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

                                    FORM 10-K

(Mark  One)

[x]     Annual Report pursuant to section 13 or 15(d) of the Securities 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 000-21463

                          Murdock Communications Corporation
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             Iowa                                42-1339746
-------------------------------     ------------------------------------
(State or other jurisdiction of     (IRS  Employer  Identification  No.)
incorporation or organization)

        5539 Crane Lane NE,     Cedar Rapids,  Iowa                52402
     ----------------------------------------------------------------------
     (Address of principal executive offices)                    (Zip Code)

        Registrant's telephone number, including area code:  319-393-8999
                                                           --------------

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

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

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

                            Common Stock, No Par Value
                      ------------------------------------
                                (Title of class)

                    Redeemable Common Stock Purchase Warrants
                    -----------------------------------------
                                (Title of class)

<PAGE>
     Check  whether  the  registrant:  (1)  has filed all reports required to be
filed  by Section 13 or 15(d) of the Exchange Act 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
           --     --

     Check 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 the
this  Form  10-K.  [    ]

     The aggregate market value of the common stock held by nonaffiliates of the
registrant as of March 1, 2001 was $537,945.  Shares of common stock held by any
executive  officer or director of the registrant and any person who beneficially
owns  10%  or  more of the outstanding common stock have been excluded from this
computation  because  such  persons  may  be  deemed  to  be  affiliates.  This
determination  of  affiliate  status is not a conclusive determination for other
purposes.

     On  March  1,  2001,  there  were  outstanding  12,514,967  shares  of  the
registrant's  no  par  value  common  stock.

DOCUMENTS  INCORPORATED  BY  REFERENCE

     None.


                                        2
<PAGE>
                                     PART I
                                     ------

ITEM  1.  BUSINESS

GENERAL

     Murdock  Communications  Corporation  ("MCC"  or  the  "Company") currently
operates  as  a  holding  company  with the Company's principal assets being the
Priority  International  Communications,  Inc.  ("PIC") business segment and its
investment  in  Actel  Integrated  Communications,  Inc.  ("Actel").  PIC is now
largely  a  reseller  of  call  processing  services.  Actel,  based  in Mobile,
Alabama,  is  a  facilities-based competitive local exchange carrier of advanced
voice  and  data  communications services to small and medium sized enterprises.
Actel  offers  advanced  end-user  services  in  the Southeastern United States.
Actel filed for bankruptcy under Chapter 11 on April 11, 2001.  As a result, the
Company  has  recorded  an impairment charge of $1.6 million in 2000, due to the
uncertainty  of  ultimate  recovery  of its investment in Actel.  The Company is
uncertain  whether its investment in Actel will have any value following Actel's
bankruptcy.  ATN  Communications Incorporated ("ATN"), a wholly owned subsidiary
of PIC, has discontinued its operations.  Unless otherwise indicated, references
in  this  report  to  "PIC"  include  the  historical  operations  of  ATN.

     As  of  the date of this report, the Company has a large amount of past due
debt  and  has  also experienced operating and cash flow difficulties at the PIC
business  segment.

     As  a  result  of  the  Company's  adverse  financial position, the Company
developed  a  revised  operating  plan  in  2000.  This  plan included the "Debt
Restructuring  Plan"  described  below and the sale of certain business segments
and other assets.  These transactions resulted in significant improvement in the
Company's  financial  condition.

     In  addition,  the  management  of PIC developed a new business plan during
2000  to stabilize the PIC business.  As a result of this revised business plan,
PIC  began  in  the  second  half  of 2000 to distribute excess cash flow to the
Company.  However,  PIC  has  not  had  excess cash flow for distribution to the
Company in recent months as a result of declining revenues, higher cost of sales
and  the  loss  of  a  number  of  its  customers.  As  a result, the Company is
uncertain  regarding  PIC's ability to make cash distributions to the Company in
future  periods.


                                        3
<PAGE>
     The  Company's current strategic direction is to continue to negotiate with
its  creditors to restructure indebtedness and to attempt to obtain financing to
fund  operations.  If  the  Company  is  successful  in  completing  further
improvements  to  its  financial condition, the Company may seek other strategic
alternatives, including attempting to use the Company's public shell as a merger
vehicle.  Due  to  the Company's large amount of past due debt, the Company will
need  to  continue its restructuring efforts in 2001.  The Company believes that
possible  sources  of  funds  in  2001  to  enable  the  Company to continue its
operations consist of cash distributions from its PIC business unit and advances
from  MCC  Investment  Company,  LLC,  a  company  owned by two of the Company's
significant  shareholders.  No  assurance  can be given that the Company will be
able  to  obtain  adequate funds from any of these possible sources in 2001.  If
the  Company  is  unable  to restructure its past due debt or to obtain adequate
funds  for  its  operational  needs, or if the holders of the Company's past due
debt  seek  to  enforce  their rights, the Company would not be able to continue
operating  as  a  going  concern.  See "- Recent Developments" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" below.

     Business  segment  information is contained in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and in Note 17 to the
Consolidated  Financial  Statements.

     MCC  was  incorporated  as  an  Iowa  corporation  in  1989.

RECENT  DEVELOPMENTS

     MCC'S  PAST DUE DEBT.  As of March 1, 2001, the Company was past due in the
payment  of approximately $10.1 million of principal and interest payments.  The
Company was also past due with its trade vendors in the payment of approximately
$536,000  as  of  February  28,  2001.  If  the  Company  is unable to raise the
necessary  funds  to  repay  its  past  due debt or to arrange for extensions or
conversions of such debt, its creditors may sue the Company to demand payment of
the amounts past due.  Any action by the Company's creditors to demand repayment
of  past  due indebtedness is likely to prevent the Company from continuing as a
going concern.  See "Management's Discussion and Analysis of Financial Condition
and  Results  of  Operations."

     The  Company's  past  due debt includes approximately $9.4 million of notes
and  accrued  interest  which have been pledged by the holders of the notes to a
bank  as  collateral  for loans made by the bank to such holders.  This bank was
liquidated  by  the  Federal Deposit Insurance Corporation ("FDIC") during 2000.
The  Company  was notified in December 2000 that the FDIC sold substantially all
the

                                        4
<PAGE>
loans  and  related  collateral  to a financial institution.  In March 2001, the
Company received a demand letter from this financial institution with respect to
past  due  notes in the aggregate principal amount of $575,000 originally issued
to  two  former executive officers of the Company.  If the financial institution
seeks to enforce its rights under the pledged notes, the Company currently would
not be able to repay these notes.  As a result, any such action by the financial
institution is likely to prevent the Company from continuing as a going concern.

     The  FDIC  has notified the Company that it believes an additional $770,000
is  outstanding  representing  various  notes  payable.  Another  party has also
asserted  that  he  is  entitled  to $500,000 allegedly outstanding under a note
payable.  Management  believes  that  no funds were received by the Company with
respect  to  these notes and that it has other defenses.  The amount of past due
debt as ofFebruary 28, 2001 does not include these amounts.  No assurance can be
given  as  to  the  ultimate  outcome  of  this  matter.

     INVESTMENT  IN  ACTEL.  During  1998,  the  Company reached an agreement to
invest  in  Actel.  Actel,  based  in  Mobile,  Alabama,  is  a facilities-based
competitive  local  exchange  carrier  of advanced voice and data communications
services  to small and medium sized enterprises.  Actel offers advanced end-user
services  in  the Southeastern United States.  The Company invested $3.0 million
in  Actel  during  1998  and  1999.  During  the third quarter of 1999, the $3.0
million  investment  was  converted  into  4,371,428  shares of Actel's Series A
Convertible  Preferred Stock (the "Actel Shares").  During the second quarter of
2000,  the Company sold or exchanged 2,213,198 Actel Shares pursuant to the Debt
Restructuring  Plan  (see  "Debt  Restructuring  Plan"  below).  Following these
transactions, the Company held 2,158,230 Actel Shares.  On April 11, 2001, Actel
filed for bankruptcy under Chapter 11.  As a result, the Company has recorded an
impairment  charge  of  $1.6 million in 2000, due to the uncertainty of ultimate
recovery  of  its  investment  in  Actel.  The  Company is uncertain whether its
investment  in  Actel  will  have  any  value  following  Actel's  bankruptcy.

     DEBT  RESTRUCTURING  PLAN.  During  the second quarter of 2000, the Company
undertook  a  plan  (the  "Debt  Restructuring  Plan") designed to restructure a
significant  portion  of  the  Company's  principal  amount  of debt and accrued
interest  under  the  Company's  past  due  debt.  In  connection  with the Debt
Restructuring  Plan,  the  Company  recorded a pre-tax gain of $6.8 million as a
result  of  the  sale  of  Actel  Shares  for cash and extinguishment of debt as
discussed  below.

     The Debt Restructuring Plan consisted of (i) a private offering (the "Actel
Share  Offering")  by  the  Company of Actel Shares for cash, and (ii) a private
offering  (the "Unit Offering") by the Company to certain holders of outstanding
indebtedness  of the Company of units consisting of Actel Shares and convertible
notes  of  the  Company  (the  "Convertible  Notes").


                                        5
<PAGE>
     During  the second quarter of 2000, the Company sold 1,149,614 Actel Shares
for  gross  proceeds of $4.9 million in the Actel Share Offering, resulting in a
gain  of approximately $3.7 million.  Proceeds were partially used to (i) reduce
$1.0  million  of past due notes and lease payables to Berthel Fisher & Company,
Inc. and its subsidiaries and their affiliated leasing partnerships ("Berthel"),
(ii)  reduce  a  total  of  $2.2  million  of the amounts owed to MCC Investment
Company,  LLC  ("MCCIC"),  an  affiliate  of  Berthel  and  another  significant
shareholder  of the Company, under the Company's bridge loan originally obtained
from  New Valley Corporation (the "New Valley Loan") and the Company's Revolving
Promissory Note from MCCIC, (iii) pay placement fees and other offering expenses
of  $444,000,  and  (iv) pay $479,000 to certain note holders upon conversion in
the  Unit Offering in partial payment of amounts owed to such note holders.  The
remaining  proceeds  were  used  for  general  working  capital.

     During  the second quarter of 2000, the Company transferred 1,063,584 Actel
Shares  with  a  fair value of approximately $4.6 million and issued Convertible
Notes  in  an aggregate principal amount of $4.6 million in the Unit Offering in
exchange  for the cancellation of outstanding indebtedness in the amount of $9.2
million.  A  net  gain of approximately $3.3 million was realized on transfer of
the  Actel  Shares.  The  Convertible  Notes  accrue interest at the rate of 12%
annually,  with  principal  and  accrued  interest  due on May 29, 2003, and are
convertible  into shares of the Company's no par value common stock (the "Common
Stock") at a conversion price of $3.03 per share (330 shares for each $1,000 due
under  the  Convertible Notes).  The Convertible Notes are unsecured obligations
of  the  Company.  The  Company  paid  $479,000  in  satisfaction  of 25% of the
outstanding  principal  and  interest  to holders of promissory notes originally
issued  by the Company in April and May 1998 with the remaining balance of these
promissory  notes  being  converted  in  the  Unit  Offering.

     SALE OF INCOMEX.  In 1998, the Company purchased Incomex, Inc. ("Incomex").
Incomex  contracted with Mexican resort hotels to provide billing and collection
services  for  calls  to  the  United  States  from  Mexico.

     Effective June 30, 2000 the Company sold all the shares of Incomex to three
of  the  former  shareholders of Incomex, for (a) the transfer to the Company by
the  purchasers  of  250,000  shares  of  Common  Stock originally issued by the
Company  pursuant  to the Company's acquisition of Incomex, (b) cancellation and
forgiveness  of  all amounts outstanding under promissory notes in the aggregate
principal amount of $684,919, and related accrued interest, originally issued by
the  Company  to  the  shareholders  of Incomex, and (c) the cancellation of all
employment  compensation  and  employment  contracts between the Company and the
purchasers.  The  parties  also executed mutual releases relating to liabilities
between the Company and Incomex and claims that the Company may have against the
former  shareholders  of  Incomex.


                                        6
<PAGE>
     SALE OF CERTAIN ASSETS OF MURDOCK TECHNOLOGY SERVICES.  MTS was formed as a
division  of  the Company in 1998 to provide database profit management services
and  other value added services to the hospitality telecommunications management
market. MTS's principal product, the MCC Telemanager , is a proprietary software
and  hardware product created to help manage telecommunication installations and
services  in  the  hospitality market.  MTS accounted for approximately 15.7% of
the  Company's revenues for the year ended December 31, 1999.  In February 2000,
the  Company  entered into a Rental Agreement with TeleManager.net providing for
the operation of the Company's Telemanager system by TeleManager.net in exchange
for  monthly  rental  payments  to the Company.  The Company also entered into a
memorandum  of  understanding  to  negotiate  a sale of certain assets of MTS to
TeleManager.net. The MCC Telemanager(TM) was the primary service provided by the
MTS  business unit.  On December 20, 2000, the Company sold certain assets which
were  subject to the Rental Agreement to Telemanager.net for (a) cash at closing
of  $104,500  and  (b)  the  termination  of  employment agreements with the two
principal  owners  of  Telemanager.net who are former executives of the Company.
The  parties  also  executed  mutual  releases  relating  to  certain  potential
liabilities  between  the  Company  and  the  former officers.  As a result, the
Company  recorded  a  gain  of  $55,000  in  the  fourth  quarter  of  2000.

     BAD  DEBT  AND  UNIVERSAL SERVICE FUND FEES.  During 1999, PIC recorded bad
debt  in  excess  of  historical amounts of approximately $5.6 million primarily
relating  to  collection issues for one type of call processing service provided
by its subsidiary ATN to a principal customer.  See "Management's Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations."

     As  a  result of this collection issue, PIC switched to another billing and
collection firm in November 1999.  The prior billing and collection firm alleged
that  PIC  had  breached  its contract and that it had a lien on the collections
from  calls  processed  by the new billing and collection firm.  At December 31,
1999,  the  Company  recorded an allowance for 100% of all receivables from both
billing  and collection firms due to the uncertainty regarding their collection.

     On  January  25,  2001, the Company reached a settlement agreement with the
prior  billing  and  collection  firm  and  the new billing and collection firm.
Under  this settlement:  (a) PIC and ATN are relieved from any further liability
allegedly  owed  to  either  billing  and collection firm, (b) PIC agreed to pay
nominal  consideration  and  to  relinquish  its claims to funds held by the new
billing  and collection firm, (c) PIC and ATN released any potential claims that
they had against the prior billing and collection firm, including claims ATN may
have  for the alleged failure by the prior billing and collection firm to assess
USF

                                        7
<PAGE>
contribution  charges  (see discussion below) on certain traffic, as well as any
claims  that  ATN may have against the prior billing and collection firm for its
role  in  the  excessive  bad  debt  charges,  and  (d) PIC and ATN released any
potential  claims  that  they  had  against the new billing and collection firm.

     In December 1999, the Company recorded a $1.7 million liability for amounts
allegedly  due  by  ATN to the Universal Service Administrative Company ("USAC")
for  universal  service  fund ("USF") fees. During the first two months of 2001,
ATN  received  credit  memos  from  USAC  which  reflect  a  balance due USAC of
$806,000.  Accordingly,  ATN recorded a $894,000 credit in the fourth quarter of
2000.  The  Company  can  make  no  assurances  that  ATN will not be liable for
additional  USF  fees.  See  "Management's  Discussion and Analysis of Financial
Condition  and  Results  of  Operations."

     STANDSTILL  AGREEMENT.  The  Company  historically obtained lease and other
financing  services  from  Berthel.  In  December  1999,  Berthel entered into a
Standstill  Agreement with the Company.  Under the Standstill Agreement, Berthel
indicated its intention to form a creditors committee to represent the interests
of  Berthel  and  other creditors of the Company.  The Company agreed to provide
the creditors committee with access to information regarding the Company and its
business  and  to  advise  the  creditors committee in advance regarding certain
significant  corporate  developments.  The  creditors  committee may also demand
that  the  Company take certain actions with respect to the Company's assets and
business.  The members of the creditors committee agreed to forebear from taking
actions  to  collect  past  due  debt  owed by the Company in the absence of the
unanimous approval of the creditors committee.  As of March 1, 2001, the Company
and  Berthel are the only parties to the Standstill Agreement and Berthel is the
only  member  of  the  creditors  committee.

     OPTIONS  TO  ACQUIRE  ACNET.  The  Company  has  an  option  to  acquire
Intercarrier  Transport Corporation, the holder of 99% of the outstanding shares
of  AcNet  S.A.  de  C.V. of Mexico ("AcNet Mexico") which expires on August 31,
2001.  The  Company's option to acquire AcNet USA, Inc. ("AcNet USA") expired on
December  31,  1999.  The  options  provide  for  an aggregate purchase price of
2,325,000 shares of the Company's Common Stock, $200,000 in closing costs and an
additional  $550,000  to pay off certain debt and accounts payable.  In light of
the  Company's  liquidity  issues and other issues involving the AcNet entities,
the  Company  is  not pursuing its options to acquire the AcNet entities.  As of
December  31,  2000,  the Company had recorded an investment of  $4.7 million in
the  AcNet  entities,  including  loans,  interest  and acquisition costs.  As a
result  of  the  Company's  decision  not  to pursue an acquisition of the AcNet
entities  and  due  to  cash  flow  difficulties  being experienced by the AcNet
entities,  the  Company

                                        8
<PAGE>
recorded  write-downs of $3.7 million in 1999 and $990,000 in 2000, which is all
of  the  Company's  investment  in the AcNet entities, due to the uncertainty of
ultimate recovery of its investment.  The Company commenced legal action against
the AcNet entities in April 2000 to collect its advances and interest.  However,
AcNet  USA  filed  for  bankruptcy  on  March 29, 2001, and the Company has been
informed  that  AcNet  Mexico  is  currently  in  receivership.

THE  COMPANY'S  PRINCIPAL  BUSINESS  UNIT

     In  1997,  the Company purchased PIC and PIC Resources Corp., including its
wholly  owned subsidiary ATN.  Currently, all of the Company's telecommunication
services  are  provided  by  PIC.  PIC  offers  telecommunications  services
principally  to  aggregators of operator service traffic and to a limited number
of  payphone  operators.  ATN  has  discontinued  its  operations.

     Prior  to  2000,  PIC  and  ATN  operated  in concert to provide marketing,
service  delivery  and  customer  support  for  owners  and  aggregators  of
telecommunications  services.  PIC  and ATN provided both live operator services
and automated call processing services.  The operator center, located in Mobile,
Alabama,  featured  50 live operator stations and automated call platforms.  PIC
and  ATN  also  offered  credit  card billing services, automated collection and
messaging  delivery  services,  voice  mail  services  and  telecommunications
consulting.

     During  1999,  PIC  experienced  significant  operating  and  cash  flow
difficulties.  The  management  of PIC developed a new business plan during 2000
to  stabilize  the PIC business.  As a result of this revised business plan, PIC
is  now  largely  a  reseller  of  call  processing services and has accordingly
eliminated  its  live  operator center.  PIC began in the second half of 2000 to
distribute  excess  cash  flow  to  the  Company  as  a result of these changes.
However,  PIC  has  not  had excess cash flow for distribution to the Company in
recent  months  as  a result of declining revenues, higher cost of sales and the
loss  of  a  number  of  its  customers.  As  a result, the Company is uncertain
regarding  PIC's  ability  to  make  cash distributions to the Company in future
periods.  See  "Management's  Discussion and Analysis of Financial Condition and
Results  of  Operations."

COMPETITION

     Competition  in  the  telecommunications industry is intense.  PIC competes
with  numerous  other  providers  of  alternative  operator  services  and  call
processing  services.  PIC's  customers,  which  include  telephone  owners  and
aggregators,  are  extremely  attentive  to  the competitive environment and the
competitive  efforts  of  alternative  operator service providers to acquire new
customers.  The  Company

                                        9
<PAGE>
believes that competition in its markets is based principally on price.  PIC may
face competition from companies with greater financial, technical, marketing and
other  resources  than  the Company.  There can be no assurance that PIC will be
able  to  compete  successfully  in  its  markets.

SIGNIFICANT  CUSTOMERS

     During  2000,  the Company derived approximately 33% and 29% of its revenue
from  two PIC customers.  PIC is currently in mediation regarding a dispute with
one  of  these customers and is conducting negotiations with the other customer.
As  a  result,  there  is  substantial  uncertainty  regarding  PIC's ability to
continue  to  do business with these two customers.  The loss of either of these
customers would have a material adverse effect on the Company.  The Company also
derived  approximately 12% of its revenue during 2000 from a third PIC customer.
See  "Legal  Proceedings" and "Management's Discussion and Analysis of Financial
Condition  and  Results  of  Operations."

SALES  AND  MARKETING

     The  Company's  sales  efforts  historically  were conducted largely by its
internal  sales  force.  PIC  had one member of its sales staff who was laid off
prior  to  December  31, 2000.  PIC's Chief Executive Officer currently services
its  existing  customers.  PIC  does  not  devote any resources to obtaining new
customers.

INTELLECTUAL  PROPERTY

     The  Company  does  not  currently  have  any  material patent or trademark
registrations.  The  Company principally relies on trade secrets and proprietary
know-how  in  the  operation  of  its  business.

REGULATION

     As  a result of PIC's revised business plan limiting PIC's services largely
to  reselling  call  processing services, the management of PIC does not believe
that  it  is  currently  subject  to  any  significant  federal  or  state
telecommunications  regulation.  However,  no  assurance  can  be given that the
Company's  business is not currently or will not in the future become subject to
significant  regulation.  Federal or state regulatory authorities may claim that
the  Company has failed to comply with applicable laws or regulations.  Fines or
other  penalties  also  may  be  imposed  for  such  violations.


                                       10
<PAGE>
EMPLOYEES

     As of December 31, 2000, MCC had seven full-time employees and no part-time
employees,  including  five  full-time  employees  at  PIC,  and  two  full-time
employees at its corporate headquarters.  The Company believes its relationships
with  its  employees  are good.  None of the Company's employees is subject to a
collective  bargaining  agreement.

ITEM  2.  PROPERTIES

     The  Company's  corporate  offices  are located in Cedar Rapids, Iowa.  The
following  table  sets  forth  the  principal  properties  of  the Company as of
December  31,  2000.
<TABLE>
<CAPTION>

                                      OWNED
                                        OR
LOCATION            BUSINESS SEGMENT  LEASED  EXPIRATION DATE   SQUARE FEET
------------------  ----------------  ------  ----------------  -----------
<S>                 <C>               <C>     <C>               <C>
Cedar Rapids, Iowa  Corporate Office  Leased  Monthly (1)             3,120
Mobile, Alabama. .  PIC               Leased  Monthly (1)             1,500
<FN>

(1)     The  leases  are  on  a  monthly basis until terminated by either party.
</TABLE>

ITEM  3.  LEGAL  PROCEEDINGS

     A lawsuit was filed in Superior Court of the State of California on October
20,  1999  claiming  conspiracy  to  defraud,  fraud  and deceit, and conversion
against  several  defendants,  including  ATN,  in  connection  with an Internal
Operator  Services  Agreement  between  the  plaintiffs  and defendant Paramount
International  Telecommunications,  Inc.  ("Paramount").  The  Internal Operator
Services  Agreement  sets  out  that Paramount will provide (among other things)
calling  services  and  billing  and  collection  of  the  charges through local
exchange  carriers, and Paramount would deduct agreed upon fees for its services
and  remit  the  balance  to the plaintiffs.  Paramount allegedly contracted out
operator and billing services with ATN from May 1998 until present.  In addition
to  other  claims  against Paramount, the plaintiffs complain that Paramount and
ATN  conspired  to  falsify  call charge reports being sent to the plaintiffs by
underreporting  the  amount  of  charges  billed to the end user and keeping the
monies  generated  therefrom,  thereby  damaging the plaintiffs for no less than
approximately  $280,000.  The  plaintiffs  also  seek  punitive  damages  in  an
unspecified amount.  ATN filed its response on January 4, 2000.  This action was
dismissed  on  February  1,  2001.


                                       11
<PAGE>
     On  April  26,  2000,  PIC filed an action in state court in Travis County,
Texas,  against  OAN  Services, Inc. ("OAN") and Billing Concepts, Inc. ("BCI"),
claiming  breach of contract and tortious interference by BCI in connection with
a  billing  and  related services agreement, dated September 1, 1999 between PIC
and  OAN, and an Account Purchase Agreement, dated November 18, 1999 between PIC
and  OAN.  PIC has also alleged that BCI's conduct in transmitting notice to OAN
claiming  rights  in call records delivered to OAN by PIC and ATN was inaccurate
and  misleading,  thus  constituting tortious interference by BCI.  PIC sought a
declaration  from the court that it is entitled to proceeds being held by OAN in
the  amount of between $650,000 and $850,000 free and clear of any claims of BCI
and  OAN  as  well as other damages.  On June 5, 2000, OAN and BCI each filed an
answer in response to PIC's claims and made certain other pre-trial motions.  On
July  5,  2000,  BCI filed a counterclaim against PIC and ATN alleging breach of
contract  and  certain  related  claims  and  seeking  damages in an unspecified
amount. On January 25, 2001, PIC reached a settlement agreement with the BCI and
OAN.  Under  this  settlement:  (a)  PIC  and  ATN are relieved from any further
liability  allegedly  owed  to  BCI  or  OAN,  (b)  PIC  agreed  to  pay nominal
consideration and to relinquish its claims to funds held by OAN, (c) PIC and ATN
released  any  potential  claims that they had against BCI, including claims ATN
may  have for the alleged failure by BCI to assess USF contribution charges (see
discussion  below)  on  certain traffic, as well as any claims that ATN may have
against  BCI for its role in the excessive bad debt charges, and (d) PIC and ATN
released  any  potential  claims  that  they  had  against  OAN.

     On  December  19,  2000,  ATN  filed an action in Texas state court against
Telephone  Service  Bureau,  LLC  ("TSB")  and  Network  Operator Services, Inc.
("NOS"),  claiming  breach  of  contract  by  TSB in connection with an Operator
Services  Agreement  between  ATN  and  TSB.  Specifically, ATN claimed that TSB
breached  the  Operator Service Agreement by refusing to pay ATN for accrued and
unaccrued  bad  debt "true-ups", which ATN estimates exceeds $2.9 million.  As a
result  of the "bad debt" impact on ATN's financial condition, ATN was forced to
discontinue  business  in  late 1999, and PIC thereafter continued providing TSB
access  to a switch and related operator services.  Because of the known history
of  the  call  traffic  at  issue, PIC requested that this particular traffic be
handled  elsewhere,  and  is  now being processed by NOS.  ATN's application for
writ  of attachment seeks attachment of advances made by PIC and NOS to TSB as a
result  of TSB traffic now being processed NOS (NOS was named in the suit solely
to  bind it to the requested writ of attachment).  ATN also requested injunctive
relief  restraining  and enjoining TSB from taking any actions which would cause
the call traffic to be re-routed or diverted and ordering PIC and NOS to deposit
that  portion  of  the PIC and NOS advances constituting TSB's gross margin into
the  registry  of  the court pending trial.  The state court entered a temporary
restraining  order  on

                                       12
<PAGE>
December  19,  2000  (effective  through  January  2,  2001), directing that TSB
refrain  from  re-routing  any  traffic  away  from  PIC  or NOS.  The temporary
restraining  order  was  later  extended  through  January  16,  2001.

     On  January 2, 2001, TSB filed a special appearance and removed the case to
U.S.  District  Court.  TSB  simultaneously  filed a motion to dismiss, claiming
that  the  case  should  be  dismissed  for  lack  of personal jurisdiction, or,
alternatively,  improper  venue.  It was not until the filing of TSB's motion to
dismiss that ATN became aware of related suits filed on November 8, 2000, in the
Chancery  Court  for Knox County, Tennessee, styled Telephone Service Bureau vs.
ATN  Communications,  Inc.  and Priority International Communications, Inc. (the
subject  matter of which is also the Operator Services Agreement) and on January
2,  2001,  in  the  Chancery  Court  for  Knox  County,  Tennessee,  styled Call
Management Systems, Inc. vs. ATN Communications, Inc. and Priority International
Communications, Inc.  ATN has removed these cases to federal court in Tennessee.

     TSB  also  filed a motion with the U.S. District Court in Texas to dissolve
the  temporary  restraining order on January 2, 2001.  The District Court denied
TSB's  motion to dissolve on January 5, 2001, and ordered the injunction hearing
be  set  for January 16, 2001.  On January 9, 2001, ATN filed a motion to remand
the  matter  back to state court.  NOS simultaneously filed a motion to dismiss.
Responses  to TSB's motion to dismiss and NOS's January 9 motion have been filed
by  ATN.  On  January  13,  2001,  the parties reached a standstill agreement to
remain  in  effect  pending  a mediation to take place.  The courts in Texas and
Tennessee  have  stayed all proceedings until a date not more than fourteen days
after completion of the mediation.  PIC is currently in mediation regarding this
dispute.  No  assurances  can  be  given  at this time as to the outcome of this
matter.

     In  the  normal  course  of  business,  the Company also may be involved in
various  legal  proceedings  from  time to time.  Except as set forth above, the
Company  does  not  believe  it is currently involved in any claim or action the
ultimate  disposition  of  which  would  have  a  material adverse effect on the
Company.

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

     No  matters  were submitted to a vote of security holders during the fourth
quarter  of  the  fiscal  year  ended  December  31,  2000.


