

         Total pro forma revenues for the year ended December 31, 2000 ("2000"),
consisting  primarily  of  subscriber  sales of  Ameritel,  were  $4,793,111  as
compared to $15,360,812 for the year ended December 31, 1999 ("1999").

         Consolidated revenues of USCI, excluding Ameritel, were $114,726 during
2000 and $nil during 1999.

         The  decreased  revenues  of  Ameritel  for  2000 are  attributable  to
decreased  sales of our  branded  cellular  services  due to a loss of  cellular
subscribers during the year. We ceased marketing efforts to add wireless service
customers in 1998, and there are no plans to start any such  marketing  efforts.
Between January 1, 1999 and December 31, 2000,  Ameritel did not add significant
numbers of new subscribers  and its active cellular  subscriber base was reduced
from approximately 15,000 to approximately 4,100.

         Consolidated  revenues  during  2000 were  attributable  $49,000  to IP
Telephony sales and $65,000 to A/R Management Services,  each of which commenced
during the fourth quarter of 2000.

Cost of Sales

         Pro forma costs of subscriber services, which consist of direct charges
from  cellular  carriers for access,  airtime and services  resold to Ameritel's
subscribers,   amounted  to  $2,062,574   and  $7,847,964  for  2000  and  1999,
respectively.  The gross margin for subscriber sales was $2,625,669, or 56%, and
$7,512,848 or 49% for 2000 and 1999, respectively.  The increase in gross margin
percentage is attributable to the higher profitability of an existing subscriber
base as contrasted  with one that has a high  percentage of new customers  added
each year.

         Excluding Ameritel,  USCI reported $9,858 of cost of sales and $104,868
of gross  margin on a  consolidated  basis  during  2000 and no cost of sales or
gross  margin  during  1999.   Consolidated  cost  of  sales  during  2000  were
attributable to IP Telephony operations.

                                       14
<PAGE>

Operating Expenses

     Subscriber   Acquisition  and  Promotional   Costs.  Pro  forma  subscriber
acquisition and promotional  costs  represent  expenses  incurred by Ameritel to
acquire new subscribers for its cellular services. These costs consist primarily
of commissions paid to retailers and outside sales  representatives,  below cost
discounts  (i.e.  reduced  monthly  access  charges or free minutes)  granted to
subscribers when purchasing cellular services, rebates issued to subscribers and
certain advertising costs. Subscriber acquisition and promotional costs amounted
to $522,153  and  $1,617,913  for 2000 and 1999,  respectively.  The decrease in
these costs in 2000 is also  attributable to lower  promotional costs due to the
termination of promotions  during a subscriber's  term. These costs are expected
to decrease since  Ameritel is not adding new  subscribers  and the  promotional
costs associated with current subscribers continue to decline.

     Excluding Ameritel, USCI reported no subscriber acquisition and promotional
costs on a consolidated basis during 2000 or 1999.

     Selling,  General and Administrative  Expense.  Pro forma combined selling,
general and administrative  expenses aggregated  $5,831,118 for 2000 as compared
to  $14,529,104  for 1999,  reflecting  staff  reductions and reduction of other
operating  expenses at both USCI and  Ameritel due to reduced  activity.  Of the
total pro forma selling,  general and  administrative  expense  reported  during
2000,  $1,674,597 was  attributable  to USCI and $4,156,521 was  attributable to
Ameritel and, during 1999, $764,088 was attributable to USCI and $13,765,016 was
attributable to Ameritel.  Salaries and related employee  benefits  decreased by
45% to  approximately  $2,470,000  for 2000 from  $4,474,000  for  1999,  due to
significant  reductions in overall  personnel levels and the elimination of most
executive level positions.  Telecommunications  and facilities expense decreased
by 44% to $452,000 for 2000 from $801,000 for 1999 and billing and credit review
services  decreased by 67% to $426,000  for 2000 from  $1,274,000  in 1999.  The
reductions in  telecommunications  and  facilities  expense is due to lower rent
from moving to smaller and less expensive  office space,  the reduced  telephone
traffic associated with a smaller staff, a less expensive  telephone system. The
reduction in billing and credit review services is attributable to the dwindling
wireless  subscriber  base  which  results  in fewer  bills  each  month and the
decision to cease marketing efforts aimed at generating new wireless  subscriber
accounts.  Professional and other decreased to approximately $1,065,000 for 2000
from  $2,972,000 in 1999 due to reduced  legal,  accounting  fees and consulting
fees.  Depreciation  and  amortization  for 2000 was  $163,000  as  compared  to
$971,000 for 1999 as a result of the  adjustment in 1999 that wrote down most of
the long lived  assets to zero  value,  leaving  very  little to  depreciate  or
amortize.

     Provisions for losses on accounts receivable  decreased to $801,000 in 2000
from $7,300,000 in 1999. Most of the uncollectible  accounts were identified and
reserved for in 1999 so the provision  for losses in 2000 relates  solely to the
significantly lower revenue base in 2000.

Restructuring and Other Charges

     During 1999, USCI and Ameritel reported pro forma restructuring and related
charges of  $2,107,087,  of which  $1,711,923  was reported on the  consolidated
financial statements of USCI and $395,164 were reported by Ameritel.  There were
no restructuring charges in 2000.

     During 1999 USCI issued common shares or options to purchase  common shares
below market value to various individuals for either services or for replacement
of shares  previously  used as  collateral.  Valuation for the shares issued for
services  amounted to  approximately  $1,720,000 for the year ended 1999.  There
were no shares issued for services in 2000, and the minimal options granted were
at or above market at the date of grant.

     As  a  result  of a  review  of  the  certain  long-lived  assets  of  U.S.
Communications, Inc., USCI recognized a loss due to impairment of such assets in
the approximate amount of $1,712,000 for the year ended 1999.

     Reorganization  costs  totaling  $395,164 were recorded by Ameritel  during
1999.  Those  costs  consisted  of certain  deferred  financing  costs that were
written off in accordance  with Statement of Position 90-7  governing  financial
reporting of entities in bankruptcy.

                                       15
<PAGE>

Other Income (Expense)

         Consolidated  other income  (expense)  consists of net interest  income
(expense)  and,  on a  consolidated  basis,  the  gain or loss  attributable  to
investment in Ameritel.

         Consolidated interest income (expense),  excluding Ameritel, was income
of  $15,528 in 2000 as  compared  to income of  $12,310  in 1999.  Ameritel  had
interest  income of $2,718 in 2000 and $10,163 in 1999.  There was  consolidated
interest  expense,  excluding  Ameritel,  of  $14,259  in 2000  and $0 in  1999.
Ameritel had interest expense of $2,151,802 in 1999 and $0 in 2000. The decrease
is the result of the  bankruptcy  filing by Ameritel  which resulted in interest
charges ceasing.  The contractual  interest that Ameritel would have reported if
not for the bankruptcy was $2,508,510.  In conjunction with the restructuring of
the secured debt to Foothill  (which resulted in the Company being released from
its guarantee  thereof) and the settlement of the RadioShack  litigation against
Ameritel  and the  Company,  the  Company  issued  4,500,000  shares of stock as
consideration or added inducement.  The market value of the stock at the date of
the agreements was recorded as "Guarantor  release expense" totaling $702,900 in
2000.

         Ameritel  reported a gain on settlement of liabilities of $2,086,510 in
2000. This was the result of the settlement of the dispute with RadioShack.

                  On a consolidated basis, USCI reported as other expense a loss
attributable  to its investment in Ameritel of $10,406,884  during 1999.  During
2000, the Company was able to extricate  itself from  guarantees of all Ameritel
debt.  There were no losses  recognized  during 2000 under the equity  method of
accounting.

         The Company  incurred net losses of $2,271,360 and $14,590,049 for 2000
and 1999, respectively.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Revenues

         Total   revenues  for  the  year  ended  December  31,  1999  ("1999"),
consisting  primarily of  subscriber  sales of  Ameritel,  were  $15,360,812  as
compared to $41,089,160 for the year ended December 31, 1998 ("1998"). Excluding
Ameritel, USCI had no consolidated revenue during 1999.

         The decreased  revenues for 1999 are attributable to decreased sales of
our branded cellular services due to a loss of cellular  subscribers  during the
year.

         Between January 1, 1999 and December 31, 1999, Ameritel did not add any
new  subscribers  and its  active  cellular  subscriber  base was  reduced  from
approximately 60,000 to approximately 15,000.

Cost of Sales

         Costs of  subscriber  services,  which  consist of direct  charges from
cellular  carriers  for  access,  airtime  and  services  resold  to  Ameritel's
subscribers,   amounted  to  $7,847,964  and  $24,683,121  for  1999  and  1998,
respectively.  The gross margin for  subscriber  sales was $7,512,848 or 49% and
$16,391,114 or 40% for 1999 and 1998, respectively. The increase in gross margin
percentage is  attributable to better  wholesale rates  experiences in the areas
Ameritel  serviced  during 1999.  Excluding  Ameritel,  USCI reported no cost of
sales and no gross profits on a consolidated basis during 1999.

Operating Expenses

         Subscriber  Acquisition and Promotional Costs.  Subscriber  acquisition
and  promotional  costs represent  expenses  incurred by Ameritel to acquire new
subscribers  for  its  cellular  services.  These  costs  consist  primarily  of
commissions  paid to retailers  and outside  sales  representatives,  below cost
discounts  (i.e.  reduced  monthly  access  charges or free minutes)  granted to
subscribers when purchasing cellular services, rebates issued to subscribers and
certain advertising costs. Subscriber acquisition and promotional costs amounted
to $1,617,913 and $18,920,271 for 1999 and 1998,  respectively.  The decrease in
these costs in 1999 is also  attributable to lower  promotional costs due to the
termination of promotions during a subscribers term. These costs are expected to
decrease since Ameritel is not adding new subscribers and the promotional  costs
associated with current  subscribers  continues to decline.  Excluding Ameritel,
USCI reported no subscriber  acquisition and promotional costs on a consolidated
basis during 1999.

                                       16
<PAGE>

         Selling,   General  and  Administrative  Expense.  Pro  forma  combined
selling,  general and administrative expenses aggregated $14,529,104 for 1999 as
compared to $32,791,669 for 1998,  reflecting  staff reductions and reduction of
other operating  expenses at both USCI and Ameritel due to reduced activity.  Of
the total pro forma selling,  general and administrative expense reported during
1999,  $764,088 was  attributable to USCI and  $13,765,016  was  attributable to
Ameritel.   Salaries  and  related  employee   benefits   decreased  by  52%  to
approximately   $4,474,000  for  1999  from  $9,384,000  for  1998,   reflecting
significant workforce reductions that began in the fourth quarter of 1998 due to
the  termination of the contract with  RadioShack.  This reduction  included the
termination  of sales,  activation  and field  personnel due to reduced sales as
well as customer  service,  collections and other personnel.  Telecommunications
and facilities expense decreased by 63% to $801,000 for 1999 from $2,189,000 for
1998 and billing and credit review services  decreased by 53% to $1,274,000 from
$2,686,000 in 1998 due, in substantial part, to decreased activity. Professional
and other  increased to  approximately  $2,972,000 from $1,165,000 due to legal,
consulting  and other fees incurred in  connection  with the  restructuring  and
reorganization.  Depreciation and amortization for 1999 was $970,252 as compared
to $2,664,476  for 1998 due in part to losses  realized as a result of the write
down of certain long lived assets of U.S. Communications, Inc.

         Provisions for losses on accounts receivable decreased to $7,300,000 in
1999  from  $11,500,000  in 1998  due to  write  off of  uncollectible  accounts
resulting  from age,  lack of  resources  and  damage  caused by the  RadioShack
termination offset by a reduction of losses suffered from fraud.

Restructuring and Other Charges

         During 1999,  USCI and Ameritel  reported pro forma  restructuring  and
related  charges  of  $3,826,551,  of  which  $3,431,387  were  reported  on the
consolidated  financial  statements  of  USCI  and  $395,164  were  reported  by
Ameritel.

         During 1999 USCI  issued  common  shares or options to purchase  common
shares  below  market value to various  individuals  for either  services or for
replacement of shares  previously  used as collateral.  Valuation for the shares
issued for  services  amounted to  approximately  $1,720,000  for the year ended
1999.

         As a result  of a review  of the  certain  long  lived  assets  of U.S.
Communications, Inc., USCI recognized a loss due to impairment of such assets in
the approximate amount of $1,712,000 for the year ended 1999.

         Reorganization costs totaling $395,164 were recorded by Ameritel during
1999.  Those costs  consisted  of certain  deferred  financing  costs which were
written off in accordance  with Statement of Position 90-7  governing  financial
reporting of entities in bankruptcy.

         Other Income (Expense)

         Consolidated  other income  (expense)  consists of net interest  income
(expense),  a one  time  gain  on the  sale of  subscribers  and  income  (loss)
attributable to Ameritel.

         During 1998, we recorded  other income  resulting  from the sale of our
subscriber  base of  approximately  22,000 paging  subscribers  to Metrocall for
$876,000  representing  the sums we owed to Metrocall.  That sale was a one time
event and no similar gain was recorded during 1999.

         Consolidated  interest  income,  net  of  interest  expense,  excluding
Ameritel, aggregated $12,310 in 1999 as compared to net expense of $8,053,256 in
1998.  Ameritel reported net interest expense of $2,141,639.  Pro forma combined
net  interest  expense for 1999,  totaled  $2,129,329.  The decrease in interest
expense  during  1999 is related  to a  reduction  in 1999 of non cash  interest
charges  attributable to the fair value of warrants offset by higher loan levels
in 1999. See "Liquidity and Capital Resources."

         On a consolidated basis, USCI reported as other income (expense) a loss
attributable to its investment in Ameritel of $10,406,884.

         We incurred  net losses of  $14,590,049  and  $42,494,373  for 1999 and
1998, respectively.

                                       17
<PAGE>

Liquidity and Capital Resources

         Pro  forma  working  capital   deficiency  at  December  31,  2000  was
$5,536,479 compared to $35,284,043 at December 31, 1999. USCI had a consolidated
working capital  deficiency of $5,600,000 at December 31, 2000 and $4,658,000 at
December 31, 1999 and Ameritel had a working  capital  deficiency of $33,585,000
at December 31, 2000 and $30,626,000 at December 31, 1999, excluding amounts due
to USCI and affiliates. Pro forma cash and cash equivalents at December 31, 2000
totaled  $686,000  compared to $604,000 at December 31, 1999 (of which  $350,500
was  restricted  at  December  31,  2000 and 1999).  USCI had a cash  balance at
December 31, 2000 of $400,000  and  Ameritel had a cash balance of $286,000,  of
which $300,000 and $50,500 were  restricted,  respectively.  The increase in pro
forma working capital deficiency is primarily due to losses suffered in 2000. We
expect to continue to  experience  monthly  losses and  negative  cash flow from
operations.

