SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10QSB

(Mark One)

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

                For the quarterly period ended December 31, 1997

                                       OR

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

                  For the transition period from ____________ to __________


                         Commission File Number 1-13764 


                        ELECTRONICS COMMUNICATIONS CORP. 
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)



          Delaware                                         11-2649088
--------------------------------------------------------------------------------
(State or other jurisdiction of                        (I.R.S. Employer 
incorporation or organization)                         Identification Number) 


         425 Broad Hollow Road
           Melville, New York                                  11747
----------------------------------------                    ----------
(Address of principal executive offices)                    (Zip Code)


Registrant's telephone number, including area code:  (516) 501-0466
 
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.    Yes [ X ]    No [   ].

         The number of shares of the registrant's  common stock ($.60 par value)
outstanding as of February 13, 1998 was 4,215,549 shares (see Note 1).


<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES

                                      INDEX


        PART 1.     FINANCIAL INFORMATION (UNAUDITED)

        Item 1.     Consolidated Financial Statements

                    Consolidated  Balance Sheets December  31, 1997 (unaudited),
                    March 31, 1997 (unaudited) and December 31, 1996

                    Consolidated Statements of Operations for the three
                    and nine months ended December 31, 1997 (unaudited)
                    and 1996 (unaudited)

                    Consolidated  (unaudited) Statements of  Cash  Flows for the
                    nine months ended December 31, 1997 and 1996

                    Consolidated  (unaudited) Statement of Changes in
                    Stockholders' Equity for the nine months ended
                    December 31, 1997

                    Notes to Consolidated Condensed Financial Statements        


        Item 2.     Management's Discussion and Analysis  
                                          

        PART II.    OTHER INFORMATION                                           

                    Signature page                                              


<PAGE>
<TABLE>
<CAPTION>
                    ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                               CONSOLIDATED BALANCE SHEETS

                                          ASSETS

                                                                           DECEMBER 31,            MARCH 31,            DECEMBER 31,
                                                                               1997                  1997                  1996
                                                                           ------------          ------------          ------------
                                                                            (UNAUDITED)          (UNAUDITED)
<S>                                                                        <C>                   <C>                   <C>         
CURRENT ASSETS
  Cash ...........................................................         $ 1,639,739           $     48,620          $    179,188
  Accounts Receivable
    (Net of $15,132 Allowance for Doubtful
     Accounts at December 31, 1997, $504,000
     at March 31, 1997 and $574,910 at
     December 31, 1996.) .........................................             504,405                685,709               676,797
  Inventories ....................................................             170,122                256,698               187,953
  Loan Receivable ................................................             114,560                114,560               114,560
  Prepaid Expenses ...............................................              80,665                  6,158                12,162
                                                                           ------------          ------------          ------------
               TOTAL CURRENT ASSETS ..............................           2,509,491              1,111,745             1,170,660
                                                                           ------------          ------------          ------------

PROPERTY AND EQUIPMENT
  Property and Equipment .........................................           2,858,175              2,794,870             2,754,910
  Accumulated Depreciation .......................................          (1,201,469)              (778,502)             (634,314)
                                                                           ------------          ------------          ------------
         NET PROPERTY AND EQUIPMENT ..............................           1,656,706             2,016,368             2,120,596
                                                                           ------------          ------------          ------------
OTHER ASSETS
  PCS Licenses ...................................................          22,179,120             20,423,459            19,809,324
  Marketing Service Contract .....................................             496,233              1,027,911             1,205,137
  Loan Origination Fees ..........................................                  --                289,876               808,287
  Paging Carrier Agreement .......................................             919,569                962,835               980,022
  Deferred Private Placements Costs ..............................                  --                347,971               237,243
  Debt Issue Cost ................................................           1,424,000                     --                    --
  Security Deposits and Other Assets .............................             194,221                190,404               226,997
  Deferred Registration Costs ....................................              75,342                 84,176                84,176
                                                                           ------------          ------------          ------------
                 TOTAL OTHER ASSETS ..............................          25,288,485             23,326,632            23,351,186
                                                                           ------------          ------------          ------------
                       TOTAL ASSETS ..............................         $29,454,682           $ 26,454,745          $ 26,642,442
                                                                           ============          ============          ============
</TABLE>
                See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                           DECEMBER 31,            MARCH 31,            DECEMBER 31,
                                                                               1997                  1997                  1996
                                                                           ------------          ------------          ------------
                                                                            (UNAUDITED)          (UNAUDITED)
<S>                                                                        <C>                   <C>                   <C>         
CURRENT LIABILITIES
  Accounts Payable and accrued expenses...........................         $  1,321,898          $  2,998,395          $  2,532,343
  Notes Payable - Other ..........................................              667,899               941,949             1,081,538
  Current Portion of Bank Note ...................................                   --                95,000                95,000
  Current Portion of Obligations Under  
    Capital Leases ...............................................              356,766               234,885               234,885
  Current Portion of Long Term Debt ..............................               15,140                 8,793                 8,793
  Private Placement Advance ......................................                   --             1,628,254               500,000
  Accrued Interest FCC Notes ......................................             957,861               607,429               493,401
                                                                           ------------          ------------          ------------
          TOTAL CURRENT LIABILITIES ..............................            3,319,564             6,514,705             4,945,960
                                                                           ------------          ------------          ------------
LONG TERM LIABILITIES
  Accrued Interest FCC Notes .....................................              957,861
  Notes Payable to Stockholders ..................................                9,043                92,215               181,677
  Notes Payable to FCC............................................           16,963,365            16,482,516            16,348,771
  Long Term Debt .................................................               31,137                41,879                43,971
  Obligations under Capital Leases ...............................              429,551               682,377               745,639
  8% Cumulative Convertible Debentures ...........................            1,707,232                    --                    --
                                                                           ------------          ------------          ------------
TOTAL LONG TERM LIABILITIES ......................................           20,098,189            17,298,987            17,320,058
                                                                           ------------          ------------          ------------
Minority Interest ................................................              454,787               424,542               415,474