                                       13
<PAGE>
                                     PART II
                                     -------

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

HISTORICAL  TRADING  INFORMATION  AND  DIVIDEND  POLICY

     The  Common  Stock  trades on the Over the Counter Bulletin Board under the
symbol  "MURC"  and  the  Company's  Redeemable  Common  Stock Purchase Warrants
("Warrants")  trade  on  the  Over  the  Counter Bulletin Board under the symbol
"MURCW."  The following table sets forth the high and low bid quotations for the
Common  Stock  and  Warrants as reported on the Over the Counter Bulletin Board.
Such  transactions reflect interdealer prices, without retail mark-up, mark-down
or  commission  and  may  not  necessarily  represent  actual  transactions.
<TABLE>
<CAPTION>

             Common Stock   Warrants
             ------------   --------
Quarter      High    Low   High    Low
-----------  -----  -----  -----  -----
<S>          <C>    <C>    <C>    <C>
FISCAL 1999
First . . .  $4.63  $2.75  $0.38  $0.06
Second. . .   4.13   2.75   0.63   0.19
Third . . .   3.88   2.69   0.60   0.24
Fourth. . .   3.25   1.75   0.88   0.10

FISCAL 2000
First . . .   2.63   0.88   0.69   0.15
Second. . .   1.63   0.31   0.19   0.13
Third . . .   0.69   0.25   0.13   0.13
Fourth. . .   0.52   0.09   0.06   0.02
</TABLE>

     At  March 1, 2001, there were approximately 140 holders of record of Common
Stock.

     The Company has not paid any cash dividends on the Common Stock in the last
two  years.  Certain  of  the  Company's  current  financing  agreements contain
restrictions  on  the  payment  of dividends.  The Company intends to retain any
earnings for use to repay its past due debt and in the operation of its business
and, therefore, does not anticipate paying any cash dividends in the foreseeable
future.


                                       14
<PAGE>
RECENT  SALES  OF  UNREGISTERED  SECURITIES

     Effective  March  22, 2000, the Company issued warrants to purchase 150,000
shares  of  the  Company's common stock to two former officers of the Company in
connection  with  the  termination of their employment agreements.  The warrants
were  issued  at an exercise price of $1.00 per share with an expiration date of
March 22, 2003.  The warrants were issued in a private placement exempt from the
registration  requirements  of  the Securities Act of 1933, amended (the "Act"),
pursuant  to  Section  4(2)  of  the  Act.

     During  the second quarter of 2000, the Company transferred 1,063,584 Actel
Shares  and  issued  Convertible  Notes in an aggregate principal amount of $4.6
million  in  the  Unit  Offering in exchange for the cancellation of outstanding
indebtedness  in  the  amount  of  $9.2  million.  The  Convertible Notes accrue
interest at the rate of 12% annually, with principal and accrued interest due on
May 29, 2003, and are convertible into shares of the Company's Common Stock at a
conversion  price  of  $3.03 per share (330 shares for each $1,000 due under the
Convertible  Notes).  The  Convertible  Notes were issued in a private placement
exempt from the registration requirements of the Act pursuant to Section 4(2) of
the  Act  and  Regulation  D  promulgated  under  the  Act.

ITEM  6.  SELECTED  FINANCIAL  DATA

     The following sets forth selected consolidated financial data in respect of
the  Company's  continuing  operations.  The  selected financial information set
forth  in the table below is not necessarily indicative of the results of future
operations  of  the Company and should be read in conjunction with "Management's
Discussion  and  Analysis  of Financial Condition and Results of Operations" and
the  consolidated  financial statements, related notes and independent auditors'
report,  contained  herein.  The statement of operations data for the five years
ended  December  31,  2000  and the related balance sheet data have been derived
from  the  audited  consolidated  financial  statements  of  the Company.  These
financial  statements  were  prepared  on  a  going  concern  basis.

                                       15
<PAGE>
<TABLE>
<CAPTION>

                                                        2000(a)    1999(b)   1998(c)   1997(d)   1996(e)
                                                       ---------  ---------  --------  --------  --------
                                                              (In thousands, except per share data)
<S>                                                    <C>        <C>        <C>       <C>       <C>
Statement of Operations Data:
Revenues. . . . . . . . . . . . . . . . . . . . . . .  $  8,437   $ 27,463   $26,067   $ 8,417   $ 8,165
Gross profit. . . . . . . . . . . . . . . . . . . . .     2,912      1,467     8,025     2,144     2,925
Loss from continuing operations . . . . . . . . . . .    (3,517)   (16,441)     (883)   (7,900)   (3,572)
Loss before extraordinary item. . . . . . . . . . . .    (5,024)   (18,398)     (174)   (7,900)   (3,572)
Net loss attributable to common shareholders. . . . .    (4,427)   (18,592)     (349)   (7,900)   (2,488)
Basic and diluted net loss
  per common share
    Loss from continuing operations . . . . . . . . .  $  (0.34)  $  (1.60)  $ (0.19)  $ (1.89)  $ (1.41)
    Income (loss) from discontinued operations. . . .     (0.14)     (0.19)     0.13         -         -
    Extraordinary gain. . . . . . . . . . . . . . . .      0.07          -         -         -      0.43
    Net loss. . . . . . . . . . . . . . . . . . . . .  $  (0.41)  $  (1.79)  $ (0.06)  $ (1.89)  $ (0.98)

Balance Sheet Data:  (at end of year)
Total assets. . . . . . . . . . . . . . . . . . . . .  $  1,108   $ 14,200   $20,909   $ 9,386   $ 7,479
Notes payable . . . . . . . . . . . . . . . . . . . .     8,783     13,708     6,788     1,715         -
Long-term debt. . . . . . . . . . . . . . . . . . . .     5,103      7,502     7,860     8,352     5,138
Total liabilities . . . . . . . . . . . . . . . . . .    18,861     27,964    17,763    13,868     6,280
Redeemable preferred stock. . . . . . . . . . . . . .         -      1,868     1,837     1,544         -
Shareholder's equity (deficiency) . . . . . . . . . .   (17,753)   (13,764)    4,077    (4,482)    1,175
<FN>

(a)     Includes: a $3.9 million charge for impairment of assets; a $990,000 charge for the write-down of
the  Company's  investment  in  the AcNet entities; a $1.6 million charge for impairment of investment in
Actel;  a  $894,000  credit  for  USF  fees;  a  gain  of $7.0 million recorded in connection with a Debt
Restructuring  Plan;  and  a  $722,000  extraordinary  gain  on  extinguishment  of  debt.

(b)     Includes:  $5.6  million  of  bad  debt  in  excess  of  historical amounts primarily relating to
collection issues for one type of call processing service provided by PIC to a principal customer; a $1.7
million  charge  for  USF fees; a $3.3 million charge for impairment of assets; and a $3.7 million charge
for  the  write-down  of  the  Company's  investment  in  the  AcNet  entities.

(c)     Includes  a  gain  of  $453,000 relating to the termination of the Company's agreement with AT&T.

(d)     Includes:  a $1.0 million charge on the write-off of all the assets of a joint venture and a $1.4
million  charge  on  the  impairment  write-down  of  assets  related  to  the  PIC  acquisition.

(e)     Includes  an  extraordinary  gain  on  debt  restructuring  of  $1.1  million.
</TABLE>


                                       16
<PAGE>

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

OVERVIEW

     MCC  currently  operates  as a holding company with the Company's principal
assets  being  the PIC business segment and its investment in Actel.  PIC is now
largely  a  reseller  of  call  processing  services.  Actel,  based  in Mobile,
Alabama,  is  a  facilities-based competitive local exchange carrier of advanced
voice  and  data  communications services to small and medium sized enterprises.
Actel  offers  advanced  end-user  services  in  the Southeastern United States.

     From  its  inception  in 1989 through 1994, the Company's primary source of
revenue was generated by providing operator services to the hospitality industry
as  an  automated  call  processing and long distance services provider.  Due to
declining  call  volumes, caused in part by the use of proprietary calling cards
and  other  dial-around activities (such as 1-800-CALL ATT), the Company entered
into  a contract with AT&T in October 1994 to route operator services traffic to
AT&T  through  the  Lodging Partnership program.  Under the Lodging Partnership,
AT&T  processed  the  calls,  carried  call traffic and billed the end user.  In
return,  AT&T  paid  MCC  commissions  on  the  calls  dialed.

     In  light  of  the  declining  call  volumes  and  narrow  profit  margins
experienced  by the Company under the Lodging Partnership with AT&T, the Company
and  AT&T  agreed  to  terminate  the  Lodging Partnership arrangement effective
October  15,  1998.  AT&T agreed to purchase all of the customer contracts under
the  Lodging Partnership and to directly manage the existing customers under the
contracts.  As  a  result,  the  Company  recorded a one-time gain in the fourth
quarter  of  1998  of $453,000.  Revenues to the Company from the AT&T agreement
ended  in  the  fourth  quarter  of  1998.

     Through  a series of acquisitions and new product developments, the Company
transformed  itself during 1998 from a reseller of AT&T network services to U.S.
hotels  to a provider of operator services and call processing to North American
pay  phones,  hotels  and  institutions, database profit management services and
telecommunications  billing and collection services for the hospitality industry
and  outsourced  operator  services  for  the  telecommunications  industry.

     As  of  the date of this report, the Company has a large amount of past due
debt  and  has also experienced significant operating and cash flow difficulties
at  the  PIC  business  unit.


                                       17
<PAGE>
     The  Company  has been developing a revised operating plan to stabilize the
PIC  business.  As a result of this revised operating plan, PIC is now largely a
reseller  of  call  processing  services and has accordingly eliminated its live
operator center.  PIC began to distribute excess cash flow to the Company in the
second  half  of  2000  as  a result of these changes.  However, PIC has not had
excess cash flow for distribution to the Company in recent months as a result of
declining  revenues,  higher  cost  of  sales  and  the  loss of a number of its
customers.  As  a  result,  the  Company is uncertain regarding PIC's ability to
make  cash  distributions to the Company in future periods.  ATN, a wholly owned
subsidiary of PIC, has discontinued its operations.  Unless otherwise indicated,
references  in  this  report  to "PIC" include the historical operations of ATN.

     The  Company completed several financial transactions in the second quarter
of  2000  which  resulted  in significant improvement in the Company's financial
condition.  The  Company's  strategic direction is to continue to negotiate with
its  creditors to restructure indebtedness and to attempt to obtain financing to
fund  operations.  If  the  Company  is  successful  in  completing  further
improvements  to  its  financial condition, the Company may seek other strategic
alternatives, including attempting to use the Company's public shell as a merger
vehicle.  Due  to  the Company's large amount of past due debt, the Company will
need  to  continue its restructuring efforts in 2001.  The Company believes that
possible  sources  of  funds  in  2001  to  enable  the  Company to continue its
operations consist of cash distributions from its PIC business unit and advances
from  MCCIC.  No  assurance can be given that the Company will be able to obtain
adequate  funds  from  any of these possible sources in 2001.  If the Company is
unable  to  restructure  its  past  due debt or to obtain adequate funds for its
operational  needs,  or  if  the  holders of the Company's past due debt seek to
enforce  their  rights, the Company would not be able to continue operating as a
going  concern.  See  Note  1  in Notes to Consolidated Financial Statements and
"Liquidity  and  Capital  Resources."


                                       18
<PAGE>
RESULTS  OF  OPERATIONS

     The  following  table  sets  forth  statements  of operations items and the
percentages  that  such  items  bear  to  revenues:
<TABLE>
<CAPTION>

                                                Years ended
                                                December 31,
                                            --------------------
                                             2000   1999   1998
                                             -----  -----  -----
<S>                                          <C>    <C>    <C>
Revenues. . . . . . . . . . . . . . . . . .   100%   100%   100%
Cost of sales . . . . . . . . . . . . . . .    65%    95%    69%
Selling, general, and administrative. . . .    33%    19%    23%
Depreciation and amortization . . . . . . .    12%     7%     6%
Impairment of assets. . . . . . . . . . . .    65%    12%    --
AcNet bad debt and acquisition expenses . .    12%    13%    --
Total operating expenses. . . . . . . . . .   121%    51%    29%
Operating income (loss) . . . . . . . . . .  (86)%  (46)%     2%
Gain on AT&T contract buyout. . . . . . . .    --     --      2%
Interest expense. . . . . . . . . . . . . .    42%    13%     8%
Other income. . . . . . . . . . . . . . . .    86%     1%    --
Loss from continuing operations . . . . . .  (42)%  (60)%   (4)%
Loss on disposition . . . . . . . . . . . .   (4)%    --     --
Income (loss) from discontinued operations.  (14)%   (7)%     3%
Extraordinary items . . . . . . . . . . . .     9%    --     --
Net loss. . . . . . . . . . . . . . . . . .  (51)%  (67)%   (1)%
</TABLE>

COMPARISON  OF  YEARS  ENDED  DECEMBER  31,  2000  AND  1999

REVENUES  -  Consolidated  revenues  declined  $19.1  million, or 69.3%, to $8.4
--------
million  for  the  year  ended December 31, 2000 from $27.5 million for the year
ended  December  31,  1999.  Revenues  from  PIC  declined $15.0 million to $8.2
million  for  the  year  ended December 31, 2000 from $23.2 million for the year
ended  December  31,  1999  primarily  due  to  the loss of all or a significant
portion  of  business  with two principal customers as discussed in the next two
paragraphs below and due to a change in revenue recognition (see Note 1 in Notes
to  Consolidated  Financial  Statements),  partially  offset  by  gains  in  new
business.

     Effective  the  third  quarter  of  1999,  a  principal  customer  for
long-distance  services originating from Mexico terminated its relationship with
PIC.  Total  revenues  relative  to  the customer were $5.3 million for the year
ended  December  31,  1999.

     During  1999, PIC's operator service business unit derived revenues from a
principal  customer  that  totaled $14.0 million or 51% of total revenues of the
Company.  PIC  terminated  a significant portion of the service provided to this
customer  in  January  2000  due  to  the  significant  bad  debt expenses being

                                       19
<PAGE>
experienced  related  to  such  calls and the customer subsequently removed more
traffic during 2000.  Total revenues relative to this customer were $2.4 million
or  29%  of  total revenues of the Company for the year ended December 31, 2000.
PIC  is  currently  in  mediation  regarding a dispute with this customer.  As a
result of this dispute, there is substantial uncertainty regarding PIC's ability
to  continue  to  do  business  with  this  customer.  See "Legal Proceedings."

     PIC's  revenues from another significant customer totaled $2.8 million, or
33%  of the total revenues of the Company, for the year ended December 31, 2000.
PIC  is  currently  conducting  negotiations with this customer.  As a result of
these  negotiations, there is substantial uncertainty regarding PIC's ability to
continue  to  do  business  with  this  customer.

     The  change in revenue recognition resulted in a decline in other revenues
of  approximately $2.6 million and will continue to result in lower revenues for
the  Company.

     Revenues  from  MTS  declined  $4.1 million to $191,000 for the year ended
December  31,  2000  from  $4.3 million for the year ended December 31,1999.  In
February  2000, the Company entered into a Rental Agreement with Telemanager.net
providing  for  the operation of the Company's Telemanger system, the division's
principal product, by Telemanager.net in exchange for monthly rental payments to
the  Company.  On  December 20, 2000, the Company sold certain assets which were
subject  to the Rental Agreement to Telemanager.net. Telemanager.net is owned by
former  executives  of  the  Company.  Accordingly,  this business unit will not
provide any significant revenues, margins or operating losses in future periods.

COST  OF SALES - Consolidated cost of sales declined $20.5 million, or 78.7%, to
--------------
$5.5  million  for  the year ended December 31, 2000 from $26.0 million for year
ended  December  31,  1999.  Consolidated  cost  of  sales,  as  a percentage of
revenues,  was  65.5% for the year ended December 31, 2000 compared to 94.7% for
the  year ended December 31, 1999.  The decline in consolidated cost of sales is
primarily  attributable  to  a  loss of all or a significant portion of business
with  two  principal  PIC  customers  (see discussion above), the decline in MTS
revenue  related  to  the  Rental Agreement with Telemanager.net (see discussion
above), and due to significant bad debt expense and USF fees recorded during the
year  ended  December  31,  1999.

     The Company did not record bad debt expense during 2000 due to a change in
revenue  recognition (See Note 1 in Notes to Consolidated Financial Statements).
During  1999,  PIC  recorded  bad  debt  expense in excess of historical amounts
totaling  approximately $5.6 million primarily relating to collection issues for
one  type  of  call  processing service provided by PIC to a principal customer.


                                       20
<PAGE>
     In December 1999, ATN received notice from USAC that USF fees were due.  A
carrier  of  interstate/intrastate calls is required to pay a USF fee based on a
percentage  of  total  call  revenues.  This  was the first time that management
became  aware  of any liability to this agency.  It was management's belief that
these  USF  fees  had  been  charged to the end-user and remitted to USAC by its
billing  and  collection  firm.  The  billing and collection firm's position was
that  they  had  collected  the  USF  fees, and remitted them to ATN.  As ATN is
legally  responsible  for USF fees, in December 1999, it recorded a liability of
$1.7  million.  Subsequent  to  the  year  ended December 31, 2000, ATN received
credit  memos  from  USAC  which  reflect  a  balance  due  USAC  of  $806,000.
Accordingly,  ATN recorded a $894,000 credit in the fourth quarter of 2000.  The
Company  can  make  no assurances that ATN will not be liable for additional USF
fees.

     On  January  24,  2001,  the Company reached a settlement agreement with a
prior  billing  and  collection firm.  The settlement includes ATN releasing any
potential  claims  it has against the billing and collection firm related to its
failure  to  assess  USF  charges  as  well  as  any  claims for its role in the
excessive  bad debt charges recorded in 1999.  PIC and ATN were relieved in this
settlement  from  any  further  liability allegedly owed for additional bad debt
expense  (see  Note  2  in Notes to Consolidated Financial Statements and "Legal
Proceedings").

SELLING,  GENERAL AND ADMINISTRATIVE EXPENSE - Consolidated selling, general and
--------------------------------------------
administrative expense decreased $2.5 million, or 48.6%, to $2.8 million for the
year  ended  December 31, 2000 from $5.3 million for the year ended December 31,
1999.  The  decline  in  expenses  is  primarily  related  to  the  substantial
elimination of MTS expenses related to the Rental Agreement with Telemanager.net
(See  discussion  above),  and  lower compensation and travel expense at PIC and
Corporate,  partially  offset  by  higher  legal  fees  and consulting expenses.
Selling,  general  and  administrative expense, as a percentage of revenues, was
32.6%  for the year ended December 31, 2000 compared to 19.4% for the year ended
December  31,  1999.

DEPRECIATION  AND  AMORTIZATION  EXPENSE-  Consolidated  depreciation  and
----------------------------------------
amortization expense declined $963,000, or 50.5%, to $935,000 for the year ended
December  31,  2000 from $1.9 million for the year ended December 31, 1999.  The
decline  is  due  to impairments recorded in 1999 and 2000.  This lower level of
expense  is  expected  to  continue  in  future  periods.

IMPAIRMENT  OF  ASSETS  - The Company periodically reviews long-lived assets and
----------------------
intangible  assets  for  impairment  whenever events or changes in circumstances
indicate  that  the  carrying  amount  of  these  assets may not be recoverable.
Although  the  Company devised a revised operating plan during 2000 to stabilize
the  PIC  business,  PIC  continues to operate in a rapidly changing competitive
environment

                                       21
<PAGE>
which  creates uncertainty regarding the fair value of PIC assets.  Accordingly,
for  the  year  ended  December  31,  2000,  the  Company recorded an impairment
write-down  of  goodwill  related  to  PIC  of  approximately $3.3 million and a
write-down of other assets, primarily telecommunications equipment, of $598,000.
All  impairments  were  determined  based  on  the  estimated fair value of such
assets.

     On  April  11,  2001,  Actel  filed  for bankruptcy under Chapter 11.  As a
result,  the  Company has recorded an impairment charge of $1.6 million in 2000,
due  to  the  uncertainty  of ultimate recovery of its investment in Actel.  The
Company  is  uncertain  whether  its  investment  in  Actel  will have any value
following  Actel's  bankruptcy.

ACNET  BAD  DEBT  AND ACQUISITION EXPENSE - As of December 31, 2000, the Company
-----------------------------------------
had  a  gross  investment of $4.7 million related to its proposed acquisition of
the AcNet entities.  In light of the Company's liquidity issues and other issues
involving the AcNet entities, the Company is not pursuing the options to acquire
the  AcNet  entities.  As  a  result  and  due  to  cash flow difficulties being
experienced  by  the  AcNet  entities, the Company recorded asset write-downs of
$3.7  million  in  1999  and $990,000 in 2000 due to the uncertainty of ultimate
recovery  of  the  investment.  The  Company  commenced legal action against the
AcNet  entities in April 2000 to collect its advances.  However, AcNet USA filed
for  bankruptcy  on March 29, 2001, and the Company has been informed that AcNet
Mexico  is  currently  in  receivership.

INTEREST EXPENSE - Consolidated interest expense, including amortization of debt
----------------
discount,  was  $3.5  million  for  the  years ended December 31, 2000 and 1999.

     Interest  expense  savings  were achieved due to the completion of the Debt
Restructuring  Plan initiated in the second quarter of 2000 (See Note 8 in Notes
to  Consolidated  Financial  Statements)  in  which  the  Company restructured a
significant  portion  of  its  past  due  principal  debt  and accrued interest.
Offsetting  the  lower interest achieved during the second half of the year as a
result of the Debt Restructuring Plan was the amortization of warrants issued to
an  affiliate  of  Berthel  for loans or advances made to the Company, or on the
Company's  behalf,  dating  to  January  2000  (See discussion in "Liquidity and
Capital  Resources"),  and an increase in interest rates on past due debt in the
first  half  of  2000  and  higher  levels  of debt during 2000 compared to 1999
primarily  related  to  investments  in  Actel  and  the  AcNet  entities.

OTHER  INCOME - Consolidated other income increased $7.0 million to $7.3 million
-------------
for  the  year ended December 31, 2000 from $314,000 for the year ended December
31,  1999.  The  increase  was  primarily  due  to  a  pre-tax  gain  of

                                       22
<PAGE>
$7.0  million  recorded in connection with the Debt Restructuring Plan completed
in  the second quarter of 2000 (see Note 8 to Notes to Financial Statements) and
a pre-tax gain of $214,000 recorded in connection with the sale of two buildings
in  Cedar  Rapids,  Iowa  and  Mobile,  Alabama.

INCOME  FROM  DISCONTINUED  OPERATIONS  OF INCOMEX - Effective June 30, 2000 the
--------------------------------------------------
Company  sold  all  the  shares  of Incomex, Inc., a wholly owned subsidiary, to
three  of the former shareholders of Incomex, for (a) transfer to the Company by
the purchasers of 250,000 shares of the Company's Common Stock originally issued
by  the  Company  pursuant  to  the  Company's  acquisition  of  Incomex,  (b)
cancellation  and  forgiveness of all amounts outstanding under promissory notes
in  the  aggregate  principal  amount of $684,919, and related accrued interest,
originally  issued  by  the  Company to the shareholders of Incomex, and (c) the
cancellation of all employment compensation and employment contracts between the
Company  and the purchasers.  The parties also executed mutual releases relating
to  liabilities  between the Company and Incomex and claims that the Company may
have  against  the former shareholders of Incomex.  Incomex is primarily engaged
in  the business of providing billing and collection services to the hospitality
industry  from  Mexico  to  the  United  States.

     The  accompanying  statements  of operations have been reclassified so that
the  results  for  the  subsidiary's  operations  are classified as discontinued
operations  for  all  periods  presented.  The  assets  and  liabilities  of the
discontinued operations have been reclassified in the 1999 balance sheet as "net
assets  of  discontinued  operations".  The statements of cash flows and related
notes  to  the  consolidated financial statements have also been reclassified to
conform  to  the  discontinued  operations  presentation.

LOSS  ON  DISPOSITION  - As a result of the sale of Incomex described above, the
---------------------
Company  recorded  a  loss  on  disposition of $332,000 in the second quarter of
2000.

EXTRAORDINARY  ITEM  -  GAIN  ON EXTINGUISHMENT OF DEBT - In connection with the
-------------------------------------------------------
Debt  Restructuring  Plan  the  Company began in the second quarter of 2000, the
Company reached a Comprise Settlement Agreement and Mutual Release with the FDIC
on  October  19,  2000 to pay $300,000 in settlement of two notes payable with a
financial  institution  with  combined  principal of $900,000.  As a result, the
Company  recorded  a  $722,000  Extraordinary  Gain  on  Extinguishment of Debt,
including  interest,  in  the  fourth  quarter  of  2000.

                                       23
<PAGE>
COMPARISON  OF  YEARS  ENDED  DECEMBER  31,  1999  AND  1998

REVENUES  -  Consolidated  revenues  increased  $1.4  million, or 5.4%, to $27.5
--------
million  for  the  year  ended December 31, 1999 from $26.1 million for the year
ended  December  31,  1998.  Revenues  from  PIC increased $2.4 million to $23.2
million  for  the  year  ended December 31, 1999 from $20.8 million for the year
ended  December  31,  1998  due to increases in the consumer alternative dialing
revenues, partially offset by a decline in revenues from a principal customer as
discussed  below.

     During 1998, PIC's operator services business unit began providing services
to  a  principal  customer  for  long distance services originating from Mexico.
During 1998, the Company provided full service in connection with the customer's
calls  including  billing and collections and accordingly recognized as revenues
the  value  of  such  billed services.  The results were that 1998 revenues from
this  customer totaled $4.2 million or 16% of the total revenues of the Company.
In  the  first  quarter  of 1999, the Company modified its relationship with the
customer  whereby calls were processed and billing records were delivered to the
customer for submission to the customer's billing service.  The Company received
fees  for  its  services that were recognized as revenues rather than the billed
value  of  the  calls.  Accordingly,  the revenues associated with this customer
included  in  the  results  for  the  year  ended December 31, 1999 represents a
blending  of  full  service  revenues,  representing  the  period from January 1
through  February  4,  1999,  and  fee revenues from February 5 through June 30,
1999.  Total  revenues  relative to the customer for the year ended December 31,
1999 were $5.3 million or 19% of the total revenues of the Company for the year.
Effective  June  1999,  this  customer  terminated  its  relationship  with PIC.

     During  1998,  PIC's operator service business unit derived revenues from a
principal  customer  that  totaled  $8.4 million or 32% of total revenues of the
Company,  compared  with  $14.0  million  or  51%  in  1999.  PIC  terminated  a
significant portion of the service provided to this customer in January 2000 due
to  the  significant  bad debt expenses being experienced related to such calls.

     Revenues  from MTS declined $1.0 million to $4.3 million for the year ended
December  31, 1999 from $5.3 million for the year ended December 31, 1998 due to
the  termination  of  the Lodging Partnership Program with AT&T in October 1998.
Call  processing  revenues  generated  by  MTS  through  its Lodging Partnership
Program decreased from $2.1 million for the year ended December 31, 1998 to none
for the year ended December 31, 1999.  MTS's revenue for the year ended December
31,  1999  consisted  of  revenues  from  its Telemanager services and equipment
sales.


                                       24
<PAGE>

COST  OF SALES - Consolidated cost of sales increased $8.0 million, or 44.1%, to
--------------
$26.0  million  for  the year ended December 31, 1999 from $18.0 million for the
year  ended  December  31, 1998.  Consolidated cost of sales, as a percentage of
revenues,  was  94.7% for the year ended December 31, 1999 compared to 69.2% for
the  year  ended  December 31, 1998.  The increase in cost of sales is primarily
attributable  to  the  PIC  segment  which experienced higher cost of sales as a
percentage of revenues due to a $5.6 million of bad debt in excess of historical
amounts  as  discussed  below  for  the  year  ended  December  31,  1999.

     During 1999, PIC recorded bad debt in excess of historical amounts totaling
approximately  $5.6 million primarily relating to collection issues for one type
of  call  processing  service provided by PIC to a principal customer.  Also, in
December  1999,  the Company recorded a $1.7 million liability for USF fees from
1997  through  1999  which  represents  the  period of time the liability is the
responsibility  of  ATN.

     Excluding  the  impact  of  the  $5.6  million  of  bad  debt  in excess of
historical  amounts  and  the  $1.7 million liability for USF fees, consolidated
cost  of  sales,  as  a  percentage  of  revenues,  was 68.1% for the year ended
December  31,  1999  compared  to  69.2%  for  the year ended December 31, 1998.

SELLING,  GENERAL AND ADMINISTRATIVE EXPENSE - Consolidated selling, general and
--------------------------------------------
administrative  expense  decreased  $609,000,  or 10.2%, to $5.4 million for the
year  ended  December 31, 1999 from $6.0 million for the year ended December 31,
1998.  Selling, general and administrative expense, as a percentage of revenues,
was  19.4%  for  the year ended December 31, 1999 compared to 22.9% for the year
ended  December  31,  1998.  The  reduction  in  expenses  were primarily due to
lowering  expenses at PIC and MTS, partially offset by higher corporate overhead
expenses.

DEPRECIATION  AND  AMORTIZATION  EXPENSE  -  Consolidated  depreciation  and
----------------------------------------
amortization  increased  $213,000  or  12.7%, to $1.9 million for the year ended
December  31,  1999 from $1.7 million for the year ended December 31, 1998.  The
increase is primarily the result of additional goodwill of $3.6 million recorded
in the fourth quarter of 1998 for the settlements of the earn-outs in connection
with  the  Company's  acquisition  of  PIC,  which  is  being amortized over the
remaining  life  of  the  original  goodwill.