         We continue to operate at a loss and have  limited  capital  resources.
Our subsidiary, Ameritel, continues to operate as a debtor-in-possession,  under
the jurisdiction of the United States Bankruptcy Court for the Southern District
of New York.

         We  currently  require  substantial  amounts of capital to fund current
operations,  for the  settlement  and payment of past due  obligations,  and the
deployment  of  our  new  business  strategy.   Due  to  recurring  losses  from
operations,  an accumulated  deficit,  stockholders'  deficit,  negative working
capital, being in default under the terms of our letters of credit advances, and
our  inability to date to obtain  sufficient  financing  to support  current and
anticipated  levels of  operations,  our  independent  public  accountant  audit
opinion states that these matters raise  substantial  doubt about our ability to
continue as a going concern.

         To  date,  we have  funded  operations  and  growth  primarily  through
financing activities.

         On April 14, 1999,  we entered  into an Amended and  Restated  Loan and
Security Agreement with Foothill Capital ("Foothill") in which the original Loan
and Security  Agreement  entered into on June 5, 1998 was amended to restructure
the existing  credit  facility by reducing the total  facility to $17.5 million.
Additionally,  certain of our preferred  shareholders  and certain other persons
have entered into a Participation Agreement with Foothill in connection with the
restructuring  of the outstanding $20 million credit facility with Foothill.  An
aggregate of $7 million was made available by the  participants  in the Foothill
facility as term loans.

         On April 28, 2000, a Release of Guaranty  and  Termination  of Security
Interests was reached between  Tranche B, Inc. and Foothill.  Tranche B, Inc. is
owned and  controlled by  shareholders  that hold a controlling  interest in the
Company. Under the terms of the agreement, Foothill agreed to sell, transfer and
assign  without  recourse,  all rights,  title and  interest in and to claims of
Ameritel,  including  any  and  all  security  interests  against  Ameritel  and
guarantees  against the  Company,  together  with their  right to receive  cash,
instruments or other property  issued in connection  with the proceedings in the
United  States  Bankruptcy  Court.  In addition,  the  transaction  included the
release of all guarantees of that indebtedness by the Company and its affiliates
other than  Ameritel.  As  consideration  for the release and  termination,  the
secured lender received 4,000,000 shares of common stock of the Company.  On the
eighteenth month anniversary of the agreement date, the Company shall also issue
to the secured lender,  such additional shares of common stock of the Company to
make the aggregate fair market value of the shares in the initial transfer equal
to $4,000,000,  based on an agreed upon weighted  average  formula.  The maximum
additional shares to be issued is 2,000,000.

         Our  operations  continue to be dependent  upon operating cash flow and
funding pursuant to the credit facility assumed by Tranche B. At March 28, 2001,
approximately  $13.4 million had been advanced  under our credit  facility.  The
term credit  facility is due in September  2002.  There is no assurance  that we
will be able to pay the  credit  facility  when it comes due or that the  credit
facility will be adequate to meet our capital needs for the next 12 months.  The
amounts  available from operating cash flows and funds available from our credit
facility  with  Tranche B are not  expected to be adequate to meet our  expected
operating needs through the end of 2001. We are seeking an expansion of our cash
collateral  financing  and  restructuring  certain  debt.  We do  not  have  any
commitments  with regard to additional  sources of financing and there can be no
assurance that any such commitments will be obtained in the foreseeable future.

                                       18
<PAGE>

         On October 29,  1999,  Ameritel  Communications,  Inc.,  a wholly owned
subsidiary of the Company ("Ameritel"), filed a voluntary petition under Chapter
11 of U.S.C.  Title 11 with the United States  Bankruptcy Court for the Southern
District  of New York (Case No.  99-11081)(the  "Bankruptcy  Court").  Since the
filing  date,  Ameritel  has  operated  its  business as a  debtor-in-possession
subject to the  jurisdiction  of the Bankruptcy  Court.  In connection  with its
Chapter 11  bankruptcy  filing on October 29, 1999,  the Company  obtained  cash
collateral financing from Foothill. This financing, which has since been assumed
by Tranche B, Inc.,  after several  extensions  expires on September  2002.  All
claims against  Ameritel in existence prior to the Chapter 11 filing are subject
to payment only when and as provided for by an order of the Bankruptcy Court.

         Ameritel's  reorganization  plan,  which has not been  completed and is
subject to approval by the Bankruptcy Court,  focuses the Company's resources on
the  sale  of its  consumer  accounts  receivable  and  the  related  subscriber
contracts.  It is too early to  determine  other  elements  of a proposed  plan.
However,  when other  elements  are  determined,  they may result in  additional
restructuring  charges, as well as the impairment of certain assets. The plan or
sale  will  have a  significant  effect  upon the value of  certain  assets  and
liabilities  included in these financial  statements.  Subject to completion and
approval of the plan or sale,  the  Company is unable to predict  the  potential
financial impact of this matter.

         The financial statements as of and for the year ended December 31, 2000
do not include any effect of the bankruptcy  which was filed on October 29, 1999
or the proposed sale or reorganization plan.

         There  is no  assurance  that we will be able to  effect  a sale of the
Ameritel Assets on a timely basis or that we will be able to use cash collateral
as  scheduled  for in a  Bankruptcy  approved  budget,  obtain an  extension  or
expansion of the cash  collateral  order,  obtain  Debtor-in-Possession  ("DIP")
financing or restructure certain debt.

         In the event that we are not successful in obtaining the aforementioned
financing,  sale  of the  Ameritel  Assets,  or  debt  restructuring,  we may be
required  to  convert  the  Ameritel  Chapter 11 filing to a  liquidation  under
Chapter 7 of the U.S.  Bankruptcy  Code or move for a dismissal of the case, and
the Company and all of its subsidiaries may also be required to join Ameritel in
filing for  protection  under the U.S.  Bankruptcy  statutes or otherwise  cease
operating and wind up their business affairs.

         Because the cost of implementing our new e-commerce  strategies,  which
began in the fourth quarter of 1999 with immaterial  operations will depend upon
a variety of factors (including our ability to negotiate additional distribution
agreements,  our ability to negotiate  favorable wholesale prices with carriers,
the number of new  customers and services for which they  subscribe,  the nature
and penetration of services that we may offer, regulatory changes and changes in
technology), actual costs and revenues will vary from expected amounts, possibly
to a material  degree,  and such  variations  will  affect  our  future  capital
requirements.

         Inflation

         To date, inflation has not had any significant impact on our business.

ITEM 7A.          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         None

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Reference  is made to the  Consolidated  Financial  Statements  for the
Years Ended December 31, 2000,  1999,  and 1998 and Notes thereto  together with
Auditors' Report comprising a portion of this Annual Report on Form 10-K.

                                       19
<PAGE>


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

         On December  29,  2000,  Arthur  Andersen  LLP  notified us that it was
resigning as the Company's independent accountant.

         Arthur Andersen LLP's reports on the financial statements for the years
ended  December  31,  1998  and 1999  did not  contain  an  adverse  opinion  or
disclaimer,  and were not qualified or modified as to uncertainty,  audit scope,
or  accounting  principles,  except that the reports for both years  contained a
"going concern" paragraph.

         During our two most  recent  fiscal  years and any  subsequent  interim
period  preceding  the  resignation  of  Arthur  Andersen  LLP,  there  were  no
disagreements with Arthur Andersen LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreement(s)  if not resolved to the  satisfaction  of Arthur  Andersen  LLP,
would have caused Arthur Andersen LLP to make reference to the subject matter of
the disagreement(s) in connection with its report.

         During our two most  recent  fiscal  years and any  subsequent  interim
period  preceding the  resignation  of Arthur  Andersen LLP,  there have been no
reportable  events of the type required to be disclosed by Item  304(a)(1)(v) of
Regulation S-K.

         On February 2, 2001, our board approved the engagement  Tauber & Balser
("T&B") as our new independent  accountants.  Prior to the engagement of T&B, we
did  not  consult  with  such  firm  regarding  the  application  of  accounting
principles to a specific  completed or contemplated  transaction,  or any matter
that was either the subject of a disagreement or a reportable event. We also did
not consult with T&B regarding the type of audit opinion which might be rendered
on our financial statements and no oral or written report was provided by T&B.

                                    PART III

ITEM 10.  DIRECTORS,   EXECUTIVE   OFFICERS,   PROMOTERS  AND  CONTROL  PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Information Regarding Executive Officers and Directors

         The  following  table  sets forth the  names,  ages and  offices of the
present  executive  officers and  directors of the Company.  The periods  during
which  such  persons  have  served  in  such  capacities  are  indicated  in the
description of business experience of such persons below.

          Name             Age                Position
         ------           -----             ------------
         Lee Feist         58              Chairman of the Board; Chief
                                           Executive Officer; Chief
                                           Financial Officer

         Bryan Finkel      38              Director

         Henry Reinhold    56              Director

     On  May  11,  1999,  the  previous   Board  of  Directors   resigned  their
directorships and Messrs. Joshua Berkowitz, Bryan Finkel and Henry Reinhold were
elected directors in their place and stead. Mr. Berkowitz  subsequently resigned
as a director.  Mr. Bruce Hahn also resigned as Chief Executive Officer of USCI,
Inc.   and  all  of  its   subsidiaries,   but   continues  as   consultant   to
Americomonline.com,  Inc.  focusing his  attention on the sales and marketing of
our new prepaid wireless and e-commerce strategies.

     Lee  Feist,  Chairman  of the  Board,  Chief  Executive  Officer  and Chief
Financial  Officer.  Mr. Feist has been  Chairman the Board and Chief  Executive
Officer of the Company since July 1999 and Chief Financial Officer since January
2001. From 1990 until June 1999, Mr. Feist served as Chief Executive  Officer of
LifeSavers  International,  a privately held turnaround and start-up  management
company,   where  he  filled  various  senior   management   roles  for  various
organizations.

                                       20
<PAGE>

     Bryan Finkel, Director. Mr. Finkel has been a director of Company since May
11, 1999.  Since January 1996,  Mr. Finkel has served as a Managing  Director of
Advanta Growth Capital LP an operating and financial  advisory firm specializing
in the information technology industry.  Prior to founding Advanta, from 1992 to
1996, Mr. Finkel was a Senior Associate at Broadview Associates,  an information
technology mergers and acquisitions advisory firm.

     Henry Reinhold, Director. Mr. Reinhold has been a director of Company since
May 11, 1999. For the past five years,  Mr. Reinhold has been engaged in private
practice as a certified  public  accountant  and as Controller of American Stock
Transfer & Trust Co. which serves as the Company's transfer agent.

     Compliance With Section 16(a) of Exchange Act

     Under the securities  laws of the United States,  the Company's  directors,
its  executive  officers,  and any persons  holding more than ten percent of the
Company's  Common Stock are required to report  their  initial  ownership of the
Company's  Common  Stock and any  subsequent  changes in that  ownership  to the
Securities  and Exchange  Commission.  Specific due dates for these reports have
been  established  and the  Company is  required  to disclose in this report any
failure to file by these dates during 2000. During 2000, all reports required to
be filed during 2000 were filed on a timely basis. In making these  disclosures,
the Company has relied solely on written statements of its directors,  executive
officers  and  shareholders  and copies of the reports  that they filed with the
Commission.

         Committees and Attendance of the Board of Directors

         In order to facilitate the various functions of the Board of Directors,
the Board has created a standing  Audit  Committee  and a standing  Compensation
Committee.

         The  functions  of the  Company's  Audit  Committee  are to review  the
Company's  financial  statements  with the Company's  independent  auditors;  to
determine  the  effectiveness  of the  audit  effort  through  regular  periodic
meetings  with  the  Company's   independent   auditors;  to  determine  through
discussion  with  the  Company's   independent  auditors  that  no  unreasonable
restrictions were placed on the scope or  implementation of their  examinations;
to inquire into the  effectiveness  of the Company's  financial  and  accounting
functions  and  internal   controls  through   discussions  with  the  Company's
independent auditors and officers of the Company; to recommend to the full Board
of Directors the engagement or discharge of the Company's  independent auditors;
and to  review  with the  independent  auditors  the plans  and  results  of the
auditing  engagement.  The  members  of the  Audit  Committee  are  Mr.  Finkel,
Chairman, and Mr. Reinhold.

         The functions of the Company's Compensation Committee include reviewing
the existing compensation arrangements with officers and employees, periodically
reviewing the overall  compensation  program of the Company and  recommending to
the Board modifications of such program which, in the view of the development of
the  Company  and  its  business,   the  Committee   believes  are  appropriate,
recommending to the full Board of Directors the  compensation  arrangements  for
senior management and directors, and recommending to the full Board of Directors
the adoption of compensation  plans in which officers and directors are eligible
to participate  and granting  options or other  benefits  under such plans.  The
members  of the  Compensation  Committee  are Mr.  Reinhold,  Chairman,  and Mr.
Finkel.

         The Board of Directors does not have a standing nominating committee or
a committee performing similar functions.

         During the year ended  December 31, 2000,  the Board of Directors  held
two meetings,  all telephonic,  and acted through  unanimous  written consent on
other  occasions,  the Audit  Committee  held no meetings  and the  Compensation
Committee held no meetings.  Each director (during the period in which each such
director  served)  attended  at  least  75% of the  meetings  of  the  Board  of
Directors.

                                       21
<PAGE>


ITEM 11.          EXECUTIVE COMPENSATION

The  following  summary  compensation  table sets forth  information  concerning
compensation for services in all capacities awarded to, earned by or paid to the
Chief Executive  Officer of the Company and the other  executive  officers whose
compensation  exceeded $100,000 ("named  executive  officers") during the fiscal
year ended December
<TABLE>

                           Summary Compensation Table
--------------------------------------------------------------------------------

                             Annual Compensation                                     Long Term
                        --------------------------------------------------------
Name and                                                           Other Annual      Compensation
Principal Position         Year       Salary ($)    Bonus ($)    Compensation ($)    Stock Options (#)
---------------------   ------------  ------------ ------------  ---------------     ----------------
<S>                     <C>           <C>          <C>           <C>                   <C>

Lee Feist (1)              2000       253,846         -             (2)                         -
 Chairman and Chief        1999                                     (2)                   798,156
                                      132,212         -
 Executive Officer         1998            -          -              -                          -
</TABLE>

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

(1)  Mr.  Feist was hired as  Chairman  and Chief  Executive  Officer on July 6,
     1999.