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Preferred Stock, par value $.01 per share, 8,000,000 authorized,
     4,000,000 Series B Non-Voting Convertible Shares issued and
     outstanding at March 31, 1997 and December 31 1996,
     respectively ................................................                   --                40,000                40,000
  Preferred Stock, no par value, 45 authorized Series C
     Non-voting Convertible 30 Shares issued and outstanding
     at December 31, 1997.........................................                   --                    --                    --
  Common Stock, par value $.60 per share, 40,000,000 authorized,
     issued and outstanding, 4,215,549 at December 31, 1997 and
     1,015,765 at March 31, 1997 and December 31, 1996 (Note 1) ..            2,529,331               609,460               609,460
  Additional Paid-In Capital .....................................           21,466,891            18,295,820            18,295,820
  Retained (Deficit) .............................................          (16,799,080)          (10,723,068)           (8,978,629)
  Discount on Common Stock available to Series C Preferred
     Shareholders ................................................           (1,615,000)                   --
  Subscription Receivable ........................................                   --            (6,000,000)           (6,000,000)
  Notes Receivable arising from Common Stock Purchase
  Warrants Sold ..................................................                   --                (5,701)               (5,701)
                                                                           ------------          ------------          ------------
         TOTAL STOCKHOLDERS' EQUITY ..............................            5,582,142             2,216,511             3,960,950
                                                                           ------------          ------------          ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................         $ 29,454,682          $ 26,454,745          $ 26,642,442
                                                                           ============          ============          ============
</TABLE>
                See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                               NINE MONTHS ENDED
                                                                  DECEMBER 31,
                                                          --------------------------
                                                             1997            1996
                                                          -----------    -----------
<S>                                                       <C>            <C>        
REVENUES
  Paging & Two Way Radio ..............................   $ 1,745,386    $   984,851
  Commissions .........................................       422,428      2,114,646
  Electronics .........................................         9,614      1,994,414
                                                          -----------    -----------
                        TOTAL SALES ...................     2,177,428      5,093,911
                                                          -----------    -----------
COST OF SALES
  Paging & Two Way Radio ..............................     1,087,399        445,808
  Commissions .........................................       275,562      1,961,928
  Electronics .........................................       389,275      2,067,782
                                                          -----------    -----------
                TOTAL COST OF SALES ...................     1,752,236      4,475,518
                                                          -----------    -----------
                       GROSS INCOME ...................       425,192        618,393
                                                          -----------    -----------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
  Selling .............................................     1,380,842      1,957,925
  General and Administrative ..........................     3,195,278      4,509,212
                                                          -----------    -----------
                    TOTAL SELLING, GENERAL AND 
                      ADMINISTRATIVE EXPENSES .........     4,576,120      6,467,137
                                                          -----------    -----------
  Interest Expense ....................................     2,497,499        165,098
  Interest Income .....................................         3,514             --

LOSS BEFORE MINORITY INTEREST, EXTRAORDINARY INCOME
AND INCOME TAXES ......................................    (6,644,913)    (6,013,842)
                                                          -----------    ----------- 
 Minority Interest in Gain (Loss)
   of Consolidated Subsidiaries .......................       (30,245)        55,264
                                                          -----------    -----------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY INCOME......    (6,675,158)    (5,958,578)
  Income Taxes ........................................            --             --
                                                          -----------    -----------
NET LOSS BEFORE EXTRAORDINARY INCOME...................    (6,675,158)    (5,958,578)
  Extraordinary Income ................................       599,146             --
                                                          -----------    -----------
  Net Loss                                                $(6,076,012)   $(5,958,578)
                                                          ===========    ===========

INCOME (LOSS) PER COMMON SHARE:
  Before Extraordinary Income .........................         (3.81)        (12.50)
                                                          -----------    -----------
  Extraordinary Income ................................           .34             --
                                                          ===========    ===========
  (Loss) per Common Share .............................   $     (3.47)   $    (12.50)
                                                          -----------    -----------
AVERAGE COMMON SHARES OUTSTANDING .....................     1,753,457        476,880
                                                          ===========    ===========
</TABLE>

                See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                    ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                       (UNAUDITED)

                                                               THREE MONTHS ENDED
                                                                  DECEMBER 31,
                                                          --------------------------
                                                              1997           1996
                                                          -----------    -----------
<S>                                                       <C>            <C>        
REVENUES
  Paging & Two Way Radio ..............................   $   592,813    $   353,461
  Commissions .........................................            --        307,394
  Electronics .........................................                      303,140
                                                          -----------    -----------
                        TOTAL SALES ...................       592,813        963,995
                                                          -----------    -----------
COST OF SALES
  Paging & Two Way Radio ..............................       351,726         95,258
  Commissions .........................................        19,831        782,015
  Electronics .........................................            --        177,493
                                                          -----------    -----------
                TOTAL COST OF SALES ...................       371,557      1,054,766
                                                          -----------    -----------
                     GROSS INCOME (LOSS) ..............       221,256        (90,771)
                                                          -----------    -----------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
  Selling .............................................       425,890        952,588
  General and Administrative ..........................       848,940      1,849,977
                                                          -----------    -----------
                     TOTAL SELLING, GENERAL AND 
                       ADMINISTRATIVE EXPENSES.........     1,274,830      2,802,565
                                                          -----------    -----------
INTEREST EXPENSE ......................................       883,955         74,396

 LOSS BEFORE MINORITY INTEREST, EXTRAORDINARY INCOME
 AND INCOME TAXES .....................................    (1,937,529)    (2,967,732)

 Minority Interest in Income (Loss)
   of Consolidated Subsidiaries .......................       (15,084)        40,010
                                                          -----------    -----------

LOSS BEFORE INCOME TAXES AND EXTRAORDINARY INCOME......    (1,952,613)    (2,927,722)
                                                          -----------    -----------
  Income Taxes ........................................            --             --
                                                          -----------    -----------
NET LOSS BEFORE EXTRAORDINARY INCOME...................   $(1,952,613)   $(2,927,722)
                                                          ===========    ===========
  Extraordinary Income ................................       599,146             --
                                                          -----------    -----------
  Net Loss ............................................   $(1,353,467)   $(2,927,722)
                                                          ===========    ===========
INCOME (LOSS) PER COMMON SHARE:
  Before Extraordinary Income .........................   $      (.63)   $     (6.14)
                                                          ===========    ===========
  Extraordinary Income ................................   $       .19             --
                                                          ===========    ===========
  Loss per Common Share ...............................   $      (.44)   $     (6.14)
                                                          ===========    ===========

AVERAGE COMMON SHARES OUTSTANDING .....................     3,107,380        476,880
                                                          ===========    ===========
</TABLE>
                See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                     ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        (UNAUDITED)

