UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE ACT
      OF 1934.

For the quarterly period ended August 31, 2004.
                               ----------------

                                       OR

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF 1934.

For the transition period from _____________________ to ______________________.

                          Commission file number 0-4465

                            eLEC Communications Corp.
--------------------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

               New York                                       13-2511270
--------------------------------------------------------------------------------
    (State or Other Jurisdiction                            (I.R.S. Employer
    of Incorporation or Organization)                       Identification No.)

    75 South Broadway, Suite 302, White Plains, New York         10601
--------------------------------------------------------------------------------
    (Address of Principal Executive Offices)                   (Zip Code)

Issuer's Telephone Number, Including Area Code: 914-682-0214
                                                ------------

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

      Check  whether  the issuer (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements  for the past 90 days.  Yes |X| No
|_|.

      State the number of shares  outstanding of each of the issuer's classes of
common equity, as of the latest  practicable  date:  16,254,282 shares of Common
Stock, par value $.10 per share, as of September 30, 2004.

<PAGE>

                          PART 1. FINANCIAL INFORMATION
                          -----------------------------

Item 1. Financial Statements
------- --------------------

                   eLEC Communications Corp. and Subsidiaries
                      Condensed Consolidated Balance Sheet

<TABLE>
<CAPTION>
                                                                         August 31, 2004
                                                                         ---------------
                                                                           (Unaudited)
<S>                                                                        <C>
Assets
Current assets:
  Cash and cash equivalents                                                $    183,325
  Accounts receivable, net                                                    1,230,025
  Prepaid expenses and other current assets                                      65,061
                                                                           ------------
  Total current assets                                                        1,478,411

Property, plant and equipment, net                                              101,848

Other assets                                                                     49,980
                                                                           ------------
Total assets                                                               $  1,630,239
                                                                           ============

Liabilities and stockholders' equity deficiency
Current liabilities:
  Current maturities of capital lease obligations                          $     32,100
  Accounts payable and accrued expenses                                       2,176,214
  Taxes payable                                                                 528,944
  Due to related parties                                                         41,084
  Deferred revenue                                                              272,884
                                                                           ------------
Total current liabilities                                                     3,051,226
                                                                           ------------

Stockholders' equity deficiency:
  Common stock $.10 par value, 50,000,000 shares authorized,
    16,254,282 shares issued                                                  1,625,428
  Capital in excess of par value                                             25,624,234
  Deficit                                                                   (28,668,083)
  Accumulated other comprehensive loss, unrealized loss on securities            (2,566)
                                                                           ------------
    Total stockholders' equity deficiency                                    (1,420,987)
                                                                           ------------
Total liabilities and stockholders' equity deficiency                      $  1,630,239
                                                                           ============
</TABLE>

See notes to the condensed consolidated financial statements.


                                       2
<PAGE>

                   eLEC Communications Corp. and Subsidiaries
 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                        For the Nine Months Ended            For the Three Months Ended
                                                    Aug. 31, 2004      Aug. 31, 2003      Aug. 31, 2004      Aug. 31, 2003
                                                    -------------      -------------      -------------      -------------
<S>                                                  <C>                <C>                <C>                <C>
Revenues                                             $  6,207,988       $  3,776,334       $  2,438,064       $  1,275,889
                                                     ------------       ------------       ------------       ------------

Costs and expenses:
 Costs of services                                      2,955,924          1,986,726          1,159,223            649,597
 Selling, general and administrative                    3,610,693          3,792,201          1,670,626          1,053,647
 Depreciation and amortization                             12,112             80,850              4,301             17,207
                                                     ------------       ------------       ------------       ------------
               Total costs and expenses                 6,578,729          5,859,777          2,834,150          1,720,451
                                                     ------------       ------------       ------------       ------------

Loss from operations                                     (370,741)        (2,083,443)          (396,086)          (444,562)
                                                     ------------       ------------       ------------       ------------

Other income (expense):
Interest expense                                           (3,126)          (105,509)                --            (36,065)
Other income (loss)                                        28,153             88,063            (22,498)           (34,300)
Gain on sale of assets                                         --          3,511,297                 --          1,254,442
Gain on sale of investment securities and other
  investments                                                 770            121,687                 --             37,926
                                                     ------------       ------------       ------------       ------------
Total other income (expense)                               25,797          3,615,538            (22,498)         1,222,003
                                                     ------------       ------------       ------------       ------------

Income (loss) before bankruptcy reorganization
items and income tax benefit (expense)                   (344,944)         1,532,095           (418,584)           777,441
                                                     ------------       ------------       ------------       ------------

Reorganization items:
  Gain on settlement with creditors                       904,027                 --                 --                 --
  Professional fees                                      (161,000)           (49,000)                --            (49,000)
                                                     ------------       ------------       ------------       ------------
                                                          743,027            (49,000)                --            (49,000)
                                                     ------------       ------------       ------------       ------------

Income (loss) before income tax benefit
(expense)                                                 398,083          1,483,095           (418,584)           728,441

Income tax benefit (expense)                               47,937            (34,000)                --            (34,000)
                                                     ------------       ------------       ------------       ------------

Net income (loss)                                         446,020          1,449,095           (418,584)           694,441

Other comprehensive (loss) -
  unrealized (loss) on marketable securities               (2,566)                --               (270)                --
                                                     ------------       ------------       ------------       ------------

Comprehensive income (loss)                          $    443,454       $  1,449,095       ($   418,854)      $    694,441
                                                     ============       ============       ============       ============

Basic and diluted earnings (loss) per share          $       0.03       $       0.09       ($      0.03)      $       0.04
                                                     ============       ============       ============       ============

Weighted average number of common shares
outstanding

   Basic                                               16,254,282         15,633,829         16,254,282         15,684,369
                                                     ============       ============       ============       ============
   Diluted                                             16,652,398         15,664,231         16,254,282         15,733,552
                                                     ============       ============       ============       ============
</TABLE>

See notes to the condensed consolidated financial statements.


                                       3
<PAGE>

                   eLEC Communications Corp. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          For the Nine Months Ended
                                                                        Aug. 31, 2004   Aug. 31, 2003
                                                                        -------------   -------------
<S>                                                                       <C>             <C>
Net cash used in operating activities:                                    ($366,808)      ($1,099,236)
                                                                          ---------       -----------

Cash flows from investing activities:
  Purchase of property and equipment                                        (88,569)           (3,200)
  Proceeds from sale of investment securities and other investments             770           198,273
  Proceeds from the sale of property and equipment                               --            16,025
  Proceeds from note                                                             --           209,102
                                                                          ---------       -----------
Net cash (used in) provided by investing activities                         (87,799)          420,200
                                                                          ---------       -----------

Cash flows from financing activities:
   Proceeds from short-term note                                                 --           200,000
   Principal payments on pre-petition debt in bankruptcy proceedings        (23,830)               --
   Repayment of long-term debt                                               (7,260)          (55,026)
                                                                          ---------       -----------
   Net cash (used in) provided by financing activities                      (31,090)          144,974
                                                                          ---------       -----------

Decrease in cash and cash equivalents                                      (485,697)         (534,062)
Cash and cash equivalents at beginning of period                            669,022           938,528
                                                                          ---------       -----------
Cash and cash equivalents at the end of period                            $ 183,325       $   404,466
                                                                          =========       ===========
</TABLE>

See notes to the condensed consolidated financial statements.