IMPAIRMENT  OF  ASSETS  - The Company periodically reviews long-lived assets and
----------------------
intangible  assets  for  impairment  whenever events or changes in circumstances
indicate  that  the carrying amount of these assets may not be recoverable.  Due
to  the rapidly changing competitive environments in which the Company operates,

                                       25
<PAGE>
the significant bad debts experienced, the loss of PIC's two major customers and
the  declining  revenues  per call have prevented the Company from significantly
increasing  operating profits from levels that existed prior to the acquisition,
in  1999,  the  Company  recorded  an  impairment  write-down  for  goodwill  of
approximately  $3.0  million  related  to  PIC and of approximately $0.3 million
related  to  other  assets, primarily telecommunications equipment, based on the
expected  fair  value  of  such  assets.

ACNET  BAD  DEBT  AND ACQUISITION EXPENSE - As of December 31, 1999, the Company
-----------------------------------------
had  an investment of $4.7 million consisting of $3.7 million of loans, $265,000
of  interest  and  $747,000  of  costs  incurred  either related to the proposed
acquisition  of  the AcNet entities or paid on behalf of the AcNet entities.  In
light  of  the  Company's  liquidity issues and other issues involving the AcNet
entities, the Company is not pursuing its options to acquire the AcNet entities.
As a result and due to cash flow difficulties experienced by the AcNet entities,
the  Company  recorded  a  $3.7  million  asset  write-down  in  1999 due to the
uncertainty  regarding  the  ultimate  recovery of the investment and notes (see
Note  6  in  Notes  to  Consolidated  Financial  Statements).

GAIN  ON  AT&T  CONTRACT  BUYOUT - The Company's agreement with AT&T was amended
--------------------------------
during 1998 to terminate as of October 15, 1998.  Under the amendment, AT&T will
directly  manage  the  existing  customers  under the contracts and AT&T assumed
liability  for  all  commissions  owed  to the existing customers for the period
March 1, 1998 to October 15, 1998.  As a result, the Company recorded a one-time
gain  in  the  fourth  quarter  of 1998 of $453,000 representing the commissions
assumed  by AT&T less the write-off of owned equipment at the existing customers
properties.

INTEREST EXPENSE - Consolidated interest expense, including amortization of debt
----------------
discount,  increased  $1.4 million, or 70.0%, to $3.5 million for the year ended
December  31,  1999 from $2.1 million for the year ended December 31, 1998.  The
increase  was  primarily  due  to  additional  debt  incurred  related  to  the
investments  in  Actel  and  the  AcNet  entities, the costs associated with the
earn-out  settlement with respect to the acquisition of PIC, the Company's lower
operating profit and general working capital purposes, and to an increase in the
interest  rates  on  the  past  due  debt.

OTHER  INCOME - Consolidated other income increased $328,000 to $314,000 for the
-------------
year  ended December 31, 1999 from a loss of $14,000 for the year ended December
31, 1998.  During the year ended December 31, 1999 the Company recorded $245,000
as  other  income  for  dividends  accrued  on  its  investment  in  Actel.


                                       26
<PAGE>
LIQUIDITY  AND  CAPITAL  RESOURCES

The  Company  completed  several financial transactions in the second quarter of
2000  which  resulted  in  significant  improvement  in  the Company's financial
condition.  These  transactions  included  the following: 1) the sale of 100% of
the  stock of Incomex to three of the former shareholders of Incomex.  The terms
of  the  purchase  agreement  included  (a)  the  transfer to the Company by the
purchasers  of 250,000 shares of the Company's Common Stock originally issued by
the  Company  pursuant to the Company's acquisition of Incomex, (b) cancellation
and  forgiveness  of  all  amounts  outstanding  under  promissory  notes in the
aggregate  principal  amount of $684,919 originally issued by the Company to the
shareholders of Incomex, and (c) the cancellation of all employment compensation
and  employment contracts between the Company and the purchasers; 2) the sale of
buildings in Cedar Rapids, Iowa and Mobile, Alabama and resulting payment on the
related  mortgage  financing;  and  3)  the Debt Restructuring Plan in which the
Company  a) sold 1,419,614 Actel Shares in a private placement for approximately
$4.9  million  and  b) transferred 1,063,584 Actel Shares and issued Convertible
Notes  in  an aggregate principal amount of $4.6 million in the Unit Offering in
exchange  for the cancellation of outstanding indebtedness in the amount of $9.2
million. The Convertible Notes accrue interest at the rate of 12% annually, with
principal  and  accrued  interest  due on May 29, 2003, and are convertible into
shares  of  the  Company's Common Stock at a conversion price of $3.03 per share
(330  shares  for each $1,000 due under the Convertible Notes).  The Convertible
Notes  are  unsecured  obligations of the Company.  The Company paid $479,000 in
satisfaction  of  25%  of  the  outstanding principal and interest to holders of
promissory notes originally issued by the Company in April and May 1998 with the
remaining  balance  of  these  promissory  notes  being  converted  in  the Unit
Offering.

     As part of the Debt Restructuring Plan, the Company issued three promissory
notes  on  June  22,  2000  to Berthel for an aggregate amount of $209,428.  The
notes are due June 21, 2001 and accrue interest at the rate of 12% annually.  In
addition,  the  Company  amended: (1) the terms of the Revolving Promissory Note
with  MCCIC  on  June 22, 2000 to a period of one year with payment of principal
and  all accrued interest due on June 21, 2001 and (2) the terms of the Note and
Warrant Purchase Agreement with MCCIC on June 22, 2000 with payment of principal
and  unpaid  interest  due  on  June  22,  2001.

     Proceeds from the sale of the Actel Shares were used to reduce amounts owed
to  MCCIC  under  the  New Valley Loan and the Revolving Promissory Note of $2.2
million, reduce past due note and lease payables to Berthel of $1.0 million, pay
placement  fees  and  other  offering  expenses  of $444,000 and pay $479,000 to

                                       27
<PAGE>
certain  noteholders  upon  conversion in the Unit Offering a partial payment of
amounts  owed to such noteholders.  The remaining proceeds of $779,000 were used
for  working  capital  purposes.

     At  December  31,  2000, the Company's current liabilities of $14.0 million
exceeded  current  assets  of $906,000 resulting in a working capital deficit of
$13.1  million.  During  the year ended December 31, 2000, the Company used $2.9
million in cash for operating activities, and received $7.1 million in investing
activities.  The  Company  received proceeds from new debt financing of $656,000
and  made  payments on debt of $4.9 million for net cash flows used in financing
activities  of  $4.3  million.  These  activities  resulted  in  an  increase in
available  cash  of  $81,000  for  the  year  ended  December 31, 2000. Accounts
receivable  declined  by  $310,000  primarily due to the lower revenue volume at
PIC.  Note  receivable  declined  by  $500,000 due to the collection of the note
during 2000.  Total current liabilities declined by $8.9 million due to the Debt
Restructuring  Plan  initiated  during  2000, partially offset by higher accrued
interest  levels.

     The  Company's  debt and capital lease obligations as of December 31, 2000,
including  the  current portion thereof, totaled $13.9 million compared to $21.2
million  at  December  31,  1999.  The  Company's current debt and capital lease
obligations  as  of  December  31,  2000  totaled $9.0 million compared to $16.2
million  at  December  31,  1999.

     As  of  December  31,  2000,  the  Company  was  past due in the payment of
approximately  $9.9  million  in  principal  and accrued interest payments.  The
Company was also past due with its trade vendors in the payment of approximately
$505,000  as  of  December  31,  2000.

     During  2000, the Company borrowed a total of $506,000 from MCCIC under the
Revolving  Promissory  Note.  The  borrowings  were originally due on demand and
bear  interest  at  12%. On April 6, 2000, the entire interest of the New Valley
Loan  was purchased by MCCIC.  As of December 31, 2000, the Company had $588,000
principal  outstanding  under  all  loans  from  MCCIC.

     The  Company's  capital expenditures for property, plant and equipment were
$672,000  during  1999.  The  Company  did not make any capital expenditures for
property,  plant  and  equipment  during  2000.  The Company does not anticipate
incurring  any  material  capital  expenditures  during  2001.

     The  Company's  past  due  debt at December 31, 2000 includes approximately
$9.2  million  of  notes  and  accrued  interest  which have been pledged by the
holders  of the notes to a bank as collateral for loans made by the bank to such
holders.  This  bank  was  liquidated  by the FDIC during 2000.  The Company was
notified  in  December  2000  that the FDIC sold significantly all the loans and
related  collateral

                                       28
<PAGE>
to  a  financial institution.  If the financial institution seeks to enforce its
rights under the pledged notes, the Company currently would not be able to repay
these  notes.  As  a  result,  any  such  action by the financial institution is
likely  to  prevent  the  Company  from  continuing  as  a  going  concern.

     The Company's existing capital and potential funds from operations will not
be  sufficient  to  meet its anticipated cash needs for working capital and debt
obligations for the next twelve months.  The Company estimates that it will need
at  least  $17  million  for  the  next  twelve  months  to fund working capital
requirements  and  repay indebtedness that is either past due or will become due
in  that period, including accrued interest, past due amounts with trade vendors
and  USF  fees  payable.  The Company believes that possible sources of funds in
2001  to  enable  the  Company  to  continue  its  operations  consist  of  cash
distributions  from  its PIC business unit and advances from MCCIC.  The Company
also  continues  to  engage  in  discussions  with  creditors  to  restructure
indebtedness.  In  January  2000,  the  Company  retained  Berthel to assist the
Company regarding the identification and investigation of strategic alternatives
that  might  be  available  to  the Company.  No assurance can be given that the
Company  will  be able to raise adequate funds or generate sufficient cash flows
to  meet  the  Company's  cash  needs.  If  the  Company  is unable to raise the
necessary  funds  to repay its past due debt, its creditors may seek their legal
remedies.  Any action by the Company's creditors to demand repayment of past due
indebtedness is likely to have a material adverse effect on the Company's future
performance, financial condition and ability to continue as a going concern. The
incurrence  of  any  material liability that could result from the resolution of
the  various  contingent  liabilities  discussed  previously is likely to have a
similar  result.  See  "Forward-Looking  Statements"  below.

IMPACT  OF  NEW  ACCOUNTING  PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  133,  "Accounting for Derivative Instruments and Hedging Activities."  SFAS
No.  133  establishes  standards  for  derivative instruments, including certain
derivative  instruments embedded in other contracts (collectively referred to as
derivatives)  and  for hedging activities.  It requires that an entity recognize
all  derivatives  as  either assets or liabilities in the statement of financial
position  and measure those instruments at fair value.  The recognition of gains
or  losses  resulting  from changes in the values of derivatives is based on the
use of each derivative instrument and whether it qualifies for hedge accounting.
The  Company  adopted SFAS No. 133 on January 1, 2001.  The adoption of SFAS No.
133  did  not  have  a material effect on the Company's results of operations or
financial  condition.


                                       29
<PAGE>
FORWARD-LOOKING  STATEMENTS

     This  report  contains  statements,  including  statements  of management's
belief  or  expectation,  which  may  be  forward-looking  within the meaning of
applicable  securities  laws.  Such  statements are subject to known and unknown
risks  and uncertainties that could cause actual future results and developments
to  differ  materially  from  those  currently  projected.  Such  risks  and
uncertainties  include,  among  others,  the  following:

-     the Company's access to adequate funds to meet the Company's operating and
      financial  needs and to repay its past due debt, and the Company's ability
      to  continue  as  a  going  concern  if  it  is  unable to access adequate
      financing;

-     the possibility that the Company's creditors may take legal action for the
      repayment  of  past  due  indebtedness  and  the ability of the Company to
      continue  as  a  going  concern  if  any  such  action  is  taken;

-     the  Company's  ability  to  restructure  its  past  due  debt;

-     the  Company's  ability  to realize potential value from its PIC operating
      unit and its Actel investment and the ability of PIC to distribute cash to
      the  Company  in  future  periods;

-     the  possibility  of  additional  impairment  write  downs  of  assets;

-     the  Company's  ability  to  respond  to  competition  in  its  markets;

-     the  outcome  of  pending  litigation;

-     changes  in, or failure to comply with, governmental regulation, including
      telecommunications  regulations;

-     the  effect  of the alleged liability of ATN for up to $0.8 million of USF
      fees and the possibility that ATN may  be  liable for additional USF fees;

-     general  economic  conditions  in  the  Company's  markets;

-     the  risk  that  the  Company's analyses of these risks could be incorrect
      and/or the strategies developed to address them could be unsuccessful; and


                                       30
<PAGE>
-     various other factors discussed  in  this  Annual  Report  on  Form  10-K.

     The  Company  will  not  update  the forward-looking information to reflect
actual  results  or  changes  in  the  factors  affecting  the  forward-looking
information.

     The  forward-looking  information  referred  to  above includes any matters
preceded  by  the words "anticipates," "believes," "intends," "plans," "expects"
and  similar  expressions as they relate to the Company and include, but are not
limited  to:

-     expectations regarding the Company's financial condition and liquidity, as
      well  as  future  cash  flows;

-     expectations  regarding sales growth, sales mix, gross margins and related
      matters  with  respect  to  operating  results;  and

-     expectations  regarding alternatives to restructure the Company's business
      and  reduce  its  overall  debt.

ITEM  7A.  DISCLOSURES  ABOUT  MARKET  RISK

     The  Company  does not have any foreign currency exchange risk or commodity
price  risk.  All  of  the Company's debt, including past due debt with carrying
value  of  $7.5  million,  was at a fixed interest rate at December 31, 2000 and
1999  and,  therefore,  the Company is not impacted by changes in interest rates
related to the debt.  The interest rates range from 12% to 18%.  The Company had
outstanding  fixed  rate long-term debt obligations with carrying values of $4.9
million  and $2.9 million at December 31, 2000 and 1999, respectively.  The fair
value  of  this  debt  was  zero and $2.5 million at December 31, 2000 and 1999,
respectively.  The  potential  loss  in  fair  value  on  such  fixed-rate  debt
obligation  from  a hypothetical 10% increase in market interest rates would not
be  material  to  the  overall  fair  value  of  the  debt.

ITEM  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

     The  consolidated  financial  statements  of the Company, notes thereto and
related financial information are filed under this item beginning on page F-1 of
this  report.

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

     Not  applicable.

                                       31
<PAGE>
                                    PART III
                                    --------

ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT.

     The  following sets forth certain information with respect to the directors
and  executive  officers  of  the  Company  as  of  December  31,  2000.

DIRECTORS
<TABLE>
<CAPTION>

                                                                                                                   DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS AND DIRECTORSHIPS                                         AGE    SINCE
                                                                                                              ---  --------
<S>                                                                                                           <C>  <C>
GUY O. MURDOCK                                                                                                 45      1989

Mr. Murdock is a private investor.  He served as Chairman of the Board of the Company from
1989 to January 2000, as Chief Executive Officer of the Company from 1989 to April 1997
and as President of the Company from 1989 to July 1996.

WAYNE WRIGHT                                                                                                   55      1997

Mr. Wright has served as President of Priority International Communications, Inc. (a
wholly-owned subsidiary of the Company since October 1997) since March 1997 and
as Chairman of the Board of Priority International Communications, Inc. from 1996 to 1997.
Mr. Wright served as an officer of U.S. Ameriphone (an aggregator of hospitality
and pay phone businesses) from 1993 to 1996.

DAVID KIRKPATRICK                                                                                              61      2000

Mr. Kirkpatrick has been a private investor since 1992.  Mr. Kirkpatrick served as a
consultant to a law firm from 1991 to 1992 and as a partner of Peat Marwick (an accounting
firm) from 1962 to 1991, most recently as Managing Partner of the Houston office.

EUGENE I. DAVIS                                                                                                46      2000

Mr. Davis has served as Chairman of the Board and Chief Executive Officer of the Company
since May 2000 and served as Interim Chairman of the Board and Interim Chief Executive Officer
of the Company from January 2000 through May 2000.  He has served as Chairman of the
Board and Chief Executive Officer of Pirinate Consulting Group, LLC (a privately held consulting
firm) since 1999 and as Chief Executive Officer of SmarTalk Teleservices, Inc. (a prepaid calling
card provider) since 1999.  Mr. Davis served as Chief Operating Officer of Total-Tel USA
Communications, Inc. (a telecommunications provider) from 1998 to 1999.  Mr. Davis served
as President of Emerson Radio Corp. (a consumer electronics products distributor) from 1994 to
1997 and served as Vice Chairman of the Board until 1997 and as a director from 1992 to 1997.
</TABLE>


                                       32
<PAGE>
EXECUTIVE  OFFICER

     The  following  table  sets  forth  the  name,  age,  current  position and
principal  occupation and employment during the past five years of the executive
officer  of  the  Company  who  is  not  a  director:
<TABLE>
<CAPTION>

NAME            AGE      CURRENT POSITION      Other Positions
                     ------------------------
<S>             <C>  <C>                       <C>
Paul C. Tunink  42   Vice President, Chief     Vice President, Chief Financial Officer and
                     Financial Officer and     Treasurer of Stuart Entertainment, Inc. (a
                     Secretary since November  manufacturer of gaming supplies) from
                     1998.                     April 1995 to October 1998.  Divisional
                                               Vice President-Finance of Younkers Inc. (a
                                               retailer) from April 1992 to April 1995.
</TABLE>

SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE

     Section  16  (a)  of  the Exchange Act requires the Company's directors and
executive  officers  and  persons who own more than 10% of a registered class of
the  Company's  equity  securities,  to  file  with  the  SEC initial reports of
beneficial  ownership  and  reports  of  changes  in beneficial ownership of the
Company's  equity  securities.  The  rules  promulgated by the SEC under Section
16(a)  of  the  Exchange  Act  require those persons to furnish the Company with
copies  of  all  reports  filed  with  the SEC pursuant to Section 16(a).  Based
solely upon a review of such forms actually furnished to the Company and written
representations  of  certain  of the Company's directors and executive officers,
all  directors,  executive officers and 10% shareholders have filed with the SEC
on  a  timely  basis all reports required to be filed under Section 16(a) of the
Exchange  Act  during  2000,  except  that  Mr.  Davis  filed a Form 3 report in
February  2000  to  report  his  appointment as an officer and a director of the
Company  in  January  2000 and Mr. Kirkpatrick filed a Form 3 report in February
2000  to  report  his  appointment as a director of the Company in January 2000.

ITEM  11.  EXECUTIVE  COMPENSATION.

     CASH  AND  OTHER  COMPENSATION.  The table which follows sets forth certain
information  concerning  compensation paid to, earned by or awarded to Eugene I.
Davis,  the  Company's  Chairman of the Board and Chief Executive Officer during
fiscal  2000,  and Paul C. Tunink, the Company's Vice President, Chief Financial
Officer  and  Secretary  during  fiscal 2000 (collectively, the "named executive
officers") during the years indicated below.  No other executive officers of the
Company  received  salary and bonus in excess of $100,000 during the fiscal year
ended  December  31,  2000.

                                       33
<PAGE>
<TABLE>
<CAPTION>

                                    SUMMARY COMPENSATION TABLE

                                                                    LONG-TERM
                                                                   COMPENSATION
                                                                      AWARDS
                                                                      ------
                                              ANNUAL COMPENSATION   SECURITIES
                                              -------------------   UNDERLYING        ALL OTHER
                                                                     OPTIONS (#)  COMPENSATION ($)
NAME AND PRINCIPAL POSITION            YEAR  SALARY ($)  BONUS ($)   -----------  ----------------
-------------------------------------  ----  ----------  ----------
<S>                                    <C>   <C>         <C>         <C>          <C>

Eugene I. Davis                        2000           -          -             -       181,109 (2)
  Chairman of the Board and            1999           -          -             -                -
  Chief Executive Officer (1)          1998           -          -             -                -

Paul C. Tunink                         2000     128,000  45,000 (4)            -                -
  Vice President, Chief                1999     128,000          -             -        31,261 (5)
  Financial Officer and Secretary (3)  1998      14,769          -        75,000                -

_______________
<FN>

(1)  Mr.  Davis  has  served  as  Chairman of the Board and Chief Executive Officer of the Company
since  May  2000  and  served as Interim Chairman of the Board and Interim Chief Executive Officer
from January 2000 through May 2000. Mr. Davis' services are contracted through Pirinate Consulting
Group, LLC.

(2)  Represents amounts paid to Pirinate Consulting Group, LLC, an entity controlled by Mr. Davis,
during  fiscal  2000.

(3)  Mr.  Tunink  has  been  a  Vice  President  of  the  Company  since  November  1998.

(4)  Represents  payments of $15,000 made on each of February 15, 2000, March 15, 2000 and May 15,
2000  to  Mr.  Tunink  under  a  retention  bonus  agreement.

(5)  Represents  amounts  paid  by  the  Company  for  Mr.  Tunink's  moving  expenses.
</TABLE>

     OPTIONS  GRANTED  DURING  2000.  There were no stock options granted to the
named executive officers of the Company during the year ended December 31, 2000.

     FISCAL  YEAR-END  OPTION  VALUES.  The  following  table  provides  certain
information  regarding  the  unexercised  options  held  by  the named executive
officers at December 31, 2000.  No named executive officer exercised any options
during  the  year  ended  December  31,  2000.
<TABLE>
<CAPTION>

                    AGGREGATED FISCAL YEAR-END OPTION VALUES

                    NUMBER OF SECURITIES       VALUE OF UNEXERCISED
                   UNDERLYING UNEXERCISED      IN-THE-MONEY OPTIONS
                 OPTIONS AT FISCAL YEAR-END    AT FISCAL YEAR-END (1)
                 --------------------------  --------------------------
NAME             EXERCISABLE  UNEXERCISABLE  EXERCISABLE  UNEXERCISABLE
---------------  -----------  -------------  -----------  -------------
<S>              <C>          <C>            <C>          <C>
Eugene I. Davis            -              -            -              -
Paul C. Tunink        75,000              -            -              -
_______________
<FN>

(1)     Based  on the reported closing bid price of $0.0938 per share of Common
Stock  on  the  OTC  Bulletin  Board  on  December  29,  2000.
</TABLE>


                                       34
<PAGE>
EMPLOYMENT  AND  CONSULTING  AGREEMENTS

     On November 16, 1998, the Company entered into an Employment Agreement with
Paul  C.  Tunink.  The Employment Agreement had an initial term through November
30,  1999  and  renews  automatically  from  year  to  year  thereafter,  unless
terminated  by  either  party,  and  provides  a  base  salary  of not less than
$128,000.  In  addition,  Mr. Tunink is eligible to participate in the Company's
bonus  plan  and  other  executive compensation plans.  The Employment Agreement
contains  a  provision  restricting competition with the Company for a period of
one year following termination of employment.  Mr. Tunink's Employment Agreement
provides  that  if  his  employment  is terminated by the Company for any reason
other  than  cause,  including:  (a) termination of employment by the Company or
its  successor;  (b)  reduction  in  salary;  (c) the relocation of Mr. Tunink's
workplace  from  the  Cedar  Rapids, Iowa area; (d) the Company's failure in any
material  respect  to  perform any provision of the Employment Agreement; or (e)
Mr.  Tunink's  continued travel on the Company's behalf in excess of 50% for any
continuous  period  of  sixty  days,  Mr.  Tunink  will  be  entitled to receive
severance  payments  totaling  $128,000  for one year and continuation of health
insurance  coverage  for  one  year.

     On  January  10,  2000,  the  Company  entered into a letter agreement with
Pirinate  Consulting  Group, LLC ("Pirinate"), an entity controlled by Eugene I.
Davis,  for the personal services of Mr. Davis as the Company's Interim Chairman
of  the  Board and Interim Chief Executive Officer.  Pirinate receives $15,000 a
month,  plus  out-of-pocket  expenses,  for these services.  The initial term of
this  agreement  was  three months.  Thereafter, either party may terminate this
agreement,  with  or  without  cause,  effective  upon  sixty days prior written
notice.  The  parties  agreed in May 2000 that Mr. Davis would serve as Chairman
of  the  Board  and  Chief  Executive  Officer  of  the  Company.

Compensation  of  Directors

     The Company pays Mr. Kirkpatrick a monthly retainer equal to the greater of
(a)  $1,000  or  (b) $1,000 for each meeting of the Board of Directors attended.
In  addition,  in  January 2000 the Company issued options to Mr. Kirkpatrick to
purchase  up to 20,000 shares of Common Stock, 10,000 of which were fully vested
at  the  time of issuance and 10,000 of which vested on January 1, 2001, with an
exercise  price of $2.25 per share.  Through its letter agreement with Pirinate,
the  Company  pays  Pirinate $15,000 per month for making Mr. Davis available to
serve  as  the  Company's  Chairman  of  the  Board and Chief Executive Officer.
Messrs.  Murdock  and  Wright do not receive any compensation for serving on the
Company's  Board  of  Directors.

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

     The following table sets forth information as of January 15, 2001 regarding
the  beneficial  ownership  of  shares of Common Stock by (a) each person who is
known  to  the  Company to be the beneficial owner of more that 5% of the Common
Stock,  (b)  each  director,  director  nominee  and named executive officer (as
defined  above)  and  (c)  all  directors  and  executive  officers  as a group.


                                       35
<PAGE>
     Beneficial  ownership  of Common Stock has been determined for this purpose
in  accordance  with  Rules  13d-3  and  13d-5  of  the  Securities and Exchange
Commission  ("SEC")  under  the  Securities  Exchange Act of 1934 (the "Exchange
Act"),  which  provide,  among  other  things, that a person is deemed to be the
beneficial  owner of Common Stock if such person, directly or indirectly, has or
shares  voting power or investment power with respect to the Common Stock or has
the  right  to  acquire such ownership within sixty days after January 15, 2001.
<TABLE>
<CAPTION>

                                       SHARES BENEFICIALLY   PERCENT OF
NAME OF BENEFICIAL OWNER                    OWNED  (1)         CLASS
-------------------------------------  --------------------  ----------
<S>                                    <C>                   <C>
Eugene I. Davis                                           -           *
David Kirkpatrick (2)                                20,000           *
Guy O. Murdock (3)                                1,668,081        13.1
Wayne Wright (4)                                  2,640,067        21.0
Paul C. Tunink (5)                                   75,000           *
Berthel Fisher & Company, Inc. (6)                8,443,959        44.0
Larry A. Cahill (7)                               7,223,892        38.5
All directors and executive officers
   as a group (5 persons) (8)                     4,403,148        34.1
___________________
<FN>

*   Less  than  1%.

(1)     This  table  is based upon information supplied by directors, executive
officers and principal shareholders.  Unless otherwise indicated in footnotes to
this  table,  each  of  the shareholders named in this table has sole voting and
investment  power  with  respect  to  the  shares  shown  as beneficially owned.

(2)     Consists  of  20,000  shares  subject  to  exercise  of  options.

(3)     Includes  215,000  shares  subject  to  exercise  of  warrants.

(4)     Includes  2,310,067  shares  owned  by  a  trust  of which Mr. Wright is
trustee,  80,000  shares subject to exercise of warrants and 250,000 shares held
by  Mr.  Wright's  spouse.

(5)     Consists  of  75,000  shares  subject  to  exercise  of  options.

(6)     Includes  (i)  2,965,154  shares  of  Common Stock beneficially owned by
certain  affiliates  of  Berthel  for which Berthel shares voting and investment
power,  including  334,731  shares  subject  to exercise of warrants and 962,959
shares  subject  to  conversion  of  Convertible Notes (based upon $2,917,765 of
principal  and  interest  outstanding  under  such notes as of January 15, 2001,
divided  by  the conversion rate of $3.03 per share); (ii) 75,000 shares subject
to  exercise  of  warrants,  (iii)  91,112  shares  subject  to  conversion  of
Convertible  Notes  (based  upon  $276,069 of principal and interest outstanding
under such notes as of January 15, 2001, divided by the conversion rate of $3.03
per  share),  and (iv) 5,199,121 shares subject to the exercise of warrants held
by  MCC  Investment Company, LLC ("MCCIC"), a company owned by Berthel and Larry
A.  Cahill.  Reflects  information reported in a Schedule 13D filed with the SEC
by Berthel on January 16, 1997, as amended on June 6, 1997, January 8, 1998, May
1,  1998, June 22, 1998, August 6, 1998 and January 15, 1999, as well as certain
other  information  provided to the Company.  The address of Berthel is 701 Tama
Street,  P.O.  Box  609,  Marion,  Iowa  52302-0609.


                                       36
<PAGE>
(7)     Includes 650,000  shares  subject  to  exercise  of warrants and 389,006
shares  subject  to  conversion  of  Convertible Notes (based upon $1,178,689 of
principal  and  interest  outstanding  under  such notes as of January 15, 2001,
divided  by  the  conversion  rate of $3.03 per share).  Also includes 5,199,121
shares  subject  to  the  exercise of warrants held by MCCIC, a company owned by
Berthel and Mr. Cahill. Mr. Cahill's address is 3330 Southgate Court S.W., Cedar
Rapids,  Iowa  52404.

(8)     Includes 95,000 shares subject to exercise of options and 295,000 shares
subject  to  exercise  of  warrants.
</TABLE>

ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.