                                                                NINE MONTHS ENDED
                                                                   DECEMBER 31,
                                                           -------------------------- 
                                                               1997          1996
                                                           -----------    ----------- 
<S>                                                        <C>            <C>         
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss .............................................   $(6,076,012)   $(5,958,578)
  Adjustments to Reconcile Net Loss to
  Net Cash Used By Operations:
   Issue of Common Stock for Marketing Agreement .......            --        187,500
   Issuance of Common Stock for Consulting .............       131,500             --
   Issuance of Common Stock for Services ...............       327,640             --
   Legal Fees Financed with Stockholder N/P ............        80,000             --
   Warrants Issued for Interest Expense ................        59,000             --
   Accrued Interest FCC Note ...........................       480,849             --
  Depreciation and Amortization ........................       738,049      2,437,028
  Provision for Doubtful Amount ........................            --        493,923
  Non-cash Interest Expense.............................     2,264,143
  Amortization of Service Contract .....................       531,678
  Minority Interest in Loss (Income)....................        30,245        (55,264)
  Changes in:
  Accounts Receivable ..................................       181,304       (169,026)
  Inventories ..........................................        86,576        290,916
  Prepayments ..........................................       (74,507)        58,763
  Accounts Payable .....................................    (1,676,497)       389,509
  Accrued Interest .....................................     1,308,293         14,000
  Security Deposits and Other...........................        (7,189)       (74,895)
Accrued Expenses and Taxes Payable .....................                      164,726
                                                           -----------    ----------- 
    TOTAL ADJUSTMENTS ..................................     4,461,084      3,737,180
                                                           ===========    =========== 
NET CASH  USED  IN
OPERATING ACTIVITIES ...................................    (1,614,928)    (2,221,398)
                                                           ===========    ===========

</TABLE>

                See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                     ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        (UNAUDITED)

                                                                 NINE MONTHS ENDED
                                                                    DECEMBER 31,
                                                           -------------------------- 
                                                               1997          1996
                                                           -----------    ----------- 
<S>                                                        <C>            <C>         
CASH FLOWS FROM INVESTING ACTIVITIES
Unrestriction of Cash ..................................    $       --    $ 1,100,000
  Paging Carrier Agreements ............................        43,266        725,580
  PCS License ..........................................    (1,755,661)    (1,632,620)
  Additions to Property and Equipment ..................       (63,305)      (639,501)
  Payment for purchase of Threshold Communications, Inc. 
    net of cash acquired ...............................                     (158,511)
  Other Assets .........................................            --         60,882
  Deferred License Costs ...............................            --        (42,122)
                                                           -----------    ----------- 
NET CASH USED IN INVESTING ACTIVITIES ..................    (1,775,700)      (586,292)
                                                           ===========    =========== 

CASH FLOWS FROM FINANCING
ACTIVITIES
Notes Receivable Arising From 
Common Stock Purchase Warrants .........................            --         53,300
 Loan Receivable .......................................            --        556,000
  Stockholder Loan Receivable ..........................            --             --
  Purchase Warrants ....................................            --             --
  Deferred Private Placement Costs .....................            --        126,901
  Payment for Deferred Debenture Costs .................      (325,000)            --
  Payment for Deferred Registration Costs ..............            --        (84,176)
  Net Proceeds (Payments) of Shareholder Loans .........       189,188        (45,571)
  Proceeds of Other Loans ..............................            --        569,538
  Private Placement Advance ............................            --        500,000
  Payments of Bank Loans ...............................       (95,000)    (1,065,000)
  Proceeds from Debentures..............................     2,399,139      2,234,376
  Payments of Other Loans ..............................      (774,050)        23,000 
  Proceeds from sale of
    10% one year convertible notes .....................       500,000             --
  Principal Payments of Capital Lease Obligations ......      (130,945)      (114,507)
  Sale of Common Stock .................................       627,810        181,976
  Proceeds from sale of Series C Preferred Stock........     2,595,000             --
  Payments of Long Term Debt ...........................        (4,395)        (3,288)
                                                           -----------    ----------- 
NET CASH PROVIDED BY
FINANCING ACTIVITIES ...................................     4,981,747      2,932,549
                                                           ===========    ===========

NET INCREASE (DECREASE) IN CASH ........................     1,591,119        124,859
                                                           ===========    ===========
CASH, BEGINNING OF PERIOD...............................        48,620         54,329
                                                           -----------    ----------- 

CASH, END OF PERIOD.....................................   $ 1,639,739    $   179,188
                                                           ===========    ===========
</TABLE>

                See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                     ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        (UNAUDITED)

                                                                 NINE MONTHS ENDED
                                                                    DECEMBER 31,
                                                           -------------------------- 
                                                               1997          1996
                                                           -----------    ----------- 
<S>                                                        <C>            <C>         


SUPPLEMENTAL DISCLOSURE FOR CASH FLOWS
 CASH PAID DURING THE PERIOD FOR:
  Interest .............................................   $  262,217     $   182,298
  Taxes ................................................           --              --
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
  Property Acquired Under Capital Lease ................           --       1,002,573
  Common Stock Issued for Payment of Loan Payable ......      352,360
  Exchange of Common Stock for Convertible Debt.........    1,908,093
  Recission of Preferred Stock .........................    6,000,000              --
  Exchange of Convertible Debt for Common Stock ........    2,600,000              --
  Retirement of Warrants and Notes Receivable ..........        5,701              --
  EITF D-60 Convertible Debt Valuation (Note 5H) .......      977,000              --
  SFAS No. 123 Deferred Expense for Warrants Issued
    (Note 5H) ... ......................................      447,000              --
  Discount on Common Stock available to Series C
    Preferred Shareholders
    Under EITF D-60.....................................    1,615,000              --
  Reclassification of Unamortized Debt Issue Cost 
    Associated with 8% Converted Debentures 
    upon Conversion to Common Stock.....................      312,000              --
</TABLE>




                See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                                          ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                                              (Unaudited)
                                                                                                      Additional         Retained 
                                              Preferred Stock              Common Stock                Paid-In           Earnings 
                                           Shares        Amount        Shares          Amount          Capital          (Deficit) 
                                      ------------    ------------  ------------    ------------    ------------     ------------
<S>                                   <C>             <C>           <C>             <C>             <C>              <C>   

Balance as of December 31, 1996 ..       4,000,000     $    40,000     1,015,765    $    609,460    $ 18,295,820     ($ 8,978,629)
Net loss .........................            --              --            --              --               --        (1,744,439)
                                      ------------    ------------  ------------    ------------    ------------     ------------
                                                   