                                       4
<PAGE>

                            eLEC COMMUNICATIONS CORP.
                            -------------------------

        Notes To Condensed Consolidated Financial Statements (Unaudited)
        ----------------------------------------------------------------

Note 1-Basis of Presentation
----------------------------

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and with the  instructions  to Form 10-QSB of Regulation
S-B.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements. In the opinion of management,  all adjustments (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included.  Operating  results for the  nine-month or  three-month  periods ended
August  31,  2004 are not  necessarily  indicative  of the  results  that may be
expected for the year ended November 30, 2004. For further information, refer to
the  consolidated  financial  statements and footnotes  thereto  included in our
Annual Report on Form 10-KSB for the year ended November 30, 2003.

Note 2-Major Customer
---------------------

During the nine and three months ended August 31, 2004 and 2003, no one customer
accounted for more than 10% of our revenue.

Note 3-Income Taxes
-------------------

At November 30, 2003, we had net operating loss carryforwards for Federal income
tax  purposes of  approximately  $19,000,000  expiring in the years 2004 through
2022. There is an annual limitation of approximately $187,000 on the utilization
of approximately  $1,300,000 of such net operating loss carryforwards  under the
provisions  of Internal  Revenue Code Section 382. As of November 30, 2003,  our
deferred  tax  asset  in the  amount  of  $6,700,000  was  reduced  to zero by a
valuation allowance.  The income tax benefit recorded for fiscal 2004 represents
adjustments to previously recorded accruals.

Note 4- Earnings (Loss) Per Common Share
----------------------------------------

Basic  earnings  (loss) per common share are  calculated  by dividing net income
(loss) by the weighted  average number of common shares  outstanding  during the
period.  Diluted earnings (loss) per share are calculated by dividing net income
by the sum of the weighted average number of common shares  outstanding plus all
additional  common  shares  that  would  have been  outstanding  if  potentially
dilutive  securities had been issued. A reconciliation of the shares used in the
computation  of our basic and diluted  earnings  (loss) per common share for the
nine and three months ended August 31, 2004 and 2003 is as follows:


                                       5
<PAGE>

                                                    Nine Months Ended
                                              Aug. 31, 2004   Aug. 31, 2003
                                              -------------   -------------
Weighted average common shares outstanding      16,254,282      15,633,829
Dilutive effect of securities                      398,116          30,402
                                                ----------      ----------
                                                16,652,398      15,664,231
                                                ==========      ==========

                                                   Three Months Ended
                                              Aug. 31, 2004   Aug. 31, 2003
                                              -------------   -------------
Weighted average common shares outstanding      16,254,282      15,684,369
Dilutive effect of securities                           --          49,183
                                                ----------      ----------
                                                16,254,282      15,733,552
                                                ==========      ==========

The  computation  of  diluted  earnings  (loss) per share for the nine and three
months  ended  August  31,  2004 and 2003  excluded  the  effect of the  assumed
exercise of approximately  1,500,000 and 2,500,000 outstanding stock options and
warrants for the nine and three months ended August 31, 2004, respectively,  and
approximately  1,750,000 outstanding stock options and warrants for the nine and
three months  ended  August 31, 2003 because the effect would be  anti-dilutive.
For the three months ended August 31, 2004, all of the options and warrants were
anti-dilutive.

Note 5-Subsidiary's Plan of Reorganization
------------------------------------------

On April 8, 2004, the United States  Bankruptcy Court for the Southern  District
of New York confirmed a Plan of Reorganization  (the "Plan") of our wholly-owned
subsidiary,  Telecarrier  Services,  Inc.  ("Telecarrier").  On July  29,  2002,
Telecarrier  had filed a voluntary  petition for relief under  Chapter 11 of the
Federal  Bankruptcy Code in the United States  Bankruptcy Court for the Southern
District of New York. The Plan authorized us to purchase the reorganized capital
stock of Telecarrier  for a purchase  price of $325,000.  Subsequent to April 8,
2004, we deposited $325,000 into a segregated  distribution account, which funds
were  distributed  by  July  22,  2004  in  accordance  with  the  Plan  in full
satisfaction  of  pre-petition  claims,  including an unsecured  line of credit,
certain post-petition claims, administrative claims and legal fees, amounting to
an aggregate of approximately $1,229,000 on April 8, 2004.

For the nine  months  ended  August  31,  2004,  Telecarrier  reported a gain of
$904,027 as a result of being judicially released from liabilities and claims as
follows:

Pre-petition claims:
  Unsecured line of credit                       $  150,000
  Trade payables and due to related party           618,481
  Other accrued expenses                            103,250
                                                 ----------
  Total pre-petition claims                         871,731
Post-petition payables and accrued expenses          68,124
Administrative claims and legal costs               289,172
                                                 ----------
Total claims                                      1,229,027
Plan proceeds                                       325,000
                                                 ----------
Gain on debt reduction                           $  904,027
                                                 ==========


                                       6
<PAGE>

Telecarrier  had an agreement,  effective  January 2, 2002, with Telco Services,
Inc.  ("Telco"),  a corporation owned by one of our former  shareholders,  under
which Telco provided Telecarrier with collection, sales and other services. As a
result of a court-stipulated  agreement between  Telecarrier and Telco,  entered
into on February 6, 2004, the amount owed Telco for such services was reduced by
approximately  $51,000.  Such  reduction  was included in the gain on settlement
with creditors for the nine months ended August 31, 2004. As of August 31, 2004,
all of Telco's  claims  related to the  Telecarrier  bankruptcy had been paid in
full,  including $65,000 in administrative  claims and approximately  $31,000 in
unsecured claims.  The President of Telco is also the President of Glad Holdings
(See Note 7).

Note 6-Risks and Uncertainties
------------------------------

We buy  substantially all of our  telecommunication  services from Regional Bell
Operating Companies ("RBOCs"),  and are, therefore,  highly dependent upon them.
We believe our  relationship  with the RBOCs from which we purchase  services is
satisfactory.  We also believe  there are other  suppliers of  telecommunication
services  in the  geographical  locations  in  which  we  conduct  business.  In
addition,  we are at risk to regulatory  agreements that govern the rates we are
to be charged.  In light of the  foregoing,  it is possible that the loss of our
relationship  with the primary RBOC that we buy services  from or a  significant
unfavorable  change in the regulatory  agreements that establish the cost of our
services  would have a severe  near-term  impact on our  ability to conduct  our
telecommunications business.