     The  Company obtains lease and other financing services from Berthel Fisher
&  Company,  Inc. and its subsidiaries and their affiliated leasing partnerships
("Berthel").  Berthel  is  the  beneficial  owner  of approximately 44.0% of the
Common  Stock  as  of  January  15, 2001.  As of March 1, 2001, the Company owed
Berthel  a  total  of  approximately  $3.9  million under certain lease and debt
financing  arrangements  and  the  Company  owed  MCCIC a total of approximately
$635,000  under  certain debt financing arrangements.  In December 1999, Berthel
entered  into  a  Standstill  Agreement  with the Company.  Under the Standstill
Agreement,  Berthel  indicated  its  intention  to form a creditors committee to
represent  the  interest  of  Berthel  and  other creditors of the Company.  The
Company  agreed  to  provide  the creditors committee with access to information
regarding  the Company and its business and to advise the creditors committee in
advance  regarding  certain  significant  corporate developments.  The creditors
committee  may also demand that the Company take certain actions with respect to
the  Company's  assets  and  business.  The  members  of the creditors committee
agreed  to  forebear  from  taking  actions to collect past due debt owed by the
Company  in the absence of the unanimous approval of the creditors committee. As
of March 1, 2001, the Company and Berthel are the only parties to the Standstill
Agreement  and  Berthel  is  the  only  member  of  the  creditors  committee.

     In  January  2000,  the  Company  retained  Berthel  to  assist the Company
regarding  the  identification  and investigation of strategic alternatives that
might  be  available  to  the Company.  The Company owed various fees to Berthel
under  a  placement  agreement  including a monthly retainer and placement fees.
The  Company  paid  to  Berthel  total fees of $536,000 during 2000.  If further
strategic  transactions  are  completed,  the  Company will owe a success fee to
Berthel,  depending  on  the  price  of  the  strategic  transactions.

     The  Company  undertook the Debt Restructuring Plan (See Note 8 to Notes to
Consolidated  Financial Statements) in 2000 which included restructuring certain
debt  and  accrued  interest  with  Berthel  and  Larry  A.  Cahill.  Mr. Cahill
beneficially  owns  approximately  38.5%  of  the Common Stock as of January 15,
2001.  Pursuant  to the Debt Restructuring Plan, the Company transferred 695,058
Actel  Shares  and  issued Convertible Notes in an aggregate principal amount of
$3.0 million to Berthel in the Unit Offering in exchange for the cancellation of
outstanding  indebtedness  in  the  amount  of  $5.9  million.  The Company also
transferred  273,768  Actel Shares and issued Convertible Notes in the aggregate
principal  amount of $1.1 million to Mr. Cahill in the Unit Offering in exchange
for  the  cancellation  of  outstanding  indebtedness  in  the  amount  of

                                       37
<PAGE>
$2.2  million.  The  Convertible  Notes  accrue  interest  at  the  rate  of 12%
annually,  with  principal  and  accrued  interest  due on May 29, 2003, and are
convertible into shares of Common Stock at a conversion price of $3.03 per share
(330  shares for each $1,000 due under the Convertible Notes).  The Company paid
Berthel $1.0 million in lease and interest payments on certain past due balances
and  paid  MCCIC  $2.2  million  with proceeds from the Debt Restructuring Plan.

     The  Company  borrowed an aggregate of $506,000 from MCCIC, a company owned
by  Berthel  and  Mr.  Cahill,  in  2000 under a Revolving Promissory Note.  The
Revolving  Promissory Note, which bears interest at 12% per year, was amended on
June  22,  2000 to provide that all remaining principal and accrued interest are
due  on  June  21, 2001.  MCCIC paid the January, February and March payments of
$200,000 each on behalf of the Company under the Company's bridge loan (the "New
Valley  Loan")  with  New  Valley Corporation ("New Valley").  On April 6, 2000,
MCCIC  purchased  the  remaining  interest of New Valley in the New Valley Loan.
The  New  Valley Loan, which bears interest at 12% per year, was amended on June
22,  2000  to  provide that all remaining principal and interest are due on June
21,  2001.  Effective  May  29, 2001, the Company issued warrants to purchase an
aggregate  of  5,199,121  shares  of Common Stock at a weighted average exercise
price  of  $1.99  per share to MCCIC in connection with the Company's borrowings
under  the  Revolving  Promissory  Note  and  the  New  Valley  Loan.

     The  Company provided telecommunications services to certain hotels managed
by  Larken, Inc., a company controlled by Larry A. Cahill. The Company generated
revenues  of  $115,000  in  2000 pursuant to its contracts with Larken, Inc. and
accrued  commissions  of  $180,000  payable  to  Larken,  Inc.  pursuant to such
contracts.  The  agreement  was  terminated  effective  May  1,  2000.

     In  January 2000, the Company entered into a letter agreement with Pirinate
which  provided  that the Company would pay Pirinate $15,000 a month in exchange
for  up  to six days per month of personal services from Eugene I. Davis.  Under
the  letter  agreement,  Mr.  Davis  serves as Interim Chairman of the Board and
Interim  Chief Executive Officer of the Company.  The letter agreement's term is
for  a  minimum  of  three months, and thereafter either party may terminate the
letter  agreement, with or without cause, effective upon 60 days written notice.
The  letter  agreement  also  provides  that  the  Company, upon approval by Mr.
Tunink,  the  Company's  Chief  Financial  Officer,  will  pay  Mr.  Davis'
out-of-pocket,  travel  and  other major expenses related to his services to the
Company.  The  parties agreed in May 2000 that Mr. Davis would serve as Chairman
of  the  Board  and  Chief  Executive  Officer of the Company.  The Company paid
$181,109  under  this  agreement  in  2000.

     On  December  24,  2000,  the  Company  signed a consulting services letter
agreement with Prentice Services LTD ("Prentice"), an entity controlled by Wayne
Wright,  a  member  of the Company's Board of Directors.  The agreement provides
that  Mr.  Wright  will  serve  as  President  of  Priority  International
Communications,  Inc.  ("PIC"),  a  subsidiary  of the Company, and will provide
consulting  services  to  PIC,  as

                                       38
<PAGE>
directed  by the Company's Chief Executive Officer.  Prentice receives $15,000 a
month,  plus  out-of-pocket  expenses,  for  these  services.  Also, at the sole
discretion  of the Company's Board of Directors, Prentice may receive additional
success  fees  and  bonuses.  Either party may terminate this agreement, with or
without cause, effective upon six months prior written notice.  The Company paid
$15,000  under  this  agreement  in  2000.

     Guy  O.  Murdock,  a  director  of  the Company, received unauthorized cash
advances  on  preferred stock dividends in the amount of $70,000 in 1999.  Under
the  terms  of the preferred stock, the Company, at its discretion, may pay such
dividends  in cash or in shares of its Common Stock.  The Company has elected to
pay  all  such  dividends  in shares of Common Stock.  The Company has requested
reimbursement  from Mr. Murdock for the cash advances made to him, and upon such
reimbursement  will  issue  25,555 shares of Common Stock to Mr. Murdock in full
payment of the accrued stock dividends the Company has declared on its preferred
stock.  The  Company has also requested substantiation or reimbursement from Mr.
Murdock  for  approximately  $66,000  for  certain  undocumented  travel  and
entertainment  expenses  and  advances.

                                     PART IV
                                     -------

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

(a)     Documents  filed  as  part  of  this  report:

1.     Financial  Statements -  See Index to Financial Statements on page F-1 of
--     ---------------------
this  Report.

2.     Financial Statement Schedules - See Index to Financial Statements on page
--     -----------------------------
F-1  of  this  Report.  All  other  schedules  are  omitted  since  they are not
required,  are  inapplicable,  or  the  required  information is included in the
financial  statements  or  notes  thereto.

3.     Exhibits:
--     --------
<TABLE>
<CAPTION>

EXHIBIT NUMBER                               DOCUMENT DESCRIPTION
--------------  -------------------------------------------------------------------------------
<S>             <C>
3.1             Restated Articles of Incorporation of the Company. (1)

3.2             First Amendment to Restated Articles of Incorporation of the Company. (2)

3.3             Second Amendment to Restated Articles of Incorporation of the Company. (2)

                                       39
<PAGE>

3.4             Amended and Restated By-Laws of the Company. (3)

4.1             Form of Common Stock Purchase Warrant Agreement between the Company
                and Firstar Trust Company. (1)

4.2             Form of Redeemable Warrant. (1)

4.3             First Amendment to Common Stock Purchase Warrant Agreement, dated as
                of September 30, 1999, between the Company and Firstar Trust Company.

4.4             Second Amendment to Common Stock Purchase Warrant Agreement, dated
                as of April 14, 2000, between the Company and Firstar Bank, N.A.

4.5             Third Amendment to Common Stock Purchase Warrant Agreement, dated as
                of October 9, 2000, between the Company and Firstar Bank, N.A.

10.1            Murdock Communications Corporation 1993 Stock Option Plan. (1) (5)

10.2            Murdock Communications Corporation 1997 Stock Option Plan, as amended. (4) (5)

10.3            Amended and Restated Employment Agreement, dated as of October 1, 1998,
                by and between the Company and Guy O. Murdock. (4) (5)

10.4            Employment Agreement, dated as of January 1, 1999, by and between the
                Company and Colin P. Halford. (4) (5)

10.5            Amended and Restated Employment Agreement, dated as of October 1, 1998,
                by and between the Company and Thomas E. Chaplin. (4) (5)

10.6            Employment Agreement, dated as of January 1, 1999, by and between the
                Company and Bill R. Wharton. (4) (5)

10.7            Employment Agreement, dated as of November 1, 1998, by and among the
                Company, Priority International Communications, Inc., PIC Resources Corp.
                and Bonner B. Hardegree. (4) (5)


                                       40
<PAGE>

10.8            Employment Agreement, dated as of November 16, 1998, by and between the
                Company and Paul C. Tunink. (4) (5)

10.9            Form of Lease Agreement. (6)

10.10           Note and Security Agreement, Note #079-21846-00, dated as of October 28,
                1997, by and among PIC Resources Corp., ATN Communications, Inc.,
                Priority International Communications, Inc. and Berthel Fisher & Company
                Leasing, Inc. (6)

10.11           Note and Warrant Purchase Agreement, dated as of June 21, 1999, by and
                among the Company, Priority International Communications, Inc., Incomex,
                Inc., MCC Acquisition Corp., and New Valley Corporation. (6)

10.12           Stock Purchase Warrant dated June 21, 1999 from the Company to New
                Valley Corporation. (6)

10.13           Fixed Rate Senior Note dated June 21, 1999 from the Company to New
                Valley Corporation. (6)

10.14           Registration Rights Agreement, dated as of June 21, 1999, between the
                Company and New Valley Corporation. (6)

10.15           Option to Merge Agreement, dated as of June 9, 1999, among MCC
                Acquisition Corp., the shareholders of Intercarrier Transport Corporation, and
                Intercarrier Transport Corporation. (7)

10.16           Option to Merge Agreement, dated June 9, 1999, among MCC Acquisition
                Corp., the shareholders of AcNet USA, Inc. and AcNet USA, Inc. (7)

10.17           Amendment to Investment Agreement, dated as of June 21, 1999, among
                ACTEL Integrated Communications, Inc., the Company, John Beck and
                Richard Courtney. (7)

10.18           Waiver and First Amendment to Note and Warrant Purchase Agreement,
                dated as of December 17, 1999, among the Company, Priority International
                Communications, Inc., ATN Communications, Inc., Incomex, Inc., MCC
                Acquisition Corp. and New Valley Corporation. (8)


                                       41
<PAGE>

10.19           Billing Services and Advance Funding Agreement, dated as of February 4,
                2000, between Priority International Communications, Inc. and NCIC
                Communications, Inc. (9)

10.20           Stockholders Agreement, dated as of April __, 2000, among Actel Integrated
                Communications, Inc., the Company and the other stockholders of Actel
                Integrated Communications, Inc. (10)

10.21           First Amendment to Stockholders Agreement and Consent to Permitted
                Transferees, dated as of June 13, 2000, among Actel Integrated
                Communications, Inc., the Company and the other stockholders of Actel
                Integrated Communications, Inc. (10)

10.22           Placement Agreement, dated as of January __, 2000, between the Company
                and Berthel Fisher & Company Financial Services, Inc. (10)

10.23           Form of Convertible Note of the Company due May 29, 2003 (10)

10.24           Billing and Advance Funding Agreement, dated as of February 2, 2000,
                between Priority International Communications, Inc. and Paramount
                International Telecommunications, Inc. (10)

10.25           Purchase Agreement, dated as of June 23, 2000, among the Company, MCC
                Acquisition Corp., John Rance, Michael Upshaw, Fernando Ficachi and the
                other former shareholders of Incomex, Inc. (11)

10.26           Addendum to Employment Agreement for Paul C. Tunink (5)

10.27           Letter Agreement, dated December 24, 2000, between the Company and
                Prentice Services Ltd.

10.28           Operator Services Subscriber Agreement, dated as of June 22, 2000, between
                NCIC Operator Services and Priority International Communications, Inc.

10.29           Agreement to Terminate Written Employment Agreement, dated
                December 20, 2000, between the Company and Colin Halford (5)


                                       42
<PAGE>

10.30           Agreement to Terminate Written Employment Agreement, dated
                December 20, 2000, between the Company and William Wharton (5)

21              Subsidiaries.

24              Power of Attorney (included as part of the signature page hereof).
<FN>


(1)     Filed  as  an  exhibit  to  the Company's Registration Statement on Form SB-2 (File No.
333-05422C)  and  incorporated  herein  by  reference.

(2)     Filed  as  an  exhibit to the Company's Quarterly Report on Form 10-QSB for the quarter
ended  September  30,  1997  (File  No.  000-21463)  and  incorporated  herein  by  reference.

(3)     Filed  as  an  exhibit to the Company's Quarterly Report on Form 10-QSB for the quarter
ended  March  31,  1997  (File  No.  000-21463)  and  incorporated  herein  by  reference.

(4)     Filed  as  an  exhibit to the Company's Annual Report on Form 10-KSB for the year ended
December  31,  1998  (File  No.  000-21463)  and  incorporated  herein  by  reference.

(5)     Management  contract  or  compensatory  plan  or  arrangement.

(6)     Filed  as  exhibit  to  the  Company's  registration  statement  on Form SB-2 (File No.
333-78399)  and  incorporated  herein  by  reference.

(7)     Filed  as  an  exhibit to the Company's Quarterly Report on Form 10-QSB for the quarter
ended  June  30,  1999  (File  No.  000-21463)  and  incorporated  herein  by  reference.

(8)     Filed  as  an  exhibit to the Company's Annual Report on Form 10-KSB for the year ended
December  31,  1999  (File  No.  000-21463)  and  incorporated  herein  by  reference.

(9)     Filed  as  an  exhibit  to  the Company's Quarterly Report on Form 10-Q for the quarter
ended  March  31,  2000  (File  No.  000-21463)  and  incorporated  herein  by  reference.


                                       43
<PAGE>
(10)     Filed  as  an  exhibit  to the Company's Quarterly Report on Form 10-Q for the quarter
ended  June  30,  2000  (File  No.  000-21463)  and  incorporated  herein  by  reference.

(11)     Filed  as  an exhibit to the Company's Current Report on Form 8-K (File No. 000-21463)
filed with the Securities and Exchange Commission on August 30, 2000 and incorporated herein by
reference.

(b)     Reports  on  Form  8-K.

     The  Company  did not file any reports on Form 8-K for the three months ended December 31,
2000.

     (c)     Exhibits.

     The response to this portion of Item 14 is submitted as a separate section of this report.

     (d)     Financial  statement  schedules.

     The response to this portion of Item 14 is submitted as a separate section of this report.
</TABLE>


                                       44
<PAGE>

                                   SIGNATURES

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

                                        MURDOCK  COMMUNICATIONS  CORPORATION

                                        By  /s/  Eugene  Davis
                                            -----------------------
                                                  Eugene Davis
                                            Chief Executive Officer

                                        Date:  April  17,  2001

                                POWER OF ATTORNEY

     Each  person whose signature appears below hereby appoints Eugene Davis and
Paul  C.  Tunink,  and  each  of  them  individually,  his  true  and  lawful
attorney-in-fact,  with  power  to  act  with or without the other and with full
power of substitution and resubstitution, in any and all capacities, to sign any
or  all amendments to the Form 10-K and file the same with all exhibits thereto,
and  other  documents  in connection therewith, with the Securities and Exchange
Commission,  granting  unto  said  attorneys-in-fact  and  agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might  or  could  do  in  person,  hereby ratifying and confirming all that said
attorneys-in-fact  and  agents,  or  their substitutes, may lawfully cause to be
done  by  virtue  hereof.

     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  dates  indicated.
<TABLE>
<CAPTION>

<S>                    <C>                             <C>

/s/ Eugene Davis       Chief Executive Officer and     April 17, 2001
---------------------  Director (Principal Executive
Eugene Davis           Officer)


                                       45
<PAGE>

/s/ Paul C. Tunink     Vice President and Chief        April 17, 2001
---------------------  Financial Officer (Principal
Paul C. Tunink         Financial Officer and
                       Principal Accounting Officer)

/s/ David Kirkpatrick  Director                        April 17, 2001
---------------------
David Kirkpatrick

                       Director
---------------------
Guy O. Murdock

/s/ Wayne Wright       Director                        April 17, 2001
---------------------
Wayne Wright
</TABLE>


                                       46

<PAGE>
MURDOCK  COMMUNICATIONS  CORPORATION

INDEX  TO  CONSOLIDATED  FINANCIAL  STATEMENTS  AND  SCHEDULE
--------------------------------------------------------------------------------

                                                                            PAGE

INDEPENDENT  AUDITORS'  REPORT                                              F-2

CONSOLIDATED  FINANCIAL  STATEMENTS:

  Consolidated  Balance  Sheets                                             F-3

  Consolidated  Statements  of  Operations                                  F-4

  Consolidated  Statements  of  Shareholders'  Equity  (Deficiency)         F-6

  Consolidated  Statements  of  Cash  Flows                                 F-9

  Notes  to  Consolidated  Financial  Statements                            F-13

SCHEDULE  -  Valuation  and  Qualifying  Accounts                           F-43

                                      F-1
<PAGE>
INDEPENDENT  AUDITORS'  REPORT

To  the  Board  of  Directors  and  Shareholders  of
Murdock  Communications  Corporation
Cedar  Rapids,  Iowa

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Murdock
Communications  Corporation  and subsidiaries (the "Company") as of December 31,
2000  and  1999,  and  the  related  consolidated  statements  of  operations,
shareholders'  equity (deficiency) and cash flows for each of the three years in
the  period  ended  December  31,  2000.  Our audits also included the financial
statement  schedule  listed  in  the  Index.  These  financial  statements  and
financial statement schedule are the responsibility of the Company's management.
Our  responsibility  is  to  express  an opinion on the financial statements and
financial  statement  schedule  based  on  our  audits.

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

In  our  opinion,  such consolidated financial statements present fairly, in all
material  respects, the financial position of Murdock Communications Corporation
and  subsidiaries  at  December  31,  2000  and  1999,  and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the  United  States  of America.  Also, in our opinion, such financial statement
schedule,  when  considered  in  relation  to  the  basic consolidated financial
statements  taken  as  a  whole,  present  fairly,  in all material respects the
information  set  forth  therein.

The  accompanying  consolidated financial statements have been prepared assuming
that  the  Company  will continue as a going concern.  As discussed in Note 1 to
the  consolidated  financial  statements,  the  Company's  recurring losses from
operations,  negative  working  capital,  and  shareholders'  deficiency  raise
substantial  doubt  about  its  ability  to  continue  as  a  going  concern.
Management's  plans  concerning these matters are also described in Note 1.  The
consolidated  financial  statements  do  not  include any adjustments that might
result  from  the  outcome  of  this  uncertainty.



/s/  DELOITTE  &  TOUCHE  LLP
Cedar  Rapids,  Iowa
April  11,  2001

                                      F-2
<PAGE>

MURDOCK  COMMUNICATIONS  CORPORATION

CONSOLIDATED  BALANCE  SHEETS
DECEMBER  31,  2000  AND  1999  (DOLLARS  IN  THOUSANDS)
--------------------------------------------------------
<TABLE>
<CAPTION>

ASSETS (Notes 7 and 8)                                                    2000       1999
<S>                                                                     <C>        <C>
CURRENT ASSETS:
  Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $    157   $     76
  Accounts receivable, less allowances for doubtful
    accounts:  2000 - $225; 1999 - $3,127. . . . . . . . . . . . . . .       582        892
  Note receivable (Note 6) . . . . . . . . . . . . . . . . . . . . . .         -        500
  Prepaid expenses and other current assets. . . . . . . . . . . . . .       167        251
                                                                        ---------  ---------
           Total current assets. . . . . . . . . . . . . . . . . . . .       906      1,719
                                                                        ---------  ---------

PROPERTY AND EQUIPMENT:
  Land and building. . . . . . . . . . . . . . . . . . . . . . . . . .         -      1,446
  Telecommunications equipment . . . . . . . . . . . . . . . . . . . .       919      8,991
  Furniture and equipment. . . . . . . . . . . . . . . . . . . . . . .       180        791
                                                                        ---------  ---------
                                                                           1,099     11,228
  Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . .      (956)    (8,679)
                                                                        ---------  ---------
           Property and equipment, net . . . . . . . . . . . . . . . .       143      2,549
                                                                        ---------  ---------

OTHER ASSETS:
  Goodwill, net of accumulated amortization:
    2000 - $1,909; 1999 - $1,396 (Notes 1, 3 and 4). . . . . . . . . .         -      3,750
  Cost of purchased site contracts, net of accumulated
    amortization:  2000 - $62; 1999 - $14. . . . . . . . . . . . . . .         -         48
  Other intangible assets, net of accumulated amortization:
    2000 - $1,230; 1999 - $619 . . . . . . . . . . . . . . . . . . . .        58        197
  Investments, at cost (Note 6). . . . . . . . . . . . . . . . . . . .         -      4,277
  Other noncurrent assets. . . . . . . . . . . . . . . . . . . . . . .         1         12
  Net assets of discontinued operations. . . . . . . . . . . . . . . .         -      1,648
                                                                        ---------  ---------
           Total other assets. . . . . . . . . . . . . . . . . . . . .        59      9,932
                                                                        ---------  ---------

TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  1,108   $ 14,200
                                                                        =========  =========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

  CURRENT LIABILITIES:
    Outstanding checks in excess of available balances . . . . . . . .  $      -   $     86
    Notes payable (Note 7) . . . . . . . . . . . . . . . . . . . . . .     8,783     13,708
    Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . .       725      2,018
    Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . .     2,854      1,894
    Accrued universal service fund fees (Note 2) . . . . . . . . . . .       806      1,700
    Other accrued expenses . . . . . . . . . . . . . . . . . . . . . .       590      1,034
    Current portion of capital lease obligations
      principally with a related party . . . . . . . . . . . . . . . .         1      1,553
    Current portion of long-term debt with related parties (Note 8). .       220        647
    Current portion of long-term debt, others (Note 8) . . . . . . . .         -        288
                                                                        ---------  ---------
           Total current liabilities . . . . . . . . . . . . . . . . .    13,979     22,928

  LONG-TERM LIABILITIES:
    Capital lease obligations principally with a related party,
      less current portion . . . . . . . . . . . . . . . . . . . . . .         -      2,148
    Long-term debt with related parties, less current portion (Note 8)     4,361      2,122
    Long-term debt, others, less current portion (Note 8). . . . . . .       521        744
    Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         -         22
                                                                        ---------  ---------
           Total liabilities . . . . . . . . . . . . . . . . . . . . .    18,861     27,964
                                                                        ---------  ---------

COMMITMENTS AND CONTINGENCIES (Notes 2 and 13)

SHAREHOLDERS' EQUITY (DEFICIENCY) (Note 1):
  8% Series A Convertible Preferred Stock, $100 stated
    value (Note 9):
    Authorized - 1,000,000 shares
    Issued and outstanding: 2000 - 0 shares; 1999 - 18,920
      shares ($1,891 liquidation value). . . . . . . . . . . . . . . .         -      1,868
  Common stock, no par or stated value (Note 11):
    Authorized - 40,000,000 shares
    Issued and outstanding:  2000 - 12,514,967 shares;
      1999 - 10,576,012 shares . . . . . . . . . . . . . . . . . . . .    22,287     20,259
  Common stock warrants (Note 10):
    Issued and outstanding:  2000 - 10,695,712; 1999 - 5,866,591 . . .     1,007        635
  Treasury stock at cost: 2000 - 250,000 shares; 1999 - none . . . . .       (94)         -
  Additional paid-in capital . . . . . . . . . . . . . . . . . . . . .       134        134
  Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . .   (41,087)   (36,660)
                                                                        ---------  ---------
           Total  shareholders' deficiency . . . . . . . . . . . . . .   (17,753)   (13,764)
                                                                        ---------  ---------

TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  1,108   $ 14,200
                                                                        =========  =========

See notes to consolidated financial statements.
</TABLE>


                                      F-3
<PAGE>

MURDOCK  COMMUNICATIONS  CORPORATION

<TABLE>
<CAPTION>
CONSOLIDATED  STATEMENTS  OF  OPERATIONS
YEARS  ENDED DECEMBER 31, 2000, 1999 AND 1998 (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
--------------------------------------------------------------------------------------

                                                                       2000      1999       1998
<S>                                                                  <C>       <C>        <C>
CONTINUING OPERATIONS:

REVENUES:
  Call processing . . . . . . . . . . . . . . . . . . . . . . . . .  $ 8,327   $ 24,424   $24,466
  Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . .      110      3,039     1,601
                                                                     --------  ---------  --------
           Total revenues . . . . . . . . . . . . . . . . . . . . .    8,437     27,463    26,067
                                                                     --------  ---------  --------

COST OF SALES:
  Call processing . . . . . . . . . . . . . . . . . . . . . . . . .    6,410     14,850    14,229
  Other cost of sales . . . . . . . . . . . . . . . . . . . . . . .        9      1,657       492
  Bad debt expense and universal service fund fees (Note 2) . . . .     (894)     9,489     3,321
                                                                     --------  ---------  --------
           Total cost of sales. . . . . . . . . . . . . . . . . . .    5,525     25,996    18,042
                                                                     --------  ---------  --------

GROSS PROFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . .    2,912      1,467     8,025
                                                                     --------  ---------  --------

OPERATING EXPENSES:
  Selling, general and administrative expense . . . . . . . . . . .    2,750      5,348     5,957
  Depreciation and amortization expense . . . . . . . . . . . . . .      935      1,888     1,675
  Impairment of assets (Notes 1 and 6). . . . . . . . . . . . . . .    5,510      3,292         -
  AcNet bad debt and acquisition expenses (Note 6). . . . . . . . .      990      3,703         -
                                                                     --------  ---------  --------
           Total operating expenses . . . . . . . . . . . . . . . .   10,185     14,231     7,632
                                                                     --------  ---------  --------

INCOME (LOSS) FROM OPERATIONS . . . . . . . . . . . . . . . . . . .   (7,273)   (12,764)      393
                                                                     --------  ---------  --------

NONOPERATING  INCOME (EXPENSE):
  Gain on AT&T contract buyout (Note 18). . . . . . . . . . . . . .        -          -       453
  Interest expense. . . . . . . . . . . . . . . . . . . . . . . . .   (3,540)    (3,519)   (2,070)
  Other income (expense) (Note 8) . . . . . . . . . . . . . . . . .    7,287        314       (14)
                                                                     --------  ---------  --------
           Total nonoperating income (expense). . . . . . . . . . .    3,747     (3,205)   (1,631)
                                                                     --------  ---------  --------

LOSS BEFORE INCOME TAXES AND JOINT VENTURE LOSS . . . . . . . . . .   (3,526)   (15,969)   (1,238)

Loss from joint venture . . . . . . . . . . . . . . . . . . . . . .        -          -       (42)
Income tax (expense) benefit (Note 12). . . . . . . . . . . . . . .        9       (472)      397
                                                                     --------  ---------  --------

LOSS FROM CONTINUING OPERATIONS . . . . . . . . . . . . . . . . . .   (3,517)   (16,441)     (883)
                                                                     --------  ---------  --------

DISCONTINUED OPERATIONS (Note 5):
  Income (loss) from operations . . . . . . . . . . . . . . . . . .   (1,175)    (1,957)      709
  Loss on disposition . . . . . . . . . . . . . . . . . . . . . . .     (332)         -         -
                                                                     --------  ---------  --------
           Total discontinued operations. . . . . . . . . . . . . .   (1,507)    (1,957)      709
                                                                     --------  ---------  --------

LOSS BEFORE EXTRAORDINARY ITEM. . . . . . . . . . . . . . . . . . .   (5,024)   (18,398)     (174)

EXTRAORDINARY ITEM - GAIN ON EXTINGUISHMENT OF
  DEBT (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . .      722          -         -
                                                                     --------  ---------  --------

NET LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (4,302)   (18,398)     (174)
Dividends and accretion on 8% Series A Convertible Preferred Stock.     (125)      (194)     (175)
                                                                     --------  ---------  --------

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS. . . . . . . . . . . .  $(4,427)  $(18,592)  $  (349)
                                                                     ========  =========  ========
</TABLE>


                                      F-4
<PAGE>
MURDOCK  COMMUNICATIONS  CORPORATION
------------------------------------

CONSOLIDATED  STATEMENTS  OF  OPERATIONS
YEARS  ENDED  DECEMBER  31,  2000,  1999  AND  1998
(DOLLARS  IN  THOUSANDS  EXCEPT  SHARE  DATA)  (CONCLUDED)
----------------------------------------------------------