Balance as of March 31, 1997 .....       4,000,000     $    40,000     1,015,765    $    609,460    $ 18,295,820     ($10,723,068)
                                      ============    ============  ============    ============    ============     ============
Sale of Common Stock in connection                 
  with Private Placement net of                    
  $562,239 of expenses ...........            --              --         205,861    $    123,516    $  1,784,577             --
Issuance of common stock for
   consulting services............            --              --          50,000          30,000         101,500
Exchange of Common Stock and                       
  Warrants into 8% Cumulative                      
  Convertible Debentures..........            --              --        (205,861)       (123,516)     (1,784,577)            --
Valuation of Discount of Common                    
  Stock Available to Holders of                    
  8% Cumulative Convertible.......            --              --            --              --         2,130,143             --
  Debentures......................            --              --       
Valuation of Discount of Common 
  Stock to Holders of 10% One
  Year Promissory Notes ..........            --              --            --              --         1,617,000             --
Rescission of Series B                              
  preferred stock ................      (4,000,000)      (40,000)           --              --        (5,960,000)            --
Conversion of 8% cumulative                        
  convertible debentures                           
  into common stock ..............                                     2,626,708       1,576,025       1,023,975
Reclassification of Unamortized
  Debt Issue Cost Associated with
  8% Converted Debentures 
  upon conversion to common
  stock....... ..................                                                                       (312,000)
Issuance of Common Stock                           
  in exchange for loans,
  subsidiary stock, Series B
  Preferred stock and
  employment agreements ..........                                       523,076         313,846         366,154
Sale of Series C                                   
  preferred stock net of $405,000
  of expenses ....................            --              --                                       2,595,000
Valuation of discount on Common
  Stock available to holders of
  Series C Preferred
  Stock (Note 8) ................             30              --                                       1,615,000
Retirement of Note Receivable
  and Warrants ...................                                                                        (5,701)
Net loss .........................            --              --            --              --                --     ($ 6,076,012)
                                      ------------    ------------  ------------    ------------    ------------     ------------
                                                   
Balance as of December 31, 1997 .             30              --       4,215,549    $  2,529,331    $ 21,466,891     ($16,799,080)
                                      ============    ============  ============    ============    ============     ============
</TABLE>                              


<PAGE>


<TABLE>
<CAPTION>
                    ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                      Notes Receivable     Discount on                          
                                        Arising From       Common Stock                             
                                        Common Stock       Available to          Subscription            
                                      Purchase Warrant Preferred Shareholders     Receivable           Total 
                                        -----------    ----------------------     -----------       -----------
<S>                                     <C>                                       <C>               <C>
Balance as of December 31, 1996 ..      $(    5,701)                              $(6,000,000)      $ 3,960,950
Net loss .........................             --                --                      --          (1,744,439)
                                        -----------    ----------------------     -----------       -----------
                                                             
Balance as of March 31, 1997 .....      $(    5,701)             --               $(6,000,000)      $ 2,216,511
                                        ===========    ======================     ===========       ===========
                                                             
Sale of Common Stock in connection                           
  with Private Placement net of                              
  $562,329 of expenses ...........             --                                        --         $ 1,908,093
Issuance of Common Stock for                                 
  consulting services.............             --                                        --             131,500 
Exchange of Common Stock and                                 
  Warrants into 8% Cumulative                                
  Convertible Debentures..........             --                                        --          (1,908,093)   
Valuation of Discount of Common                              
  Stock Available to Holders of                                                
  8% Cumulative Convertible                                                    
  Debentures......................             --                                        --           2,130,143
Valuation of Discount of Common                                                
  Stock to Holders of 10% One                                                  
  Year Promissory Notes ..........                                                                    1,617,000
Rescission of Series B                                                         
  preferred stock ................                                                  6,000,000              --
Conversion of 8% cumulative                                                    
  convertible debentures                                                       
  into common stock ..............                                                                    2,600,000
Reclassification of Unamortized                                                
  Debt Issue Cost Associated with                                              
  8% Converted Debentures upon
  conversion to common stock ....                                                                      (312,000)
Issuance of Common Stock                                                       
  in exchange for loans,                                                       
  subsidiary stock, Series B                                                   
  Preferred Stock and                                                          
  employment agreements...........                                                                      680,000
Sale of Series C                                                               
  preferred stock net of $405,000                                              
  of expenses                                                                                         2,595,000
Valuation of discount on Common
  Stock available to holders of
  Series C Preferred                                                           
  Stock (Note 8) ................                         (1,615,000)                                      -- 
Retirement of Note Receivable                                     
  and Warrants ..................             5,701                                                        -- 
Net loss .........................             --                                        --          (6,076,012)
                                        -----------    ---------------------      -----------       -----------
                                                                               
Balance as of  December 31,  1997 .     $      --         (1,615,000)                    --         $ 5,582,142
                                        ===========    ======================     ===========       ===========
</TABLE>                                                

<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (A) Business Activity and Basis of Presentation

         During 1994,  Electronics  Communications Corp. (the "Company") changed
         its name from Genetic Breeding,  Inc. to Internow Affiliates,  Inc. and
         then to Electronics  Communications Corp. Effective on January 1, 1994,
         the Company  acquired Free Trade  Distributors,  Inc. (which engaged in
         the  wholesale   distribution   of  cellular   telephones  and  related
         accessories and electronic products) and Trade Zone Distributors,  Inc.
         (which  engaged in the  activation of cellular  radio  subscribers  for
         commissions),  both serving the New York Metropolitan Area. The Company
         no longer distributes  cellular  telephones and related accessories and
         electronic  products nor does it engage in the  activation  of cellular
         telephones for commissions.

         In 1995,  the Company  formed  Electrocomm  Wireless,  Inc., a Delaware
         corporation as a subsidiary, to become a radio paging and two-way radio
         carrier in the New York  Metropolitan Area and the State of New Jersey.
         The Company is presently inactive.

         In July 1995, the Company formed Personal  Communications Network, Inc.
         ("PCN"),  a  Delaware  corporation,   to  participate  in  the  Federal
         Communications  Commission  auction for  licenses to engage in personal
         communications  services  ("PCS").  On May 8, 1996 the Company obtained
         six PCS licenses for $26,452,200  entitling it to operate  wireless PCS
         telephone systems covering nearly 1.5 million people in five states. In
         February,  1997  four  (4)  officers  and  directors  and the wife of a
         director of the Company  acquired a 24% interest in "PCN".  See Note 16
         as to the Company's  acquisition  of  this  24% interest  in  PCN. As a
         result, PCN is now 100% owned by the Company.
         
         On March 22, 1996,  Threshold  Communications,  Inc.  ("TCI")  acquired
         substantially  all of the assets and  assumed  certain  liabilities  of
         General  Communications  and Electronics,  Inc. ("GCE").  GCE is in the
         business of reselling  paging air time to corporate  clients.  TCI also
         acquired as part of this  transaction 56 2/3% of the outstanding  stock
         of General  Towers of America,  Inc.  (which engages in the business of
         providing two way radio  services in the New York  Metropolitan  Area).
         TCI and its  subsidiary  General  Towers of America,  Inc.  ("GTA") are
         treated as subsidiaries of the Company.

         On June 28, 1996, the Company acquired 51% of Threshold Communications,
         Inc. On January 2, 1998, the Company purchased the remaining 49% of TCI
         for a $90,000 cash payment.