(2)  Although the officer receives certain  perquisites such as company provided
     life insurance,  the value of such perquisites did not exceed the lesser of
     $50,000 or 10% of the officer's salary and bonus.

Compensation of Directors

         Non-employee directors currently receive reimbursement of out-of-pocket
expenses,  for  attendance  at  each  meeting  of the  Company's  Board  and any
committee  meeting  thereof not held in conjunction  with a Board Meeting.  Each
non-employee  director  also  receives an annual  grant of  non-qualified  stock
options  to  acquire  shares of the  Company's  Common  Stock in an amount to be
determined  each year by the entire Board of Directors.  No options were granted
to the  directors in 2000.  In May 1999,  each  non-employee  director  received
100,000 common shares of USCI, Inc.

Stock Option Exercises

          The following table sets forth information  concerning the exercise of
stock  options  during 2000 by each named  executive  officer and the number and
value of unexercised options held by the named officers at the end of 2000:
<TABLE>

                                       Number of Unexercised     Value of Unexercised
                 Shares                    Options at            In-the-Money Options
               Acquired on    Value         Year End             at Year End ($) (1)
    Name       Exercise (#)  Realized ($)  Exercisable  Unexercisable    Exercisable  Unexercisable
-------------- ------------ ------------- ------------- -------------- -------------  -------------
<S>            <C>          <C>           <C>           <C>            <C>            <C>

  Lee Feist           -      $      -        798,156            -        $     -       $       -

</TABLE>

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

1.   Based on the fair market  value per share of the Common  Stock at year end,
     minus the exercise price of "in-the-money"  options.  The closing price for
     our Common  Stock on  December  31,  2000 on the OTC  Bulletin  Board was $
     0.018.


                                       22
<PAGE>

Employment  Contracts,  Termination of Employment and Change in Control
Arrangements

     Effective  July 6, 1999, we entered into an employment  agreement  with Lee
Feist pursuant to which Mr. Feist was hired as Chief Executive Officer.

     Pursuant  to such  agreement,  Mr.  Feist  receives  a base  salary  of (1)
$275,000  during the first year of  employment,  (2) $295,000  during the second
year, (3) 315,000  during the third year,  (4) $335,000  during the fourth year,
and (5)  $355,000  during the fifth year.  In addition to his base  salary,  Mr.
Feist  is  entitled  to (1) a  $75,000  bonus  at the end of his  first  year of
employment  (which has  subsequently  been deferred until the Company  reports a
quarterly  profit),  (2)  incentive  compensation  equal  to 5% of the  first $4
million  of  earnings  before  depreciation,  interest,  amortization  and taxes
("EBITDA")  and 2% of EBITDA in excess of $4 million for each year, (3) use of a
leased  automobile  (which has  subsequently  been  deferred  until the  Company
reports a quarterly profit),  (4) reimbursement of certain relocation  expenses,
and (5) insurance and other benefits  customarily  provided to senior management
personnel.  Mr. Feist's employment  agreement also provides for the grant of the
following stock options:  (1) ten year non-qualified stock options to be granted
on  the  date  of  the  employment   agreement  and  on  the  second  and  third
anniversaries of the employment  agreement,  each grant to be in an amount equal
to 0.5% of the outstanding  shares on a fully diluted basis on the date of grant
and exercisable at par value, (2) ten year incentive stock options to be granted
on the date of the  employment  agreement  and on the  second,  third and fourth
anniversaries of the employment  agreement,  each grant to be in an amount equal
to 0.5% of the  outstanding  shares on a fully diluted basis and  exercisable at
fair  market  value on the date of  grant,  and (3) ten year  stock  options  to
purchase 1,500,000 shares at $1.50 per share and exercisable if the common stock
is traded on an exchange,  Nasdaq or the  pink-sheets  and the closing  price or
closing bid price has equaled or exceed $1.50 for 25  consecutive  trading days.
The obligations of USCI under the employment are secured by a $300,000 letter of
credit in favor of Mr. Feist.

     The employment  agreement with Mr. Feist is for a term of five years and is
subject to automatic  renewal for  additional  two year terms  unless  notice of
non-renewal is provided.

     The employment  agreement  prohibits Mr. Feist from competing,  directly or
indirectly,  with  USCI  for a  period  of one  year  following  termination  of
employment  or  disclosing  confidential  matters with respect to USCI for three
years after termination of employment.

     In the event of the termination of Mr. Feist's employment within 90 days of
the  occurrence of various change in control  events,  USCI must pay Mr. Feist's
salary and continue to provide  certain  insurance  coverage for a period of one
year  following  such  termination  of  employment.  As used  in the  employment
agreement of Mr.  Feist,  a "change in control" is defined to be (1) a merger or
consolidation pursuant to which USCI is not the surviving corporation and USCI's
stockholders  do  not  have  the  same  proportionate  ownership  following  the
transaction,   (2)  a  sale,  lease,  exchange  or  other  transfer  of  all  or
substantially  all of the assets of USCI, (3) approval by the  stockholders of a
plan for  liquidation  or  dissolution  of USCI, or (4) the  acquisition  by any
person or group of 51% of USCI's common stock.

     USCI  has no  other  employment  agreements  with  any  other  officers  or
employees.

Compensation Report

     General. The Compensation  Committee of the Board of Directors  establishes
the general compensation  policies of the Company and the compensation plans and
specific compensation levels for executive officers.

     The Committee believes that the Company is best served by a program that is
designed  to  motivate,  reward and retain the  management  team to achieve  the
objectives  of the  Company.  To this end, the  Committee  has adopted a program
designed to focus on the Company's long-term goals.  Accordingly,  a significant
portion of the senior  executive  compensation is dependent upon achieving these
long-term goals.

     The philosophical basis of the Committee is to compensate  executives based
on  performance  and on the level of  responsibility  of the  executive.  Salary
ranges are  established  based on such criteria.  Salaries of key executives are
set by measuring performances against the benchmark and by determining the value
of the  executive's  contribution  towards the  Company's  long-term  goals.  In
addition,  consideration  is  given  to the  individual's  experience  and  past
performance  because the Committee also believes that any program must recognize
performance and encourage initiative.

                                       23
<PAGE>

     The Committee also reviews  management's  response to the changing business
environment in which the Company  operates.  A timely and effective  response by
management  to changing  business  conditions  while  continuing to focus on the
long-term  objectives is considered  essential by the  Committee.  Management is
also  evaluated  on its ability to evaluate  and adjust the  long-term  goals in
response to the evolving business climate.

     Base Salary. For fiscal 2000, the base salary of executive officers,  other
than  the  Chief  Executive  Officer  whose  base  salary  is  determined  by an
employment  agreement,  were set  based  upon  the  results  of the  executive's
performance  review.  Each executive is reviewed annually by the Chief Executive
Officer and Chairman and given specific objectives,  with the objectives varying
based  upon the  executive's  position  and  responsibilities  and the  specific
objectives for that position. At the next annual review, the performance of each
executive is reviewed  versus the objectives  established for each executive and
the Company's overall  performance.  The results of the review are then reported
to the Committee along with senior management's compensation recommendation. The
Committee  then  determines  whether the base salary  should be adjusted for the
coming year.

     Long-Term Incentive Compensation. Each executive officer of the Company was
granted  options at the time of the  initial  adoption  of the  Company's  stock
option plans or at the time the officer joined the Company.  The Committee makes
option  grants to executive  officers on a  case-by-case  basis  relative to the
annual performance reviews and the recommendations of senior management.  Grants
of options are designed to align the interests of executive  officers with those
of stockholders.  The size of these grants is generally set at a level which the
Committee  feels  is in  proportion  with the  role  and  responsibility  of the
executive,   as  well  as  his  or  her  opportunity  to  effect  the  Company's
performance,  while  also being  sufficient  to  attract  and  retain  qualified
executives.

     Chief Executive Officer  Compensation.  With respect to the compensation of
the Chief Executive  Officer,  compensation is fixed pursuant to the terms of an
employment agreement.  Given the difficult financial condition of the Company at
the time Mr. Feist was hired as Chief Executive  Officer,  the Committee felt it
both necessary and appropriate to provide an attractive compensation arrangement
with substantial  performance based  compensation in order to attract and retain
Mr.  Feist's  services.  Based  on that  criteria,  the  Committee  agreed  to a
compensation   arrangement   with  an  initial  base  salary  of  $275,000  with
predetermined  annual  increases  and a first year bonus and annual  performance
bonuses  based on EBITDA as well as a package of stock  options.  The  Committee
believed that such a  compensation  package was essential to attract a qualified
CEO in the Company's efforts to achieve profitability.

     The Committee believes these executive  compensation  policies and programs
serve the interests of stockholders and the Company effectively. The various pay
vehicles offered are appropriately  balanced to provide increased motivation for
senior executives to contribute to the Company's overall future success, thereby
enhancing the value of the Company for the stockholder's benefit.

                                                    Compensation Committee

                                                    HENRY REINHOLD, Chairman
                                                    BRYAN FINKEL

                                       24
<PAGE>

Company Performance

     The following  graph compares the cumulative  total investor  return on the
Company's  Common Stock for the five year period ended December 31, 2000 with an
index  consisting of returns from a peer group of  companies,  consisting of the
Nasdaq US Index (the "Nasdaq US Index"), and the Nasdaq Non-Financial Index (the
"Nasdaq Non-Financial Index").

     The graph  displayed  below is presented in accordance  with Securities and
Exchange Commission requirements. Shareholders are cautioned against drawing any
conclusions from the data contained  herein, as past results are not necessarily
indicative  of future  performance.  This graph in no way reflects the Company's
forecast of future financial performance.



   (graph appears at this location depicting the following stock performance)


<TABLE>

                         1995       1996       1997        1998       1999       2000
                       --------  ---------  ---------   ---------   ---------  ---------
  <S>                  <C>       <C>        <C>         <C>         <C>        <C>

  USCI, Inc.              100      54.43      70.89        0.51       3.54        0.18
  Nasdaq US Index         100     123.03     150.68      212.46     394.82      237.37
  Nasdaq Non-Financial    100     121.47     142.19      208.68     409.12      238.41
</TABLE>


                                       25
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth  information as of March 21, 2001, based
on  information  obtained  from the persons  named  below,  with  respect to the
beneficial  ownership of shares of the  Company's  Common Stock held by (i) each
person  known by the Company to be the owner of more than 5% of the  outstanding
shares of the  Company's  Common  Stock,  (ii) each  director,  (iii) each named
executive officer, and (iv) all executive officers and directors as a group:

         Name and Address               Number of Shares           Percentage
        of Beneficial Owner             Beneficially Owned (1)     of Class (2)
    -------------------------------    ------------------------   --------------

    JNC Opportunity Fund Ltd.
      c/o Olympia Capital Cayman Ltd
      20 Reid St, Hamilton HM 11
      Bermuda 19102                            197,073,319 (3)          72.8%
    Lee Feist                                  1,596,316   (4)          1.6%
    Bryan Finkel                               100,000                  *
    Henry Reinhold                             135,500                  *
    All directors and executive officers
      as a group (three persons)               1,831,816   (5)          1.9%

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

(1)  Unless otherwise indicated,  each beneficial owner has both sole voting and
     sole investment power with respect to the shares beneficially owned by such
     person,  entity or group. The number of shares shown as beneficially  owned
     include all  options,  warrants  and  convertible  securities  held by such
     person, entity or group which are exercisable or convertible within 60 days
     of March 21, 2001.

(2)  The percentages of beneficial ownership as to each person,  entity or group
     assume the exercise or conversion of all options,  warrants and convertible
     securities  held by such person,  entity or group which are  exercisable or
     convertible  within 60 days, but not the exercise or conversion of options,
     warrants and convertible securities held by others shown in the table.

(3)  Based  solely on  information  contained  in a Schedule 13D dated April 26,
     1999.  Includes  172,073,137  shares issuable to JNC Opportunity  Fund upon
     conversion of (a) 385 shares of Series A Convertible  Preferred  Stock, (b)
     500 shares of Series B  Convertible  Preferred  Stock and (c) 500 shares of
     Series C Convertible  Preferred Stock held by JNC Opportunity Fund. This is
     derived from a conversion formula described in an agreement dated April 26,
     1999 between JNC, the Company and certain other preferred  shareholders and
     assumes  conversion of all  preferred  shares held by JNC as of the date of
     the agreement.  The Series A Preferred Stock,  Series B Preferred Stock and
     Series C Preferred  Stock,  each in a face amount of $10,000 per share,  is
     convertible,  at the  option of JNC,  at a  conversion  price  equal to the
     lesser of $1.00 per share or 85% of the  average  closing  bid price of the
     Company's  common stock over the five trading  days  preceding  conversion.
     Since  the  number of  shares  that are  issuable  upon  conversion  of the
     Preferred  Shares is derived  from a conversion  formula  which is based in
     part  upon the  market  price of the  shares  prior  to a  conversion  of a
     Preferred  Shares,  the actual  number of shares that will be issued upon a
     conversion of the Preferred  Shares (and  therefore  beneficially  owned by
     JNC) cannot accurately be determined at this  time.

(4)  Includes 798,156 shares issuable upon the exercise of currently exercisable
     options.

(5)  Includes 798,156 shares issuable upon the exercise of currently exercisable
     options held by officers and directors of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During the year ended  December 31, 2000,  Tranche B, Inc. a company  owned
and  controlled  by  stockholders  that  hold  a  controlling  interest  in  the
Registrant  acquired  from a secured  lender all rights,  title and  interest in
claims  against  USCI,  Inc. and Ameritel  Communications,  Inc., a wholly owned
subsidiary  operating as a  debtor-in-possession  subject to the jurisdiction of
the United States  Bankruptcy  Court for the Southern  District of New York. The
transaction  included the release of all guarantees of  indebtedness of Ameritel
to the secured  lender by USCI,  Inc.  At December  31,  2000,  the  outstanding
indebtedness  included in the transaction  totaled  $13,413,905.

                                       26
<PAGE>

                                    PART IV

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

         (a)(1)   Financial Statements

         See  Index  to  Financial  Statements  on page 30 of  this  report  for
financial statements and supplementary data filed as part of this report.