<TABLE>
<CAPTION>

                                                          2000          1999         1998
<S>                                                   <C>           <C>           <C>
BASIC AND DILUTED NET LOSS PER COMMON SHARE
 Loss from continuing operations . . . . . . . . . .  $     (0.34)  $     (1.60)  $    (0.19)
 Income (loss) from discontinued operations. . . . .        (0.14)        (0.19)        0.13
                                                      ------------  ------------  -----------
 Loss before extraordinary item. . . . . . . . . . .        (0.48)        (1.79)       (0.06)
 Extraordinary item - gain on extinguishment of debt         0.07             -            -
                                                      ------------  ------------  -----------
 Net loss. . . . . . . . . . . . . . . . . . . . . .  $     (0.41)  $     (1.79)  $    (0.06)
                                                      ============  ============  ===========

BASIC AND DILUTED WEIGHTED AVERAGE COMMON
  SHARES OUTSTANDING . . . . . . . . . . . . . . . .   10,869,511    10,392,940    5,422,783
                                                      ============  ============  ===========

See notes to consolidated financial statements.
</TABLE>


                                      F-5
<PAGE>
MURDOCK  COMMUNICATIONS  CORPORATION

<TABLE>
<CAPTION>
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY  (DEFICIENCY)
YEARS  ENDED  DECEMBER  31,  2000,  1999  AND  1998  (DOLLAR  AND  SHARE DATA IN THOUSANDS)
-------------------------------------------------------------------------------------------

                                             8% SERIES A
                                             CONVERTIBLE                       COMMON STOCK
                                           PREFERRED STOCK  COMMON STOCK          WARRANTS
                                           ---------------  ------------     ------------------
                                           NUMBER           NUMBER            NUMBER              ADDITIONAL  ACCUMU-
                                             OF               OF                OF                 PAID-IN     LATED
                                           SHARES  ISSUED   SHARES  ISSUED   WARRANTS    ISSUED    CAPITAL    DEFICIT
<S>                                        <C>     <C>      <C>     <C>      <C>        <C>       <C>         <C>
BALANCES AT JANUARY 1, 1998 . . . . . . .      16  $ 1,544   4,458  $11,343     2,149   $   316   $      134  $(17,819)

Issuance of 8% Series A Convertible
  Preferred Stock, net of issuance costs
  of $5 . . . . . . . . . . . . . . . . .       3      262       -        -         -         -            -         -
Issuance of common stock and warrants
  in connection with the acquisition of
  Incomex (Note 4). . . . . . . . . . . .       -        -   1,900    2,494       156        30            -         -
Exercise of warrants by a related
  party . . . . . . . . . . . . . . . . .       -        -   1,100    1,753    (1,100)     (322)           -         -
Issuance of warrants in connection with
  debt financing with a related party . .       -        -       -        -       350       165            -         -
Issuance of warrants in connection with
  debt financing (Note 7) . . . . . . . .       -        -       -        -     2,700       221            -         -
Issuance of warrants in lieu of director
  and consulting fees . . . . . . . . . .       -        -       -        -        45         5            -         -
Issuance of warrants in lieu of agent
  fees to a related party (Note 7). . . .       -        -       -        -       121        24            -         -
Issuance of common stock in connection
  with the acquisition of PIC (Note 3). .       -        -   2,872    4,245         -         -            -         -
Accretion to conversion price of 8%
  Series A Convertible Preferred Stock. .       -       31       -        -         -         -            -       (31)
Accrued dividends on 8% Series A
  Convertible Preferred Stock . . . . . .       -        -       -        -         -         -            -      (144)
Net loss for 1998 . . . . . . . . . . . .       -        -       -        -         -         -            -      (174)
                                           ------  -------  ------  -------  ---------  --------  ----------  ---------

BALANCES AT DECEMBER 31, 1998 . . . . . .      19  $ 1,837  10,330  $19,835     4,421   $   439   $      134  $(18,168)
                                           ======  =======  ======  =======  =========  ========  ==========  =========

                                              SHARE-
                                             HOLDERS'
                                              EQUITY
                                           (DEFICIENCY)
<S>                                        <C>
BALANCES AT JANUARY 1, 1998 . . . . . . .  $     (4,482)

Issuance of 8% Series A Convertible
  Preferred Stock, net of issuance costs
  of $5 . . . . . . . . . . . . . . . . .           262
Issuance of common stock and warrants
  in connection with the acquisition of
  Incomex (Note 4). . . . . . . . . . . .         2,524
Exercise of warrants by a related
  party . . . . . . . . . . . . . . . . .         1,431
Issuance of warrants in connection with
  debt financing with a related party . .           165
Issuance of warrants in connection with
  debt financing (Note 7) . . . . . . . .           221
Issuance of warrants in lieu of director
  and consulting fees . . . . . . . . . .             5
Issuance of warrants in lieu of agent
  fees to a related party (Note 7). . . .            24
Issuance of common stock in connection
  with the acquisition of PIC (Note 3). .         4,245
Accretion to conversion price of 8%
  Series A Convertible Preferred Stock. .             -
Accrued dividends on 8% Series A
  Convertible Preferred Stock . . . . . .          (144)
Net loss for 1998 . . . . . . . . . . . .          (174)
                                           -------------

BALANCES AT DECEMBER 31, 1998 . . . . . .  $      4,077
                                           =============
</TABLE>

See  notes  to  consolidated  financial  statements.     (Continued)

                                      F-6
<PAGE>
MURDOCK  COMMUNICATIONS  CORPORATION

<TABLE>
<CAPTION>
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY  (DEFICIENCY)
YEARS  ENDED  DECEMBER  31,  2000,  1999  AND  1998  (DOLLAR  AND  SHARE DATA IN THOUSANDS)
-------------------------------------------------------------------------------------------

                                             8% SERIES A
                                             CONVERTIBLE                       COMMON STOCK
                                           PREFERRED STOCK  COMMON STOCK          WARRANTS
                                           ---------------  ------------     ------------------
                                           NUMBER           NUMBER            NUMBER              ADDITIONAL  ACCUMU-
                                             OF               OF                OF                 PAID-IN     LATED
                                           SHARES  ISSUED   SHARES  ISSUED   WARRANTS    ISSUED    CAPITAL    DEFICIT
<S>                                        <C>     <C>      <C>     <C>      <C>        <C>       <C>         <C>
BALANCES AT JANUARY 1, 1999. . . . . . .       19  $ 1,837  10,330  $19,835     4,421   $   439   $      134  $(18,168)

Issuance of warrants in connection with
  debt financing with related parties
  (Notes 7 and 8). . . . . . . . . . . .        -        -       -        -     1,195       223            -         -
Issuance of warrants in connection with
  debt financing with lender (Note 7). .        -        -       -        -       500        80            -         -
Conversion of notes payable, accrued
  interest and related common stock
  warrants into common stock . . . . . .        -        -      84      150       (84)       (3)           -         -
Conversion of common stock warrants
  into common stock. . . . . . . . . . .        -        -      54       13      (115)       (4)           -         -
Common stock issued. . . . . . . . . . .        -        -       2        3         -         -            -         -
Common stock options exercised by
  individuals. . . . . . . . . . . . . .        -        -      19       37         -         -            -         -
Accretion to conversion price of 8%
  Series A Convertible Preferred Stock .        -       31       -        -         -         -            -       (31)
Accrued dividends on 8% Series A
  Convertible Preferred Stock paid in
  common stock . . . . . . . . . . . . .        -        -      87      221         -         -            -      (163)
Warrants expired . . . . . . . . . . . .        -        -       -        -       (50)     (100)           -       100
Net loss for 1999. . . . . . . . . . . .        -        -       -        -         -         -            -   (18,398)
                                          -------  -------  ------  -------  ---------  --------  ----------  ---------

BALANCES AT DECEMBER 31, 1999. . . . . .       19  $ 1,868  10,576  $20,259     5,867   $   635   $      134  $(36,660)
                                          =======  =======  ======  =======  =========  ========  ==========  =========

                                              SHARE-
                                             HOLDERS'
                                              EQUITY
                                           (DEFICIENCY)
<S>                                       <C>
BALANCES AT JANUARY 1, 1999. . . . . . .  $      4,077

Issuance of warrants in connection with
  debt financing with related parties
  (Notes 7 and 8). . . . . . . . . . . .           223
Issuance of warrants in connection with
  debt financing with lender (Note 7). .            80
Conversion of notes payable, accrued
  interest and related common stock
  warrants into common stock . . . . . .           147
Conversion of common stock warrants
  into common stock. . . . . . . . . . .             9
Common stock issued. . . . . . . . . . .             3
Common stock options exercised by
  individuals. . . . . . . . . . . . . .            37
Accretion to conversion price of 8%
  Series A Convertible Preferred Stock .             -
Accrued dividends on 8% Series A
  Convertible Preferred Stock paid in
  common stock . . . . . . . . . . . . .            58
Warrants expired . . . . . . . . . . . .             -
Net loss for 1999. . . . . . . . . . . .       (18.398
                                          -------------

BALANCES AT DECEMBER 31, 1999. . . . . .  $    (13,764)
                                          =============
</TABLE>

See  notes  to  consolidated  financial  statements.     (Continued)

                                      F-7
<PAGE>
MURDOCK  COMMUNICATIONS  CORPORATION

<TABLE>
<CAPTION>
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY  (DEFICIENCY)
YEARS  ENDED  DECEMBER  31,  2000,  1999  AND  1998  (DOLLAR  AND  SHARE DATA IN THOUSANDS)
-------------------------------------------------------------------------------------------

                                                            8% SERIES A
                                                            CONVERTIBLE
                                                             PREFERRED                                          COMMON STOCK
                                                               STOCK                  COMMON STOCK                WARRANTS
                                                    ---------------------------  --------------------------  --------------------
                                                       NUMBER                      NUMBER                     NUMBER
                                                         OF                          OF                         OF
                                                       SHARES         ISSUED       SHARES       ISSUED       WARRANTS    ISSUED
<S>                                                 <C>           <C>             <C>       <C>              <C>        <C>
BALANCES AT JANUARY 1, 2000. . . . . . . . . . . .           19   $       1,868     10,576  $        20,259     5,867   $   635

  Issuance of warrants in connection with
    termination of employment agreements . . . . .            -               -          -                -       150         -
  Issuance of warrants in connection with
    debt financing with lender (Note 7). . . . . .            -               -          -                -     5,199       472
  Cancellation of warrants . . . . . . . . . . . .            -               -          -                -      (495)      (99)
  Conversion of common stock warrants
    into common stock. . . . . . . . . . . . . . .            -               -         19               35       (25)       (1)
  Accretion to conversion price of 8%
    Series A Convertible Preferred Stock . . . . .            -              23          -                -         -         -
  Conversion of preferred stock into common stock.          (19)         (1,891)     1,684            1,891         -         -
  Accrued dividends on 8% Series A
    Convertible Preferred Stock paid in
    common stock . . . . . . . . . . . . . . . . .            -               -        236              102         -         -
  Treasury stock acquired -Incomex sale. . . . . .            -               -          -                -         -         -
  Net loss for 2000. . . . . . . . . . . . . . . .            -               -          -                -         -         -
                                                    ------------  --------------  --------  ---------------  ---------  --------

BALANCES AT DECEMBER 31, 2000. . . . . . . . . . .            -   $           -     12,515  $        22,287    10,696   $ 1,007
                                                    ============  ==============  ========  ===============  =========  ========

                                                   TREASURY STOCK
                                                   ----------------    ADDI-
                                                    NUMBER             TIONAL     ACCU-       SHARE-
                                                      OF              PAID-IN    MULATED     HOLDERS'
                                                    SHARES   ISSUED   CAPITAL    DEFICIT   (DEFICIENCY)
<S>                                                 <C>     <C>       <C>       <C>        <C>
BALANCES AT JANUARY 1, 2000. . . . . . . . . . . .       -  $     -   $    134  $(36,660)  $    (13,764)

  Issuance of warrants in connection with
    termination of employment agreements . . . . .       -        -          -         -              -
  Issuance of warrants in connection with
    debt financing with lender (Note 7). . . . . .       -        -          -         -            472
  Cancellation of warrants . . . . . . . . . . . .       -        -          -         -            (99)
  Conversion of common stock warrants
    into common stock. . . . . . . . . . . . . . .       -        -          -         -             34
  Accretion to conversion price of 8%
    Series A Convertible Preferred Stock . . . . .       -        -          -       (23)             -
  Conversion of preferred stock into common stock.       -        -          -         -              -
  Accrued dividends on 8% Series A
    Convertible Preferred Stock paid in
    common stock . . . . . . . . . . . . . . . . .       -        -          -      (102)             -
  Treasury stock acquired -Incomex sale. . . . . .     250      (94)         -         -            (94)
  Net loss for 2000. . . . . . . . . . . . . . . .       -        -          -    (4,302)        (4,302)
                                                    ------  --------  --------  ---------  -------------

BALANCES AT DECEMBER 31, 2000. . . . . . . . . . .     250  $   (94)  $    134  $(41,087)  $    (17,753)
                                                    ======  ========  ========  =========  =============
See notes to consolidated financial statements.

</TABLE>

                                      F-8
<PAGE>

MURDOCK  COMMUNICATIONS  CORPORATION

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
YEARS  ENDED  DECEMBER  31,  2000,  1999  AND  1998  (DOLLARS  IN  THOUSANDS)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                            2000      1999       1998
<S>                                                       <C>       <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss . . . . . . . . . . . . . . . . . . . . . . .  $(4,302)  $(18,398)  $  (174)
  Adjustments to reconcile net loss to net cash flows
    from operating activities of continuing operations:
    Impairment of assets . . . . . . . . . . . . . . . .    5,510      3,293         -
    AcNet bad debt and acquisition expenses. . . . . . .      990      3,703         -
    Depreciation and amortization. . . . . . . . . . . .      935      1,888     1,675
    Gain on sale of property and equipment . . . . . . .     (269)        (6)        -
    Noncash interest expense . . . . . . . . . . . . . .      512        723       272
    Gain on debt restructuring plan. . . . . . . . . . .   (6,946)         -         -
    (Income) loss on discontinued operations . . . . . .    1,175      1,957      (709)
    Loss on disposition of discontinued operations . . .      332          -         -
    Extraordinary gain on extinguishment of debt . . . .     (722)         -         -
    Noncash commission expense . . . . . . . . . . . . .        -          -        71
    Loss from joint venture. . . . . . . . . . . . . . .        -          -        42
    Changes in operating assets and liabilities:
      Receivables. . . . . . . . . . . . . . . . . . . .      310      1,091      (862)
      Other current assets . . . . . . . . . . . . . . .      195       (185)       52
      Other noncurrent assets. . . . . . . . . . . . . .       11        182       251
      Outstanding checks in excess of available balances      (86)       104      (247)
      Accounts payable and accrued expenses. . . . . . .      248      2,094      (513)
      Accrued universal service fund fees. . . . . . . .     (894)     1,700         -
      Other liabilities. . . . . . . . . . . . . . . . .      (22)        (7)      (37)
                                                          --------  ---------  --------
           Net cash flows from operating activities of
              continuing operations. . . . . . . . . . .   (3,023)    (1,861)     (179)
           Net cash flows from discontinued operations .      175        522      (894)
                                                          --------  ---------  --------
           Net cash flows from operating activities. . .   (2,848)    (1,339)   (1,073)
                                                          --------  ---------  --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment. . . . . . . . . .        -       (671)     (632)
  Cash paid for acquisitions . . . . . . . . . . . . . .        -          -      (130)
  Payments for site contracts. . . . . . . . . . . . . .        -        (10)       (3)
  Proceeds from sale of investments. . . . . . . . . . .    4,948          -         -
  Cash paid for investments. . . . . . . . . . . . . . .        -     (6,480)   (1,500)
  Cash advanced to joint venture . . . . . . . . . . . .        -        (46)     (362)
  Cash acquired with acquisitions. . . . . . . . . . . .        -          -        16
  Proceeds from sale of property and equipment . . . . .    1,639         13         -
  Issuance of note receivable. . . . . . . . . . . . . .        -     (1,000)        -
  Payments received on note receivable . . . . . . . . .      500        500         -
                                                          --------  ---------  --------
           Net cash flows from investing activities. . .    7,087     (7,694)   (2,611)
                                                          --------  ---------  --------
</TABLE>

                                                                     (Continued)


                                      F-9
<PAGE>
MURDOCK  COMMUNICATIONS  CORPORATION

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
YEARS  ENDED  DECEMBER  31,  2000,  1999  AND  1998  (DOLLARS  IN  THOUSANDS)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                            2000      1999      1998
<S>                                                                       <C>       <C>       <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on capital lease obligations with a related party . . . . . .     (472)     (301)     (265)
  Proceeds from capital lease obligations with a related party . . . . .        -         -       710
  Borrowings on notes payable. . . . . . . . . . . . . . . . . . . . . .      656     7,992     5,406
  Borrowings of long-term debt with related parties. . . . . . . . . . .        -       500         -
  Payments on notes payable. . . . . . . . . . . . . . . . . . . . . . .   (2,789)     (479)   (1,457)
  Payments on long-term debt with related parties. . . . . . . . . . . .     (468)     (705)     (719)
  Borrowings on long-term debt, others . . . . . . . . . . . . . . . . .        -     1,029         -
  Payments on long-term debt, others . . . . . . . . . . . . . . . . . .   (1,085)     (671)     (152)
  Proceeds from issuance of common stock and warrants. . . . . . . . . .        -         3     1,430
  Payment of dividends . . . . . . . . . . . . . . . . . . . . . . . . .        -       (18)        -
  Proceeds from exercise of stock options. . . . . . . . . . . . . . . .        -        37         -
  Proceeds from issuance of 8% Series A Convertible Preferred Stock. . .        -         -        50
  Payments for offering costs. . . . . . . . . . . . . . . . . . . . . .        -         -      (145)
                                                                          --------  --------  --------
           Net cash flows from financing activities. . . . . . . . . . .   (4,158)    7,387     4,858
                                                                          --------  --------  --------

NET INCREASE (DECREASE) IN CASH. . . . . . . . . . . . . . . . . . . . .       81    (1,646)    1,174

CASH AT BEGINNING OF YEAR. . . . . . . . . . . . . . . . . . . . . . . .       76     1,722       548
                                                                          --------  --------  --------

CASH AT END OF YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . .  $   157   $    76   $ 1,722
                                                                          ========  ========  ========

SUPPLEMENTAL DISCLOSURE:
  Cash paid during the year for interest, principally to a related party  $   985   $   824   $ 2,183
  Cash paid during the year for income taxes . . . . . . . . . . . . . .        6         4        24
</TABLE>

See  notes  to  consolidated  financial  statements.


                                      F-10
<PAGE>
MURDOCK  COMMUNICATIONS  CORPORATION

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
YEARS  ENDED  DECEMBER  31,  2000,  1999  AND  1998
---------------------------------------------------

SUPPLEMENTAL  DISCLOSURES  OF  2000  NONCASH  OPERATING, INVESTING AND FINANCING
ACTIVITIES:

The  Company  recorded  an  increase  to  the carrying value of the Company's 8%
Series  A  Convertible  Preferred  Stock  and a charge to accumulated deficit of
$23,000  representing  the  current  period accretion to its conversion price of
$1,891,000.  These  shares were converted into 1,683,880 shares of common stock.

During  the  year,  18,941  common stock warrants were exercised by individuals,
increasing  common  stock by $35,000 in a cashless exercise through the exchange
of  debt.

The  Company  issued  stock dividends of $102,000 representing 236,129 shares of
common  stock  recorded as an increase to common stock and a decrease in accrued
dividends.

The  Company  recorded  $94,000  representing  treasury  stock  received  in the
cashless  sale  of the Incomex subsidiary, representing 250,000 shares of common
stock.

During  the year the Company issued 5,199,121 common stock warrants and recorded
a  $472,000  increase  to  common  stock  warrants and deferred financing costs.

The net assets of the Company decreased by $1,648,000 related to the sale of the
Incomex  subsidiary  in  a  noncash  transaction.

The  Company transferred 1,063,584 shares of Actel Preferred Stock, reducing the
cost  basis  of  the investment by $729,910, and $4,600,000 of new notes payable
were  issued  in  connection the transaction in exchange for the cancellation of
approximately  $9,200,000  of  outstanding  indebtedness  related  to  the  Debt
Refinancing  Plan.

In  December  of  2000,  the Company cancelled warrants with a recorded value of
$99,000.

SUPPLEMENTAL  DISCLOSURES  OF  1999  NONCASH  OPERATING, INVESTING AND FINANCING
ACTIVITIES:

During  1999,  199,172  common stock warrants were exercised by individuals.  Of
these,  83,872  were  converted  to the same number of common shares and reduced
notes  payable  by  $116,000  and accrued interest by $31,000.  Of the remaining
115,300  warrants,  114,000 warrants were converted into 51,507 shares of common
stock  in  a cashless exercise.  1,300 warrants were converted into 2,668 shares
of  common  stock  for  $8,475,  which  had not been received prior to year end.
These  warrants  had  a  carrying  value  of  $7,921.

The  Company  recorded  an  increase  to  the  carrying value of the 8% Series A
Convertible  Preferred  Stock  and  a  charge  to accumulated deficit of $31,353
representing  the  current  year's  accretion  to  its  conversion  price.

The  Company recorded an increase to accrued expense and a charge to accumulated
deficit  of  $162,559  for  cumulative dividends earned by the holders of the 8%
Series  A  Convertible  Preferred  Stock.

The  Company  issued  stock  dividends  of $220,836 which had been recognized in
current  and  prior  years through charges to retained earnings and increases in
accrued  expenses  representing  87,708  shares  of  common  stock.

                                                                     (Continued)

                                      F-11
<PAGE>
MURDOCK  COMMUNICATIONS  CORPORATION

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
YEARS  ENDED  DECEMBER  31,  2000,  1999  AND  1998  (CONCLUDED)
----------------------------------------------------------------

The  Company  recorded  $303,000  of deferred loan costs in connection with debt
financing  of  $7,975,000  and  related  issuance  of  common  stock warrants to
purchase  1,695,000  shares of the Company's common stock.  Such costs are being
amortized  to  non-cash  interest  expense.

The  Company recorded a decrease in common stock warrants of $100,000 due to the
expiration  of  50,000  warrants  previously  recorded  at their fair value to a
financial  institution.

SUPPLEMENTAL  DISCLOSURES  OF  1998  NONCASH  OPERATING, INVESTING AND FINANCING
ACTIVITIES:

The  Company  recorded  a  note  payable  of  $25,000  in  exchange  for accrued
consulting  fees.

The  Company  recorded a note payable of $5,000 in exchange for accrued director
fees.

The  Company  recorded  an  increase  to  the  carrying value of the 8% Series A
Convertible  Preferred  Stock  and  a  charge  to accumulated deficit of $31,191
representing  the  current  year's  accretion  to  its  conversion  price.

The  Company recorded an increase in accrued expense and a charge to accumulated
deficit of $143,322 for the cumulative dividends earned by the holders of the 8%
Series  A  Convertible  Preferred  Stock.

The  Company  recorded  prepaid  commissions of $180,000 and accrued expenses of
$37,000  in  connection  with  the  issuance  of  2,170  shares  of  8% Series A
Convertible  Preferred  Stock.

The Company recorded long-term debt, others and land and building of $525,000 in
connection  with  the  purchase  of  ATN's  building.

The  Company  recorded  goodwill  of  $3,916,889,  accounts payable of $135,000,
accrued expenses of $153,059, common stock of $4,244,731 and decreased long-term
debt  by  $527,389  and issued 571,428 shares of common stock in connection with
the  PIC  earnout  as  discussed  in  Note  3.

See  notes  to  consolidated  financial  statements.

                                      F-12
<PAGE>
MURDOCK  COMMUNICATIONS  CORPORATION

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
YEARS  ENDED  DECEMBER  31,  2000,  1999  AND  1998
---------------------------------------------------

1.     BUSINESS  AND  SIGNIFICANT  ACCOUNTING  POLICIES

DESCRIPTION  OF  BUSINESS - Murdock Communications Corporation (individually, or
collectively  with  its  wholly-owned  subsidiaries discussed below, referred to
herein  as  the  "Company")  has been engaged in recent years in the business of
providing  operator  services  and  call processing to North American payphones,
hotels  and  institutions,  database  profit  management  services  and
telecommunications  billing and collection services for the hospitality industry
and  outsourced  operator  services  for  the  telecommunications industry.  The
Company  operated  its  business  under  three business units prior to the sales
discussed  below.

Through  a  series of acquisitions and new product development in 1997 and 1998,
the  Company  transformed  itself  from a long distance reseller of AT&T network
services  to  U.S.  hotels  to  being a communications service provider in North
America.

MTS  -  Murdock  Technology  Services  ("MTS"),  formerly  the operating unit of
Murdock  Communications  Corporation,  was the unit responsible for marketing of
AT&T  operator  services.  In light of the declining volume and narrow margin of
the  AT&T  business,  and the Company's refocused business strategy, the Company
reached  an agreement with AT&T to terminate their marketing agreement effective
October  15,  1998  (see  Note  18).

The  MTS  division  was  created  in  1998  to meet the needs of the hospitality
telecommunications  management  market  by  providing database profit management
services  and other value added telecommunication services.  The division's main
product,  the  Telemanager,  was  a  proprietary  software and hardware product,
created  to  help  manage  telecommunication  installations  and services in the
hospitality  market.

In  February  2000,  the  Company  entered  into  a  Rental  Agreement  with
Telemanager.net  providing  for  the  operation  of  MCC  Telemanager  by
Telemanager.net  in  exchange  for  monthly  rental payments to the Company.  On
December  20,  2000,  the  Company sold certain assets which were subject to the
Rental  Agreement  to Telemanager.net (see Note 17).  Telemanger.net is owned by
former  executives  of  the  Company.

Incomex - On February 13, 1998, the Company purchased Incomex, Inc. ("Incomex"),
the  Company's second business unit (see Note 4).  Incomex was primarily engaged
in  the business of providing billing and collection services to the hospitality
industry  from  Mexico  to  the  United  States.

The  Company  sold  100%  of  the  stock  of  Incomex  to  three  of  the former
shareholders  of  Incomex  with  an effective closing date of June 30, 2000 (see
Note  5).

PIC  -  On  October  31,  1997,  the  Company  purchased  Priority International
Communications,  Inc.  ("PIC").  PIC  was  primarily  engaged in the business of
providing long-distance telecommunications services to patrons of hotels, public
and  private  payphone  owners  and aggregators of operator service traffic with
which  PIC  had contracts to provide such services.  Services included, but were
not  limited to, credit card billing services, live operator services, automated
collection  and  messaging  delivery  services,  voice  mail  services  and
telecommunications  consulting.

Also,  on October 31, 1997, the Company purchased PIC Resources Corp. ("PIC-R").
PIC-R,  operating  through  its  wholly-owned  subsidiary  ATN  Communications,
Incorporated  ("ATN"),  was  merged into PIC in January 1999.  ATN was primarily
engaged  in  the  business  of  providing  carrier  services  for  long-distance
telecommunications companies throughout the United States.  ATN handled incoming
operator  assisted  calls


                                      F-13
<PAGE>
with  their  operators  on  location.  Unless otherwise indicated, references in
this  report  to  "PIC"  include  the  historical  operations  of  ATN.

As  a  result of the unit's operational difficulties, management developed a new
business  plan  during  2000 to stabilize the PIC business.  As a result of this
revised  business  plan,  PIC  became a reseller of call processing services and
eliminated  its  live  operator  center.

BASIS  OF PRESENTATION - The accompanying consolidated financial statements have
been  prepared  on  a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The
Company  has  an  accumulated  deficit  of $41.1 million and current liabilities
exceed  current  assets by $13.1 million at December 31, 2000.  The Company also
is  past  due  in  the  payment  of approximately $10.1 million in principal and
accrued  interest  payable as of February 28, 2001.  The Company's past due debt
includes  approximately  $9.4  million  of  notes and accrued interest which are
believed  to  be pledged by the holders of the notes to a bank as collateral for
loans made by the bank to such holders.  This bank was liquidated by the Federal
Deposit Insurance Corporation ("FDIC") during 2000.  The Company was notified in
December  2000  that  the  FDIC  sold  significantly  all  the loans and related
collateral  to  a financial institution.  The financial institution has issued a
demand  letter  to  the  Company  for  approximately  $575,000 of principal plus
accrued  interest  of  the notes.  If the financial institution seeks to enforce
its  rights  under the pledged notes, the Company currently would not be able to
repay  these  notes.  These factors, among others, indicate that the Company may
be  unable  to  continue  as  a  going  concern for a reasonable period of time.
Management's  plans  to  sustain  operations  are  discussed  below.

The consolidated financial statements do not include any adjustments relating to
the  recoverability  and classification of recorded asset amounts or the amounts
and  classification of liabilities that might be necessary should the Company be
unable  to  continue  as a going concern.  The Company's continuation as a going
concern  is  dependent upon its ability to generate sufficient cash flow to meet
its  obligations  on  a  timely  basis  and  to  obtain additional financing and
refinancing  as  may  be  required.  Management's  plans  to  accomplish  these
objectives  include,  but  are  not  limited  to,  the  following:

-     The Company's current strategic direction is to continue to negotiate with
its  creditors  to  restructure  indebtedness  and  obtain  financing  to  fund
operations.  If  the  Company  is  successful  in completing improvements to its
financial  condition,  the  Company  may  seek  other  strategic  alternatives,
including  attempting to use the Company's public shell as a merger vehicle.  If
the  Company  is  unsuccessful  in this strategy, the Company may not be able to
continue  operating  as  a  going  concern.