Future  results  of  operations  involve a number  of risks  and  uncertainties.
Factors  that could  affect  future  operating  results and cash flows and cause
actual results to vary materially from historical  results include,  but are not
limited to:

      -     Our  business  strategy  with  respect  to  bundled  local  and long
            distance services may not succeed.

      -     Failure  to  manage,  or  difficulties  in  managing,   our  growth,
            operations or  restructurings,  including  attracting  and retaining
            qualified  personnel and opening up new  territories for our service
            with favorable gross margins.

      -     Dependence  on  the   availability,   pricing  or  functionality  of
            incumbent local telephone companies' networks, as they relate to the
            unbundled network element platform or the resale of such services.

      -     Our  operations  are currently  using cash, and our cash position is
            deteriorating.  We may run  out of cash  and be  unable  to  conduct
            business.

      -     Increased price competition in local or long distance service.

      -     Failure or interruption in our network or information systems.

      -     Changes in government policy, regulation or enforcement. The FCC has
            issued  interim rules that,  after March 2005  adversely  affect the
            pricing of network  elements  and  bundles  thereof.  Such rules may
            limit our ability to pursue our current "customer first" strategy of
            acquiring  a base  of  customers  before  acquiring  and  installing
            network  assets.   Such


                                       7
<PAGE>

            change may force us to accelerate the  development of our Voice over
            Internet  Protocol  ("VoIP") network before our operations are ready
            to handle a potentially large transition of our customer base.

      -     Failure of our  collection  management  system  and credit  controls
            efforts for customers.

      -     Our  inability to adapt to  technological  change or implement  VoIP
            service.

      -     Competition in the telecommunications industry.

      -     Our inability to manage customer attrition or bad debt expense.

      -     Adverse change in our relationship with third party carriers.

      -     Failure or bankruptcy  of other  telecommunications  companies  upon
            which we rely for services or revenues.

      -     Our inability to secure financing.

Note 7-Asset Sale
-----------------

On September 3, 2002, we entered into an agreement with Essex  Acquisition Corp.
("EAC"), a wholly-owned  subsidiary of BiznessOnline.com,  Inc. ("Biz"), to sell
substantially  all the assets  (amounting to $1,102,103 at November 30, 2002) of
our former wholly-owned  subsidiary,  Essex  Communications Inc. ("Essex"),  for
five dollars plus the assumption of certain  liabilities of Essex  (amounting to
$10,081,382 at November 30, 2002),  including all obligations due and payable to
Essex's largest vendor, Verizon Services Corp. ("Verizon").  EAC entered into an
agreement  with Verizon  that  provided a payment  schedule for the  liabilities
assumed from Essex and Verizon granted EAC a discount on the assumed liabilities
provided  EAC  adheres  to the payout  schedule.  EAC also paid us  $270,000  to
reimburse us for amounts paid by us to Essex's former lender, Textron Financial,
formerly  known as RFC Capital  Corporation.  The sale to EAC closed on December
31, 2002. As the  creditors of Essex did not consent to the  assignment of their
claims,  Essex has remained liable for substantially all the obligations assumed
in the sale  until  such  time as they are  paid.  The June 30,  2002  unaudited
financial  statements  of Biz  indicated  that  Biz had a  stockholders'  equity
deficiency of  approximately  $20,500,000  and had negative  working  capital of
approximately  $3,500,000.  The most recent independent  auditor's report of Biz
expressed  significant doubt about Biz's ability to continue as a going concern.
These factors  indicated there was significant  uncertainty as to the ability of
Biz and its subsidiaries' to repay the obligations described above. Accordingly,
we did not record any gain related to the  assumption by Biz of the  liabilities
of Essex until Essex was released from the assumed obligations.  During the nine
and  three-month  periods  ended August 31,  2003,  EAC settled  liabilities  of
approximately $3,511,000 and $1,254,000, respectively, and accordingly, gain was
recorded during such periods for such amounts.

On September  11, 2003,  we sold all the  outstanding  capital stock of Essex to
Glad Holdings,  LLC ("Glad  Holdings"),  a New Jersey limited  liability company
owned by one of our former shareholders, for an aggregate purchase price of $100
and a general  release  from Glad  Holdings  with respect to any and all matters
arising prior to September  11, 2003.  Based on all  available  information  and
consultation with counsel, following such sale we concluded that it was unlikely


                                       8
<PAGE>

that any creditor of Essex would be able to hold us responsible for any debts or
liabilities of Essex. As a result,  on a consolidated  basis, we believe we have
been  released  of all the  liabilities  related  to Essex,  which  amounted  to
approximately  $7,314,000 on September 11, 2003, and accordingly,  recorded such
amount as gain in the fourth quarter of fiscal 2003.

The  following  unaudited  pro forma  summary  presents  consolidated  financial
information of our operations for the nine- and three-month periods ended August
31,  2004 and  2003,  as if the  sale of  Essex's  assets  had  occurred  at the
beginning  of each  period  presented.  The pro forma  amounts  include  certain
adjustments  that  eliminate  all  the  operations  of  Essex  for  the  periods
presented.  The pro forma  information  does not necessarily  reflect the actual
results  that  would have  occurred  had the sale  taken  place for the  periods
presented,  nor is it  necessarily  indicative  of  the  future  results  of the
operations of the remaining company:

                                                  For the Nine Months Ended
                                                  -------------------------
                                               Aug. 31, 2004     Aug. 31, 2003
                                               -------------     -------------
Revenues                                        $ 6,207,988       $ 2,883,138
                                                -----------       -----------

Net income (loss)                               $   446,020       ($1,757,858)
                                                -----------       -----------

Basic and dilutive income (loss) per share      $      0.03       ($     0.11)
                                                ===========       ===========

                                                 For the Three Months Ended
                                                 --------------------------
                                               Aug. 31, 2004     Aug. 31, 2003
                                               -------------     -------------
Revenues                                        $ 2,438,064       $ 1,275,889
                                                -----------       -----------

Net loss                                        ($  418,584)      ($  535,638)
                                                -----------       -----------

Basic and dilutive loss per share               ($     0.03)      ($     0.03)
                                                ===========       ===========