         (a)(2)   Financial Statement Schedules

         All financial  statement  schedules are omitted  because the conditions
requiring  their  filing do not exist or the  information  required  thereby  is
included in the financial statements filed, including the notes thereto.

         (b)      Reports on Form 8-K

         On  December  29,  2000,  the  Registrant  filed a  report  on Form 8-K
disclosing  under Item 4 the  resignation  of Arthur  Andersen LLP as certifying
accountants.

         (c)      Exhibits

        Number                  Description of Exhibit
       --------                -------------------------

     3.1  Certificate of Incorporation of Trinity Six Inc. (1)

     3.2  Certificate of Amendment of Certificate  of  Incorporation  of Trinity
          Six Inc. (4)

     3.2A Certificate of Designation  for Series A Convertible  Preferred  Stock
          (11)

     3.3  By-Laws of Registrant (1).

     4.1  Form of Certificate evidencing shares of Common Stock (5).

     10.1 Amended and Restated 1992 Stock Option Plan (6).

     10.1A 1997 Stock Option Plan. (7)

     10.2 Agreement dated October 1996 between Ameritel Communications, Inc. and
          GTE Mobilenet Service Corp. (7)

     10.3 Stock  Option  Agreements  dated as of October 30,  1997 with  certain
          stockholders of the Registrant. (9)

     10.4 Warrant  Agreement  dated October 30, 1997 between the  Registrant and
          PaineWebber. (9)

     10.5 Shareholder Collateral Agreement dated as of October 30, 1997. (9)

     10.6 Warrant issued by the Registrant to Alan R. Dresher. (9)

     10.7 Warrant issued by the Registrant to Decameron Partners. (9)

     10.8 Warrant issued by the Registrant to Alan Baron. (9)

     10.9 Warrant dated  February 2, 1998 issued by the  Registrant to Decameron
          Partners, Inc. (10)

     10.10Warrant  dated  February 2, 1998 issued by the  Registrant  to Alan R.
          Dresher. (10)

     10.11Warrant  dated  February  2,  1998  issued by the  Registrant  to Alan
          Baron. (10)

     10.12Private  Placement  Purchase  Agreement  dated February 24, 1998 among
          the Registrant, George Karfunkel, Michael Karfunkel,  Huberfeld Bodner
          Family Foundation,  Inc., Laura Huberfeld/Naomi Bodner Partnership and
          Ace Foundation, Inc. (10)

     10.13Convertible  Restated  Note  dated  February  24,  1998  issued by the
          Registrant in favor of George Karfunkel. (10)

     10.14Convertible  Restated  Note  dated  February  24,  1998  issued by the
          Registrant in favor of Michael Karfunkel. (10)

     10.15Convertible  Restated  Note  dated  February  24,  1998  issued by the
          Registrant in favor of Laura Huberfeld/Naomi Bodner Partnership. (10)

     10.16Convertible  Restated  Note  dated  February  24,  1998  issued by the
          Registrant in favor of Huberfeld Bodner Family Foundation, Inc. (10)

     10.17Warrant  dated  February 24, 1998 issued by the  Registrant  to George
          Karfunkel. (10)

     10.18Warrant  dated  February 24, 1998 issued by the  Registrant to Michael
          Karfunkel. (10)

     10.19Warrant  dated  February  24, 1998 issued by the  Registrant  to Laura
          Huberfeld/Naomi Bodner Partnership. (10)

     10.20Warrant dated  February 24, 1998 issued by the Registrant to Huberfeld
          Bodner Family Foundation, Inc. (10)

                                       27
<PAGE>

     10.21Convertible  Note dated  February 24, 1998 issued by the Registrant in
          favor of George Karfunkel. (10)
     10.22Convertible  Note dated  February 24, 1998 issued by the Registrant in
          favor of Ace Foundation. (10)
     10.23Warrant  dated  March 5,  1998  issued  by the  Registrant  to Alan R.
          Dresher. (10)
     10.24Warrant  dated  March 5, 1998  issued  by the  Registrant  to  Bulldog
          Capital Management. (10)
     10.25Warrant  dated March 5, 1998 issued by the  Registrant  to Alan Baron.
          (10)
     10.26Convertible  Preferred Stock Purchase Agreement between the Registrant
          and JNC Opportunity Fund Ltd. dated March 24, 1998 (11).
     10.27Registration  Rights  Agreement  dated  March  24,  1998  between  the
          Registrant and JNC Opportunity Fund, Ltd. (11)
     10.28Escrow  Agreement  dated  March 24,  1998  among the  Registrant,  JNC
          Opportunity Fund, Ltd. and Robinson Silverman Pearce Aronsohn & Berman
          LLP (11)
     10.29Warrant  dated  March  24,  1998  granted  by  the  Registrant  to JNC
          Opportunity Fund Ltd. (11)
     10.30Warrant  dated March 24,  1998  granted by the  Registrant  to Wharton
          Capital Partners, Ltd. (11)
     10.31Amended and  Restated  Loan and Security  Agreement  dated as of April
          14, 1999 (11)
     10.32Preferred  Stockholders  Conversion  Agreement  dated as of April  26,
          1999 (11)
     10.33Consulting  Agreement  dated as of May 1, 1999 between the  Registrant
          and Howard Zuckerman (12)
     10.34+ Employment Agreement dated as of July 6, 1999 between the Registrant
          and Lee Feist (13)
     10.35Sublease  dated  February 24, 2000 between  Factory  Mutual  Insurance
          Company and Americomonline.com, Inc. (14)
     10.36Marketing  and  Distribution  Agreement  dated  April 3, 2000  between
          Net2Phone, Inc. and Americomonline.com, Inc. (14)
     10.37Purchase  and  Assignment  of  Claim  dated  April  28,  2000  between
          Foothill Capital Corporation, Tranche B, Inc. and USCI, Inc. (14)
     21.1* Subsidiaries of Registrant
     23.1* Consent of Arthur Andersen LLP
     23.2* Consent of Tauber & Balser

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

*    Filed herewith.
+    Compensatory plan or management agreement.
(1)  Incorporated  by  reference  to an  Exhibit  filed  as  part  of  Trinity's
     Registration Statement on Form S-1 (File No. 33-64489).
(2)  Incorporated  by reference to Exhibit C of Trinity's  Proxy Statement dated
     April 17, 1995.
(3)  Incorporated  by reference to an Exhibit filed as part of the  Registrant's
     Registration Statement on Form S-1 on Form S-4 (File No. 33-88828).
(4)  Incorporated  by  reference  to an Exhibit to the  Registrant's  Transition
     Report on Form 10-K for the  Transition  Period from October 1, 1994 to May
     14, 1995.
(5)  Incorporated  by  reference to an Exhibit  filed as part of  Post-Effective
     Amendment No. 1 on Form S-3 to the Registrant's  Registration  Statement on
     Form S-1 on Form S-4 (File No. 33-88828).
(6)  Incorporated  by reference to an Exhibit filed as part of the  Registrant's
     Registration Statement on Form S-8 (File No. 333-16291).
(7)  Incorporated  by reference to an Exhibit filed as part of the  Registrant's
     Registration Statement on Form S-8 (File No. 333-37329).
(8)  Incorporated  by reference to an Exhibit filed as part of the  Registrant's
     Form 10-K for the period ended December 31, 1996.
(9)  Incorporated  by reference to an Exhibit filed as part of the  Registrant's
     Form 8-K dated and filed on January 13, 1998.
(10) Incorporated  by reference to an Exhibit filed as part of the  Registrant's
     Form 8-K dated and filed on March 12, 1998.
(11) Incorporated  by reference to an Exhibit filed as part of the  Registrant's
     Form 10-K for the year ended December 31, 1999.
(12) Incorporated  by reference to an Exhibit filed as part of the  Registrant's
     Form 10-Q for the quarter ended March 31, 1999.
(13) Incorporated  by reference to an Exhibit filed as part of the  Registrant's
     Form 10-Q for the quarter ended June 30, 1999.
(14) Incorporated  by reference to an Exhibit filed as part of the  Registrant's
     Form 10-K for the year ended December 31, 1999

                                       28
<PAGE>

                                   SIGNATURES

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

                                           USCI, INC.

                                       By: /s/ Lee Feist
                                          -----------------------------------
                                           Lee Feist, Chief Executive Officer

Dated: April 11, 2001

         Pursuant to the  requirements  of 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 date indicated.


   Signature            Title                                    Date

 /s/ Lee Feist         Chairman of the Board, Chief          April 11, 2001
---------------------- Executive Officer and Director
Lee Feist              (Principal Executive Officer
                       and Principal Financial and
                       Accounting Officer)



 /s/ Bryan Finkel      Director
-----------------------
                                                              April 11, 2001
Bryan Finkel


  /s/ Henry Reinhold   Director                               April 11, 2001
-----------------------
Henry Reinhold


                                       29
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS


                                                                         Page

USCI, Inc. and Subsidiaries

  Reports of Independent Public Accountants...........................  F-1 - 2
  Consolidated Balance Sheets as of December 31, 2000 and 1999........     F-3
  Consolidated Statements of Operations for the Years Ended
     December 31, 2000, 1999 and 1998.................................     F-4
  Consolidated Statements of Stockholders' Deficit for the Years
     Ended December 31, 2000, 1999 and 1998...........................     F-5
  Consolidated Statements of Cash Flows for the Years Ended
     December 31, 2000, 1999 and 1998................................. F-6 - 7
  Notes to Consolidated Financial Statements..........................  F-8-19

  Ameritel Communications, Inc.

  Reports of Independent Public Accountants........................... F-20-21
  Balance Sheets as of December 31, 2000 and 1999.....................    F-22
  Statements of Operations for the Year Ended December 31, 2000
    and 1999..........................................................    F-23
  Statement of Stockholders' Deficit for the Year Ended December
    31, 2000 and 1999.................................................    F-24
  Statement of Cash Flows for the Years Ended December 31, 2000
    and 1999..........................................................    F-25
       Notes to Financial Statements.................................. F-26-30


                                       30
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and Shareholders
USCI, Inc.:

We have audited the  accompanying  consolidated  balance sheet of USCI,  Inc. (a
Delaware  corporation)  and subsidiaries as of December 31, 2000 and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit.

We conducted our 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
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of USCI,  Inc. and
subsidiaries  as of December 31, 2000,  and the results of their  operations and
their cash flows for the year then ended in conformity  with generally  accepted
accounting principles in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going  concern.  As discussed in Notes A and G to the
financial statements, the Company has suffered recurring losses from operations,
has an accumulated  deficit,  has a stockholders'  deficit, has negative working
capital,  has  triggered  default  provisions  under the terms of its letters of
credit,  has uncertainties  related to significant  litigation,  and has not yet
obtained sufficient financing  commitments to support the current or anticipated
level of operations.  In addition, on October 29, 1999, Ameritel Communications,
Inc., a wholly-owned  subsidiary of the Company filed a voluntary petition under
Chapter 11 of U.S.C.  Title 11 with the United States  Bankruptcy  Court.  These
matters raise  substantial  doubt about the  Company's  ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note A. The financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.

TAUBER & BALSER, P.C.


Atlanta, Georgia
March 30, 2001

                                       F-1

<PAGE>


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To USCI, Inc.:

We have audited the  accompanying  consolidated  balance sheet of USCI,  Inc. (a
Delaware  corporation)  and subsidiaries as of December 31, 1999 and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
each of the two years in the period ended  December 31,  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. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of USCI, Inc. and subsidiaries as
of December  31, 1999 and the results of their  operations  and their cash flows
for each of the two years in the period ended  December  31, 1999 in  conformity
with accounting principles generally accepted in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note A to the
financial statements, the Company has suffered recurring losses from operations,
has an accumulated  deficit,  has a stockholders'  deficit, has negative working
capital,  has  triggered  default  provisions  under the terms of its letters of
credit,  has uncertainties  related to significant  litigation,  and has not yet
obtained sufficient financing  commitments to support the current or anticipated
level of operations.  In addition, on October 29, 1999, Ameritel Communications,
Inc., a wholly-owned  subsidiary of the Company filed a voluntary petition under
Chapter 11 of U.S.C.  Title 11 with the United States  Bankruptcy  Court.  These
matters raise  substantial  doubt about the  Company's  ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note A. The financial  statements do not include any adjustments  relating to
the  recoverability  and  classification of asset carrying amounts or the amount
and classification of liabilities that might result should the Company be unable
to continue as a going concern.