         On July 31, 1997 the Company's  board of directors  effected a 1 for 12
         reverse stock split of its $.05 par value common stock.  The new common
         stock has a $.60 per share par value. New management has announced that
         it will seek  stockholder  ratification of the reverse stock split at a
         special meeting of stockholders expected to be held prior to the end of
         the current  fiscal year. All references to number of common shares for
         all  periods   presented   assumes  such  ratification  and  have  been
         retroactively restated for the reverse stock split.
<PAGE>
               ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

         On  August  11,  1997 the  Company  changed  its  fiscal  year end from
         December 31 to March 31.

         The accompanying  unaudited 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  and  Article 10 of  Regulation  S-X.  Accordingly,  they do not
         necessarily  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  months  ended
         December 31, 1997 are not  necessarily  indicative  of the results that
         may be  expected  for the year  ended  March 31,  1998.  The  unaudited
         consolidated  financial  statements  should be read in conjunction with
         the consolidated financial statements and footnotes thereto included in
         the  Company's  annual  report on Form  10K-SB as amended  for the year
         ended December 31, 1996.

         (B) Principles of Consolidation

         The  consolidated   financial   statements   include  the  accounts  of
         Electronics Communications Corp., its wholly-owned  subsidiaries,  Free
         Trade  Distributors,  Inc.,  Trade  Zone  Distributors,  Inc.  Personal
         Communications Network, Inc., and majority owned subsidiary's Threshold
         Communications,   Inc.  and  General   Towers  of  America,   Inc.  All
         significant intercompany accounts and transactions have been eliminated
         in consolidation.

         (C) Property and Equipment

         Property and equipment are recorded at cost.  Depreciation  is provided
         using  accelerated  methods  over  the  estimated  useful  lives of the
         respective  assets  (5 to 7 years). 

         (D) Inventories

         Inventories  are  valued  at the  lower  of  cost  or  market,  cost is
         determined using the first in, first out method.

         (E) Revenue Recognition

         It is the Company's policy to categorize  revenue into either (i) sales
         of  electronic  goods,  (ii)  commissions  for fees  earned on sales of
         cellular radio service  contracts,  and (iii) sales of its radio paging
         and two way radio services.  Sales of electronic goods includes, but is
         not  limited to  cellular  phones  and  related  accessories  and other
         electronic  automobile  and  office  products.  Revenue  from the above
         mentioned
<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

         (E) Revenue Recognition (continued)

         products are  recognized  when they  are shipped.  The Company  had  no
         revenues  from  the  sale of  electronic  goods for  the quarter  ended
         December 31, 1997. Revenues from sales of electronic  goods represented
         approximately 43% of  the Company's total revenue for  the nine  months
         ended  December  31, 1997.

         Commissions  are  inclusive of fees earned  for the  sale  of  cellular
         telephone service contracts and  residuals received on those contracts.
         Revenues and related commissions from the sale of the service contracts
         are  recognized at the point of activation. Revenues from residuals are
         realized when approved  by the cellular  telephone service supplier and
         are paid on customer usage for a maximum of three years.The Company had
         no commission revenue for the quarter ended December 31,1997.Commission
         revenue represented 32% of the Company's total revenue for  the quarter
         ended  December 31, 1996.


         The Company established a reserve of 3.5% for charge-backs on customers
         that  prematurely  terminate  cellular  service.  In  addition  to  the
         commissions  paid  by the  cellular  telephone  supplier,  the  Company
         receives co-op fees. Co-op fees are reimbursements of expenditures that
         are approved by the cellular  telephone  supplier for  advertising  and
         promotion in connection with the sale of cellular telephone  contracts.
         Revenues from radio paging and two way radio services are recognized in
         the  beginning of the month for which they are invoiced and amounted to
         100% and 37% of revenues in the quarters  ended,  December 31, 1997 and
         1996 respectively.

         (F) Concentration of Credit Risk

         The Company  maintains its major cash accounts in banks in the New York
         and New Jersey Area. The total cash deposits are insured by the Federal
         Deposit  Insurance  Corporation  up to $100,000 per account.  Uninsured
         balances at December 31, 1997 totalled approximately $1,250,000.

         (G) Use of Estimates

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities and disclosure of contingent  assets and liabilities at the
         date of the financial  statements and the reported  amounts of revenues
         and expenses during the period.  Actual results could differ from those
         estimates.
<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

         (H)  Fair Value of Financial Instruments

         At December  31, 1997,  March 31, 1997 and December 31, 1996,  the fair
         values of cash, cash equivalents,  accounts receivable  non-convertible
         short  term  debt and  current  portion  of  long-term  debt,  accounts
         payable,   accrued   interest,   accrued  salaries  and  other  accrued
         liabilities   approximated   their  carrying   values  because  of  the
         short-term  nature of these  instruments.  The fair value and  carrying
         amount of the  Company's  long term  notes  payable  to the FCC with an
         actual interest rate of 7% was adjusted to reflect an imputed  interest
         rate of 14% which more closely  corresponds to the Company's  borrowing
         rate.

NOTE 2 - PRIVATE PLACEMENT OF SECURITIES AND 8% CUMULATIVE CONVERTIBLE          
         DEBENTURES

         In  April  1997,  the  Company  sold  205,861  units  consisting  of an
         aggregate   205,861  shares  of  Common  Stock  and  Class  A  warrants
         exercisable  to  purchase an  additional  aggregate  308,792  shares of
         Common  Stock at an  exercise  price of $60.00 per share  (subsequently
         reduced to $2.25 per share). The units were sold in a Private Placement
         to a number  of  unaffiliated  investors  for an  aggregate  $2,470,334
         including cash  consideration  of $2,061,999 and an exchange of Company
         notes payable and accrued interest  aggregating  $408,334.  The Company
         incurred $562,239 of expenses in connection with the Private Placement.
         All of the investors in this Private Placement  subsequently  exchanged
         their  units  for  Debentures  in the  August  1997  Private  Placement
         Offering hereinafter described.
 