Note 8- Stock-Based Compensation Plans
--------------------------------------

We issue  stock  options to our  employees  and  outside  directors  pursuant to
stockholder-approved  stock  option  programs.  We account  for our  stock-based
compensation  plans under the intrinsic value method of accounting as defined by
Accounting  Principles  Board  Opinion No. 25,  Accounting  for Stock  Issued to
Employees,  and related  interpretations.  No stock-based employee  compensation
cost was  reflected  in net income  (loss) for the nine and three  months  ended
August 31,  2004 and 2003,  as all  options  granted  under  these  plans had an
exercise price equal to the fair market value of the underlying  common stock on
the date of the grant.  For pro forma  disclosures,  the estimated fair value of
the options was amortized over the vesting  periods,  which range from immediate
vesting to five years. The following table  illustrates the affect on net income
(loss) per share if we had  accounted  for our stock  option and stock  purchase
plans under the fair value  method of  accounting  under  Statement of Financial
Accounting   Standards   ("SFAS")   No.   123,   "Accounting   for   Stock-Based
Compensation",   as  amended  by  SFAS  No.148,   "Accounting   for  Stock-Based
Compensation - Transition and Disclosure":


                                       9
<PAGE>

<TABLE>
<CAPTION>
                                         For the Nine Months Ended        For the Three Months Ended
                                       Aug. 31, 2004   Aug. 31, 2003    Aug. 31, 2004   Aug. 31, 2003
                                       -------------   -------------    -------------   -------------
<S>                                      <C>            <C>               <C>            <C>
Net income (loss) as reported            $  446,020     $ 1,449,095       ($ 418,584)    $  694,441
Deduct: Total stock-based employee
    compensation expense determined
    under fair value-based method
    for all awards, net of related
    tax effects                            (168,724)       (227,386)         (56,593)       (77,573)
                                         ----------     -----------       ----------     ----------
Pro forma net income (loss)              $  277,296     $ 1,221,709       ($ 475,177)    $  616,868
                                         ----------     -----------       ----------     ----------
Earnings (loss) per share
  Basic, as reported                     $      .03     $       .09       ($     .03)    $      .04
  Basic, pro forma                       $      .02     $       .08       ($     .03)    $      .04

  Diluted, as reported                   $      .03     $       .09       ($     .03)    $      .04
  Diluted, pro forma                     $      .02     $       .08       ($     .03)    $      .03
</TABLE>

Note 9 Related Party Transactions
---------------------------------

During  the nine and three  months  ended  August 31,  2004 and 2003,  we billed
Cordia Corporation ("Cordia"), a related party, $306,804 and $8,773 and $127,087
and $38,153,  respectively,  for rent, telecommunications services,  commissions
and other  costs,  and Cordia  billed us $531,352  and $142,856 and $234,691 and
$133,178,  respectively,  for telecommunications services and other costs. As of
August 31, 2004, we owed Cordia $41,084.  Cordia is controlled by entities owned
by one of our shareholders and former employees and members of his family.


                                       10
<PAGE>

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

      The statements  contained in this Report that are not historical facts are
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995 with respect to the financial  condition,  results
of operations and business of the Company, which can be identified by the use of
forward-looking   terminology,   such  as  "estimates,"   "projects,"   "plans,"
"believes,"  "expects,"  "anticipates,"  "intends,"  or the negative  thereof or
other variations  thereon,  or by discussions of strategy that involve risks and
uncertainties.  Management  wishes to caution the reader of the  forward-looking
statements,  that such statements,  which are contained in this Report,  reflect
our current  beliefs with respect to future events and involve known and unknown
risks, uncertainties and other factors, including, but not limited to, economic,
competitive,  regulatory,  technological,  key  employee,  and general  business
factors affecting our operations,  markets, growth, services, products, licenses
and  other  factors  discussed  in our other  filings  with the  Securities  and
Exchange   Commission,   and  that  these   statements  are  only  estimates  or
predictions.  No assurances  can be given  regarding the  achievement  of future
results, as actual results may differ materially as a result of risks facing us,
and actual events may differ from the assumptions underlying the statements that
have been made regarding  anticipated events.  Factors that may cause our actual
results, performance or achievements,  or industry results, to differ materially
from those  contemplated by such  forward-looking  statements  include,  without
limitation:  (1) the availability of additional funds to successfully pursue our
business plan; (2) the impact of changes the Federal  Communications  Commission
or State Public Service Commissions may make to existing  telecommunication laws
and regulations;  (3) the cooperation of incumbent  carriers in implementing the
unbundled  network  elements  platform  required by the  Federal  Communications
Commission;  (4)  our  ability  to  maintain,  attract  and  integrate  internal
management,  technical  information and management  information systems; (5) our
ability to market  our  services  to  current  and new  customers  and  generate
customer demand for our product and services in the geographical  areas in which
we  operate;  (6) our  success  in  gaining  regulatory  approval  to access new
markets;  (7) our ability to  negotiate  and maintain  suitable  interconnection
agreements with the incumbent carriers;  (8) the availability and maintenance of
suitable vendor  relationships,  in a timely manner, at reasonable cost; (9) the
intensity of competition;  and (10) general economic conditions. All written and
oral forward  looking  statements  made in connection  with this Report that are
attributable  to us or persons  acting on our behalf are expressly  qualified in
their entirety by these  cautionary  statements.  Given the  uncertainties  that
surround such statements, prospective investors are cautioned not to place undue
reliance on such forward-looking statements.

Overview

eLEC Communications Corp. is a  telecommunications  service holding company with
primary  operations in two wholly-owned  subsidiaries,  that focus on developing
integrated  telephone service in the competitive local exchange carrier ("CLEC")
industry.  We offer small businesses and residential consumers an integrated set
of  telecommunications  products and services,  including local exchange,  local
access, domestic and international long distance telephone,  and a full suite of
local features and calling plans. In the states in which we operate,  we compete
with the incumbent  local carrier and a variety of other  competitive  carriers,
including companies that were originally long distance service providers or data
service  providers.  We find that approximately 90% of the local telephone lines
in the  states in which we are  operating  are  served by  Verizon,  AT&T  Corp.
("AT&T")  or MCI Inc.  ("MCI").  Our  strategy  is to offer  the same  telephone
products  and services  offered by Verizon,  AT&T and MCI at discounts of 10% to
25%


                                       11
<PAGE>

off their  published  rates. We lease lines from Verizon in order to provide our
local telephone service. We also strive to provide friendly and helpful customer
service that exceeds the service provided by these large competitors.

We plan to increase our  telecommunications  offerings and decrease our reliance
on Verizon by providing VoIP network  services.  On July 23, 2004, we formed Vox
Communications Corp. ("Vox"), a wholly-owned subsidiary,  to develop and provide
VoIP  service.  We  believe  the sales,  provisioning,  billing  and  collection
processes and procedures  that we have in place for our CLEC  operations give us
strong positioning to be a scalable and sizable VoIP provider. Our internal VoIP
system  supports eight  different  hardware  Internet access devices and Session
Initiation  Protocol ("SIP") phones,  in addition to most of the "software only"
types of devices that reside on a personal computer.