ARTHUR ANDERSEN LLP


Atlanta, Georgia
April 14, 2000


                                       F-2

<PAGE>

             USCI, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999

<TABLE>


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

ASSETS

CURRENT ASSETS:
     Cash and cash equivalents,including restricted  cash
         of $300,000 in 2000 and 1999                                    $   400,140       $    300,000
     Prepaid expenses and other                                                3,610            691,017
                                                                      ---------------   ----------------
         Total current assets                                                                   991,017
                                                                             403,750

PROPERTY AND EQUIPMENT, net                                                    6,276            155,000
OTHER ASSETS                                                                  56,474              6,474
                                                                      ---------------   ----------------
         TOTAL ASSETS                                                    $   466,500      $   1,152,491
                                                                      ===============   ================

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
     Letter-of-credit advances                                          $  2,491,982      $   2,491,982
     Notes payable                                                                                    -
                                                                             183,497
     Accounts payable                                                      2,598,715          2,612,152
     Commissions payable                                                     225,571            225,571
     Accrued expenses                                                        503,213            319,520
                                                                      ---------------   ----------------

         TOTAL CURRENT LIABILITIES                                         6,002,979          5,649,225
                                                                      ---------------   ----------------

COMMITMENTS AND CONTINGENCIES

INVESTMENT IN AMERITEL                                                             -         30,592,037
                                                                      ---------------   ----------------

STOCKHOLDERS' DEFICIT
     Convertible Preferred Stock, $.01 par value;
         5,000 shares authorized,                                                 18                 18
     Common stock, $.0001 par value; 100,000,000 shares authorized;            9,898              9,398
     Additional paid-in capital                                           66,853,573         66,131,173
     Accumulated deficit                                                (72,371,918)      (101,201,310)
     Treasury stock, at cost, 5,500 shares in 2000 and 1999                 (28,050)           (28,050)
                                                                      ---------------   ----------------
     Total stockholders' deficit                                         (5,536,479)       (35,088,771)
                                                                      ---------------   ----------------

         TOTAL LIABILITIES AND STOCKHOLDERS'
              DEFICIT                                                    $   466,500     $ (29,439,546)
                                                                      ===============   ================
</TABLE>


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


                                       F-3
<PAGE>


        USCI, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
<TABLE>


                                                             2000         1999         1998
                                                       --------------  -----------  -----------
<S>                                                     <C>            <C>          <C>

REVENUES
     Subscriber sales                                     $      -     $        -  $ 41,074,235
     Activation commissions                                      -              -        14,925
     Other operating revenue                               114,726              -             -
                                                     --------------    ----------- -------------
       Total revenues                                      114,726              -    41,089,160
                                                     --------------    ----------- -------------

COST OF SALES
     Cost of subscriber sales                                    -              -    24,683,121
     Cost of agency commissions                                  -              -        11,380
     Cost of other operating revenue                         9,858              -             -
                                                     --------------    ----------- -------------
            Total cost of sales
                                                             9,858              -    24,694,501
                                                     --------------    ----------- -------------
GROSS MARGIN                                               104,868              -    16,394,659
                                                     --------------    ----------- -------------

SELLING, GENERAL AND ADMINISTRATIVE, NET                 1,674,597        764,088    32,791,669
STOCK COMPENSATION EXPENSE                                       -      1,719,464             -
SUBSCRIBER ACQUISITION AND
     PROMOTIONAL COSTS                                           -              -    18,920,271
WRITEDOWN OF LONG-LIVED ASSETS                                   -      1,711,923             -
                                                     --------------    ----------- -------------

                                                         1,674,597      4,195,475    51,711,940
                                                     --------------    ----------- -------------
OPERATING LOSS                                         (1,569,729)     (4,195,475)  (35,317,281)
                                                     --------------    ----------- -------------

OTHER INCOME (EXPENSE)
     Gain on sale of subscribers                                -               -       876,164
     Interest income                                       15,528          12,310        86,601
     Interest expense                                     (14,259)              -    (8,139,857)

     Guarantor release expense                           (702,900)              -             -
     Income (loss) from investment in Ameritel                  -     (10,406,884)            -
                                                     --------------   ------------ -------------
       Total other income (expense)                      (701,631)    (10,394,574)   (7,177,092)
                                                     --------------   ------------ -------------

NET LOSS                                             $ (2,271,360)   $(14,590,049) $(42,494,373)
                                                     ==============   ============ =============

BASIC AND DILUTED LOSS PER SHARE                     $      (0.02)   $      (0.22) $      (3.90)
                                                     ==============   ============ =============


WEIGHTED AVERAGE SHARES OUTSTANDING                    96,751,900      67,174,007    11,072,905
                                                     ==============   ============ =============
</TABLE>



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


                                       F-4
<PAGE>


                           USCI, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998


<TABLE>

                                        Preferred Stock       Common Stock        Additional
                                      ------------------  ----------------------   Paid In     Accumulated    Treasury
                                       Shares    Amount     Shares     Amount      Capital       Deficit       Stock        Total
                                      --------  --------  ---------- ----------- -----------   -------------  ---------  -----------
<S>                                   <C>       <C>       <C>        <C>         <C>           <C>            <C>        <C>

BALANCE, December 31, 1997                -   $    -    10,267,309 $   1,027   $ 36,836,625  $ (43,122,580) $ (28,050) $(6,312,978)

   Issuance of Convertible
   Preferred Stock                    1,500       15             -         -     13,384,497              -          -   13,384,512
   Sale of common stock
                                          -        -       423,913        43      2,258,354              -          -    2,258,397
   Exercise of stock options
                                          -        -         3,043         -          5,221              -          -        5,221
   Exercise of warrants
                                          -        -           987         -          3,751              -          -        3,751
   Warrants issued in connection
   with debt financings                   -        -             -         -      4,647,000              -          -    4,647,000
   Dividends on Convertible
   Preferred Stock                        -        -             -         -        644,415       (644,415)         -
   Common stock issued in lieu of
   interest                               -        -        34,000         3        135,317              -          -      135,320
   Conversion of preferred stock
   to common stock                      (90)      (1)      814,939        82         (4,350)             -          -       (4,269)
   Conversion of notes payable to
   common stock                           -        -       462,637        46      1,542,520              -          -    1,542,566
   Conversion of notes payable to
   preferred stock                      500        5             -         -      3,999,995              -          -    4,000,000
   Net loss                               -        -             -         -              -    (42,494,373)         -  (42,494,373)
                                    --------- --------- ------------ ---------  ------------ -------------- ---------- -----------

BALANCE, December 31, 1998            1,910       19    12,006,828     1,201     63,453,345    (86,261,368)   (28,050) (22,834,853)
   Issuance of common stock
                                          -        -     6,170,045       617      2,167,901              -          -    2,168,518
   Dividends on Convertible
   Preferred Stock                        -        -             -         -        349,893       (349,893)         -
   Exercise of stock options              -        -       798,156        80        167,533              -          -      167,613
   Conversion of preferred stock to
      common stock                     (175)      (1)   75,000,000     7,500         (7,499)             -          -
   Net loss                               -        -             -         -              -    (14,590,049)         -  (14,590,049)
                                    --------- --------- ------------ ---------  ----------- --------------  ---------- -----------
BALANCE, December 31, 1999            1,735       18    93,975,029     9,398     66,131,173   (101,201,310)  ( 28,050) (35,088,771)
   Issuance of common stock               -        -        50,000        50         19,950                                 20,000
   Release of subsidiary debt guarantee   -        -             -         -              -     31,100,752          -   31,100,752
   Issuance of stock for settlement
      of liabilities                      -        -     4,500,000       450        702,450              -          -      702,900
   Net loss                               -        -             -         -              -     (2,271,360)         -   (2,271,360)
                                    --------- --------- ------------ ---------  -----------  --------------  ---------- ----------

BALANCE, December 31, 2000            1,735    $  18    98,525,029   $ 9,898    $66,853,573  $ (72,371,918) $ (28,050) $(5,536,479)
                                    ========= ========= ============ =========  ===========  ==============  ========== ==========

</TABLE>



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


                                       F-5
<PAGE>


        USCI, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
<TABLE>

                                                              2000          1999         1998
                                                            ---------    -----------   ----------
<S>                                                       <C>            <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                             $(2,271,360)   (14,590,049)   (42,494,373)
                                                           ----------    ------------   ------------
     Adjustments:
         Depreciation and amortization                        156,409        732,685      2,664,476
         Amortization of discount on notes payable                  -              -      5,342,000
         Amortization of deferred financing costs                   -              -      1,124,509
         Provision for losses on accounts receivable                -         12,166     11,539,141
         Gain from sale of subscribers                              -              -       (876,164)
         Stock compensation expense                                 -      1,719,464              -
         Stock issued for settlement of liabilities           702,900              -              -
         (Income) loss from investment in subsidiary                -     10,406,884              -
         Restructuring and other special charges                    -      1,711,923              -
         Changes in:
            Accounts receivable:
              Trade                                                 -              -    (17,131,129)
              Other                                                 -         35,366      1,091,551
            Prepaid expenses and other                        687,407        230,650        361,005
            Commissions payable                                     -        (17,607)      (874,561)
            Accounts payable and accrued expenses             170,257        745,328     10,923,310
            Promotional deposits                              (50,000)    (1,053,387)      (642,668)
                                                           -----------    ------------   -----------
              Total adjustments
                                                            1,666,973     14,523,472     13,521,470
                                                           -----------    ------------   -----------
         Net cash used by operating activities
                                                             (604,387)       (66,577)    28,972,903)
                                                           -----------    ------------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures                                      (7,685)             -       (601,427)
                                                           -----------    ------------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from notes payable, long-term debt and
         credit facility
                                                              183,497              -      26,631,199
     Payments received from Ameritel
                                                                    -       366,577                -
     Repayment of notes payable and credit facility
                                                                    -             -      (12,642,631)
     Change in Investment in Ameritel
                                                              508,715             -                -
     Exercise of stock options
                                                                    -             -            8,972
     Issuance of Convertible Preferred Stock
                                                                    -             -       15,000,000
     Sale of common stock
                                                               20,000             -        2,489,999
     Costs associated with debt offerings                           -             -         (416,891)
     Costs associated with equity offerings                         -             -       (1,847,090)
                                                            -----------    ------------   -----------
         Net cash provided by (used in) financing
         activities                                           712,212       366,577       29,223,558
                                                            -----------    ------------   -----------

NET INCREASE (DECREASE) IN CASH                               100,140       300,000         (350,772)

CASH AND CASH EQUIVALENTS, beginning of year                $       -             -      $ 1,105,530
                                                            -----------    ------------   -----------

CASH AND CASH EQUIVALENTS, end of year                      $ 100,140       $     -      $   754,758
                                                            ===========    ============   ===========
</TABLE>



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


                                       F-6
<PAGE>



  USCI, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998




SUPPLEMENTAL INFORMATION:
     Interest paid
                                              $     -    $     -    $  796,067
                                              ========= ========== ============

     Noncash financing activities:
         Warrants issued in connection with
         letter-of-credit                     $     -    $     -    $4,467,000
                                              ========= ========== ============

         Conversion of notes payable
                                              $  -       $  -       $5,542,566
                                              ========= ========== ============



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



                                       F-7



     USCI, INC., AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2000, 1999 AND 1998



NOTE A - OPERATIONS

USCI, Inc. (the "Company") is a marketer of IP Telephony  products and services,
an accounts  receivable  management and debt recovery agency,  and a reseller of
cellular services to subscribers via reselling  agreements with carriers through
its wholly-owned subsidiary, Ameritel Communications,  Inc. ("Ameritel").  Prior
to November 1996, before becoming a reseller, the Company was a nationwide agent
for  companies  providing  cellular and paging  communication  services  through
national distribution channels.

On October 29, 1999,  Ameritel  filed a voluntary  petition  for  reorganization
under Chapter 11 of U.S.C.  Title 11 with the United States Bankruptcy Court for
the Southern District of New York (Case No. 99-11081) (the "Bankruptcy  Court").
Under Chapter 11,  certain  claims  against  Ameritel in existence  prior to the
filing of the petitions for relief under the federal  bankruptcy laws are stayed
while Ameritel continues business operations as a debtor-in-possession.

The Company has never  operated at a profit since its  inception in 1991 and had
losses of $2,271,360,  $14,590,049, and $42,494,373 for the years ended December
31, 2000, 1999, and 1998 respectively.  Additionally,  at December 31, 2000, the
Company had an  accumulated  deficit of $72,371,918 a  stockholders'  deficit of
$5,536,479  and a working  capital  deficiency of  $5,599,229.  The Company will
require  substantial  financing  for working  capital for a period of time until
profitability  is  achieved,  if ever,  and there can be no  assurance  that the
Company will be successful in its efforts to arrange this financing.
In the second half of 1999,  the Company  altered its operations in an effort to
achieve future profitability,  including  establishing an e-commerce platform to
market services and products,  downsizing of staff and facilities and other cost
cutting  efforts to reduce  overhead and the adoption of its internet  telephony
initiative.  During  the first half of 2000,  AmericomOnline.com,  Inc. a wholly
owned subsidiary, entered into an agreement with Net2Phone, Inc. to market their
IP Telephony products and services to specific mass-market channels.  During the
second half of 2000, Telcollect, Inc., a wholly owned subsidiary specializing in
accounts  receivable  management  and the  recovery  of past  due  consumer  and
commercial debts was established.  While the Company believes that these efforts
will  position it  favorably to grow  revenues,  improve  operating  margins and
minimize  operating  costs,  there can be no assurance  that the Company will be
successful in growing revenues or operating profitably.

The factors  discussed  above raise  substantial  doubt about the ability of the
Company to continue as a going concern,  which  contemplates  the realization of
assets and the liquidation of liabilities in the normal course of business.  The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.


                                       F-8

<PAGE>


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The  accompanying  consolidated  financial  statements  of the  Company  and its
subsidiaries  include  the assets,  liabilities,  revenues  and  expenses of all
majority-owned  subsidiaries over which the Company exercises  control,  and for
which control is other than temporary.  Intercompany  transactions  and balances
are eliminated in consolidation.  The Company's subsidiary,  Ameritel, filed for
reorganization  under Chapter 11 in October 1999, and effectively the Company no
longer exercises  control over this subsidiary.  Investments in  nonconsolidated
affiliates (majority-owned subsidiaries over which the Company does not exercise
control) are accounted for on the equity basis.  Accordingly,  the Company began
accounting  for its investment in Ameritel under the equity method of accounting
retroactively, as of January 1, 1999.

Revenue Recognition

For  the  year  ended  December  31,  1998,  Ameritel  accounted  for all of the
Company's  revenue.  For the year ended  December  31,  1999,  all  revenue  was
generated by Ameritel and thus the consolidated statement of operations reflects
no  revenue  for the  year  as a  result  of the  de-consolidation  of  Ameritel
discussed  above.  For the  year  ended  December  31,  2000,  the  consolidated
statement of  operations  includes  only revenue from  marketing of IP telephony
products and services to consumers and providing accounts receivable  management
and past due debt recovery services to other companies.
The Company  recognizes an activation  commission  pursuant to the activation of
cellular and paging devices with a contracted carrier at a contracted amount per
activation.   The  Company   simultaneously   recognizes  a  related  commission
pass-through expense at a contracted amount per activation. The Company reserves
a portion of these commission revenues for estimated  chargebacks to the Company
arising from  deactivations  of cellular and paging devices by customers  during
specified contract periods.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original  maturities of
three  months  or  less to be  cash  equivalents.  Included  in  cash  and  cash
equivalents  at December  31,  2000 and 1999 was  $300,000  of  certificates  of
deposit which were restricted to cover letters-of-credit  required as collateral
by an employment agreement with an officer of the Company.

Fair Value of Financial Instruments

Fair value of financial instruments that are assets are estimated to approximate
their carrying  value  December 31, 2000. It is not  practicable to estimate the
fair value of the  Company's  liabilities  at that date because of the Company's
inability to fund its liabilities.


                                       F-9
<PAGE>

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment

Property  and  equipment   are  stated  at  cost  except  as  discussed   below.
Depreciation  is provided  using the  straight-line  method  over the  estimated
useful lives of the assets which are five years for  equipment and furniture and
fixtures  and the  shorter  of the  useful  life or  lease  term  for  leasehold
improvements.