         On August 7, 1997,  the  Company  consummated  a  Regulation  S Private
         Placement  Offering directed to non "United States Persons" pursuant to
         which the Company sold $2,500,000  principal amount of the Company's 8%
         Cumulative  Convertible  Debentures (the  "Debentures").  The principal
         amount of the Debentures are  convertible  into shares of the Company's
         common  stock at the  option of the  holder,  commencing  41 days after
         issuance,  at a price  equivalent  to a 30% discount  from market based
         upon the five (5) day average daily  closing bid price,  as reported on
         NASDAQ,  for the  five  (5)  trading  days  immediately  preceding  the
         applicable date of conversion.  As a result of the Emerging Issues Task
         Force   ("EITF")   Bulletin  D-60,  as  promulgated  by  the  Financial
         Accounting Standards Board ("FASB"), the Company has recorded a finance
         charge and a  corresponding  increase to Paid in Capital of  $1,071,429
         attributable to the sale of the Convertible Debentures.  The Debentures
         bear  interest at the rate of 8% per annum  payable on August 7 of each
         year  commencing  August 7, 1998.  The  Debentures  are  redeemable and
         callable for conversion  under certain  circumstances  and are due June
         30, 2000.  The Company  paid a placement  fee equal to 10% of the gross
         proceeds and a 3%  non-accountable  expense  allowance to the Placement
         Agent.
<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - PRIVATE PLACEMENT OF SECURITIES AND 8% CUMULATIVE CONVERTIBLE          
         DEBENTURES - (Continued)
 
         At the same time but separate from the  Regulation S Private  Placement
         Offering, $2,470,334 principal amount of the Debentures were offered to
         those persons who subscribed to and participated in the Company's April
         1997 Private  Placement of the units.  Those investors were offered the
         opportunity  to exchange all, but not less than all, of their units for
         Debentures, on a dollar for dollar basis. As a result, effective August
         7,  1997,  the  holders  of the  April  1997  Private  Placement  units
         exchanged their units for an agggregate  $2,470,334 principal amount of
         the 8% Convertible Debentures. The Debentures in this separate offering
         are  convertible at the option of the holder  commencing 180 days after
         issuance.  As a result  of the EITF  Bulletin  D-60,  the  Company  has
         reduced the carrying  value of the  Debentures  and  increased  Paid In
         Capital in the amount of  $1,058,715  and recorded a finance  charge of
         $311,733 on the sale of these convertible debenture.

         As of  December  31,  1997,  $2,600,000  of  the  Debentures  had  been
         converted into 2,626,708 shares of the Company's common stock.

NOTE 3 - PCS LICENSES

         (A)  The  PCS  licenses  were  awarded  in  a  Federal   Communications
         Commissions ("FCC") "C" Block Auction.  The markets awarded the Company
         include  Elmira-Corning, New York;   Bangor/Lewiston-Auburn/Waterville-
         Augusta, Maine; and Burlington/Rutland-Bennington, Vermont. The Vermont
         markets encompass virtually the entire state. The Maine markets cover a
         majority of the  population and most of the state  geographically.  The
         licenses expire and are subject to renewal after ten (10) years.

         The Company's total winning bids amounted to $26,452,200, after the 25%
         discount provided to small businesses,  for which the Company qualified
         under  the  terms  of  the  auction.  The  Company  deposited  cash  of
         $2,645,220.  The  remaining  balance is payable  over the next 10 years
         with 7% interest  only during the first six years.  On March 31,  1997,
         the FCC imposed a moratorium on the payment of interest until March 31,
         1998.  Included in the license costs are certain legal fees incurred in
         obtaining  the  license.  Capitalized  PCS  interest  in the  amount of
         $2,201,720  is  included  in PCS  Licenses  at  December  31,  1997 and
         represents interest capitalized in conjunction with these licenses. The
         Company  has  not  begun  PCS  service  and  will  require  substantial
         additional  financing to pay the balance of the purchase  price for the
         PCS  licenses  and to  construct  the system  prior to  initiating  PCS
         service.  No  assurance  can be given that such  financing  will become
         available.  Assuming  inception  of  PCS  services,  the  Company  will
         amortize the licenses and related costs over a 40 year period.

         On October  16,  1997 in an effort to bring  relief to C-Block  license
         holders,  the FCC offered three options, one of which must be chosen by
         a revised date of February 26, 1998.  The three options are as follows:
         (1) an "Amnesty  Option"  permitting  return of the licenses which will
         result in the forfeiture of the original down payment of $2,645,220 and
         the  return to the  Company  of the  previous  installments  paid which
         amount  to  approximately   $286,000;  (2)  a  "Disaggregation  Option"
         permitting the
<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - PCS LICENSES - (Continued)

         return of 15 megahertz of the 30  megahertz of spectrum  awarded  under
         the licenses,  back to the FCC and reducing the current note payable to
         the FCC by 50%; and (3) a "Prepayment  Option"  permitting the exchange
         of all  licenses in a  particular  BTA for a partial  reduction  of the
         current  note  payable  to the  FCC  (equal  to 70% of the  total  down
         payments of the surrendered licenses).

         (B) Deferred  License Costs consists of various  legal,  consulting and
         registration fees in connection with obtaining paging licenses, two-way
         radio licenses and personal  communication service licensing.  Interest
         cost associated with obtaining these licenses is being capitalized. The
         licenses  when put into  service  will be  amortized  over a forty year
         period.
 
NOTE 4 - CONSULTING SERVICE CONTRACT

         In July 1997, the Company  entered into a Consulting  Agreement with an
         unaffiliated  financial  advisory  firm.  Pursuant to the terms of this
         agreement,  the firm was hired as a financial  advisory  consultant  to
         provide promotional and specialty and management consulting services to
         the Company.  In  consideration  of the services to be performed by the
         firm,  the  Company  issued  50,000  shares to the firm  pursuant  to a
         Registration  Statement  filed with the SEC on Form S-8. As of December
         31,  1997,  the Company had accrued  $65,750 in prepaid  expenses  with
         respect to this contract.

NOTE 5 - NOTES PAYABLE

         (A) On April 18, 1995, the Company  entered into a financing  agreement
         with a bank  in the  amount  of  $100,000.  This  loan  was  personally
         guaranteed  by  the  Company's   former   President,   cross  corporate
         guaranteed by the Company's Free Trade  Distributors,  Inc.  subsidiary
         and secured by the Company's inventory.  Interest is payable monthly at
         the rate of 1.5% per annum in excess of the  bank's  fluctuating  prime
         lending rate.  The balance of the loan wes paid in full on December 30,
         1997.

         (B) On February 29, 1996, the Company borrowed  $134,000  pursuant to a
         financing  arrangement with an unaffiliated  corporation.  Interest was
         payable at a rate of 10% in monthly  installments  of $1,117 per month.
         As additional consideration,  the Company issued the corporation 66,667
         Class "A"  Warrants  exercisable  to purchase  66,667  shares of common
         stock at an exercise price of $27.00 per share (subsequently reduced to
         $2.25 per share).  The Company also granted 90 day registration  rights
         and "Piggy Back" registration  rights. The outstanding  balance of this
         loan was  $109,711 at  December  31,  1996.  The note was paid in March
         1997.  As a result of this  transaction,  $500,000 in loan  origination
         fees were recognized and amortized over the life of the loan.
<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - NOTES PAYABLE - (Continued)

         (C) In connection with TCI's  acquisition of GCE, the Company assumed a
         $350,000 non-interest bearing note. The outstanding principal amount of
         this non interest bearing note was $252,777, $281,944 and  $311,111  at
         December 31, 1997, March 31, 1997 and December 31, 1996,  respectively,
         less unamortized  discount (discount is based on interest of 12%) for a
         net balance of $175,443, $243,695 and $265,121 respectively.