We are  utilizing  two  basic  strategies  in  rolling  out  our  VoIP  product.
Initially,  we have begun providing VoIP services through a wholesaler.  We plan
to pursue a variety of wholesale  arrangements with several  wholesalers so that
we can differentiate  our service plans in our target markets.  By starting with
this methodology, we are able to test, market, provision and bill a VoIP product
before our own VoIP  technology  is fully  developed.  The VoIP solution we have
chosen for our internal  platform was developed over the past four months and is
now  being  tested.   Our  software   platform  has  an   open-source   baseline
functionality  that uses Linux as the operating  system. We plan to use multiple
backbone  providers  and to  continue  to build our  footprint  as we see stable
providers  entering  the  industry.  We may also  consider  rolling  out our own
network in those  locations  in which we have  concentrations  of customers in a
"smart-build"  approach.  As a CLEC and as a VoIP  provider,  we take a deferred
build approach to network assets.  We believe it is a safer business practice to
first build and  establish a customer  base in a specific  location  and then to
build a network to serve the established customer base.

Our CLEC  subsidiaries  lease lines from Verizon,  using the  unbundled  network
elements  platform  ("UNE-P")  service  offering.  UNE-P  allows us to lease the
network elements we need, such as the local line and the port on a local switch,
so that we can provide local dial tone service to our customers.  We can provide
virtually all of the same additional  voice services  provided by any ILEC, such
as three-way calling,  call waiting,  call forwarding and caller ID. We sell our
services  at a fee  that  is at  least  10% and as much  as 25%  less  than  the
published rate charged by the ILEC. We also offer a bundled package of local and
regional calling minutes with popular voice service features.

We believe UNE-P is the preferable  platform under which any CLEC should operate
while it is growing and building a customer  base.  It is a useful  platform for
servicing a customer base until such base has reached a quantity large enough to
justify  moving the customers to an owned  network.  We believe  UNE-P's  future
viability  is  somewhat  in  jeopardy  due to  recent  regulatory  developments.
Initially,  the anticipated impact of the regulatory  developments appears to be
an increase in our costs that may  decrease our gross  margins by  approximately
five to ten percent.  Because we know we will be receiving a price increase from
Verizon  within the next five  months,  we raised the selling  price of our most
popular  bundled  service plan by five dollars a month for new  customers  only,
beginning October 1, 2004. This price increase has not yet had an adverse impact
on the ability of our outside  telemarketing  firms to obtain new customers.  We
will continue to use UNE-P for as long as we can generate  margins that are high
enough to provide  cash flow to cover our general and  administrative  expenses.
Additionally, we believe it is important for us to establish a relationship with
telephone  services users so that we can


                                       12
<PAGE>

eventually  offer them our VoIP  service,  which should allow us to keep them as
customers without using the UNE-P service offering.

Regulatory Developments

Our  ability  to  continue  achieving  our  current  level of gross  margins  is
dependent upon the pricing structure of the network elements that we obtain from
the ILECs.  The  requirement  that the ILECs provide us with  unbundled  network
elements at the current rates is the subject of regulatory and judicial  actions
that may affect their  availability and pricing.  On September 13, 2004, the FCC
published interim requirements establishing the details of a 12-month transition
plan governing unbundled access by CLECs to the network elements of ILECs. These
requirements were issued to avoid disruption in the telecommunications  industry
for an interim  period of up to one year,  while the FCC is  writing  new rules.
Among other  things,  they  require the ILECs to  continue  providing  unbundled
access to switching,  enterprise market loops and dedicated  transport under the
same rates, terms and conditions that applied under  interconnection  agreements
with CLECs that were in effect on June 15, 2004. The rates, terms and conditions
are to remain in place  until the earlier of the  issuance  of final  unbundling
rules by the FCC or six months after  September  13, 2004,  except to the extent
that  they  have  been  replaced  by  (1) a  voluntarily  negotiated  commercial
agreement between the ILEC and CLEC; (2) an intervening commission order; or (3)
a state  public  utility  commission  order that raises the rates to the CLEC to
purchase network elements.

If the FCC has not  issued  new  rules  within  six  months,  then  for the next
six-month period an ILEC will only be required to lease the switching element to
a CLEC in combination  with shared  transport and loops (as a component of a UNE
platform)  at a rate  equal to the higher of (1) the rate  existing  at June 15,
2004 plus one dollar, or (2) the rate set by a state public utility  commission,
if any,  between  June 16,  2004 and March 13,  2005,  for this  combination  of
elements,  plus one  dollar.  These rates that are  available  during the second
six-month  period will only apply to the embedded  customer base.  They will not
apply to new customers.

We cannot predict the outcome of the new rules written by the FCC or the outcome
of various  state  commissions  that are examining  the pricing  structures.  As
previously noted, this regulatory  environment has led us to increase our prices
to new  customers  in an effort to maintain our gross  margins  after we receive
price  increases from Verizon,  early in 2005. We continue to sell and provision
new lines on the UNE-P service  offering,  where we anticipate the gross margins
will remain at  approximately  50% for the remainder of the year. We have always
viewed the UNE-P service offering as a stepping-stone to a packet-based network.
We believe  our lack of network  assets,  our size and our  ability to write the
appropriate  software  programs for a SIP server and customer  support web sites
will enable us to survive  the  transition  from UNE-P to VoIP,  and to become a
stable VoIP provider.

To mitigate the impact of any regulatory  developments on our larger  customers,
we now have the  ability  to  provide  VoIP  services  to carry  local  and long
distance  voice traffic for our larger  accounts  that have high speed  Internet
access.  These  services  do not rely on  Verizon  to  originate,  transport  or
terminate a telephone call.  Instead of routing a call through a Verizon switch,
these calls  travel in data packets over a high speed  Internet  connection.  We
have a signed contract with a wholesale  carrier to terminate any voice Internet
traffic for the customers to whom we sell VoIP services.  We are looking to sign
agreements  with other VoIP  wholesale


                                       13
<PAGE>

carriers,  and believe we will also have VoIP customers on our own VoIP platform
before the end of our fourth quarter.

Plan of Operation

Our primary  methods of obtaining  new  customer  accounts  will  continue to be
through  telemarketing  and outside sales agents. We believe these are effective
low-cost  methods of building  new  accounts,  and our past  history  with these
customer acquisition methods is helpful in planning and budgeting our operations
on a going forward basis. While telemarketing  generally leads to a higher level
of initial customer churn and bad debts than most other selling  strategies,  we
believe  these  excesses are  acceptable  due to the low  acquisition  cost of a
telemarketed  line.  It is not unusual for 20% or more of new lines  acquired in
any month to leave our  service  within  two months of the sale.  Large  winback
offers from Verizon  contribute to the high rate of initial churn.  However,  we
plan to  continue  telemarketing  UNE-P  lines,  as they  currently  generate an
acceptable  gross profit  percentage.  While we believe we have enough cash flow
from  operations  for  continued  limited  growth,  our  cash  balances  are not
sufficient  to  generate  the growth we desire or the growth  that our  internal
operating  systems  are  capable  of  handling.  We are  therefore  pursuing  an
asset-based  lending  agreement or an equity placement to generate the financing
needed for more rapid growth.