Property and equipment,  at cost,  consist of the following at December 31, 2000
and 1999:

                                                 2000            1999
                                             -------------   -------------

              Equipment                       $    7,685      $155,000
              Less accumulated depreciation
                                                   1,409             -
                                             -------------   -------------
                                              $    6,276      $155,000
                                             =============   =============


As of December  31,  1999,  the  Company had pledged all of its fixed  assets in
connection with Ameritel's credit facility  agreement.  During 2000,  Ameritel's
lender foreclosed on all of the fixed assets.

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be disposed of," the Company  evaluates  whether events and  circumstances  have
occurred that indicate possible impairment. As a result of this review and based
upon an independent  third party  valuation,  the Company recorded an impairment
loss of $801,590  related to certain  equipment in 1999. The impairment loss for
these  assets to be held and used was included in the  writedown  of  long-lived
assets within the statement of operations.

Other Assets
Other assets at December 31, 2000 and 1999 consisted of the following:

                                                     2000             1999
                                                  ------------     ------------
              Deposits                             $ 55,374         $   5,374
              Other
                                                      1,100             1,100
                                                  ------------     ------------
                                                   $ 56,474         $   6,474
                                                  ============     ============



During 1999, the Company reviewed certain of its long-lived assets including its
capitalized system development costs and purchased software. As a result of this
review and based upon an independent third party valuation, the Company recorded
an impairment loss related to systems  development costs and purchased  software
of  $910,333.  This amount is included in the  writedown  of  long-lived  assets
within the statement of operations.



                                      F-10

<PAGE>

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investment in Ameritel

As discussed  above, due to the Chapter 11 bankruptcy  filing by Ameritel,  USCI
began  accounting  for its  investment  in Ameritel  under the equity  method of
accounting as of January 1, 1999.  Summarized financial  information of Ameritel
as of and for the years ended December 31, 2000 and 1999 were as follows:
<TABLE>


            December 31,                                       2000              1999
                                                          --------------    ---------------
            <S>                                           <C>               <C>


            Total assets                                   $    546,441       $  2,373,951

            Total liabilities                                52,950,760         54,822,294
                                                          --------------    ---------------
            Stockholder's deficit                          $(52,404,319)      $(52,448,343)
                                                          ==============    ===============

            For the year ended December 31,
            Revenues                                       $   4,678,385      $ 15,360,812

            Costs                                              4,642,162        25,767,696
                                                          --------------    ---------------
            Loss before extraordinary items and income     $      36,223      $(10,406,884)
            taxes                                         ==============    ===============
</TABLE>



Total liabilities include intercompany payables to USCI, Inc. of $18,854,608 and
$21,856,306  at December  31, 2000 and 1999,  respectively.  The  Investment  in
Ameritel is shown in the accompanying Consolidated Balance Sheets as of December
31, 1999 as a liability  and  consists of the  intercompany  amounts due to USCI
offset by the Stockholder's  deficit of Ameritel.  No adjustments have been made
to this  Investment  in Ameritel to reflect the impact that would  result if any
adjustments of Ameritel's  assets or liabilities are made as part of its Chapter
11 reorganization case. Therefore,  this Investment in Ameritel does not purport
to  represent  the net  liability  of USCI in  connection  with  the  Bankruptcy
proceedings.

In 2000,  the Company was released from its  guarantee of  Ameritel's  debt (See
Note C) and  accordingly  reduced its investment  balance to zero as is required
under the equity method.

Subscriber Acquisition and Promotional Costs
Subscriber  acquisition  costs and  promotional  costs include costs incurred to
acquire  subscribers,  including  commissions,  discounts given to consumers for
reduced airtime and other promotions, and advertising.

Other Income
In  November  1998 the Company  sold its paging  services  subscriber  base to a
paging  vendor for the amount  owed to the vendor,  which  resulted in a gain of
$876,164.

                                      F-11

<PAGE>


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net Loss Per Share

The  Company  calculates  and  presents  net loss per share in  accordance  with
Statement of Financial  Accounting  Standards  ("SFAS") No. 128,  "Earnings  Per
Share."  Basic  earnings per share are based on the weighted  average  number of
shares outstanding. Diluted earnings per share are based on the weighted average
number of shares  outstanding  and the  dilutive  effect  of  outstanding  stock
options  and  warrants  (using  the  treasury  stock  method).  For all  periods
presented,  outstanding  options and warrants  have been  excluded  from diluted
weighted average shares outstanding, as their impact was antidilutive.

Net loss  attributable to common  stockholders  for the years ended December 31,
1999 and 1998, as adjusted by dividend requirements on the Company's convertible
preferred  stock was $14,939,942 and  $43,138,788,  respectively.  There were no
preferred  dividend  requirements  for the year ended  December 31, 2000.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  requires  management to make estimates and  assumptions.
These  estimates  and  assumptions  affect  the  reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial  statements  as well as reported  amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Long-Lived Assets

The Company periodically evaluates the carrying values of its long-lived assets,
such as property  and  equipment  and systems  development  costs,  to determine
whether  any  impairment  is  other  than  temporary.  Management  believes  the
long-lived  assets  in  the  accompanying  balance  sheets,  as  adjusted,   are
appropriately valued after the impairment charges discussed above.
Significant Concentrations
For the year ended December 31, 1998,  approximately  75% of subscriber  revenue
was attributable to one merchandiser's activation's with the Company. In October
1998, the Company's relationship with the merchandiser was terminated.

Reclassifications

Certain  prior year amounts have been  reclassified  to conform with the current
year presentation.


                                      F-12
<PAGE>

NOTE C - LETTER -OF-CREDIT ADVANCES AND NOTES PAYABLE

Credit Facility

On April 14, 1999, Ameritel  Communications,  Inc., a wholly owned subsidiary of
the Company  ("Ameritel") entered into an Amended and Restated Loan and Security
Agreement with Foothill  Capital Corp.  ("Foothill")  in which the original Loan
and  Security  Agreement  entered  into on  September  5,  1998 was  amended  to
restructure the existing credit facility by reducing the total facility to $17.5
million.  Additionally,  certain of our preferred shareholders and certain other
persons entered into a Participation  Agreement with Foothill in connection with
the  restructuring of the outstanding $20 million credit facility with Foothill.
The  participants  in the  Foothill  facility  made an  aggregate  of $7 million
available as term loans.  Although the limit of the credit  facility was reduced
from $20 million to $17.5 million,  the $7 million  allocated for term loans was
available for working capital upon certain  conditions.  The $10.5 million limit
was structured as part revolver, part term loan and part letter of credit. Also,
there were  approximately  $1 million in standby  letters of credit  outstanding
under the line.  The Company  guaranteed  payment of amounts due under the above
Agreement.

On April 28, 2000, a Release of Guaranty and  Termination of Security  Interests
was reached between  Tranche B, Inc. and Foothill.  Tranche B, Inc. is owned and
controlled  by  shareholders  that hold a  controlling  interest in the Company.
Under the terms of the agreement,  Foothill agreed to sell,  transfer and assign
without recourse,  all rights,  title and interest in and to claims of Ameritel,
including any and all security interests against Ameritel and guarantees against
the Company,  together  with their right to receive cash,  instruments  or other
property  issued  in  connection  with  the  proceedings  in the  United  States
Bankruptcy  Court  of the  Southern  District  of New  York.  In  addition,  the
transaction  included the release of all guarantees of that  indebtedness by the
Company and its affiliates other than Ameritel. As consideration for the release
and  termination,  Foothill  received  4,000,000  shares of common  stock of the
Company.

On the  eighteenth  month  anniversary  of the  agreement  date,  Foothill is to
receive  such  additional  shares of common  stock of the Company as to make the
aggregate  fair  market  value of the shares in the  initial  transfer  equal to
$4,000,000,  based on an agreed upon weighted  average  formula.  The additional
shares to be issued,  if any, under this formula cannot exceed 2,000,000 shares.
If additional shares are issued,  the value of the stock issued will be recorded
as an expense  at that date.  The value of the stock will be based on the market
price at the date the number of shares to be issued is determined.

NOTE D - STOCKHOLDERS' DEFICIT

Common Stock

During 1999, the Company issued  6,170,045  shares of common stock.  The Company
issued  5,000,000 shares to an independent  consultant  pursuant to a consulting
agreement,  300,000  shares to the new Board of  Directors  (100,000  shares per
member),  350,000  shares to a then current  employee and an additional  520,045
shares to current  employees and  directors  for the shares  utilized in October
1997 as collateral for a  letter-of-credit  issued by an investment  banker. The
value of these  issuances  totaled  $2,168,518,  of which  $691,017  remained in
prepaid expenses at December 31, 1999.

                                      F-13

<PAGE>

NOTE D - STOCKHOLDERS' DEFICIT (CONTINUED)

During 2000, the Company issued  4,550,000  shares of common stock.  The Company
issued  4,000,000  shares  in  connection  with  the  Release  of  Guaranty  and
Termination of Security  Interests between Tranche B Inc. and the secured lender
providing the credit  facility to Ameritel  (see Note C),  500,000 in connection
with the RadioShack settlement (see Note G), and 50,000 shares for $20,000 cash.

Preferred Stock

On April  26,  1999,  pursuant  to an  agreement  between  the  Company  and its
preferred shareholders ("Preferred  Agreement"),  the holders of the Convertible
Preferred Stock converted $1,500,000 stated value of Convertible Preferred Stock
into  75,000,000  shares of common stock at $.02 per share,  agreed to waive all
future  dividends on the outstanding  Convertible  Preferred Stock, and canceled
all outstanding  options and warrants held by them covering  4,485,707 shares of
common stock.

At December 31, 2000, the Company had a total of 1,735 shares of Preferred stock
outstanding,  comprised  of 385  shares of Series A, 500 shares of Series B, 500
shares of Series C and 350 shares of Series D. The Series A, B, and C  Preferred
shares each have a stated  value of $10,000 per share and the Series D Preferred
shares each have a stated value of $8,000.  The Preferred  stock is  convertible
into common  stock of the Company at a  conversion  price equal to the lesser of
$1.00 per share or 85% of the average closing bid price of the Company's  common
stock over the five trading days preceding conversion.
Stock Options

The Company's 1992 Stock Option Plan (the "1992 Plan"), as amended, provides for
the issuance of up to 750,000  incentive and  nonqualified  stock options to key
employees and nonemployee directors. In March 1997, the Company adopted the 1997
Stock Option Plan (the "1997 Plan"),  which also provides for the issuance of up
to 750,000  incentive  and  nonqualified  stock  options.  In 1999,  the Company
adopted the 1999 Stock  Option Plan (the "1999  Plan"),  which  provides for the
issuance of up to 5,000,000  incentive and nonqualified stock options.  The 1992
Plan, the 1997 Plan, and the 1999 Plan are hereafter  referred to as the "Option
Plans."

Options are  granted at an  exercise  price which is not less than fair value as
estimated by the Board of Directors and become  exercisable as determined by the
Board of  Directors,  generally  over a period  of four to five  years.  Options
granted  under the Option  Plans  expire  ten years  from the date of grant.  At
December 31,  2000,  options to purchase  4,325,844  shares of common stock were
available for future grant under the Option Plans.

Additionally, the Company from time to time grants options outside of the Option
Plans to nonemployee directors,  employees, and consultants. The Company granted
no options  outside the Option Plans  during the three years ended  December 31,
2000.


                                      F-14
<PAGE>

NOTE D - STOCKHOLDERS' DEFICIT (CONTINUED)


Transactions  related to stock options for each of the three years in the period
ended December 31, 2000 are as follows:
                                                                  Weighted
                                                                  Average
                                                     Shares        Price
                                                   ------------  -----------

      Options outstanding at December 31, 1997       1,526,170       $5.13
             Granted                                   377,500        5.55
             Forfeited                               (240,879)        6.34
             Exercised                                 (3,043)        1.72
                                                   ------------

      Options outstanding at December 31, 1998       1,659,748        4.99
             Granted                                 2,478,312        0.32
             Forfeited                               (981,764)        4.55
             Exercised                               (798,156)        0.21
                                                   ------------

      Options outstanding at December 31, 1999       2,358,140        2.68
             Granted                                    60,000        0.14
             Forfeited                               (563,479)        0.70
             Exercised
                                                             -
                                                   ------------

      Options outstanding at December 31, 2000       1,854,661        2.27
                                                   ============

      Exercisable at December 31, 2000               1,693,501        2.45
                                                   ============



The following table summarizes  information  about stock options  outstanding at
December 31, 2000:

                      Options  Outstanding                   Options Exercisable
          ----------------------------------------------     -------------------
                                               Weighted
                                  Weighted     Average                  Weighted
    Range of                      Average     Remaining                 Average
    Exercise          Number      Exercise   Contractual     Number     Exercise
     Prices         of Shares      Price        Life       of Shares    Price
----------------- ------------  -----------  -----------   ----------- ---------

$0.14 - $3.00     1,216,156    $  0.31         6.6         1,057,396   $   0.32
$3.01 - $4.50       109,000       4.22         1.3           106,600       4.23
$4.51 - $6.75       479,505       6.16         1.5           479,505       6.16
$6.76 - $8.50        50,000       8.25         0.3            50,000       8.25
                  ---------                                -----------
                  1,854,661                                1,693,501
                  =========                                ===========



                                      F-15

<PAGE>


NOTE D - STOCKHOLDERS' DEFICIT (CONTINUED)

The  Company  accounts  for the stock  purchase  and stock  option  plans  under
Accounting  Principles Board ("APB") Opinion No. 25, which requires compensation
costs to be recognized  only when the option price differs from the market price
at the grant  date.  SFAS No. 123 allows a company to follow APB  Opinion No. 25
with  additional  disclosure that shows what the Company's net loss and loss per
share would have been using the compensation model under SFAS No. 123.