-     The  Company  plans  to  continue to operate as a holding Company with the
Company's  principal  assets  being  PIC  and the investment in Actel Integrated
Communications,  Inc.  ("Actel").  However,  the  Company is currently uncertain
regarding  PIC's  ability  to  make  cash contributions to the Company in future
periods.  Also,  on  April  11,  2001,  Actel  filed  for  Chapter 11 bankruptcy
protection.  Therefore, the Company is uncertain regarding any ultimate recovery
of  these  investments.

-     During  2000,  the  Company  retained  an  investment banker to assist the
Company regarding the identification and investigation of strategic alternatives
available  to  the  Company.

PRINCIPLES  OF CONSOLIDATION - The consolidated financial statements include the
accounts  of  the Company and the accounts of its wholly-owned subsidiaries, PIC
and  Incomex  (prior  to  its  sale).  Significant  intercompany  accounts  and
transactions  have  been  eliminated  in  consolidation.

USE  OF  ESTIMATES  - The preparation of financial statements in conformity with
accounting  principles  generally  accepted  in  the  United  States  of America
requires  management  to make estimates and assumptions that affect the reported
amounts  of  assets  and  liabilities  and  disclosure  of contingent assets and
liabilities  at the date of the financial statements and the reported amounts of
revenues  and expenses during the reporting period.  Actual results could differ
significantly  from  those  estimates.


                                      F-14

<PAGE>
CERTAIN  RISK  CONCENTRATIONS - The Company derived considerable portions of its
revenues from significant customers during 2000, 1999 and 1998.  The table below
indicates the percentage of Company's total revenue derived from these customers
during  those  years.
<TABLE>
<CAPTION>

CUSTOMER  2000   1999   1998
<S>       <C>    <C>    <C>
A. . . .   29 %   51 %   32 %
B. . . .      -   19 %   16 %
C. . . .   33 %    8 %    2 %
D. . . .   12 %      -      -
</TABLE>

Also,  substantially  all  of  the Company's leasing arrangements have been with
Berthel  Fisher  &  Company  and  its subsidiaries, and their affiliated leasing
partnerships ("Berthel").  Berthel owned 13.9%, 14.4% and 14.8% of the Company's
outstanding  common  stock  at  December  31, 2000, 1999 and 1998, respectively.

OFF  BALANCE  SHEET  CREDIT  RISK - The Company is a party to various agreements
with  off  balance  sheet  credit risk as part of its normal course of business.
The  Company  receives  funds  from  independent billing and collection firms or
other third parties, which advances funds before collecting from the end-user by
billing  through  a  Regional  Bell  Operating  Company or other local telephone
company.  Amounts  not  ultimately  collected  from the end-user may be deducted
from  future advance payments.  These agreements involve elements of credit risk
which  are  not  recognized  in  the  Company's  consolidated  balance  sheet.

REVENUE RECOGNITION - Beginning in February 2000 PIC became solely a reseller of
call  processing  services.  The  Company  began accounting for revenue on a net
commission basis as the calls are placed.  Prior to February 2000, revenues were
derived  from  processing long-distance telephone calls reflecting gross charges
for  these  calls  which were recognized as revenues by the Company as the calls
were  placed.  At  the  same time, amounts were recorded as cost of services for
long-distance  charges  from  the  carrier  of the calls, as well as charges for
processing  the  calls,  bad  debts  and  commissions  to  be  paid based on the
Company's  prior  experience  for  these  items.

Revenues  derived  in  1998  from the AT&T commission agreement related to calls
were  recognized  as  revenues  as  the  calls were placed.  Additional bonuses,
primarily  for reaching the number of contracted rooms or calls specified in the
agreement,  were  recognized  when  the  specified  criteria  had  been  met.

PROPERTY  AND  EQUIPMENT  -  Property  and  equipment  are  stated at cost.  For
financial  reporting  purposes,  depreciation  and  amortization are computed on
these  assets  using  the straight-line method over their estimated useful lives
ranging  from  1  to 28 years.  For income tax purposes, accelerated methods are
used.  Amortization  of  telecommunications  equipment  under  capital leases is
included  with  depreciation  expense.

The Company has accounted for its telecommunications equipment leases as capital
leases  under  the  provisions  of  Statement  of Financial Accounting Standards
("SFAS")  No.  13.  Accordingly,  the  cost of the leased assets and the related
obligations  under  the  lease agreements have been recorded at the inception of
the  lease.

GOODWILL  -  Goodwill  was  amortized  on the straight-line method over 10 years
prior  to the impairment write-downs discussed in Note 1, Impairment of Property
and  Equipment  and  Intangible  Assets.

IMPAIRMENT  OF  PROPERTY  AND  EQUIPMENT  AND  INTANGIBLE  ASSETS  - The Company
periodically  reviews  long-lived  assets  and  intangible assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of
these  assets  may  not  be recoverable.  The PIC business operates in a rapidly
changing  competitive  environment  which creates uncertainty regarding the fair
value  of  certain  assets.  For the years ended December 31, 2000 and 1999, the
Company  recorded  impairment  write-downs  of  goodwill  related  to  PIC  of
approximately  $3.3  million  and $3.0 million, respectively, and write-downs of
other  assets,  primarily  telecommunications  equipment  at  PIC  and  MTS,  of
approximately  $600,000  and  $317,000,  respectively.  All  impairments  were
determined  based  on  the  estimated  fair  value  of  such  assets.


                                      F-15

<PAGE>
COST  OF  PURCHASED  SITE  CONTRACTS  - The cost of obtaining site contracts was
amortized  over the term of the related contracts, generally one to three years,
using  the  straight-line  method.

OTHER  INTANGIBLE ASSETS - Other intangible assets relate to deferred financing,
deferred lease and loan restructuring costs.  Deferred financing, lease and loan
restructuring  costs incurred, net of amortization, in connection with new loans
and  modifications of existing lease and loan agreements of $58,000 and $197,000
at  December  31,  2000 and 1999, respectively, have been deferred and are being
amortized  over the new or restructured lease and loan agreement terms using the
effective  interest  method.

INVESTMENTS  - The Company owns convertible preferred stock which is not readily
marketable.  This  investment  is  accounted  for  at  cost.  This  investment
experienced a decline in value that is other than temporary in 2000 due to Actel
filing  for bankruptcy in April 2001 and the Company recorded an impairment loss
of  $1.6  million.  (See  Note  6.)

INCOME TAXES - The Company files a consolidated federal and certain consolidated
state  income  tax  returns with its subsidiaries.  Some states do not allow the
filing  of  a consolidated state tax return, and therefore, certain subsidiaries
file a separate state income tax return.  Deferred income taxes are provided for
the  tax  consequences  in future years of temporary differences between the tax
basis  of assets and liabilities and their financial reporting amounts, based on
enacted  tax  laws  and  tax  rates  applicable  to  the  periods  in  which the
differences  are  expected  to  affect taxable income.  Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to  be  realized.  Income  tax  expense  is the tax payable for the year and the
change  during  the  period  in  deferred  tax  assets  and  liabilities.

ACCRETION  ON PREFERRED STOCK - Up to September 30, 2000, the date of conversion
(see  Note  9),  the  Company  accreted  the  carrying  value of the 8% Series A
Convertible  Preferred  Stock (net of offering costs incurred) to the conversion
price  by  the  effective  interest  method.

CUMULATIVE  DIVIDENDS ON PREFERRED STOCK - Up to September 30, 2000, the date of
conversion  (see  Note  9),  cumulative  dividends  on the Company's 8% Series A
Convertible  Preferred Stock were recorded as a charge to accumulated deficit as
the  dividends were earned by the holders and an accrued liability was recorded.

STOCK-BASED  COMPENSATION  -  The Company measures stock-based compensation cost
with  employees as the excess of the fair value of the Company's common stock at
date  of grant over the amount the employee must pay for the stock.  The Company
measures stock-based compensation with other than employees as the fair value of
the  goods  or  services  received  or  the  fair value of the equity instrument
issued,  whichever  is  more  reliably  measurable.

NET  LOSS  PER  COMMON  SHARE  - Basic net loss per common share is based on the
weighted  average  number of shares of common stock outstanding during the year.
Diluted net loss per common share is the same as basic net loss per share due to
the  antidilutive  effect  on  net  loss  per share of any assumed conversion of
convertible  securities  or  exercise  of  options  and  warrants.


                                      F-16

<PAGE>
Potential  common  shares  excluded  from the per share computation because they
were  antidilutive  are  as  follows:
<TABLE>
<CAPTION>

                                 YEARS ENDED DECEMBER 31,
                                 ------------------------
                               2000       1999       1998
<S>                          <C>       <C>        <C>
Convertible preferred stock         -  1,681,776  1,681,776
Options . . . . . . . . . .         -    355,918    146,502
Warrants. . . . . . . . . .         -  1,189,000    950,937
                             --------  ---------  ---------
Total . . . . . . . . . . .         -  3,226,694  2,779,215
                             ========  =========  =========
</TABLE>

The  exercise  prices  on all outstanding options and warrants exceed the market
price  of  the  Company's  common  stock  at  December  31,  2000.

RECLASSIFICATIONS  - Certain amounts in the 1999 and 1998 consolidated financial
statements  have  been  reclassified  to  conform  with  the  2000 presentation.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial Accounting
Standards  Board  ("FASB")  issued  SFAS  No.  133,  "Accounting  for Derivative
Instruments  and  Hedging  Activities."  SFAS  No. 133 establishes standards for
derivative  instruments,  including  certain  derivative instruments embedded in
other  contracts  (collectively  referred  to  as  derivatives), and for hedging
activities.  It  requires  that  an  entity  recognize all derivatives as either
assets  or  liabilities in the statement of financial position and measure those
instruments  at  fair  value.  The recognition of gains or losses resulting from
changes  in  the  values  of  derivatives is based on the use of each derivative
instrument  and  whether it qualifies for hedge accounting.  The Company adopted
SFAS  No.  133  on January 1, 2001.  The adoption of SFAS No. 133 did not have a
material  effect  on the Company's results of operations or financial condition.

2.     BAD  DEBT  EXPENSE  AND  UNIVERSAL  SERVICE  FUND  FEES

During  1999,  PIC  recorded  bad  debt charges primarily relating to collection
issues  for  one  type of call processing service provided by PIC to its largest
customer  totaling  approximately  $5.6 million in excess of historical amounts.
PIC  used  an  independent  billing and collection firm, which advanced funds to
PIC,  for  calls  handled by PIC, before collecting from the end-user by billing
through  a  Regional  Bell  Operating  Company or other local telephone company.
This  billing  and  collection firm reconciled amounts ultimately collected from
the  end-user  with the initial advances made and remitted the additional amount
collected  or  reduced  advances,  for any deficiency, to PIC in future periods.
This  process  took  12  -  18  months  to  complete.  PIC  used  its historical
experience  to  estimate  the ultimate collections to be received.  During 1999,
PIC  experienced  an  amount  of  reductions  in these payments significantly in
excess  of  PIC's  and  industry  historical  experience.

Due  to  the  high  level  of  these  uncollectable amounts, PIC contracted with
another  billing  and  collection  firm in November 1999.  The prior billing and
collection  firm alleged that PIC had breached its contract and placed a lien on
the collections from calls processed by the new billing and collection firm.  At
December 31, 1999, the Company recorded an allowance for 100% of all receivables
from  both  billing  and collection firms due to the uncertainty regarding their
collection.

As a result of PIC's new business plan developed during 2000, PIC has contracted
with  several  billing  and  collection firms during 2000 and has eliminated its
live  operator  center.  As  a  result,  PIC  is  now largely a reseller of call
processing  services  and  essentially receives commissions from the billing and
collections  firms.  Accordingly,  PIC  no  longer  records  bad  debt  expense
separately.

On January 25, 2001, the Company reached a settlement with the prior billing and
collection firm and the new billing and collection firm.  Under this settlement:
(a)  PIC  and  ATN  were  relieved  from any further liability allegedly owed to
either  billing  and collection firm, (b) PIC agreed to pay a nominal amount and
to  relinquish  its claims to funds held by the new billing and collection firm,
(c)  PIC  and  ATN released any potential claims that they had against the prior
billing  and collection firm, including claims that ATN may have for the alleged
failure  by  the  prior  billing  and collection firm to assess USF contribution
charges  (see  discussion  below) on certain traffic, as well as any claims that
ATN may have against the prior billing and collection agency for its role in the
excessive  bad  debt  charges recorded in 1999, and (d) PIC and ATN released any
potential  claims  that  they  had  against the new billing and collection firm.


                                      F-17
<PAGE>
In  December 1999, ATN received notice from the Universal Service Administrative
Company  ("USAC")  that Universal Service Fund ("USF") fees were due.  A carrier
of  interstate/intrastate  calls  is  required  to  pay  a  USF  fee  based on a
percentage  of  total  call  revenue.  The  USF  fee  is applicable to all calls
carried  after  January  1, 1997.  The notice was the first time that management
became  aware  of  any  liability  to  this  agency.

It  was management's belief that these USF fees had been charged to the end-user
and  remitted to USAC by its prior billing and collection firm.  The billing and
collection firm's position was that they had collected the USF fees and remitted
them  to  ATN.  As  ATN is legally responsible for USF fees, in December 1999 it
recorded  an estimated liability of $1.7 million.  In April 2000, the management
of  ATN determined that beginning in 1998 ATN had been credited with certain USF
fees  by  its  billing and collection firm.  Management believes a total of $0.9
million  of  such fees have been credited to ATN, with the credits offset by the
excessive bad debt charges.  The Company reached a settlement agreement with the
prior  billing  and  collection  firm on January 25, 2001 which included the USF
fees  (see  discussion  above.)

During  the  first two months of 2001, ATN received credit memos from USAC which
reflect a balance due to USAC of $806,000.  Accordingly, ATN recorded a $894,000
credit  for  universal  service fund fees in the fourth quarter of 2000 based on
the new information from USAC.  The Company can make no assurances that ATN will
not  be  liable  for  additional  USF  fees.

3.     ACQUISITION  OF  PIC  AND  PIC-R

Effective October 31, 1997, the Company purchased all of the outstanding capital
stock  of  PIC and PIC-R in exchange for a cash payment at closing, the issuance
of  debt  and  the issuance of an aggregate of 300,000 shares of common stock of
the  Company.  The Stock Purchase Agreements also provided for certain recession
and  earn-out  rights.  The acquisitions were recorded under the purchase method
for  financial  reporting  purposes.  Goodwill of approximately $4.2 million was
associated  with  the  acquisitions  (see  Note  1  for  impairment).

Effective May 21, 1998, the Company and the former shareholders of PIC and PIC-R
entered  into  an  agreement  to  amend the terms of the original Stock Purchase
Agreements with respect to the Company's acquisition of PIC and PIC-R.  Pursuant
to the Stock Purchase Agreements, the former PIC and PIC-R shareholders received
certain  special  default  rights  to rescind the acquisitions of PIC and PIC-R.
The  May  21, 1998 amendment terminated the special default rights.  Pursuant to
the  amendment,  the  Company  also  issued  571,428 shares of common stock as a
prepayment of $1.0 million of promissory notes due in installments through April
30,  1999  (the  "Long-Term  Notes").

Effective  December  7, 1998, the Company and the former shareholders of PIC and
PIC-R  entered into an Earn-Out Settlement Agreement.  This Agreement terminated
the  May  21, 1998 Agreement.  Pursuant to the Earn-Out Settlement Agreement, in
full  and final settlement of the earn-out rights for the former shareholders of
PIC  and  PIC-R,  the  Company issued 2,300,000 shares of common stock; issued a
$300,000  note  payable  in  24 monthly installments commencing January 7, 1999;
assumed  $135,000  of costs associated with the defense and settlement of a suit
related  to brokerage fees in connection with the PIC acquisition; and agreed to
pay  in full the total outstanding balances on the Long-Term Notes issued to the
principle  shareholders.  The  principal  balance  on  the Long-Term Notes as of
December  31,  1998  was $338,138.  Goodwill of $3.9 million was associated with
the  amended  terms  of  the  agreement  (see  Note  1  for  impairment).

4.     ACQUISITION  OF  INCOMEX

On  February  13, 1998, the Company entered into an agreement to purchase all of
the  outstanding  shares  of  common  stock  of Incomex, in exchange for 400,000
shares  of  common stock of the Company, valued at $422,500.  The agreement also
provided  for  the  Company  to pay the selling shareholders an aggregate amount
equal  to  60%  of the income before income taxes of Incomex, as defined, during
the  period  from  February 1, 1998 through July 31, 1998.  The Company had also
agreed  to  issue  common  stock  of the Company equal to an aggregate quarterly
average market value of $1.50 for each dollar of income before taxes of Incomex,
as  defined,  earned  in  excess  of  $400,000  during  the two 12 month periods
beginning  August,  1998.  The  Incomex  acquisition had been recorded under the
purchase  method.  Goodwill  of  $901,219  was  associated with the acquisition.


                                      F-18
<PAGE>
Effective  December  7, 1998, the Company and the former shareholders of Incomex
entered  into  an Earn-Out Settlement Agreement.  This agreement amended certain
provisions of the purchase agreement to provide full and final settlement of the
earn-out  rights for the former shareholders of Incomex.  Under the terms of the
Earn-Out  Settlement  Agreement,  the  Company issued 1,500,000 shares of common
stock;  issued  $744,915 in notes payable maturing in one year at an annual rate
of  14%  and  which  included  a  1%  origination  fee;  issued 155,384 warrants
associated with the notes payable entitling the holder to purchase the Company's
common  stock  at  an  exercise  price of $3.25 which expire, if unexercised, on
December  31,  2003; issued $340,000 in notes payable due no later than April 1,
1999  and  recorded  cash obligations of $117,479.  Goodwill of $3.3 million was
associated  with  the  amended  terms  of  the  agreement.

See  Note  5  for  sale  of  Incomex.

5.     DISCONTINUED  OPERATIONS

Effective  June  30, 2000 the Company sold all the shares of Incomex to three of
the  former  shareholders  of Incomex for (a) the transfer to the Company by the
purchasers  of 250,000 shares of the Company's common stock originally issued by
the  Company  pursuant to the Company's acquisition of Incomex, (b) cancellation
and  forgiveness  of  all  amounts  outstanding  under  promissory  notes in the
aggregate principal amount of $684,919, and related accrued interest, originally
issued  by  the Company to the shareholders of Incomex, and (c) the cancellation
of  all employment compensation and employment contracts between the Company and
the  purchasers.  The  parties  also  executed  mutual  releases  relating  to
liabilities between the Company and Incomex and claims that the Company may have
against  the  former  shareholders of Incomex.  Incomex was primarily engaged in
the  business  of  providing  billing and collection services to the hospitality
industry  from  Mexico  to  the  United  States.

The  accompanying  statements  of  operations have been reclassified so that the
results  for  Incomex's operations are classified as discontinued operations for
all  periods  presented.  The  assets  and  liabilities  of  the  discontinued
operations  have  been  reclassified in the 1999 balance sheet as "net assets of
discontinued operations".  The statements of cash flows and related notes to the
consolidated  financial statements have also been reclassified to conform to the
discontinued  operations  presentation.

Summary  operating results of the discontinued operations are as follows for the
years  ended  December 31, 2000, 1999 and 1998 (amounts expressed in thousands):
<TABLE>
<CAPTION>

                                              2000      1999       1998
<S>                                         <C>       <C>        <C>
Revenues . . . . . . . . . . . . . . . . .  $ 2,987   $  8,284   $ 7,921
Expenses . . . . . . . . . . . . . . . . .   (4,162)   (10,713)   (6,740)
Taxes. . . . . . . . . . . . . . . . . . .        -        472      (472)
                                            --------  ---------  --------
Income (loss) from discontinued operations  $(1,175)  $ (1,957)  $   709
                                            ========  =========  ========
</TABLE>

                                      F-19
<PAGE>
A  summary  of  the  net  assets  of  the discontinued operations are as follows
(amounts  expressed  in  thousands):
<TABLE>
<CAPTION>

                                                               DECEMBER 31,
                                                                   1999
<S>                                                            <C>
Assets:
    Accounts receivable, less allowance for doubtful accounts  $          90
    Prepaid expense and other current assets. . . . . . . . .             61
                                                               -------------
Total current assets. . . . . . . . . . . . . . . . . . . . .            151
                                                               -------------
    Property and equipment, net . . . . . . . . . . . . . . .             61
    Goodwill, net of accumulated amortization . . . . . . . .          1,252
    Prepaid commissions . . . . . . . . . . . . . . . . . . .          1,633
                                                               -------------
Total noncurrent assets . . . . . . . . . . . . . . . . . . .          2,946
                                                               -------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . .          3,097
                                                               -------------

Liabilities:
  Outstanding checks in excess of available balances. . . . .             18
  Notes payable . . . . . . . . . . . . . . . . . . . . . . .            735
  Accounts payable. . . . . . . . . . . . . . . . . . . . . .            252
  Accrued interest. . . . . . . . . . . . . . . . . . . . . .            116
  Other accrued expenses. . . . . . . . . . . . . . . . . . .             78
  Current portion of long-term debt, others . . . . . . . . .             83
                                                               -------------
Total current liabilities . . . . . . . . . . . . . . . . . .          1,282
  Long-term debt, others, less current portion. . . . . . . .            167
                                                               -------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . .          1,449
                                                               -------------

Net assets. . . . . . . . . . . . . . . . . . . . . . . . . .  $       1,648
                                                               =============
</TABLE>

6.     INVESTMENTS

During  1998, the Company reached an agreement to invest in Actel.  Actel, based
in  Mobile, Alabama, is a facilities-based competitive local exchange carrier of
advanced  voice  and  data  communications  services  to  small and medium sized
enterprises.  Actel offers advanced end-user services in the Southeastern United
States.  As  of  June  21,  1999 the Company had invested $3.0 million in Actel.
Effective  June  21,  1999,  the  Company and Actel entered into an agreement to
amend  the  terms  of  the  original  investment  agreement  with respect to the
Company's investment in Actel.  This agreement amended certain provisions of the
investment  agreement  including  limiting  the Company's investment in Actel to
$3,000,000.  During  the  third quarter of 1999, the $3.0 million investment was
converted  into 4,371,428 shares of Actel's Series A Convertible Preferred Stock
as  allowed  by  the  investment  agreement.  Each share of Series A Convertible
Preferred  Stock  accrues  a cumulative 10% dividend per annum through March 10,
2002  and  may be converted into 3 shares of Actel's common stock at any time at
the  option  of  the  Company,  subject  to certain restrictions.  The share and
conversion information have been retroactively restated for a stock split of the
Series  A Convertible Preferred Stock and common stock by Actel during 2000.  In
addition,  the  Company  loaned  $1.0  million  to  Actel  under  the terms of a
promissory  note  dated  June  23,  1999.  The note was repaid during the second
quarter  of  2000  and  had  a  balance  at  December  31,  1999  of  $500,000.


                                      F-20
<PAGE>
On  April 6, 2000, Actel completed a private placement of newly created Series E
Preferred  Shares.  As  a  result  of that private placement, Actel received $40
million  in cash plus a commitment for an additional $35 million contingent upon
Actel  achieving  certain  operational  milestones.

During  the  second  quarter of 2000, the Company undertook a Debt Restructuring
Plan  which  resulted  in  the Company selling or exchanging 2,213,198 shares of
Actel  Series  A Convertible Preferred Stock in private placements (see Note 8).
Following  these transactions, the Company held 2,158,230 shares of Actel Series
A  Convertible  Preferred  Stock.

During  late  2000, Actel began experiencing cash flow difficulties and on April
11,  2001,  Actel filed for bankruptcy protection under Chapter 11.  The Company
has  recorded an impairment charge of approximately $1.6 million in 2000, due to
the  uncertainty  of  ultimate  recovery  of  the  investment.

During  1998,  the  Company reached an initial lending/investment agreement with
AcNet S.A. de C.V. of Mexico ("AcNet Mexico"). The initial agreement was revised
in  June  1999,  whereby  the  Company entered into two agreements providing the
Company  with separate options to acquire (i) Intercarrier Transport Corporation
("ITC"),  the  holder  of  approximately  99% of the outstanding shares of AcNet
Mexico,  and  (ii)  AcNet USA, Inc. ("AcNet USA"), an affiliate of AcNet Mexico,
for  an aggregate of 2,325,000 shares of the Company's common stock, $200,000 in
closing  costs  and  an additional $550,000 to pay off certain debt and accounts
payable.  The  option with ITC expires August 31, 2001 and the option with AcNet
USA  expired  on  December  31,  1999.  As of December 31, 2000, the Company had
loaned $3.7 million to the AcNet entities, recorded $264,000 of net interest and
incurred  $737,000  of costs either related to the acquisition or paid on behalf
of  the  AcNet  entities.

In  light of the Company's liquidity issues and other issues involving the AcNet
entities, the Company is not pursuing the options to acquire the AcNet entities.
As  a  result  and  due to cash flow difficulties being experienced by the AcNet
entities,  the  Company  recorded  asset  write-downs  of $3,703,000 in 1999 and
$990,000  in the second quarter of 2000 due to the write-off of costs associated
with  the  proposed  acquisition and the uncertainty of ultimate recovery of the
investment.  The  Company  commenced  legal action against the AcNet entities in
April  2000  to collect its advances and interest.  On March 29, 2001, AcNet USA
filed  for  bankruptcy  protection  and the Company has been informed that AcNet
Mexico  is  in  receivership.

The AcNet entities provide internet services and network services to businesses,
governments  and  consumers,  primarily  in  Mexico  and  Texas.

Investments  at  December  31,  2000 and 1999 are summarized as follows (amounts
expressed  in  thousands):
<TABLE>
<CAPTION>

                                              2000      1999
<S>                                         <C>       <C>
Actel Series A Convertible Preferred Stock  $ 1,481   $ 3,000
Accrued dividends. . . . . . . . . . . . .      100       245
Impairment reserve for Actel . . . . . . .   (1,581)        -
AcNet entities loans and related costs . .    4,429     4,429
Accrued interest . . . . . . . . . . . . .      264       264
Allowance for AcNet entities . . . . . . .   (4,693)   (3,703)
Other. . . . . . . . . . . . . . . . . . .        -        42
                                            --------  --------
Investments. . . . . . . . . . . . . . . .  $     -     4,277
                                            ========  ========
</TABLE>


                                      F-21
<PAGE>
7.     NOTES  PAYABLE

Notes  payable  as  of  December  31, 2000 and 1999, consisted of the following:
<TABLE>
<CAPTION>

                                                                              (DOLLARS IN THOUSANDS)
                                                                              ----------------------
                                                                                  2000        1999
<S>                                                                           <C>         <C>
Past due notes payable to individuals, $200,000 of which has
  been provided by related parties at December 31, 2000,
  bearing interest at the default rate of 18%, due March 5, 1999.
  Warrants to purchase 500,000 shares of the Company's
  common stock were issued, 400,000 of which were issued to
  related parties, at an exercise price of $1.44 per share which
  expire, if unexercised, on March 31, 2001.  A warrant to
  purchase 10,000 shares of the Company's common stock was
  issued to Berthel at an exercise price of $1.44 per share
  which expires if unexercised, on March 31, 2001. . . . . . . . . . . . . .  $       300  $     500

Past due notes payable to individuals, $225,000 of which has
  been provided by related parties at December 31, 2000,
  bearing interest at the default rate of 18%, due March 31, 1999.
  Warrants to purchase 1,486,000 shares of the Company's
  common stock were issued, 225,000 of which were issued
  to related parties, at an exercise price of $1.75 per share
  which expire, if unexercised, on March 31, 2001.  Warrants
  to purchase 121,100 shares of the Company's common stock
  were issued to Berthel in connection with the offering with terms
  substantially similar to the warrants issued in the offering.. . . . . . .          275      1,371

Past due notes payable to individuals, $5,995,000 of which has
  been provided by related parties, bearing interest at the default
  rate of 18%, due November 30, 1999.
  Warrants to purchase 1,379,000 shares of the Company's
  common stock were issued, 1,199,000 of which were issued
  to related parties.  The warrants were issued at exercise prices
  ranging from $2.50 to $4.13 and, if unexercised, expire on
  dates ranging from November 2003 to December 2003. . . . . . . . . . . . .        6,895      6,895

Past due note payable to consultant bearing interest at 14%, due
  March 31, 1999.  Warrants to purchase 25,000 shares
  of the Company's common stock were issued at an
  exercise price of $1.75 per share which expire, if
  unexercised, on March 31, 2001.. . . . . . . . . . . . . . . . . . . . . .           25         25

Uncollateralized notes payable to individual, bearing interest at 14%,
  due May 19, 2001.  A warrant to purchase 100,000 shares
  of the Company's common stock was issued.  The warrant
  has an exercise price of $3.50 and, if unexercised,
  expires December 6, 2003.. . . . . . . . . . . . . . . . . . . . . . . . .          500          -


                                      F-22
<PAGE>

                                                                              (DOLLARS IN THOUSANDS)
                                                                              ----------------------
                                                                                  2000        1999
Note payable to MCC Investment Company, LLC ("MCCIC")
  bearing interest at 12%, due June 21, 2001.  Warrants to purchase
  4,289,897 shares of the Company's common stock were issued at
  a weighted average exercise price of $1.99 per share which, if
  unexercised, expire December 20, 2004.  The note is collateralized by
  the Company's shares of Actel Series A preferred stock and sustantially
  all assets of the Company (see additional terms below and see Note 6). . .          388          -

Revolving promissory note payable to MCCIC bearing interest at 12%,
  due June 21, 2001.  Warrants to purchase 909,224 shares of
  the Company's common stock were issued at a weighted average exercise
  price of $1.99 per share which, if unexercised, expire December 20, 2004.
  The note is collateralized by the Company's shares of
  Actel Series A preferred stock and sustantially all assets of the
  Company (see additional terms below and see Note 6). . . . . . . . . . . .          200          -

Notes payable to Berthel, bearing interest at 12% due June 21, 2001. . . . .          200          -

Note payable to financial institution bearing interest at
  10.5% due March 30, 2000 collateralized by substantially all the
  assets of MTS and an assignment of leasehold interests.  Due to
  a cross-collateralization agreement with the financial institution,
  this note became due on March 28, 1999.. . . . . . . . . . . . . . . . . .            -        500

Note payable to financial institution bearing interest at 2%
  over the bank's prime rate (combined rate of 9.75% at December 31,
  1999), due March 28, 1999, collateralized by substantially
  all the assets of MTS and an assignment of leasehold interests.. . . . . .            -        400

Convertible note payable to financial institution bearing interest
  at 12% (14% upon default) due in five monthly installments of $200,000
  beginning January 17, 2000 with a final payment of $1,000,000 due
  June 17, 2000.  Warrants to purchase 500,000 shares of the Company's
  common stock were issued at an exercise price of $3.50 per share
  which, if unexercised, expire June, 2009.  The note was collateralized
  by shares of Actel Series A preferred stock and substantially all assets
  of the Company (see additional terms below). . . . . . . . . . . . . . . .            -      2,000

Note payable to related party bearing interest at 12% and due
  February 9, 2000.  A warrant to purchase 400,000 shares of the
  Company's common stock was issued at an exercise price of
  $3.31 per share which, if unexercised, will expire August 2004.. . . . . .            -      2,000

Note payable to related party with interest at 18%, due on demand. . . . . .            -         17
                                                                              -----------  ---------

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     8,783  $  13,708
                                                                              ===========  =========
</TABLE>

                                      F-23
<PAGE>
On June 17, 1999, the Company completed a bridge financing in the amount of $2.0
million  with  New  Valley  Corporation  ("New Valley").  Pursuant to the bridge
financing,  the  Company  issued  a note in the principal amount of $2.0 million
(the  "Note").  This  principal and all unpaid accrued interest at 12% per annum
were  due  July  21, 1999.  The Company was past due on this note effective July
21,  1999.  Warrants  to  purchase  250,000 shares of the Company's common stock
were  issued in connection with the Note at an exercise price of $3.50 per share
and  may be exercised at anytime through June 21, 2009.  Because the Company did
not  repay  the  Note  on  or  prior  to September 21, 1999, the warrants may be
exercised  to  purchase a total of 500,000 shares of the Company's common stock.
On  December  17,  1999, the Company amended the terms of the agreement with New
Valley.  The  amendment reset the interest rate to 12% since inception (14% upon
default)  and  was  due  in 5 monthly payments of $200,000 beginning January 17,
2000  with  a  final  payment  of $1.0 million on June 17, 2000.  Waivers of any
prior  violations  were  included  as  part  of  the  amendment.  The  Note  was
convertible  into  shares  of  common  stock of the Company at the option of New
Valley  at  any  time  up  to  the maturity date, in any portion in multiples of
$1,000.  The  number  of shares in the conversion was to be obtained by dividing
the  principal  amount  of  the Note converted by the conversion price of $3.00.