In the third  quarter of fiscal 2004, we made  approximately  $80,000 of capital
expenditures  related to the development of our VoIP platform.  We do not expect
to purchase any significant assets or make any significant capital  expenditures
in the next 12 months, although our VoIP initiative will require the purchase of
certain equipment that we plan to purchase with our cash on hand. We believe our
back-office  systems are  adequately  developed  and  functioning  well,  and we
anticipate only minor  expenditures to further  automate such systems during the
next 12 months.

We  believe  our VoIP  solution  will give us the  opportunity  to lower our per
minute costs for calls that our customers  complete  using our VoIP service.  In
addition to having our own VoIP  technology,  we plan to provide  VoIP  services
through several wholesale carriers,  so that we are not dependent on one network
and can perform least-cost routing.

Unlike the CLEC  landline  services we provide,  where it is customary to charge
for  features,  or to bundle  features in a plan  package so we can increase the
selling price of a bundled plan, most features in the VoIP platform come without
an  additional  charges to the customer,  and we incur no additional  per minute
usage cost for these features.  The free features include voice mail, caller ID,
call waiting,  call forwarding,  call block and call return.  Our customers will
also be able to view  calls and bills  online,  and play  back  their  voicemail
messages by simply clicking a link in their Internet  browser.  Our goal will be
to move as much control as is  reasonable to the end user,  thereby  providing a
valuable tool to our customer, while reducing our costs associated with customer
service.

Nine Months Ended August 31, 2004 vs. Nine Months Ended August 31, 2003
-----------------------------------------------------------------------

Our  revenues  for the  nine-month  period  ended  August 31, 2004  increased by
approximately  $2,432,000,  or approximately 64%, to approximately $6,208,000 as
compared to approximately  $3,776,000  reported for the nine-month  period ended
August 31, 2003.  Included in our revenue


                                       14
<PAGE>

for the nine-month period ended August 31, 2003 were approximately $2,883,000 in
aggregate  sales  reported  by  New  Rochelle   Telephone  Corp.   ("NRTC")  and
Telecarrier  and  approximately   $893,000  in  sales  reported  by  our  former
wholly-owned subsidiary,  Essex (See Note 7). Aggregate revenue reported by NRTC
and  Telecarrier  for the  nine-month  period ended August 31, 2004 increased by
approximately  $3,325,000,  or approximately  115%, over the year-ago period. We
anticipate  revenues for NRTC and  Telecarrier  will continue to increase in the
fourth quarter of fiscal 2004, as we work to add new customers. While the number
of telephone  lines we serve and our customer  base has continued to grow in the
fourth quarter of 2004, we believe additional growth will be directly related to
the amount of cash we have  available for new line  acquisition  costs.  See the
discussion on liquidity below.

Our gross profit for the  nine-month  period ended August 31, 2004  increased by
approximately   $1,462,000  to  approximately   $3,252,000  from   approximately
$1,790,000  reported in the  nine-month  period ended  August 31, 2003,  and our
gross profit percentage  increased to approximately  52% from  approximately 47%
reported in the prior fiscal period.  The increase in our gross profit and gross
profit  percentage  reflects our sales  strategy to sell in only those states in
which we believe we will be able to achieve a margin of over 40%.  The  increase
in gross profit and gross profit  percentage  was  attributable  to lower buying
prices  from  ILECs in the  states in which we  operated  during  the first nine
months of fiscal 2004,  compared to the states in which we were operating during
the first nine months of 2003.  NRTC and  Telecarrier are operating in states in
which  we  can  purchase   unbundled   network   elements  at  prices  that  are
significantly  lower than the prices  charged in some of the states in which our
former wholly-owned  subsidiary,  Essex, was operating.  Our selling strategy in
fiscal  2004 is to  continue  to sell in states  that offer the  opportunity  to
achieve  higher  margins.  However,  due to a recent court ruling,  as discussed
above,  we may not be  able to  continue  to  achieve  these  margin  levels  in
subsequent years, as Verizon is petitioning regulatory bodies to raise the UNE-P
rates it charges us beginning in 2005,  and the FCC has agreed to rate increases
with the interim  requirements  it published on September 13, 2004. We also plan
to sell VoIP services  nationwide in fiscal 2005.  The margins for such services
will be  dependent  on the  cost  structures  we  negotiate  with  carriers  for
wholesale  services or to  terminate  calls from our  customers'  SIP phone to a
traditional  landline  phone.  Any calls from one SIP phone to another SIP phone
would not generate any usage cost to us.

Selling, general and administrative expenses ("SG&A") decreased by approximately
$181,000,  or approximately  5%, to approximately  $3,611,000 for the nine-month
period ended  August 31, 2004 from  approximately  $3,792,000  reported in prior
year  fiscal  period.  Approximately  $650,000  of this  decrease in expense was
directly related to the sale of our Essex operations and approximately  $124,000
was  related to a decrease  in  insurance  expense  resulting  partially  from a
settlement with our insurance  carrier on the amount of audit premiums that were
recorded in the prior  fiscal year and  partially  from a reduction  in property
insurance  premiums as a result of the sale of our headquarters  building in the
fourth quarter of fiscal 2003. These expense reductions were partially offset by
an increase of approximately  $328,000 in new line acquisition costs as our line
count increased by approximately 120% over the year-ago period and approximately
$140,000 in bad debt expense.  Additionally,  we curtailed our in-house  billing
and  telemarketing  efforts in the third  quarter of fiscal 2003 and  outsourced
these functions to third-party vendors. By outsourcing these functions,  we only
pay  for  telephone  lines  billed  and  telemarketed  lines  accepted,  thereby
eliminating  staffing and other  associated  overhead  cost.  For the nine-month
period ended August 31, 2004, our SG&A costs averaged approximately $400,000 per
month, of which approximately $130,000 represented new line acquisition costs.


                                       15
<PAGE>

Depreciation  expense  decreased  by  approximately  $69,000,  to  approximately
$12,000  for  the  nine-month  period  ended  August  31,  2004 as  compared  to
approximately  $81,000 for the  nine-month  period ended  August 31,  2003.  The
decline in  depreciation  expense was primarily  attributable to the sale of our
headquarters  building  in the fourth  quarter of fiscal 2003 and to the sale of
certain assets to EAC in the first quarter of fiscal 2003.

Interest expense decreased by approximately  $103,000,  to approximately  $3,000
for the  nine-month  period ended  August 31, 2004 as compared to  approximately
$106,000  for the  nine-month  period  ended  August 31,  2003.  The decrease in
interest expense was partially  attributable to the repayment of a mortgage note
in conjunction with the sale of our headquarters  building in the fourth quarter
of fiscal 2003.