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions used for grants:

                                    2000        1999         1998
                                 -----------  ----------  -----------

      Risk-free interest rate       6.0%         6.0%        5.9%
      Expected dividend yield       0.00         0.00        0.00
      Expected lives             Five years   Five years  Five years
      Expected volatility            50%          50%         50%


The total  values of the options  granted  during the years ended  December  31,
2000,  1999,  and 1998 were computed as  approximately  $40,828,  $282,240,  and
$1,138,000 respectively, which would be amortized over the vesting period of the
options.  If the Company had accounted  for these plans in accordance  with SFAS
No. 123,  the  Company's  reported pro forma net loss and pro forma net loss per
share for the years ended  December 31,  2000,  1999 and 1998 would have been as
follows:
<TABLE>

                                             2000           1999           1998
                                          ----------    -------------  -------------
       <S>                              <C>             <C>            <C>
        Net loss:
            As reported                  $(2,271,360)   $(14,590,049)  $(42,494,373)
            Pro Forma                    $(2,312,188)   $(14,730,789)  $(43,141,051)
        Basic and diluted loss per share:
            As reported                  $     (0.02)   $      (0.22)  $      (3.90)

            Pro Forma                    $     (0.02)   $      (0.22)  $      (3.95)
</TABLE>


Because the SFAS No. 123 method of  accounting  has not been  applied to options
granted prior to January 1, 1995, the resulting pro forma  compensation cost may
not be representative of that to be expected in future years.

Outstanding Warrants

At December 31, 2000, the Company had outstanding warrants to purchase 1,172,282
shares of common stock at a weighted average exercise price of $6.07.

NOTE E -- WRITEDOWN OF LONG-LIVED ASSETS

During 1999,  the Company  conducted a review of certain long lived assets owned
by the Company's wholly-owned subsidiary,  U.S. Communications,  Inc. (the "U.S.
Communications  assets").  As a result of this review, based upon an independent
third party valuation, the Company recorded a loss on the impairment of the U.S.
Communications assets in the amount of $1,711,923 (See Note B).


                                      F-16
<PAGE>

NOTE F - EXPENSES RELATED TO SETTLEMENTS

As noted,  the Company  issued  4,500,000  shares of common stock in conjunction
with settlements of claims by a vendor of Ameritel and as consideration  for its
release as guarantor of certain secured debt of Ameritel (see Note G). The terms
of the  transactions  were finalized and approved by the Board of Directors in a
meeting on April 29, 2000.  The value of the stock issued was  determined by the
closing  price  of the  stock on the day  preceding  and the day  following  the
Board's  action.  The  resulting  charge of $702,900  is  included in  guarantor
release expense for the year ended December 31, 2000.

NOTE G - COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments
The Company and subsidiaries lease office space under  noncancellable  operating
leases.  Total  operating  lease  expenses  for 2000 and 1999 were  $90,140  and
$156,600,  respectively..  In 1999, lease expense was included in "Income (loss)
from  investment  in Ameritel" in the  accompanying  Consolidated  Statements of
Operations.

In February  2000,  the Company  entered  into a sublease  for office space more
suitable to its reduced  level of  operations.  The sublease runs for 31 months,
terminating  September 14, 2002.  Under the terms of the  sublease,  the Company
pays rent of $8,333 per month from September 1, 2000 through August 31, 2001 and
$10,000 per month for the period  September 1, 2001 through  September 14, 2002.
The Company  occupied the space rent free until  September  1, 2000.  $73,333 of
rent expense was recognized in 2000.

Future  minimum  lease  payments  on this  noncancelable  operating  lease as of
December 31, 2000 are as follows:

              Year ending December 31,
                     2001                                    $ 106,664
                     2002                                       75,000
                                                            -----------
                                                             $ 181,664
                                                            ===========


Contract Termination and Litigation

Ameritel  had an  agreement  with  RadioShack,  a division  of Tandy,  to be the
exclusive  provider of analog cellular  communications  services to RadioShack's
retail  locations in the greater New York  metropolitan  area.  The contract was
guaranteed by the Company.  In October  1998,  the contract was  terminated  and
RadioShack   initiated   legal  action  in  December   1998  seeking  more  than
$11,000,000.  During 2000,  the parties agreed to a mutual release of all claims
against each other (the Company had filed a counterclaim)  which was approved by
the Bankruptcy  Court. As a condition to the mutual release,  the Company issued
500,000 shares of common stock to Ameritel Communications,  Inc. in August 2000,
and may be  required to issue as many as 250,000  additional  shares in eighteen
months, depending upon the price of the stock at that time. If additional shares
are issued, the value of the stock issued will be recorded as an expense at that
date.  The value of the stock will be based on the market  price at the date the
number of shares to be issued is determined.


                                      F-17
<PAGE>


NOTE G - COMMITMENTS AND CONTINGENCIES (CONTINUED)


Various vendors have instituted lawsuits against the Company or its subsidiaries
(excluding Ameritel Communications, Inc.) demanding payment of amounts owed. The
Company is attempting to negotiate  settlements of the outstanding  claims, some
of which have been  reduced to  judgement.  There can be no  assurance  that the
Company  will  successfully  defend or settle  these  lawsuits or prevail in any
counterclaim.  Most of these actions involve an inactive  subsidiary,  which has
virtually no assets and  generated no revenue in the three years ended  December
31,  2000.  Failure to  favorably  resolve  these  matters  will have a material
adverse  effect on the Company  and could  compel the  Company,  or at least the
subsidiary,  to seek  protection  under the federal  bankruptcy  system,  either
voluntarily or  involuntarily.  The ultimate  outcome of these matters cannot be
determined at this time.

Employee Contracts

During  1999,  the  Company  entered  into an  employee  contract  with a senior
executive  for a term  expiring in 2005.  The  contract  provides  for an annual
salary  ranging  from  $275,000 to  $355,000.  In  addition,  the employee is to
receive incentives based on performance, a guaranteed bonus of $75,000 after the
first year of employment  (which the  executive  has deferred  until the Company
reports  a profit  for any  quarter)  and stock  options  dependent  on  certain
conditions.  The  contract  includes a provision  for a lump sum cash  severance
payment of $600,000 in the event the contract is terminated for certain  reasons
and is partially secured by a $300,000 letter-of-credit.

Letter of Credit Advances

In 1997,  the Company  and  Ameritel  entered an  agreement  with an  investment
banking firm which provided that the  investment  bank would  establish  standby
letters  of credit  for up to  $3,750,000  to  satisfy  requirements  of certain
Ameritel clients and vendors. Under the terms of the agreement,  the Company was
required to pledge  545,045  shares of common stock of the Company.  Some of the
Company's  officers,  directors  and other  stockholders  agreed to deposit  the
required  shares in return for options to purchase 54,505 shares of common stock
at $6.00 per share.

In October 1998, two vendors received $2,700,000 under the letter-of-credit. The
investment  bank took  control  of the  common  stock  held for  collateral.  At
December 31, 2000 and 1999, the liability to the  investment  bank has a balance
of $2,491,982.  Ameritel is in default under the terms of the agreement, but the
investment bank has made no demand of the Company. While the Company believes it
has a reasonable  basis for a claim against the investment bank, there can be no
assurance  the  Company  would be  successful  in  defending  or  settling  this
liability should the investment bank make such demand.

The Company is involved in various other legal  proceedings  that have arisen in
the ordinary course of business. While it is not possible to predict the outcome
of such  proceedings  with  certainty,  the Company  believes these  proceedings
should not ultimately  result in any liability that would have a material effect
on the  financial  position,  liquidity or results of operations of the Company.
See Note C for  commitment  to issue up to an  additional  2,000,000  shares  of
stock.

                                      F-18
<PAGE>


NOTE H - INCOME TAXES

The Company has incurred net operating losses  ("NOL's") since inception.  As of
December 31, 2000 and 1999,  the Company had net  operating  loss  carryforwards
totaling  $94,604,418  and  $92,384,725,  respectively,  which expire at various
times  beginning in 2006.  Due to the recurring  operating  losses,  a valuation
allowance  has been  provided  against the entire amount of its net deferred tax
assets.  A  portion  of the net  operating  loss  carryforwards  is  subject  to
substantial  limitation  due to the  change of control  in 1995.  The  effective
income tax rate of 0.0% for the years ended  December  31, 2000 and 1999 differs
from the U.S. statutory rate due to the valuation allowance.

Components of deferred tax assets are as follows at December 31, 2000 and 1999:

                                                   2000             1999
                                              --------------   --------------

     Deferred tax assets
          Net operating loss carryforwards     $ 36,668,484     $36,030,043
          Allowance for doubtful accounts         4,112,097       3,529,432
                                              --------------   --------------
                                                 40,780,581      39,559,475
     Valuation allowance                        (40,780,581)    (39,559,475)
                                              --------------   --------------

     Deferred tax assets
                                               $          -     $         -
                                              ==============   ==============


NOTE I - SUBSEQUENT EVENTS

As of April  2001,  a motion is  pending  to  dismiss  the  Ameritel  bankruptcy
primarily based upon Ameritel's  apparent inability to confirm a Chapter 11 plan
of reorganization.



                                      F-19
<PAGE>


REPORT  OF  INDEPENDENT  PUBLIC  ACCOUNTANTS

To the Board of Directors and Shareholders USCI, Inc.:

We have audited the accompanying balance sheet of Ameritel Communications,  Inc.
(a  debtor-in-possession  and a  wholly-owned  subsidiary of USCI,  Inc.,) as of
December  31,  2000 and the  related  statements  of  operations,  stockholder's
deficit,  and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our 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
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Ameritel  Communications,  Inc.
as of December 31, 2000 and the results of its operations and its cash flows for
the year then ended in conformity with accounting  principles generally accepted
in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note A to the
financial statements,  the Company filed a voluntary petition for reorganization
under Chapter 11 of U.S.C.  Title 11 with the United States  Bankruptcy Court on
October 29, 1999. The Chapter 11 filing was a result of the  substantial  losses
sustained by the Company and the Company's  inability to raise capital  required
to  support  its  existing  business.  The  Company  has also  violated  certain
restrictive  covenants  under  certain  letters  of  credit  due to its  reduced
subscriber  base,  reduced  revenue  levels and net loss.  These  matters  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Although the Company is currently operating as a debtor-in-possession  under the
jurisdiction  of the Bankruptcy  Court,  the  continuation  of the business as a
going  concern  is  contingent  upon,  among  other  things,  the  approval  and
confirmation by the creditors and Bankruptcy Court of the aforementioned plan of
reorganization,  the  success  of  future  operations,  and/or  the  amount  and
classification  of  liabilities.  The  financial  statements  do not include any
adjustments that might result from the outcome of this uncertainty.

TAUBER & BALSER, P.C.


Atlanta, Georgia
March 30, 2001



                                      F-20
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and Shareholders

We have audited the accompanying balance sheet of Ameritel Communications,  Inc.
(a  debtor-in-possession  and a  wholly-owned  subsidiary  of USCI,  Inc.  as of
December  31,  1999 and the  related  statements  of  operations,  stockholders'
deficit,  and cash flows for the year ended December 31, 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 audit in accordance with auditing standards  generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Ameritel  Communications,  Inc.
as of December 31, 1999 and the results of its operations and its cash flows for
the year ended  December  31,  1999 in  conformity  with  accounting  principles
generally accepted in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note A to the
financial statements,  the Company filed a voluntary petition for reorganization
under Chapter 11 of U.S.C.  Title 11 with the United States  Bankruptcy Court on
October 29, 1999. The Chapter 11 filing was a result of the  substantial  losses
sustained by the Company and the Company's  inability to raise capital  required
to  support  its  existing  business.  The  Company  has also  violated  certain
restrictive  covenants  under  certain  letters  of  credit  due to its  reduced
subscriber  base,  reduced  revenue  levels and net loss.  These  matters  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Although the Company is currently operating as a debtor-in-possession  under the
jurisdiction  of the Bankruptcy  Court,  the  continuation  of the business as a
going  concern  is  contingent  upon,  among  other  things,  the  approval  and
confirmation by the creditors and Bankruptcy Court of the aforementioned plan of
reorganization, the success of future operations, and the ability to recover the
carrying amount of assets and/or the amount and  classification  of liabilities.
The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and  classification  of asset carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.


ARTHUR ANDERSEN LLP


Atlanta, Georgia
April 14, 2000

                                      F-21

<PAGE>

                          AMERITEL COMMUNICATIONS, INC.
                             (DEBTOR-IN-POSSESSION)
                     (WHOLLY OWNED SUBSIDIARY OF USCI, INC.)
                                 BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999

<TABLE>

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

ASSETS

CURRENT ASSETS
    Cash and cash equivalents - $50,500 restricted in
       2000 and 1999                                         $   285,999       $  304,161
    Accounts receivable - trade, net of allowances of
       $2,054,115 and $2,855,535                                 175,218        2,006,003
    Prepaid expenses and other
                                                                  49,622           29,989
                                                              -----------      -----------
           Total current assets                                  510,840        2,340,153
COMPUTER EQUIPMENT, net of accumulated
    depreciation of $10,951 and $4,296                             9,011           15,664
OTHER ASSETS                                                      26,591           18,134
                                                              -----------     ------------

           TOTAL ASSETS                                       $  546,441        2,373,951
                                                              ===========     ============

LIABILITIES AND STOCKHOLDER'S DEFICIT

Liabilities not subject to compromise:
    Current liabilities
       Accrued expenses                                       $  211,580       $ 138,561
       Accounts payable                                          467,148         467,148
                                                              -----------     ------------
           Total current liabilities                             678,728         605,709

Liabilities subject to compromise                             52,272,032      54,216,585
                                                              -----------     ------------

           Total liabilities                                  52,950,760      54,822,294
                                                              -----------     ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S DEFICIT
    Common stock, no par value, 2,000 shares authorized and
       Issued                                                        100            100
    Additional paid-in capital                                    77,800              -
    Accumulated deficit                                      (52,482,219)   (52,448,443)
                                                             ------------    ------------
        Total stockholder's deficit                          (52,404,319)   (52,448,343)
                                                             ------------    ------------

           TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT       $   546,441     $2,373,951
                                                             ============    ============
</TABLE>


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


                                      F-22
<PAGE>


                          AMERITEL COMMUNICATIONS, INC.
                             (DEBTOR-IN-POSSESSION)
                     (WHOLLY OWNED SUBSIDIARY OF USCI, INC.)
                            STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>


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

REVENUES                                                           $  4,678,385    $  15,360,812

COST OF SALES                                                         2,052,716        7,847,964
                                                                   -------------   --------------

GROSS MARGIN                                                          2,625,669        7,512,848
                                                                   -------------  ---------------

SELLING, GENERAL AND ADMINISTRATIVE                                   4,156,521       13,765,016

SUBSCRIBER ACQUISITION AND PROMOTIONAL
      COSTS                                                             522,153        1,617,913

REORGANIZATION ITEM                                                           -          395,164
                                                                  -------------   ---------------
                                                                      4,678,674       15,778,093
                                                                  -------------   ---------------

OPERATING LOSS                                                       (2,053,005)      (8,265,245)
                                                                  -------------   ---------------