The January, February and March 2000 payments under the Note were paid on behalf
of  the  Company  by  MCCIC,  a company owned by Berthel and another significant
shareholder of the Company.  On April 6, 2000, the entire interest of New Valley
in this loan was purchased by MCCIC.  The terms of the note and warrant purchase
agreement with MCCIC, bearing interest at 12%, was amended on June 22, 2000 with
payment  of  all  remaining  principal  and  interest  due  on  June  22,  2001.

During  2000,  the  Company  also  entered into a Revolving Promissory Note with
MCCIC,  bearing  interest at 12% with payment of all remaining principal and all
accrued  interest  due  on  June  21,  2001.

Effective  May 29, 2000, the Company issued warrants to purchase an aggregate of
5,199,121  shares  of  the Company's common stock at a weighted average exercise
price  of  $1.99  per share to MCCIC in connection with the Company's borrowings
under the Revolving Promissory Note and the New Valley loan.  Deferred financing
costs  of  $472,000 were recorded for the fair values of the warrants issued and
are  being  amortized  over  the  remaining  life  of  the  related  debt.

The  Company reached a Comprise Settlement Agreement and Mutual Release with the
FDIC on October 19, 2000 to pay $300,000 in settlement of two notes payable with
a  financial  institution with combined principal of $900,000.  As a result, the
Company  recorded  a  $722,000  extraordinary  gain  on  extinguishment of debt,
including  interest,  in  the  fourth  quarter  of  2000.

See  Note  8,  Long-Term  Debt, for a discussion of the Debt Restructuring Plan.


                                      F-24
<PAGE>
8.     LONG-TERM  DEBT

Long-term  debt,  others  as  of  December  31,  2000  and 1999 consisted of the
following:
<TABLE>
<CAPTION>

                                                                              (DOLLARS IN
                                                                               THOUSANDS)
                                                                              -------------
                                                                              2000    1999
<S>                                                                           <C>    <C>
Mortgage note payable to partnership due in monthly
  installments of $3,299, including interest at 8.5%,
  until September 15, 2000, when the balance is due.
  The note was collateralized by a first mortgage on the
  Company's corporate office facilities and land.. . . . . . . . . . . . . .  $   -  $  245

Note payable to financial institution to refinance an existing note on
  ATN's building and upgrade the building for the purpose of leasing a
  portion to Actel, due in monthly installments of $7,834, including
  interest at 8.4% until October 2004, when the balance is due.
  The note was collateralized by ATN's office facilities and land. . . . . .      -     774

Uncollateralized note payable to financial institution due in monthly
  installments of $12,353, including interest at the financial institution's
  prime rate (8.5% at December 31, 1999),
  until January 2000, when the balance was due.. . . . . . . . . . . . . . .      -      13

Uncollateralized convertible notes payable to individuals, bearing
  interest at 12% due May 29, 2003 (see additional terms below). . . . . . .    521       -
                                                                              -----  ------

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    521   1,032
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . .      -     288
                                                                              -----  ------
Long-term debt, others . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 521  $  744
                                                                              =====  ======
</TABLE>


                                      F-25
<PAGE>
Long-term  debt  with related parties at December 31, 2000 and 1999 consisted of
the  following:
<TABLE>
<CAPTION>

                                                                         (DOLLARS IN
                                                                          THOUSANDS)
                                                                        --------------
                                                                         2000    1999
<S>                                                                     <C>     <C>
Uncollateralized notes payable to Berthel due January 31, 2005,
  (net of discount of $299,648 at December 31, 1999).
  Interest payable quarterly at 4%, beginning March 31, 1995
  until maturity, when the balance is due (effective interest
  rate of 11.5%).. . . . . . . . . . . . . . . . . . . . . . . . . . .  $    -  $  700

Uncollateralized note payable to Berthel, due in five monthly
  installments of $9,494 including interest at 14% beginning
  on March 30, 1998, then fifty-five installments of $20,130
  including interest at 14% until February 28, 2003. . . . . . . . . .       -     702

Non-interest bearing, uncollateralized note payable to the former
  owner of PIC (net of discount of $13,656 at December 31,
  1999) due in monthly installments of $12,500, beginning January 1999
  through January 2001 (effective interest rate of 19.6%). . . . . . .       -     136

Note payable to Berthel due in monthly installments of $23,528
  beginning December 1, 1997 until November 1, 2002 when
  the balance is due including interest at 14.5%, collateralized
  by all telecommunications equipment owned by PIC.. . . . . . . . . .     470     699

Uncollateralilzed convertible notes payable to individuals, bearing
  interest at 12% due May 29, 2003 (see additional terms below). . . .   1,190       -

Uncollateralilzed convertible notes payable to Berthel, bearing
  interest at 12% due May 29, 2003 (see additional terms below). . . .   2,921       -

Uncollateralized notes payable to individual, bearing interest at 14%,
  due May 19, 2001.  A warrant to purchase 100,000 shares
  of the Company's common stock was issued.  The warrant
  has an exercise price of $3.50 and, if unexercised,
  expires December 6, 2003.. . . . . . . . . . . . . . . . . . . . . .       -     500

Uncollateralized, noninterest bearing demand notes payable to
  related parties. . . . . . . . . . . . . . . . . . . . . . . . . . .       -      32
                                                                        ------  ------

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4,581   2,769
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . .     220     647
                                                                        ------  ------
Long-term debt with related parties. . . . . . . . . . . . . . . . . .  $4,361  $2,122
                                                                        ======  ======
</TABLE>


                                      F-26
<PAGE>
During  the  second  quarter  of  2000,  the Company undertook a plan ("the Debt
Restructuring  Plan")  designed  to  restructure  a  significant  portion of the
Company's principal amount of debt and accrued interest under the Company's past
due  debt.  In connection with the Debt Restructuring Plan, the Company recorded
a  pre-tax  gain of approximately $7.0 million as a result of the sale of shares
of  Actel's  Series  A  Convertible Preferred Stock for cash and cancellation of
debt  as  discussed  below.

The  Debt  Restructuring  Plan  consisted  of (i) a private offering (the "Actel
Share  Offering")  by  the  Company  of shares of Series A Convertible Preferred
Stock  (the  "Actel Shares") of Actel for cash, and (ii) a private offering (the
"Unit  Offering")  by the Company to certain holders of outstanding indebtedness
of  the Company of units consisting of Actel Shares and convertible notes of the
Company  (the  "Convertible  Notes").

During  the  second quarter of 2000, the Company sold 1,149,614 Actel Shares for
gross  proceeds of $4.9 million in the Actel Share Offering, resulting in a gain
of  approximately  $3.7  million.  Proceeds  were partially used to (i) reduce a
total  of $2.2 million of the amounts owed to MCCIC, an affiliate of Berthel and
another  significant shareholder of the Company, under the Company's bridge loan
originally  obtained from New Valley and the Company's Revolving Promissory Note
from  MCCIC,  (ii)  reduce  $1.0 million of past due notes and lease payables to
Berthel,  (iii)  pay placement fees and other offering expenses of $444,000, and
(iv)  pay  $479,000 to certain note holders upon conversion in the Unit Offering
in  partial payment of amounts owed to such note holders. The remaining proceeds
were  used  for  general  working  capital.

During  the  second  quarter  of  2000,  the Company transferred 1,063,584 Actel
Shares  with  a  fair value of approximately $4.6 million and issued Convertible
Notes  in  an aggregate principal amount of $4.6 million in the Unit Offering in
exchange  for the cancellation of outstanding indebtedness in the amount of $9.2
million.  A  net gain of approximately $3.3 million was realized on the transfer
of  the  Actel Shares.  The Convertible Notes accrue interest at the rate of 12%
annually,  with  principal  and  accrued  interest  due on May 29, 2003, and are
convertible  into  shares  of  the  Company's  no  par  value  common stock at a
conversion  price  of  $3.03 per share (330 shares for each $1,000 due under the
Convertible  Notes).  The  Convertible  Notes  are  unsecured obligations of the
Company.  The  Company  paid  $479,000 in satisfaction of 25% of the outstanding
principal  and  interest to holders of promissory notes originally issued by the
Company  in April and May of 1998 with the remaining balance of these promissory
notes  being  converted  in  the  Unit  Offering.

The  Company sold its buildings in Cedar Rapids, Iowa and Mobile, Alabama during
the  second  quarter  of 2000 resulting in a pre-tax gain of $214,000.  Proceeds
were  used  to  pay  related  indebtedness  of  $1.0  million.

Maturities  of  long-term debt for each of the five years subsequent to December
31,  2000  are  as  follows  (dollars  in  thousands):
<TABLE>
<CAPTION>

       RELATED
       PARTIES   OTHER   TOTAL
<S>    <C>       <C>     <C>
2001.  $    220  $    -  $  220
2002.       250       -     250
2003.     4,111     521   4,632
       --------  ------  ------
Total  $  4,581  $  521  $5,102
       ========  ======  ======
</TABLE>

Also  see  Note  16  with respect to the estimated fair value of long-term debt.

                                      F-27
<PAGE>
9.     PREFERRED  STOCK

On  July 2, 1997, the Company amended its articles of incorporation to authorize
1,000,000  shares  of  a  new  class  of  "blank  check"  preferred  stock.

On August 1, 1997, the Company authorized the issuance of up to 50,000 shares of
Series  A  Convertible  Preferred  Stock  (the  "Convertible  Preferred").  The
Convertible  Preferred  had  a liquidation preference, subject to adjustment, of
$100  per  share and accrued cumulative dividends at an annual rate of 8% of the
liquidation  preference.  Dividends  were  payable  quarterly  at  the Company's
option  in  cash  or  in  common stock.  The Convertible Preferred had no voting
rights,  except  as  required  by  applicable  law.

On  February  26,  1998, the Company agreed to issue 2,170 shares of Convertible
Preferred  to an affiliate of Berthel in exchange for the prepayment of $180,000
of  commissions  and  the payment of $37,000 of commissions then currently owed.
This  transaction  was  completed  and  the  shares  issued  on  June  19, 1998.

The  Company's  Convertible  Preferred  automatically  converted  into 1,683,880
shares  of  the  Company's  Common  Stock  on  September  30,  2000,  the  third
anniversary  of  the  date  the  first  shares  of  Convertible  Preferred  were
originally  issued.

                                      F-28
<PAGE>
10.     COMMON  STOCK  WARRANTS

A  summary  of common stock warrant activity during the years ended December 31,
2000,  1999  and  1998  is  as  follows:
<TABLE>
<CAPTION>

                                                                            WEIGHTED
                                                                            AVERAGE
                                                                WARRANT     WARRANT
                                                   WARRANT       PRICE       PRICE      EXPIRATION
                                                    SHARES      PER SHARE   PER SHARE       DATE
<S>                                               <C>          <C>          <C>         <C>
Balance at January 1, 1998 . . . . . . . . . . .   2,149,279   $1.12-$9.75  $     2.91  1999-2002

Warrants issued in connection with Incomex
  Earn-Out settlement (Note 4) . . . . . . . . .     155,384          3.25        3.25       2003
Warrants issued with note payable (Note 7) . . .   1,486,000          1.75        1.75       2001
Warrants issued with note payable (Note 7) . . .     500,000          1.75        1.75       2001
Warrants issued with note payable (Note 7) . . .     684,000     2.50-3.25        3.17       2003
Warrants issued with note payable (Note 7) . . .       5,000          1.75        1.75       2000
Warrants issued with note payable (Note 7) . . .      25,000          1.75        1.75       2001
Warrants issued with offering agreement
   (Note 7). . . . . . . . . . . . . . . . . . .      10,000          1.44        1.44       2001
Warrants issued with short-term notes payable. .      15,000          1.44        1.44       2001
Warrants issued with offering agreement. . . . .     121,100          1.75        1.75       2001
Warrants issued with notes payable to related
  party. . . . . . . . . . . . . . . . . . . . .     350,000          1.44        1.44       2001
Warrants exercised by related party. . . . . . .  (1,100,000)         1.44        1.44
Warrants issued with consulting agreements . . .      20,000     3.00-3.60        3.30       2003
                                                  -----------

Balance at December 31, 1998 . . . . . . . . . .   4,420,763     1.12-9.75        2.86

Warrants issued with notes payable to related
  parties (Notes 7 and 8). . . . . . . . . . . .     795,000     3.25-4.13        3.63       2003
Warrants issued with notes payable to financial
  institution (Note 7) . . . . . . . . . . . . .     500,000          3.50        3.50       2009
Warrants issued with notes payable to related
  party (Note 7) . . . . . . . . . . . . . . . .     400,000          3.31        3.31       2004
Warrants expired . . . . . . . . . . . . . . . .     (50,000)         2.88        2.88
Warrants exercised . . . . . . . . . . . . . . .      (1,300)         3.14        3.14
Warrants exercised by related party. . . . . . .      (4,000)         1.44        1.44
Warrants exercised . . . . . . . . . . . . . . .    (193,872)         1.75        1.75
                                                  -----------

Balance at December 31, 1999 . . . . . . . . . .   5,866,591     1.12-9.75        3.05

Warrants issued with termination of
  employment agreements. . . . . . . . . . . . .     150,000          1.00        1.00       2003
Warrants issued with notes payable to
  financial institution (Note 7) . . . . . . . .   5,199,121      .94-2.44        1.99       2004
Warrants exercised . . . . . . . . . . . . . . .     (25,000)         1.75        1.75
Warrants cancelled . . . . . . . . . . . . . . .    (495,000)    3.50-4.13        3.88
                                                  -----------

Balance at December 31, 2000 . . . . . . . . . .  10,695,712   $1.12-$9.75  $     2.44
                                                  ===========
</TABLE>


                                      F-29
<PAGE>
The  weighted  average remaining life of the warrants was 3.1, 3.0 and 2.5 years
at  December  31,  2000,  1999  and  1998,  respectively.

Warrants  outstanding  and  exercisable  at  December  31, 2000 were as follows:
<TABLE>
<CAPTION>

EXERCISE PRICE     WARRANTS
<S>               <C>
$0.94 . . . . .     435,467
$1.00 . . . . .     150,000
$1.12 . . . . .     229,279
$1.25 . . . . .     200,000
$1.31 . . . . .     884,804
$1.44 . . . . .      21,000
$1.50 . . . . .     100,000
$1.75 . . . . .   1,918,228
$2.09 . . . . .     499,600
$2.19 . . . . .      40,000
$2.25 . . . . .     831,467
$2.44 . . . . .   2,207,783
$2.50-$3.00 . .      90,000
$3.01-$3.25 . .   1,798,084
$3.26-$3.60 . .   1,210,000
$9.75 . . . . .      80,000
                  ----------
                  10,695,712
                  ==========
</TABLE>

The  Company  issued  880,000 common stock warrants to the public in conjunction
with  the  Company's initial public offering during 1996.  The underwriters also
received  80,000  warrants.  As  a  result  of  the anti-dilutive provision, the
exercise price for the 880,000 public warrants at December 31, 1998 was adjusted
in  accordance  with  the  agreement  to  $3.14.  Each warrant is exercisable to
purchase  2.068  shares  of  common  stock.  As  a  result  of the anti-dilutive
provision, the 80,000 underwriters warrants at December 31, 1998 are exercisable
to  purchase  162,839  units at an exercise price of $6.146 per unit.  Each unit
consists of two shares of the Company's common stock and one warrant exercisable
at  $9.75  per  share  to  purchase  one  share  of  the Company's common stock.

The  Company  has  amended  the  terms  of  these 880,000 warrants to extend the
expiration date from October 21, 1999 to October 21, 2001.  The 880,000 warrants
are  exercisable  into  1,819,918 shares of common stock at an exercise price of
$3.14  per share.  During the extension period the Company will not be obligated
to  make  any  further  adjustments to the exercise price of the warrants or the
number  of  shares  for  which  the  warrants  may  be  exercised.

On  March  22,  2001,  the  Company  extended  the  expiration date of 1,939,228
warrants  from  March  31,  2001  to  March  31,  2002.


                                      F-30
<PAGE>
11.     STOCK  OPTION  PLANS

The Company adopted the 1993 Stock Option Plan (the "1993 Plan") whereby options
may  be granted to employees to purchase up to an aggregate of 272,529 shares of
the  Company's  common  stock.  The  1993  Plan  is administered by the Board of
Directors,  which  determines  to  whom  options will be granted.  The 1993 Plan
provides  for the grant of incentive stock options (as defined in Section 422 of
the  Internal  Revenue Code) to employees of the Company.  The exercise price of
stock  options  granted  under  the 1993 Plan is established by the Compensation
Committee or the Board of Directors, but the exercise price may not be less than
the  fair  market value of the common stock on the date of grant of each option.
Each option shall be for a term not to exceed ten years after the date of grant,
and  a  participant's  right  to  exercise an option vests at the rate of twenty
percent on the date of grant and each anniversary date until the option is fully
vested.

A  summary  of  stock option activity under the 1993 Plan during the years ended
December  31,  2000,  1999  and  1998,  is  summarized  as  follows:

<TABLE>
<CAPTION>

                                                           WEIGHTED                WEIGHTED
                                                           AVERAGE                 AVERAGE
                                                           OPTION                  OPTION
                                OPTIONS     OPTION PRICE   PRICE       OPTIONS     PRICE
                              OUTSTANDING    PER SHARE   PER SHARE   EXERCISABLE  PER SHARE
<S>                           <C>           <C>          <C>         <C>          <C>
Balance at January 1, 1998 .      223,929   $1.88-$2.25  $     2.05       79,279  $     1.88
  Granted at market. . . . .       30,927          2.00
  Cancelled. . . . . . . . .       (1,000)         2.25
  Cancelled. . . . . . . . .      (13,255)         2.00
                              ------------
Balance at December 31, 1998      240,601     1.88-2.25        2.04      163,026        1.97

  Exercised. . . . . . . . .      (18,500)         1.88
  Exercised. . . . . . . . .       (1,000)         2.25
                              ------------
Balance at December 31, 1999      221,101     1.88-2.25        2.06      182,564        2.02

  Cancelled. . . . . . . . .      (20,299)         1.88
  Cancelled. . . . . . . . .      (15,523)         1.88
  Cancelled. . . . . . . . .       (5,000)         2.25
  Cancelled. . . . . . . . .       (8,836)         2.00
                              ------------

Balance at December 31, 2000      171,443     1.88-2.25        2.09      171,443        2.09
                              ============
</TABLE>

At December 31, 2000, options for 171,443 shares were exercisable, an additional
81,586  shares  were  available  for  future  grants  and  the  weighted average
remaining  life  of  the  options  outstanding  was five years.  The Company has
reserved  272,529  shares  of  common  stock in connection with the 1993 Plan at
December  31,  2000,  1999  and  1998.

The  Company  has  adopted  the  1997  Stock Option Plan (the "1997 Stock Option
Plan").  During 1998, the Company amended the 1997 Stock Option Plan to increase
the  number  of  shares  authorized to 1,727,471.  The 1997 Stock Option Plan is
also  administered by the Compensation Committee or the Board of Directors which
determines  to  whom  the  options  will be granted.  The 1997 Stock Option Plan
provides  for the grant of incentive stock options (as defined in Section 422 of
the  Internal Revenue Code) or nonqualified stock options to executives or other
key  employees  of the Company.  The exercise price of the stock options granted
under the 1997 Stock Option Plan is established by the Compensation Committee or
the  Board  of  Directors,  but the exercise price may not be less than the fair
market  value  of  the  common stock on the date of the grant of each option for
incentive  stock  options.  Each  option  shall  be for a term not to exceed ten
years  after  the  date  of  grant for non-employee directors and five years for
certain  shareholders.  Options cannot be exercised until the vesting period, if
any,  specified  by  the  Compensation  Committee  or the Board of Directors has
expired.


                                      F-31
<PAGE>
A  summary  of  stock  option  activity under the 1997 Stock Option Plan for the
years  ended  December  31,  2000,  1999  and  1998,  is  as  follows:
<TABLE>
<CAPTION>

                                                         WEIGHTED                 WEIGHTED
                                                          AVERAGE                 AVERAGE
                                                          OPTION                  OPTION
                                OPTIONS     OPTION PRICE   PRICE       OPTIONS     PRICE
                              OUTSTANDING    PER SHARE   PER SHARE   EXERCISABLE  PER SHARE
<S>                           <C>           <C>          <C>         <C>          <C>
Balance at January 1, 1998 .      255,629   $3.13-$4.16  $     3.28      100,000  $     2.57
  Granted at market. . . . .      400,000     2.25-3.50
  Granted at market. . . . .       17,000          3.13
  Granted at market. . . . .      165,000          2.81
  Granted at market. . . . .      535,000          2.75
  Granted at market. . . . .        4,073          2.00
  Granted at market. . . . .      225,629          2.25
  Cancelled. . . . . . . . .     (225,629)         3.25
  Cancelled. . . . . . . . .       (1,745)         2.00
                              ------------
Balance at December 31, 1998    1,374,957     2.00-4.16        2.65      893,561        2.62

  Cancelled. . . . . . . . .       (7,000)         3.13
  Cancelled. . . . . . . . .      (90,000)         2.81
  Granted at market. . . . .        2,000          3.88
  Granted at market. . . . .        5,500          2.56
  Granted at market. . . . .        4,500          2.75
                              ------------
Balance at December 31, 1999    1,289,957     2.00-4.16        2.64    1,106,259        2.63

  Cancelled. . . . . . . . .     (323,236)    2.25-2.75
  Cancelled. . . . . . . . .     (600,000)    2.25-3.50
  Cancelled. . . . . . . . .       (1,164)         2.00
  Cancelled. . . . . . . . .      (15,000)    3.13-4.16
  Cancelled. . . . . . . . .      (15,000)    3.13-4.16
  Cancelled. . . . . . . . .      (10,000)         3.13
  Cancelled. . . . . . . . .       (2,000)         3.88
  Cancelled. . . . . . . . .       (5,500)         2.56
  Cancelled. . . . . . . . .       (4,500)         2.75
  Granted at market. . . . .       20,000          2.25
                              ------------
Balance at December 31, 2000      333,557     2.00-2.81        2.58      323,557        2.58
                              ============
</TABLE>


                                      F-32
<PAGE>
At December 31, 2000, options for 323,557 shares were exercisable, an additional
1,393,914  shares  were  available  for  future  grants and the weighted average
remaining  life  of  the  options  outstanding was seven years.  The Company has
reserved  1,727,471  shares  of  common  stock in connection with the 1997 Stock
Option  Plan  at  December  31,  2000,  1999  and  1998.

Options outstanding and exercisable at December 31, 2000 under the 1993 Plan and
the  1997  Stock  Option  Plan  were  as  follows:
<TABLE>
<CAPTION>

OPTIONS OUTSTANDING                          EXERCISABLE
--------------------                         -----------
                                 WEIGHTED
                                 AVERAGE
                                REMAINING
                               CONTRACTUAL
                                   LIFE
EXERCISE PRICE        SHARES    (IN YEARS)     SHARES
<S>                   <C>      <C>           <C>
$1.88 . . . . . . .   67,899             3       67,899
$2.00-$2.25 . . . .  227,101             6      217,101
$2.75-$2.81 . . . .  210,000             7      210,000
                     -------                -----------
                     505,000                    495,000
                     =======                ===========
</TABLE>

No compensation expense was recorded in connection with the grant of options for
the  years  ended  December  31, 2000, 1999 and 1998, respectively.  The Company
accounts  for  stock  option  grants and awards to employees using the intrinsic
value  method.  If compensation cost for stock option grants and awards had been
determined  based  on  fair value at the grant dates for options consistent with
the  method  prescribed  by Statement of Financial Accounting Standards No. 123,
"Accounting  for  Stock  Based Compensation" ("SFAS No. 123"), the Company's net
loss  and  net  loss  per  share would have been the pro forma amounts indicated
below  for  the  years  ended  December  31,  2000,  1999  and  1998 (dollars in
thousands,  except  per  share  data):
<TABLE>
<CAPTION>

                                          2000      1999       1998
<S>                        <C>          <C>       <C>        <C>
Net loss attributable to   As reported  $(4,427)  $(18,592)  $  (349)
  common shareholders      Pro forma     (4,731)   (19,207)   (2,348)

Net loss per common share  As reported  $ (0.41)  $  (1.79)  $ (0.06)
                           Pro forma      (0.44)     (1.85)    (0.43)
</TABLE>

The  weighted  average  fair  values at date of grant for options granted during
2000,  1999  and  1998  were  estimated to be $304,000, $615,000 and $1,999,000,
respectively.  The  Company's  calculations  were  made  using the Black-Scholes
option  pricing  model with the following weighted average assumptions: ten year
expected  life; stock volatility of 221% in 2000, 102% in 1999 and 153% in 1998;
risk-free  interest  rate  of  5.2% in 2000, 6.4% in 1999 and 6% in 1998; and no
dividends  during  the  expected  term.

                                      F-33
<PAGE>
12.     INCOME  TAXES

The provision for (benefit from) income taxes consisted of the following for the
years  ended  December  31,  2000,  1999  and  1998  (dollars  in  thousands):
<TABLE>
<CAPTION>

                             2000    1999    1998
<S>                         <C>     <C>     <C>
Continuing operations -
  Current, state . . . . .  $  (9)  $ 472   $(397)

Discontinued operations -
  Current, state . . . . .      -    (472)    472
                            ------  ------  ------
Total expense (benefit). .  $  (9)  $   -   $  75
                            ======  ======  ======
</TABLE>

The provision for (benefit from) income taxes from continuing operations for the
years  ended December 31, 2000, 1999, and 1998 is less than the amounts computed
by  applying  the  statutory  federal  income tax rate of 35% to the loss before
income  taxes  from continuing operations due to the following items (dollars in
thousands):
<TABLE>
<CAPTION>

                                                   2000      1999     1998
<S>                                              <C>       <C>       <C>
Computed expected amount. . . . . . . . . . . .  $(1,234)  $(5,589)  $(433)
Amortization and write-down of goodwill . . . .    1,313     1,875     236
Other . . . . . . . . . . . . . . . . . . . . .        -         9      18
State income taxes, net of federal tax benefit.       (9)      (69)     75
Change in valuation allowance . . . . . . . . .      (79)    4,246    (293)
                                                 --------  --------  ------
  Income tax provision (benefit). . . . . . . .  $    (9)  $   472   $(397)
                                                 ========  ========  ======
</TABLE>

At  December  31,  2000  the  Company  has  net operating loss carryforwards for
federal income tax purposes of approximately $29 million to use to offset future
taxable  income.  These  net  operating  losses  will  expire  through  2020.