Other income (loss) for the  nine-month  period ended August 31, 2004 was income
of approximately  $28,000 as compared to income of approximately $88,000 for the
nine-month  period ended August 31, 2003. The income for the  nine-month  period
ended  August  31,  2004,   resulted   primarily  from   commission   income  of
approximately  $70,000,  partially offset by charges for environmental  costs of
approximately  $45,000 directly related to the sale of our headquarters building
in the fourth quarter of fiscal 2003. The income for the nine-month period ended
August  31,  2003,  resulted  primarily  from  rental and  commission  income of
approximately $219,000,  partially offset by the write-down of certain assets of
approximately  $131,000,  including  the  write-down  of  certain  fixed  assets
associated with the curtailment of our  telemarketing and billing efforts in the
third quarter of fiscal 2003.

For the nine-month period ended August 31, 2004,  Telecarrier reported income of
approximately  $904,000 from debt  reduction in  bankruptcy.  No such income was
reported  for  the   nine-month   period  ended  August  31,  2003.   Bankruptcy
reorganization  costs for the nine-month  periods ended August 31, 2004 and 2003
of  approximately  $161,000 and $49,000,  respectively,  represented  legal cost
associated with the TSI bankruptcy (See Note 5).


Gain on the sale of assets for the  nine-month  period ended August 31, 2003 was
approximately  $3,511,000  (See Note 7). We had no such sale for the  nine-month
period ended August 31, 2004.

For the nine-month  period ended August 31, 2004, gain on the sale of investment
securities and other investments of approximately $1,000, resulted from the sale
of Cordia  shares as  compared  to the gain of  approximately  $122,000  for the
nine-month  period ended August 31, 2003, which resulted from the sale of shares
of Cordia and Talk America Holdings Inc. ("Talk").

For the  nine-month  period ended August 31, 2004, we recorded a net tax benefit
of  approximately  $48,000,  which  resulted  from the reduction of an estimated
accrual of corporate  tax expense for fiscal  2003.  For the  nine-month  period
ended  August  31,  2003,  we  recorded  estimated   corporate  tax  expense  of
approximately $34,000.

Three Months Ended August 31, 2004 vs. Three Months Ended August 31, 2003
-------------------------------------------------------------------------

Our revenue for the  three-month  period  ended  August 31,  2004  increased  by
approximately  $1,162,000,  or approximately 91%, to approximately $2,438,000 as
compared to approximately  $1,276,000  reported for the three-month period ended
August 31, 2003. No sales were reported


                                       16
<PAGE>

by our former wholly-owned  subsidiary,  Essex, for the three-month period ended
August 31, 2003 (See Note 7). We anticipate  revenues of NRTC and Telecarrier to
continue to increase in the fourth quarter of fiscal 2004, as we work to add new
customers.  While the number of telephone  lines we serve and our customer  base
has continued to grow in the fourth quarter of 2004,  additional  growth will be
directly related to the cash we have available for new line  acquisition  costs.
See the discussion on liquidity below.

Our gross profit for the  three-month  period ended August 31, 2004 increased by
approximately  $653,000 to approximately  $1,279,000 from approximately $626,000
reported in the  three-month  period ended August 31, 2003, and our gross profit
percentage increased to approximately 52% from approximately 49% reported in the
prior fiscal  period.  The  increase in our gross profit was a direct  result of
increased  sales due to  continued  growth in the number of  telephone  lines we
serve. The gross profit  percentage  reflects our sales strategy to sell in only
those  states in which we  believe  we will be able to  achieve a margin of over
40%.  The  increase in gross  profit  percentage  is  primarily  due to a higher
percentage of our customer base using our long distance telephone service.

SG&A increased by approximately $617,000, or approximately 59%, to approximately
$1,671,000 for the three-month  period ended August 31, 2004 from  approximately
$1,054,000  reported  in the prior  year  fiscal  period.  Of this  increase  in
expense,   approximately   $300,000  was  in  new  line  acquisition  costs  and
approximately  $155,000 in bad debt  expense.  Additionally,  we  curtailed  our
in-house billing and  telemarketing  efforts in the third quarter of fiscal 2003
and outsourced  these  functions to third-party  vendors.  By outsourcing  these
functions,  we only  pay for  telephone  lines  billed  and  telemarketed  lines
accepted,  thereby eliminating  staffing and other associated overhead cost. For
the  three-month   period  ended  August  31,  2004,  our  SG&A  costs  averaged
approximately  $546,000 per month, of which,  approximately $207,000 represented
new line acquisition costs.

Depreciation expense decreased by approximately $13,000, to approximately $4,000
for the  three-month  period ended August 31, 2004 as compared to  approximately
$17,000  for the  three-month  period  ended  August 31,  2003.  The  decline in
depreciation  expense was primarily  attributable  the sale of our  headquarters
building in the fourth quarter of fiscal 2003.

Interest expense decreased by approximately  $36,000 for the three-month  period
ended  August  31,  2004.  The  decrease  in  interest   expense  was  primarily
attributable to the repayment of a mortgage note in conjunction with the sale of
our headquarters building in the fourth quarter of fiscal 2003.

Other income (loss) for the three-month  period ended August 31, 2004 was a loss
of approximately  $22,000 as compared to a loss of approximately $34,000 for the
three-month  period ended August 31, 2003. The loss for the  three-month  period
ended August 31,2004, resulted primarily from commission income of approximately
$22,000, partially offset by charges for environmental costs directly related to
the sale of our  headquarters  building in the fourth  quarter of fiscal 2003 of
approximately  $45,000.  The loss for the  three-month  period  ended August 31,
2003,  resulted primarily from the write-down of certain assets of approximately
$89,000,  including the write-down of certain fixed assets  associated  with the
curtailment  of our  telemarketing  and billing  efforts in the third quarter of
fiscal 2003,  partially offset by rental and commission  income of approximately
$55,000.


                                       17
<PAGE>

Gain on the sale of assets for the three-month  period ended August 31, 2003 was
approximately  $1,254,000  (See Note 7). We had no such sale for the three-month
period ended August 31, 2004.

For the three-month period ended August 31, 2003, gain on the sale of investment
securities and other  investments of  approximately  $38,000,  resulted from the
sale of Talk shares. We had no such sale for the three-month period ended August
31, 2004.

Bankruptcy reorganization costs for the three-month period ended August 31, 2003
of  approximately  $49,000  represented  legal  cost  associated  with  the  TSI
bankruptcy (See Note 5). No such amount was recorded in the  three-month  period
ended August 31, 2004.

Liquidity and Capital Resources
-------------------------------

At August 31, 2004, we had cash and cash equivalents of  approximately  $183,000
and negative working capital of approximately $1,573,000.