OTHER INCOME (EXPENSE)
      Interest income                                                     2,718           10,163
      Interest expense (contractual amount $2,508,102 in 2000)
          a reorganization item)                                              -       (2,151,802)
      Gain on settlement of liabilities                               2,086,510                -
                                                                  -------------   ---------------
                                                                      2,089,228       (2,141,639)
                                                                  -------------   ---------------

NET INCOME (LOSS)                                                 $      36,223    $ (10,406,884)
                                                                  =============   ================

</TABLE>


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



                                      F-23
<PAGE>


                          AMERITEL COMMUNICATIONS, INC.
                             (DEBTOR-IN-POSSESSION)
                     (WHOLLY OWNED SUBSIDIARY OF USCI, INC.)
                       STATEMENTS OF STOCKHOLDER'S DEFICIT
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>

                                               Common Stock      Additional   Accumulated
                                           ---------------------
                                             Shares    Amount     Paid-in      Deficit          Total
                                                                  Capital
                                           --------- ---------- ----------    ------------    ------------
<S>                                        <C>       <C>        <C>           <C>             <C>

BALANCE, December 31, 1998                  2,000     $ 100      $     -     $ (42,041,559)   $(42,041,459)

      Net loss                                  -         -            -       (10,406,884)    (10,406,884)
                                           --------- ---------- ----------     -------------  -------------

BALANCE, December 31, 1999                  2,000       100            -       (52,448,443)    (52,448,343)

Contribution of stock from USCI, Inc.           -         -       77,800                 -          77,800

Comprehensive loss:
      Net income                                -         -            -            36,223          36,223
      Unrealized loss on equity securities
      of USCI, Inc.                             -         -            -           (69,999)       (69,999)
                                                                               -------------  -------------

                                                                                   (33,776)       (33,776)
                                                                               -------------  -------------

BALANCE, December 31, 2000                  2,000   $   100    $  77,800      $(52,482,219)  $(52,404,319)
                                           ========= ========== ==========     =============  =============
</TABLE>




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


                                      F-24
<PAGE>



                          AMERITEL COMMUNICATIONS, INC.
                             (DEBTOR-IN-POSSESSION)
                     (WHOLLY OWNED SUBSIDIARY OF USCI, INC.)
                             STATEMENT OF CASH FLOWS

<TABLE>

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

CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income (loss)                                       $    36,223   $ (10,406,884)
                                                             --------------  --------------
       Adjustments:
          Gain on settlement of liabilities                     (2,086,510)              -
          Depreciation and amortization                              6,654           2,455
          Reorganization item                                            -         395,164
          Changes in:
             Accounts receivable - trade                         1,830,785       6,208,479
             Prepaid expenses and other                            (20,290)         37,172
             Commissions payable                                         -          (2,375)
             Accounts payable and accrued expenses                  73,019     (10,594,685)
             Promotional deposits and other liabilities                  -         (80,492)
                                                             --------------  ---------------

                Total adjustments                                 (196,342)     (4,034,282)
                                                             --------------  ---------------

                Net cash used in operating activities             (160,119)    (14,441,166)
                                                             --------------  ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
       Capital expenditures                                              -         (12,595)
                                                             --------------  ---------------

CASH FLOWS FROM FINANCING ACTIVITIES
       Proceeds and draws from notes payable, long-term
          debt and Credit Facility                                       -      20,059,719
       Repayment of notes payable and Credit Facility                    -      (5,705,733)
       Receipts from (payments to) parent company                  141,957        (366,577)
                                                             --------------  ---------------

                Net cash provided by financing activities          141,957      13,987,409
                                                             --------------  ---------------
NET DECREASE IN CASH
                                                                   (18,162)       (466,352)
CASH AND CASH EQUIVALENTS, beginning of year
                                                                    304,161         770,513
                                                             --------------  ---------------

CASH AND CASH EQUIVALENTS, end of year                        $    285,999   $     304,161
                                                             ==============  ===============

SUPPLEMENTAL INFORMATION
       Interest paid                                          $        -     $   2,151,802
                                                             ==============  ===============

NONCASH INVESTING AND FINANCING ACTIVITIES
       Contribution of stock from USCI, Inc.                  $     77,800   $           -
                                                             ==============  ===============
</TABLE>



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

                                      F-25
<PAGE>


                          AMERITEL COMMUNICATIONS, INC.
                             (DEBTOR-IN-POSSESSION)
                     (WHOLLY OWNED SUBSIDIARY OF USCI, INC.)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

NOTE A - CHAPTER 11 REORGANIZATION PROCEEDINGS

Ameritel Communications,  Inc. (the "Company"),  is a wholly owned subsidiary of
USCI,  Inc.  (the  "Parent  Company").  The  Company is a reseller  of  cellular
services to  subscribers  via  reselling  agreements  with  carriers.  Effective
October 1998, the Company ceased the active acquisition of new subscribers.

On October 29, 1999, the Company filed a voluntary  petition for  reorganization
under Chapter 11 of U.S.C.  Title 11 with the United States Bankruptcy Court for
the Southern District of New York (Case No. 99-11081) (the "Bankruptcy  Court").
Under Chapter 11, certain  claims against the Company in existence  prior to the
filing of the petitions for relief under the federal  bankruptcy laws are stayed
while the Company continues business operations as a Debtor-in-possession. These
claims  are  reflected  in  the  balance  sheet  as   "liabilities   subject  to
compromise."  Additional  claims  (liabilities  subject to compromise) may arise
subsequent to the filing date resulting  from rejection of executory  contracts,
including  leases and from the  determination by the Bankruptcy Court for relief
from the stay.  Secured claims are secured by liens on substantially  all of the
Company's assets.

The Company has not yet filed a plan of  reorganization.  Such a plan may result
in additional  reorganization  charges,  as well as impairment of certain assets
included in these financial statements.

Entering  reorganization,  although a  significant  event,  does not  ordinarily
affect or change the application of accounting principles followed by a company.
The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern in accordance  with the AICPA Statement
of Position  ("SOP") 90-7,  "Financial  Reporting by Entities in  Reorganization
under the Bankruptcy Code." As such, asset and liability carrying amounts do not
purport to represent  realizable or  settlement  values as  contemplated  by the
Bankruptcy  Code.  Specifically,  the  financial  statements  do not present the
amounts that will  ultimately be paid to settle  liabilities  and  contingencies
which may be allowed in the Chapter 11 reorganization  case or the effect of any
changes which may be made in connection  with the  Company's  capitalization  or
operations resulting from a plan of reorganization.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Revenues from subscriber sales are recorded for charges to customers for monthly
access,  cellular  and  paging  airtime,  roaming,  and long  distance,  as such
services are rendered.


                                      F-26
<PAGE>



NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Cash and Cash Equivalents

The Company considers all highly liquid investments with original  maturities of
three  months  or  less to be  cash  equivalents.  Included  in  cash  and  cash
equivalents  at  December  31,  2000 and 1999 was  $50,500  of  certificates  of
deposit.

Computer Equipment

Computer  equipment  is  stated  at cost.  Depreciation  is  provided  using the
straight-line  method over the estimated useful lives of the computer equipment,
which is 3 to 5 years.

Subscriber Acquisition and Promotional Costs

Subscriber  acquisition  costs and  promotional  costs include costs incurred to
acquire  subscribers,  including  commissions,  discounts given to consumers for
reduced airtime and other promotions, and advertising.

Reorganization Item

In accordance with SOP 90-7, and the reorganization of the Company under Chapter
11 of the U.S Bankruptcy Code, the Company wrote off certain deferred  financing
costs.  The  related  expense of  $395,164  is  reflected  in the  statement  of
operations for the year ended December 31, 1999 as Reorganization Item.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  requires  management to make estimates and  assumptions.
These  estimates  and  assumptions  affect  the  reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial  statements  as well as reported  amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair value of financial  instruments that are assets is estimated to approximate
their carrying value at December 31, 2000. It is not practicable to estimate the
fair value of the  Company's  liabilities  at that date  because  the Company is
subject to the  provisions of the  bankruptcy  code and because of the Company's
inability to fund its liabilities.

                                      F-27

<PAGE>


NOTE C - LIABILITIES SUBJECT TO COMPROMISE

At December 31, 2000 and 1999 "liabilities  subject to compromise" was comprised
of the following:
<TABLE>

                                                                             2000           1999
                                                                        --------------  --------------
                               Item
              ------------------------------------------------
              <S>                                                      <C>                <C>
               Secured Liabilities                                      $12,811,419       $12,524,772
               Due to parent and affiliates                              18,854,608        21,856,306
               Unsecured priority claims                                  1,337,225         1,337,225
               Unsecured nonpriority claims                              19,268,780        18,498,282
                                                                        -------------    -------------
                             Total Liabilities Subject to Compromise    $52,272,032       $54,216,585
                                                                        =============    =============
</TABLE>

Secured Liabilities

The  Company  had a  revolving  credit  and term loan  facility  in place with a
commercial  lender  ("lender").  Funding  under  the term loan  ceased  when the
Company filed for reorganization  under Chapter 11 of the U.S. Bankruptcy Court.
The  Company was able to borrow  additional  money  under the  revolving  credit
facility  subsequent  to the filing based upon cash  collateral  and  extensions
allowed by the U.S.  Bankruptcy  Court.  Term loans bear  interest at 10.25% and
revolving  credit  borrowings bear interest at 9.25%.  Substantially  all of the
assets of the  Company  are  pledged  as  collateral  for these  borrowings.  In
addition, the Parent had guaranteed the total indebtedness.

On April 28, 2000, Tranche B, Inc., the Parent and the lender entered a Purchase
and Assignment Agreement which assigned all rights, title and interest in and to
the claims of the lender  against  the  Company,  the Parent and  guarantors  to
Tranche B, Inc.  Tranche B is owned and  controlled by  shareholders  who hold a
controlling  interest in the Parent.  Concurrent with this agreement,  Tranche B
released the Parent from all  obligations  related to the  revolving  credit and
term loan facility.

Secured Liabilities consists of the following:


                                       December 31,
                           -------------------------------------
                                          2000          1999
                                       ----------    -----------

              Term Loan              $ 11,637,517   $  11,424,107
              Revolving Credit          1,173,902       1,100,665
                                      ------------  -------------
              Total                  $ 12,811,419   $  12,524,772
                                      ============  =============


Unsecured Priority Claims

Unsecured  priority  claims  consists of taxes and  certain  other debts owed to
governmental units. A significant portion of these claims represent amounts owed
to various government authorities for taxes.

                                      F-28
<PAGE>


NOTE C - LIABILITIES SUBJECT TO COMPROMISE (CONTINUED)

Unsecured NonPriority Claims

Unsecured  nonpriority  claims  consist  of  accounts  payable,  notes  payable,
liabilities under letters of credit,  and other accrued expenses incurred in the
normal course of business. The note payable is a $12,376,995 note payable to the
Company's  largest  vendor,  entered into in April 1999.  Under the terms of the
original  agreement,  the  Company  was to repay the  balance  in equal  monthly
payments through April 2003.  Interest is payable monthly at 6%. Pursuant to the
agreement,  the  Company is required to make  current  payments  for its monthly
airtime usage and to secure a standby letter of credit totaling  $1,000,000.  As
of  December  31,  2000 and 1999,  the  Company had made only one payment to the
vendor under the terms of the agreement.

Contract Termination and Litigation

The Company had an agreement  with  RadioShack,  a division of Tandy,  to be the
exclusive  provider of analog cellular  communications  services to RadioShack's
retail locations in the greater New York metropolitan  area.  Ameritel was party
to the  contract  which was  guaranteed  by the  Parent.  In October  1998,  the
contract was terminated by RadiShack who initiated legal action in December 1998
seeking  more than  $11,000,000.  During  2000,  the parties  agreed to a mutual
release of all claims against each other (the Company had filed a  counterclaim)
which was  approved  by the  Bankruptcy  Court.  As a  condition  to the  mutual
release,  the Parent issued 500,000  shares of the Parent's  common stock to the
Company and may be required to issue  additional  stock,  not to exceed  250,000
shares,  depending upon the market price of the stock eighteen  months after the
release.  As a  result  of the  settlement,  the  Company  recorded  a  gain  of
$2,086,510, which represented the net liability to RadioShack at the time of the
settlement.

In 1997,  the Company and the Parent  entered an  agreement  with an  investment
banking firm which provided that the  investment  bank would  establish  standby
letters of credit for up to  $3,750,000 to satisfy  requirements  of clients and
vendors.  Under the terms of the  agreement,  the Parent was  required to pledge
545,045  shares of common stock of the Parent.  Some of the  Parent's  officers,
directors and other stockholders agreed to deposit the required shares in return
for options to purchase 54,505 shares of common stock at $6.00 per share.

The Company is involved in various other legal  proceedings  that have arisen in
the ordinary course of business. While it is not possible to predict the outcome
of such  proceedings  with  certainty,  the Company  believes these  proceedings
should not ultimately  result in any liability that would have a material effect
on the financial position, liquidity or results of operations of the Company.

NOTE D - COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

The  Company  leased  certain  office  space and  telecommunications  and office
equipment under noncancellable operating leases that expired at various times in
2000. At December 31, 2000,  there were no future  minimum lease  payments under
noncancellable operating leases.

The expenses for operating  leases were $90,140 and $156,600 for the years ended
December 31, 2000 and 1999, respectively.

                                      F-29
<PAGE>


NOTE E - INCOME TAXES

The  Company's  results are included in the federal and state income tax returns
of the  Parent.  For  purposes  of these  financial  statements,  the income tax
provision  has been  determined  on a basis as if the  Company  were a  separate
taxpayer. Due to the history of losses incurred by the Company, the net deferred
tax asset  resulting  from net operating  loss  carryforwards  is not considered
probable of  realization  and therefore is offset in all periods  presented by a
valuation allowance.

NOTE F - SUBSEQUENT EVENTS

On January 26, 2001,  the Company sold 2,507  cellular  service  subscribers  in
Puerto Rico plus the related accounts receivable to Celulares Telefonica for the
forgiveness of  approximately  $1,100,000 owed to Celulares by the Company.  The
receivables  transferred  aggregated  $115,000,  which resulted in a gain on the
transaction of about $1,000,0000.

As of April 2001, a motion is pending to dismiss the bankruptcy  primarily based
upon  the  Company's  apparent  inability  to  confirm  a  Chapter  11  plan  of
reorganization.

                                      F-31