         (D) The Notes Payable - FCC consist of six 7% 10 year notes aggregating
         $23,806,980.  The  notes  are  payable  in  quarterly  installments  of
         interest  only for the  first six years  and  principal  plus  interest
         thereafter.  The notes are secured by the PCS  licenses.  The  interest
         payment due December 31, 1996 was partially paid on March 31, 1997. The
         Company has not made a quarterly interest payment since March 31, 1997.
         This  non-payment  is due to an FCC  moratorium  on quarterly  interest
         payments  while the Company  awaits a decision on the FCC  changing the
         quarterly  installment due. This anticipated change is being considered
         to allow PCS license  holders to better utilize short term cash to more
         quickly build out their systems in an effort to generate revenues.

         (E) On September 20, 1996,  the Company  borrowed  $500,000 for working
         capital purposes from an unaffiliated  private lender. In consideration
         for the loan,  the Company  issued  16,667  shares of common  stock and
         "Class A"  warrants  exercisable  to purchase  33,334  shares of common
         stock at $27 per share (subsequently reduced to $2.25 per share) to the
         lender. The loan bore interest at the rate of 10% per annum and was due
         and payable on June 20, 1997. The Company  obtained an extension of the
         due date and in July,  1997,  paid $125,000 of this  indebtedness.  The
         $375,000   balance  together  with  accrued  interest  of  $33,334  was
         exchanged  by the lender  for units in the  Company's  above  described
         April, 1997 Private Placement.  These units were subsequently exchanged
         by the lender for  $408,334 in  principal  amount of the  Company's  8%
         Cumulative  Convertible  Debentures  in  connection  with the Company's
         August, 1997 Private Placement.

         (F)  Purchase  Money Notes  Payable in monthly  installments  of $1,262
         including  interest at 13%.  The last payment is due on August 1, 2001.
         This loan is  collateralized by equipment with a book value of $44,842.
         The balance of this loan was $46,277,  $50,852 and $52,764 at September
         30, 1997, March 31, 1997 and December 31, 1996 respectively.

         (G) On October  21,  1996 the  Company  borrowed  $200,000  for working
         capital purposes from an unaffiliated  private lender. In consideration
         for the loan, the Company isued 6,667 shares of common stock and "Class
         A" warrants  exercisable  to purchase  13,334 shares of common stock at
         $27 per share (subsequently  reduced to $2.25 per share) to the lender.
         The loan  bore  interest  at the rate of 10% per  annum and was due and
         payable  in  November,  1997.  The  loan was  secured  by a lien on the
         Company's  receivables  and  equipment  and was repaid in full in June,
         1997.

         (H) Since  September 30, 1997, the Company  borrowed  $300,000 from one
         lender and $200,000 from a lender  affiliated  with the Placement Agent
         of the Company's August 1997 Regulation S Private Placement Offering of
         debentures  (See Note 2) and of its December 1997  Regulation S Private
         Placement  Offering of shares of its 1997 Series C Preferred Stock (see
         note 8). The Company  agreed to issue its 10%  promissory  notes to the
         lenders in the  principal  amounts of the loans.  The notes are payable
         one year after the loans  together  with  interest at a 10% annual rate
         payable semi-annually in cash, or at the Company's option, in shares of
         Common Stock.  The note principal is convertible at the holder's option
         into shares of Common Stock at a  conversion  price equal to the lesser
         of $1.125 per share or a Conversion  Formula  similar to the Conversion
         Formula  of the  Series C  Preferred  Stock.  In  accordance  with EITF
         Bulletin  D-60,  the  Company  has  recorded  a debt  issue  cost and a
         corresponding  increase  to  additional  paid in capital  of  $506,000,
         representing  the  difference  between  the  fair  market  value of the
         Company's  common  stock on the  date of the  loan  and the  conversion
         price.  The cost is being  amortized  over  the  life of the  loan.  In
         addition,  the  Company has agreed to issue  five-year  warrants to the
         lenders exercisable to purchase 100,000 shares of Common Stock for each
         $100,000 loan (i.e., an aggregate 500,000 shares of Common Stock) at an
         exercise  price per share  equal to 120% of the  closing  bid price for
         such Common Stock on the trading day immediately preceding the day of a
         particular  loan. In accordance with Statement of Financial  Accounting
         Standards  No 123,  the  Company  has  recorded a debt issue cost and a
         corresponding  increase to  additional  paid in capital of  $1,111,000,
         representing  the fair value of the warrants on the date of grant.  The
         fair  value of the  warrants  were  estimated  using the  Black-Scholes
         option pricing model with the following  weighted-average  assumptions:
         the risk free interest rate of 14%, dividend yield of 0.0%,  volatility
         factors of the expected market price of the Corporation's  common stock
         of 203.1% and a  weighted-average  expected  life of the  warrants of 5
         years. This cost is being amortized over the life of the loan.

         The  Black-Scholes  option  valuation  model was  developed  for use in
         estimating  the fair  value of traded  options  which  have no  vesting
         restrictions and are fully transferable.  In addition, option valuation
         models require the input of highly subjective assumptions including the
         expected price  volatility.  Because the warrants have  characteristics
         significantly  different from those of normal  publicly traded options,
         and because changes in the subjective input  assumptions can materially
         affect the fair value estimate,  in management's  opinion, the existing
         models do not necessarily provide a reliable single measure of the fair
         value of the aforementioned warrants.

         (I) In December 1997, the Company borrowed an additional  $105,000 from
         a director for working  capital  purposes.  This loan was repaid out of
         the net proceeds of the 1997 Series C Preferred Stock offering.
<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - NOTES PAYABLE - STOCKHOLDERS

         Notes Payable -  Stockholders  are unsecured and payable on demand with
         interest at rates from 7.5% to 10.65% per annum.  See Note 16 as to the
         subsequent  satisfaction of these loans through the grant of options to
         purchase common stock.

NOTE 7 - LOSS PER COMMON SHARE

         The Company  computes loss per common share by dividing the net loss by
         the weighted  average  number of common  stock and dilutive  equivalent
         shares outstanding. The computation of fully diluted net loss per share
         was  antidilutive  in each of the  periods  presented;  therefore,  the
         amounts reported for primary and fully diluted loss are the same.