Net cash used in  operating  activities  aggregated  approximately  $367,000 and
$1,099,000  in  the   nine-month   periods  ended  August  31,  2004  and  2003,
respectively.  The  principal  use of cash in fiscal  2004 was the net change in
operating assets and liabilities and the pay-off of bankruptcy liabilities. This
use  of  cash  was  partially  offset  by the  net  income  for  the  period  of
approximately  $446,000.  The  principal  use of cash in fiscal 2003 was the net
income  for the  period  of  approximately  $1,449,000,  which  was  offset by a
non-cash  item,  the net effect of the gain of  approximately  $3,511,000 on the
transfer of assets of our former Essex subsidiary (See Note 7).

Net cash used in investing activities  aggregated  approximately  $88,000 in the
nine-month  period  ended  August 31, 2004 as  compared to net cash  provided by
investing activities that aggregated  approximately  $420,000 for the nine-month
period ended August 31, 2003.  The  principal use of cash in fiscal 2004 was the
purchase of equipment and software. The principal sources of cash in fiscal 2003
were the proceeds from the sale of investment  securities and other  investments
of  approximately   $198,000,  the  proceeds  from  the  sale  of  equipment  of
approximately $16,000 and the proceeds of a note of approximately $209,000.

Net cash used in financing activities  aggregated  approximately  $31,000 in the
nine-month  period  ended  August 31, 2004 as  compared to net cash  provided by
financing  activities that aggregated  approximately  $145,000 in the nine-month
period ended August 31, 2003. In fiscal 2004, the principal use of cash resulted
from the repayment of debt of  approximately  $31,000.  In fiscal 2003, net cash
provided by financing  activities resulted from the proceeds of short-term notes
of  approximately  $200,000,  offset  by the  repayment  of  long-term  debt  of
approximately $55,000.

For the nine-month period ended August 31, 2004, we spent approximately  $89,000
on capital expenditures,  primarily for software related to our VoIP initiative.
We believe our  back-office  systems are  adequately  developed and  functioning
well, and we anticipate only minor expenditures to further automate such systems
during the next 12 months. We are continuing to pursue the utilization of a VoIP
network to carry our local voice  traffic.  This  technology is used to transmit
voice  conversations over a data network using the Internet Protocol.  Such data
network may be the Internet or may be a managed network.  We do not plan to have
substantial  equipment  purchases to carry out this initiative,  although as new
equipment is available, we may consider certain purchases.


                                       18
<PAGE>

We have stock purchase warrants that entitle us to purchase approximately 95,000
shares of Talk. The warrant  exercise price is $6.30 per share and, at September
30, 2004, our warrants were not  in-the-money,  as Talk common stock was trading
at approximately $5.23 per share at such date.

The  report  of the  independent  auditors  on  our  2003  financial  statements
indicates  there is  substantial  doubt about our ability to continue as a going
concern.  The auditors noted a deficit in working capital and continuing  losses
from operations.  We are continuously working to improve our financial condition
and we are now operating  our business  with fixed costs that are  substantially
lower than our fixed overhead  during the previous three years.  As discussed in
Note 7, on April 8, 2004,  the  bankruptcy  court  approved  our purchase of the
reorganized  Telecarrier  for a total purchase price of $325,000.  This purchase
and  reorganization  eliminated  approximately  $1,229,000  in  liabilities  and
administrative claims that were carried on our consolidated balance sheet.

During  the  third  fiscal  quarter,  we  were  able  to  spend  an  average  of
approximately  $207,000 a month on customer acquisition costs. During the months
of August and September 2004, we billed our customers  approximately  $1 million
each month.  With gross margins of  approximately  50%, and a monthly average of
SG&A costs exclusive of customer acquisition costs of approximately $339,000, we
will not be able to maintain customer acquisition spending at its current level.
Our customer  acquisition spending in the third fiscal quarter exceeded our cash
flow generated from operations. However, in our business model, the value of our
company is significantly  enhanced by adding and retaining new customers as soon
as possible,  and we would like to continue to add as many new  customers as our
financial  resources  permit.  We are currently  evaluating term sheets for debt
financing,  equity  financing  and a  combination  of both in order to have more
funds to accelerate our growth. We anticipate that with such financing,  we will
be able to continue to accelerate  our growth and also better manage and finance
our transition  into a VoIP provider.  Our inability to secure such financing or
our  inability to carry out this plan may result in a rapid  curtailment  of our
new customer  acquisitions and a shut down of certain third-party  telemarketing
centers that are currently providing us service (See Note 6).

Item 3. Controls and Procedures
------- -----------------------

            Disclosure  Controls  and  Procedures.  Our  management,   with  the
participation  of our  chief  executive  officer/chief  financial  officer,  has
evaluated the  effectiveness of our disclosure  controls and procedures (as such
term is defined in Rules 13a-15(e) and 15d-15(e)  under the Securities  Exchange
Act of 1934,  as  amended  (the  "Exchange  Act"))  as of the end of the  period
covered  by  this  report.  Based  on  such  evaluation,   our  chief  executive
officer/chief  financial  officer  has  concluded  that,  as of the  end of such
period,  our  disclosure  controls and  procedures  are  effective in recording,
processing,  summarizing and reporting, on a timely basis,  information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act.

            Internal Control Over Financial  Reporting.  There have not been any
changes in the Company's internal control over financial reporting (as such term
is defined in Rules  13a-15(f) and 15d-15(f)  under the Exchange Act) during the
third quarter of 2004 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.


                                       19
<PAGE>

                            eLEC COMMUNICATIONS CORP.
                            -------------------------
                            PART II-OTHER INFORMATION
                            -------------------------

Item 1.     Legal Proceedings
-------     -----------------

            None

Item 2.     Changes in Securities and Purchases of Equity Securities
-------     --------------------------------------------------------

            None

Item 3.     Defaults Upon Senior Securities
-------     -------------------------------

            None

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

            None

Item 5.     Other Information
-------     -----------------

            None

Item 6.     Exhibits and Reports on Form 8-K
-------     --------------------------------

            (a) Exhibits.

                  31.1  Certification  of our Chief Executive  Officer and Chief
                        Financial Officer,  Paul H. Riss,  Pursuant to 18 U.S.C.
                        1350 (Section 302 of the Sarbanes-Oxley Act of 2002)

                  32.1  Certification  of our Chief Executive  Officer and Chief
                        Financial Officer,  Paul H. Riss,  Pursuant to 18 U.S.C.
                        1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

            (b) Reports on Form 8-K

                  On July 1, 2004, we filed a Current Report on Form 8-K related
      to the Company's  press release of such date which reported the results of
      the Company's second quarter and six month fiscal 2004 financial results.


                                       20
<PAGE>

Signatures
----------

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                                            eLEC Communications Corp.


  October 15, 2004                             By: /s/ Paul H. Riss
---------------------                              ----------------
Date                                           Paul H. Riss
                                               Chief Executive Officer
                                               (Principal Financial and
                                               Accounting Officer)


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