Certain  restrictions  under  the  Tax Reform Act of 1986, caused by a change in
ownership  resulting from sales of common stock, limit the annual utilization of
net  operating loss carryforwards.  The initial public offering of the Company's
common  stock  during  1996 resulted in such a change in ownership.  The Company
estimates  that  the  post-change  taxable  income  that  may be offset with the
pre-change net operating loss carryforward of approximately $4.5 million will be
limited  annually  to  approximately  $600,000.  The  annual  limitation  may be
increased for any built-in gains recognized within five years of the date of the
ownership  change.


                                      F-34
<PAGE>
Significant  components  of the Company's deferred tax assets and liabilities as
of  December  31,  2000  and  1999  are  as  follows  (dollars  in  thousands):
<TABLE>
<CAPTION>

                                                               2000       1999
<S>                                                          <C>        <C>
Deferred tax assets:
  Current:
    Allowance for doubtful accounts receivable. . . . . . .  $     79   $    150
                                                             ---------  ---------

  Noncurrent:
    Intangible asset amortization and valuation allowance .         -        155
    Differences in net book value of property and equipment        66        446
    Capital lease adjustment. . . . . . . . . . . . . . . .         -        298
    Interest and other accruals . . . . . . . . . . . . . .       795        523
    Unrealized loss on investments. . . . . . . . . . . . .         -      1,389
    Carryforward of net operating loss. . . . . . . . . . .    10,058      7,507
                                                             ---------  ---------
                                                               10,919     10,318
                                                             ---------  ---------
Total deferred tax assets . . . . . . . . . . . . . . . . .    10,998     10,468
Valuation allowance for deferred tax assets . . . . . . . .   (10,998)   (10,468)
                                                             ---------  ---------
Net deferred tax assets . . . . . . . . . . . . . . . . . .  $      -   $      -
                                                             =========  =========
</TABLE>

A  valuation  allowance  for  the entire balance of deferred tax assets has been
recorded because management believes it is more likely than not that such assets
will  not  be  realized.

13.     COMMITMENTS  AND  CONTINGENCIES

Rent  expense under operating leases for the years ended December 31, 2000, 1999
and  1998  was  $141,000,  $168,000 and $215,000, respectively.  At December 31,
2000,  future  minimum  rental  payments  on  lease  obligations  are as follows
(dollars  in  thousands):
<TABLE>
<CAPTION>

                               OPERATING
                                 LEASES
<S>                            <C>
Years ending December 31:
      2001. . . . . . . . . .  $       31
      2002. . . . . . . . . .          28
      2003. . . . . . . . . .          28
      2004. . . . . . . . . .          23
      2005. . . . . . . . . .          11
                               ----------
      Minimum rental payments  $      121
                               ==========
</TABLE>

The  Company  has  guaranteed  a facility lease between Actel and a third party.
The lease expires in June 2009 and total remaining noncancellable lease payments
were  $765,000 at December 31, 2000.  Actel was current on its lease payments as
of  December  31,  2000.  However,  on April 11, 2001 Actel filed for Chapter 11
bankruptcy  protection.


                                      F-35
<PAGE>
The  Company was notified by the FDIC of discrepancies between the amount of the
Company's notes payable pledged as collateral by a note holder and the amount of
notes  payable  recorded  by  the Company.  The FDIC originally indicated to the
Company  that an additional $1,125,000 is outstanding representing various notes
with  a  significant shareholder and creditor.  The FDIC notified the Company on
May  10,  2000,  that  the discrepancies total only $770,000.  Another party has
asserted  that  he  is  entitled  to $500,000 allegedly outstanding under a note
payable.  Management  believes  that  no funds were received by the Company with
respect  to  these  notes  and  that it has other defenses.  No assurance can be
given  that  the  Company's  defenses  are valid or that the Company will not be
liable  for  any part or all of the amounts allegedly due under these notes.  No
loss,  if  any,  has been recorded in the consolidated financial statements with
respect  to  this  matter.

On  April  26, 2000, PIC filed an action in state court in Travis County, Texas,
against  OAN Services, Inc. ("OAN") and Billing Concepts, Inc. ('BCI"), claiming
breach of contract and tortious interference by BCI in connection with a billing
and  related services agreement dated September 1, 1999 between PIC and OAN, and
an Account Purchase Agreement, dated November 18, 1999 between PIC and OAN.  PIC
alleged that BCI's conduct in transmitting notice to OAN claiming rights in call
records delivered to OAN by PIC was inaccurate and misleading, thus constituting
tortious  interference  by BCI.  PIC sought a declaration from the court that it
is  entitled to proceeds being held by OAN in the amount of between $650,000 and
$850,000  free  and clear of any claims of BCI and OAN as well as other damages.
On  June  5,  2000, OAN and BCI each filed an answer in response to PIC's claims
and  made  certain  other  pre-trial  motions.  On  July  5,  2000,  BCI filed a
counterclaim against PIC and ATN alleging breach of contract and certain related
claims  and  seeking damages in an unspecified amount.  On January 25, 2001, the
Company reached a settlement agreement with BCI and OAN.  Under this settlement:
(a) PIC and ATN are relieved from any further liability allegedly owed to BCI or
OAN, (b) PIC agreed to pay nominal consideration and to relinquish its claims to
funds  held  by OAN, (c) PIC and ATN released any potential claims that they had
against  BCI,  including  claims  ATN may have for the alleged failure by BCI to
assess  USF  contribution charges on certain traffic, as well as any claims that
ATN may have against BCI for its role in the excessive bad debt charges, and (d)
PIC  and  ATN  released  any  potential  claims  that  they  had  against  OAN.

The  Company's  wholly-owned  subsidiary,  PIC,  is  involved  in  an  adversary
proceeding  filed  in  connection  with  two  jointly  administered  Chapter  11
proceedings  in  the United States Bankruptcy Court for the Southern District of
Florida.  On  May  13,  1997,  a  joint  motion  of  the Chapter 11 Trustees and
Strategica  Capital  Corporation  ("Strategica")  was filed for an order to show
cause why certain individuals and entities, including PIC, should not be held in
civil  contempt of court; for relief under Rule 70 of the Federal Rules of Civil
Procedure  and  Rule  7070 of the Federal Rules of Bankruptcy Procedure; and for
the  entry  of  an  order  of  criminal referral for criminal conduct of certain
individuals  and  entities,  including  PIC.  The  proceeding does not specify a
dollar  amount  of  damages.  The  contempt  motion was denied by the Bankruptcy
Court  on November 4, 1998.  Strategica filed a motion for rehearing on November
16,  1998,  which  was  denied  by  the  Bankruptcy  Court  on December 2, 1998.
Strategica  filed a notice of appeal of the adverse ruling on December 11, 1998.
PIC  filed  a  motion  for attorneys' fees and costs on November 24, 1998, and a
hearing  was  conducted by the Bankruptcy Court on January 28, 1999 with respect
to  PIC's  motion.  Strategica's appeal and PIC's motion for attorneys' fees and
costs  are  both currently pending.  Strategica filed its brief in the appeal on
March  2,  1999;  ATN and PIC filed their reply briefs in May and June 1999; and
Strategica  filed its responses in August 1999.  The District Court affirmed the
Bankruptcy  Court's  ruling on March 8, 2000, but denied PIC's motion to dismiss
and  for  sanctions.  This  affirmation  of  the Bankruptcy Court's decision was
followed by an appeal to the Eleventh Circuit Court of Appeals.  On February 26,
2001,  the  Court  of  Appeals  affirmed  the  Bankruptcy  Court's  denial  of
Strategica's  contempt  motion.  Strategica  filed  a  petition for rehearing on
March  19,  2001.  No  assurance can be given as to the ultimate outcome of this
matter.  No  loss,  if  any,  has  been  recorded  in the consolidated financial
statements  with  respect  to  this  matter.


                                      F-36
<PAGE>
A  lawsuit was filed in Superior Court of the State of California on October 20,
1999  claiming  conspiracy  to defraud, fraud and deceit, and conversion against
several  defendants,  including  ATN,  in  connection  with an Internal Operator
Services  Agreement between the plaintiffs and defendant Paramount International
Telecommunications,  Inc.  ("Paramount").  The  Internal  Operator  Services
Agreement  sets  out  that  Paramount  will provide (among other things) calling
services  and  billing  and  collection  of  the  charges through local exchange
carriers, and Paramount would deduct agreed upon fees for its services and remit
the  balance to the plaintiffs.  Paramount allegedly contracted out operator and
billing  services  with  ATN  from May 1998 until present.  In addition to other
claims  against  Paramount,  the  plaintiffs  complain  that  Paramount  and ATN
conspired  to  falsify  call  charge  reports  being  sent  to the plaintiffs by
underreporting  the  amount  of  charges  billed to the end user and keeping the
monies  generated  therefrom,  thereby  damaging the plaintiffs for no less than
approximately  $280,000.  The  plaintiffs  also  seek  punitive  damages  in  an
unspecified amount.  ATN filed its response on January 4, 2000.  This action was
dismissed  on  February  1,  2001.

On December 19, 2000, ATN filed an action in Texas state court against Telephone
Service  Bureau,  LLC  ("TSB")  and  Network  Operator  Services,  Inc. ("NOS"),
claiming  breach  of  contract  by  TSB  in connection with an Operator Services
Agreement  between ATN and TSB.  Specifically, ATN claimed that TSB breached the
Operator  Service Agreement by refusing to pay ATN for accrued and unaccrued bad
debt  "true-ups",  which ATN estimates exceeds $2.9 million.  As a result of the
"bad  debt"  impact  on ATN's financial condition, ATN was forced to discontinue
business  in  late  1999, and PIC thereafter continued providing TSB access to a
switch  and related operator services.  Because of the known history of the call
traffic  at  issue,  PIC  requested  that  this  particular  traffic  be handled
elsewhere,  and  is  now  being processed by NOS.  ATN's application for writ of
attachment  seeks  attachment of advances made by PIC and NOS to TSB as a result
of  TSB  traffic now being processed by NOS (NOS was named in the suit solely to
bind  it  to  the  requested  writ of attachment.  ATN also requested injunctive
relief  restraining  and enjoining TSB from taking any actions which would cause
the call traffic to be re-routed or diverted and ordering PIC and NOS to deposit
that  portion  of  the PIC and NOS advances constituting TSB's gross margin into
the  registry  of  the court pending trial.  The state court entered a temporary
restraining  order  on  December  19,  2000 (effective through January 2, 2001),
directing  that  TSB  refrain  from re-routing any traffic away from PIC or NOS.
The  temporary  restraining  order  was later extended through January 16, 2001.

On  January 2, 2001, TSB filed a special appearance and removed the case to U.S.
District Court.  TSB simultaneously filed a motion to dismiss, claiming that the
case  should  be dismissed for lack of personal jurisdiction, or, alternatively,
improper venue.  It was not until the filing of TSB's motion to dismiss that ATN
became  aware  of related suits filed on November 8, 2000, in the Chancery Court
for  Knox  County,  Tennessee,  styled  Telephone  Service  Bureau  vs.  ATN
Communications,  Inc.  and  Priority  International  Communications,  Inc.  (the
subject  matter of which is also the Operator Services Agreement) and on January
2,  2001,  in  the  Chancery  Court  for  Knox  County,  Tennessee,  styled Call
Management Systems, Inc. vs. ATN Communications, Inc. and Priority International
Communications, Inc.  ATN has removed these cases to federal court in Tennessee.

TSB  also  filed  a motion with the U.S. District Court in Texas to dissolve the
temporary  restraining  order  on  January  2, 2001.  This District Court denied
TSB's  motion to dissolve on January 5, 2001, and ordered the injunction hearing
be  set  for January 16, 2001.  On January 9, 2001, ATN filed a motion to remand
the  matter  back to state court.  NOS simultaneously filed a motion to dismiss.
Responses  to TSB's motion to dismiss and NOS's January 9, 2001 motion have been
filed  by  ATN.  On January 13, 2001, the parties reached a standstill agreement
to  remain in effect pending a mediation to take place.  The courts in Texas and
Tennessee  have  stayed all proceedings until a date not more than fourteen days
after completion of the mediation.  PIC is currently in mediation regarding this
dispute.  No  assurance  can  be  given  at  this time as to the outcome of this
matter.


                                      F-37
<PAGE>
On  November 16, 1998 the Company entered into an Employment Agreement with Paul
C. Tunink, Chief Financial Officer.  The Employment Agreement had a term through
November  30, 1999 and renews automatically from year to year thereafter, unless
terminated  by  either  party,  and  provides  a  base  salary  of not less than
$128,000.  In  addition,  Mr. Tunink is eligible to participate in the Company's
bonus  plan  and  other  executive compensation plans.  The Employment Agreement
contains  a  provision  restricting competition with the Company for a period of
one year following termination of employment.  Mr. Tunink's Employment Agreement
provides  if  his  employment  is terminated by the Company for any reason other
than  cause,  Mr. Tunink will be entitled to receive severance at an annual rate
of  $128,000  for one year and continuation of health insurance coverage for one
year.

The  Company has divested certain of its businesses during 2000.  As a result of
such  divestitures,  there  may be lawsuits, claims or proceedings instituted or
asserted against the Company related to the period that the businesses were owed
by  the  Company.

14.     RELATED  PARTY  TRANSACTIONS

The  Company  conducts  a  significant amount of business with Berthel and other
affiliated  entities.  Berthel  provided  lease  and  other  financing services,
including  investment  banking,  to  the  Company.

In  December 1999, Berthel entered into a Standstill Agreement with the Company.
Under  the  Standstill  Agreement,  Berthel  indicated  its  intention to form a
creditors committee to represent the interests of Berthel and other creditors of
the  Company.  The Company agreed to provide the creditors committee with access
to  information  regarding  the  Company  and  its  business  and  to advise the
creditors  committee  in  advance  regarding  certain  significant  corporate
developments.  The  creditors  committee  may  also demand that the Company take
certain  actions  with  respect  to  the  Company's  assets  and  business.  The
creditors  committee  agreed  to forbear from taking actions to collect past due
debt  owed  by  the  Company  in  the  absence  of the unanimous approval of the
creditors  committee.  As  of February 28, 2001, the Company and Berthel are the
only  parties  to the Standstill Agreement and Berthel is the only member of the
creditors  committee.

In  January  2000,  the Company retained Berthel to assist the Company regarding
the  identification  and  investigation  of strategic alternatives that might be
available  to  the  Company.  The Company owed various fees to Berthel under the
Placement  Agreement  including  a  monthly  retainer  and  placement fees.  The
Company  paid  to  Berthel  total  fees of $536,000 during 2000.  If any further
strategic  transactions  are  completed,  the  Company will owe a success fee to
Berthel,  depending  on  the  price  of  the  strategic  transactions.

The  Company  borrowed  money during 2000 from MCCIC, a company owned by Berthel
and  another  significant  shareholder  of  the  Company  (see  Note  8).

The  Company  also  undertook the Debt Restructuring Plan in 2000 which included
restructuring  certain  debt and accrued interest with related parties (see Note
8).

On  July  1,  1994,  the  Company  entered  into  an  agreement  with a minority
shareholder to provide telecommunication services to hotels owned and managed by
Larken,  Inc.,  a  company  50%  owned  by  a minority shareholder.  Revenues of
$109,000,  $412,000  and  $464,000  were  generated  from such agreement for the
years  ended  December  31,  2000,  1999  and  1998, respectively.  Further, the
Company  had  call  processing  receivables  from  the hotels included under the
agreement  of  $0,  $55,000  and  $247,000  at December 31, 2000, 1999 and 1998,
respectively.  The  agreement  provided for a fixed payment of $30,000 per month
in  commissions  to  be  paid  to  the  minority shareholder. This agreement was
terminated  effective  May  1,  2000.


                                      F-38
<PAGE>
The  Company  has  also  paid  consulting  expenses  to  a  former member of the
Company's  Board  of  Directors and had loans with related parties (see Note 7).

In January 2000, the Company entered into a letter agreement with Pirinate which
provided  that the Company would pay Pirinate $15,000 a month in exchange for up
to  six  days  per  month  of personal services from Eugene I. Davis.  Under the
letter  agreement, Mr. Davis serves as Interim Chairman of the Board and Interim
Chief  Executive  Officer  of the Company.  The letter agreement's term is for a
minimum  of  three  months, and thereafter either party may terminate the letter
agreement,  with  or  without cause, effective upon 60 days written notice.  The
letter  agreement  also  provides that the Company, upon approval by Mr. Tunink,
the Company's Chief Financial Officer, will pay Mr. Davis' out-of-pocket, travel
and  other  major  expenses related to his services to the Company.  The parties
agreed in May 2000 that Mr. Davis would serve as Chairman of the Board and Chief
Executive  Officer  of  the  Company.

On  December 24, 2000, the Company signed a consulting services letter agreement
with Prentice Services LTD ("Prentice"), an entity controlled by Wayne Wright, a
member  of  the  Company's  Board of Directors.  The agreement provides that Mr.
Wright  will  serve  as President of PIC and will provide consulting services to
PIC,  as  directed  by the Company's Chief Executive Officer.  Prentice receives
$15,000  a month, plus out-of-pocket expenses, for these services.  Also, at the
sole  discretion  of  the  Company's  Board  of  Directors, Prentice may receive
additional success fees and bonuses.  Either party may terminate this agreement,
with  or  without  cause,  effective  upon six months prior written notice.  The
Company  paid  $15,000 under this agreement in 2000.  Mr. Wright owned 19.10% of
the  Company's  outstanding  common  stock  at  December  31,  2000.

A  summary of transactions with related parties for the years ended December 31,
2000,  1999  and  1998  is  as  follows  (dollars  in  thousands):
<TABLE>
<CAPTION>

                                                   2000    1999   1998
<S>                                               <C>     <C>     <C>
Consulting expense - Prentice. . . . . . . . . .  $   15  $    -  $   -
Consulting expense - former directors. . . . . .       -      58     74
Consulting expense - Pirinate. . . . . . . . . .     181       -      -
Interest expense on related party notes payable.   1,620   1,171    290
Interest expense on notes payable to Berthel . .     243     138    134
Interest expense on notes payable to MCCIC . . .      36       -      -
Commissions to minority shareholder. . . . . . .     180     360    360
Commissions and related fees to Berthel. . . . .       -     130    142
Investment banking and placement fees to Berthel     536       -      -
Lease payments to Berthel. . . . . . . . . . . .     840     507    840
</TABLE>


                                      F-39
<PAGE>
15.     PROFIT  SHARING  PLAN

The  Company  has  a  profit  sharing  plan under Section 401(k) of the Internal
Revenue  Code.  Employees  are  eligible  to  participate  in  the  plan  after
completing three months of service.  There were no contributions required and no
discretionary  contributions  made  to the plan for the years ended December 31,
2000,  1999  and  1998.

Effective  November  15,  2000,  the  Company  terminated  the  plan  due to low
participation  and  high  administrative  expenses.

16.     FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

The  fair  value  amounts disclosed below are based on estimates prepared by the
Company  utilizing  valuation  methods  appropriate  in  the  circumstances.
Accounting  principles generally accepted in the United States of America do not
require  disclosure  for  lease  contracts.  The  carrying  amount for financial
instruments  included  among cash, receivables, notes receivable, notes payable,
and other short-term payables approximates their fair value because of the short
maturity  of  those  instruments.  The estimated fair value of other significant
financial  instruments  are based principally on discounted future cash flows at
rates  commensurate  with  the  credit  and  interest rate risk involved and the
timing  of  when  the  instruments  were  entered  into.

The  estimated  fair  values  of  the  Company's  other  significant  financial
instruments at December 31, 2000 and 1999 are as follows (dollars in thousands):
<TABLE>
<CAPTION>

                             2000               1999
                           CARRYING    FAIR   CARRYING    FAIR
                            AMOUNT    VALUE    AMOUNT    VALUE
<S>                        <C>        <C>     <C>        <C>
Long-term note receivable  $       -  $    -  $   1,000  $1,000
Long-term debt. . . . . .      4,882       -      2,866   2,450
</TABLE>

17.     BUSINESS  SEGMENT  INFORMATION

Previously  the  Company had three reportable segments.  During 2000 the Company
sold  its  Incomex  segment  which  is reported in the financial statements as a
discontinued operation (see Note 5).  Also in February 2000, the Company entered
into  a rental agreement with Telemanager.net providing for the operation of MCC
Telemanager(TM)  by  Telemanager.net  in exchange for monthly rental payments to
the  Company.  The  MCC  Telemanager(TM) was the primary service provided by the
MTS  segment.  On  December 20, 2000, the Company sold certain assets which were
subject  to  the  rental  agreement  to  Telemanager.net.  As  a result of these
transactions,  the  MTS  segment  is  no  longer  significant.

Accordingly,  the  Company's  one  reportable  segment during 2000 was PIC.  The
Company  provides  long-distance  telecommunications  services  to  hotels  and
payphone  owners  in  the  United  States  through  the  PIC business unit.  The
services  have  included, but were not limited to, credit card billing services,
automated  collection  and  messaging delivery services, voice mail services and
telecommunications  consulting.  During  2000, PIC developed a revised operating
plan to stabilize the PIC business.  As a result of this revised operating plan,
PIC  became  a  reseller  of  call  processing  services and eliminated its live
operator  center.


                                      F-40
<PAGE>
The  accounting  policies  of  the  reportable  segments  are  the same as those
described  in  Note  1.  The  Company  evaluates the performance of its segments
based  on  income  (loss)  from  operations.  Summarized  financial  information
concerning  the Company's reportable segments, net of intercompany eliminations,
is  shown  in  the  following  table (dollars in thousands).  The "Other" column
includes  corporate  related  items  and  MTS  for  2000.
<TABLE>
<CAPTION>

                                         PIC       MTS      OTHER      TOTAL
<S>                                    <C>       <C>       <C>       <C>
2000:
Revenues. . . . . . . . . . . . . . .  $ 8,246   $     -   $   191   $  8,437
Loss from operations. . . . . . . . .   (3,846)        -    (3,427)    (7,273)
Total assets. . . . . . . . . . . . .      720         -       388      1,108
Depreciation and amortization expense      920         -        15        935
Capital expenditures. . . . . . . . .        -         -         -          -

1999:
Revenues. . . . . . . . . . . . . . .  $23,150   $ 4,313   $     -   $ 27,463
Loss from operations. . . . . . . . .   (6,418)   (1,642)   (4,704)   (12,764)
Total assets. . . . . . . . . . . . .    6,370     1,328     6,502     14,200
Depreciation and amortization expense    1,339       549         -      1,888
Capital expenditures. . . . . . . . .      561       110         -        671

1998:
Revenues. . . . . . . . . . . . . . .  $20,804   $ 5,263   $     -   $ 26,067
Income (loss) from operations . . . .    1,509      (793)     (323)       393
Total assets. . . . . . . . . . . . .   11,079     3,542     1,783     16,404
Depreciation and amortization expense      903       772         -      1,675
Capital expenditures. . . . . . . . .      275       357         -        632
</TABLE>

The  Company  operates  in  the  United  States.

18.     AT&T  COMMISSION  AGREEMENT

Under its agreement with AT&T, the Company received monthly commissions based on
the number of calls made, bonuses of up to $400,000 based on the number of calls
processed  during the year and monthly compliance incentive bonuses based on the
number of calls processed each month.  The agreement included provisions for the
refund  of the bonus payments should the Company terminate the agreement or fail
to  comply  with  the  agreement.  AT&T  was  responsible for determining if the
Company was in compliance with certain standards, as set forth in the agreement.
AT&T  reserved  a  number  of  grounds  to  terminate the agreement prior to its
expiration,  with  or  without  cause.

During  1998,  the  Company  and  AT&T agreed to terminate the agreement with an
effective  date  of  October  15,  1998.  The Company based this decision on the
declining  volume  and narrow margins of the AT&T business, and on the Company's
refocused  business  strategy.  AT&T  agreed  to  pay  certain hotel commissions
otherwise  payable  by  the  Company  and,  as  a result, the Company recorded a
one-time  gain  in  the  fourth  quarter  of  1998  of  $453,396.


                                      F-41
<PAGE>
19.      QUARTERLY  RESULTS  OF  OPERATIONS  (UNAUDITED)

The  following is a summary of the quarterly results of operations for the years
ended  December  31, 2000 and 1999 (dollars in thousands except per share data).
These quarterly results have been reclassified from those previously reported in
form  10-Q's filed with the Securities and Exchange Commission so the results of
operations  for Incomex that was sold effective June 30, 2000, are classified as
discontinued  operations  for  all  periods  presented.
<TABLE>
<CAPTION>

                                                       FIRST     SECOND     THIRD     FOURTH
                                                      QUARTER   QUARTER    QUARTER    QUARTER    TOTAL
<S>                                                  <C>        <C>       <C>        <C>        <C>
2000
---------------------------------------------------
Revenues. . . . . . . . . . . . . . . . . . . . . .  $  2,437   $  2,010  $  2,093   $  1,897   $ 8,437
Gross profit. . . . . . . . . . . . . . . . . . . .       804        152       542      1,414     2,912
Income (loss) from continuing operations. . . . . .    (1,092)     2,436    (1,407)    (3,454)   (3,517)
Income (loss) before extraordinary item . . . . . .    (2,206)     2,043    (1,407)    (3,454)   (5,024)
Net income (loss) . . . . . . . . . . . . . . . . .    (2,206)     2,043    (1,407)    (2,732)   (4,302)

Basic and diluted earnings (loss) per common share
  Income (loss) before extraordinary item . . . . .  $  (0.21)  $   0.19  $  (0.14)  $  (0.28)  $ (0.48)
  Net (income) loss . . . . . . . . . . . . . . . .     (0.21)      0.19     (0.14)     (0.22)    (0.41)
</TABLE>

The  second  quarter  includes a $2.6 million charge for impairment of assets, a
$490,000  charge  for  the  write-down  of the Company's Investment in the AcNet
entities, and a $7.0 million gain recorded in connection with the Company's Debt
Restructuring  Plan.  The  fourth  quarter  includes  a  $1.2 million charge for
impairment  of  property  and equipment and intangible assets, a $500,000 charge
for the write-down of the Company's investment in the AcNet entities, a $893,000
credit  for USF fees, an impairment charge of $1.6 million for the write-down of
the  Company's  investment  in  Actel,  and a $722,000 extraordinary gain on the
extinguishment  of  debt.

<TABLE>
<CAPTION>

                                                       FIRST     SECOND      THIRD     FOURTH
                                                      QUARTER    QUARTER    QUARTER    QUARTER     TOTAL
<S>                                                  <C>        <C>        <C>        <C>        <C>
1999
---------------------------------------------------
Revenues. . . . . . . . . . . . . . . . . . . . . .  $  7,847   $  6,249   $  6,333   $  7,034   $ 27,463
Gross profit (loss) . . . . . . . . . . . . . . . .     1,807      1,301      1,256     (2,897)     1,467
Loss from continuing operations . . . . . . . . . .      (511)    (1,351)    (1,234)   (13,345)   (16,441)
Net income (loss) . . . . . . . . . . . . . . . . .        84       (863)    (1,604)   (16,015)   (18,398)

Basic and diluted earnings (loss) per common share
  Net income (loss) . . . . . . . . . . . . . . . .  $      -   $  (0.09)  $  (0.16)  $  (1.53)  $  (1.79)
</TABLE>

The  fourth  quarter includes a $1.7 million charge for USF fees, a $3.3 million
charge for impairment of assets, a $3.7 million charge for the write-down of the
Company's  investment in the AcNet entities and $4.1 million of bad debt expense
in  excess of historical amounts primarily relating to collection issues for one
type  of  call  processing  service.

Per  share  information is calculated for each quarterly and annual period using
average  outstanding  shares for the period. Therefore, the sum of the quarterly
per  share  amounts  will  not  necessarily  equal  the annual per share amounts
presented.
                                    * * * * *

                                      F-42

<PAGE>
                                   SCHEDULE II

                       MURDOCK COMMUNICATIONS CORPORATION
                        VALUATION AND QUALIFYING ACCOUNTS
                    YEARS ENDED DECEMBER 31, 2000, 1999, 1998

<TABLE>
<CAPTION>

                                                Balance at   Net Charges                   Balance at
                                                 Beginning     to Costs                      End of
Description                                       of Year    and Expenses  Deductions (1)     Year
----------------------------------------------  -----------  ------------  --------------  -----------
<S>                                             <C>          <C>           <C>             <C>
Year ended December 31, 2000
  Allowance for doubtful accounts. . . . . . .  $     3,127            98           3,000  $       225

Year ended December 31, 1999
  Allowance for doubtful accounts. . . . . . .  $       654         7,789           5,316  $     3,127

Year ended December 31, 1998
  Allowance for doubtful accounts. . . . . . .  $       377         3,321           3,044  $       654

Note (1)  Uncollectible receivable written off
</TABLE>


                                      F-43