NOTE 8 - CONVERTIBLE PREFERRED STOCK

         On July 23, 1996, the Board of Directors of the Company  authorized the
         issuance  of an  aggregate  of  4,000,000  shares of Series B Preferred
         Stock   ("Preferred   Stock").   Each  share  of  Preferred  Stock  was
         convertible into .13 shares of the Company's common stock. These shares
         were  purchased by certain  officers  and  directors of the company for
         three year Promissory  Notes ("Notes")  bearing interest at the rate of
         7% per annum.  The interest was to be accrued and was not to be payable
         until the  securities  were  sold.  The Notes  were  non-recourse,  but
         collateralized  by the  pledge of the  Preferred  Stock.  Each share of
         Preferred Stock was subject to a three year vesting period, whereby 1/3
         was  immediately  vested,  and the balance was to be vested  during the
         next two years as long as the  aforementioned  individuals  remained as
         either officers or directors of the Company.

         In an  effort  to hire a new  management  team and  secure  anticipated
         further  financing,  said officers and directors agreed to rescind this
         transaction.  As a result,  the 4,000,000  shares of Series B Preferred
         have  been   rescinded  by  the  Company  and  are  no  longer   deemed
         outstanding (See Note 14).

         On  December  24,  1997,  the new  Board of  Directors  of the  Company
         authorized  the  issuance of a minimum of 20 shares and a maximum of 45
         shares of Series C Preferred Stock ("Preferred Stock") at the aggregate
         subscription  price of $100,000 per share pursuant to an offer and sale
         of such Preferred Stock in a Regulation S Private  Placement  Offering.
         Holders of the Preferred Stock are entitled to receive a 10% cumulative
         annual  dividend  payable  semi-annually  in cash,  or at the Company's
         option,  in shares of the  Company's  common stock $.60 par value.  The
         Preferred Stock is non-voting and is convertible in whole or in part at
         any time  commencing  fifty (50) days after issuance at the election of
         the holder,  into shares of common stock at an initial conversion price
         equal to a 25%  discount  from the  average  closing  bid price for the
         common stock in the  over-the-counter  market for the five trading days
         immediately   preceding  the  conversion,   said  discount   thereafter
         increasing  at the rate of 2% per calendar  month  commencing  March 1,
         1998 up to a maximum  discount of 35% ("the Conversion  Formula").  The
         Company has no ability to force conversion but 24 months after issuance
         of the initial  Preferred Stock,  any outstanding  Preferred Stock will
         automatically  convert  into  shares  of  Common  Stock  based  on  the
         Conversion  Formula then in effect.  The Company  paid a placement  fee
         equal  to 13% of the  gross  proceeds  to the  Placement  Agent.  As of
         December 31, 1997 the Company  issued 30 shares of Preferred  Stock and
         received  $2,595,000,  net of $405,000 in expenses.  In accordance with
         EITF  bullentin  D-60,  the Company has recorded an adjustment  for the
         discount on Common  Stock  available to  Preferred  shareholders  and a
         corresponding  increase to  additional  paid in capital of  $1,615,000,
         representing  the value of the 35% conversion  discount  offered on the
         Preferred Stock.  This cost is being amortized over the period in which
         the maximum discount will be realized,  commencing with the date of the
         issuance.

NOTE 9 - INCOME TAXES
      
         The  Company  adopted the  liability  method of  accounting  for income
         taxes, as set forth in Statement of Financial  Accounting Standards No.
         109,  "Accounting  for  Income  Taxes."  Under  the  liability  method,
         deferred  taxes are  determined  based on the  differences  between the
         financial  statement and tax basis of assets and liabilities at enacted
         tax rates in effect in the years in which the  differences are expected
         to reverse. At December 31, 1996, the Company had federal net operating
         loss  carryforwards  of  approximately  $5,000,000  which  will  expire
         beginning in fiscal 2010. These losses are limited by the provisions of
         Section 382 of the Internal  Revenue Code due to a considered more than
         50%  change  in  ownership   with  the  issuance  of  the   Convertible
         Subordinated Debentures in August 1997. Following such a change, the

<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - INCOME TAXES - (Continued)

         utilization  of tax loss  carryforwards  is limited to the value of the
         Company on the date of such change, multiplied by the Federal long-term
         exempt rate (the "annual limitation").  To the extent amounts available
         under the annual  limitation are not used,  they may be carried forward
         for the remainder of 15 years from the date the losses were  originally
         incurred. As a result of the change in ownership,  use of net operating
         losses will be limited to  approximately  $300,000  per year subject to
         certain additional limitations.

NOTE 10- EXTRAORDINARY ITEM

         During the quarter  ended  December  31, 1997,  the Company  recognized
         extraordinary  income of $599,146 resulting from the negotiated payment
         of certain trade payables.

NOTE 11- CONTINGENT LIABILITIES

         (A) On  December  1,  1994,  the  Company  entered  into an  employment
         agreement  with the  President  of the Company for a term of five years
         with an option for an  additional  three one year terms.  The agreement
         provided  for annual  compensation  of $150,000  during the term of the
         employment  agreement  and  entitled the  President  to certain  fringe
         benefits,  including  automobile  maintenance,   disability  insurance,
         medical benefits and life insurance coverage. The President agreed that
         during the term of his agreement and for 12 months  thereafter  (unless
         the agreement was  terminated  without  cause),  he would be subject to
         non-competition  provisions.  Upon  termination  of employment  without
         cause, the President would be entitled to a lump sum payment of $75,000
         multiplied by the number of years of his employment by the Company.  In
         January 1998 this agreement was terminated (See Note 16).

         (B) On June 1, 1995,  the Company  entered into a consulting  agreement
         with a corporation owned by four of the Company's legal representatives
         for non-legal services.  In consideration for services performed by the
         consultant  the Company  agreed to pay $144,000 per year for five years
         payable  in  monthly  installments  of  $12,000.   This  agreement  was
         retroactively  cancelled  as  of  February  1,  1997.  No  amounts  are
         currently due under this contract.

         (C) On May 17, 1995, the Company  entered into an employment  agreement
         with the  Executive  Vice  President,  which was  amended on October 1,
         1995.  The term of the  agreement was for five years with an option for
         additional   one  year  terms.   The  agreement   provided  for  annual
         compensation  of $137,500  during the term of the employment  agreement
         and entitled the Executive Vice  President to certain fringe  benefits,
         including  automobile   maintenance,   disability  insurance,   medical
         benefits and life  insurance  coverage.  The Executive  Vice  President
         agreed  that  during  the  term  of  his  agreement  and  for 6  months
         thereafter  (unless the agreement was  terminated  without  cause),  he
         would be subject to  non-competition  provisions.  Upon  termination of
         employment  without  cause,  the  Executive  Vice  President  would  be
         entitled to a lump sum payment of $50,000  multiplied  by the number of
         years of his employment by the Company.  In January 1998 this agreement
         was terminated (See Note 16).

         (D) Effective  September 12, 1996, the Company  entered into Employment
         Agreement with the Secretary of the Company. The term of this Agreement
         was for five years, at an annual salary of $75,000,  plus a monthly car
         allowance of $750/month.  In January 1998 this agreement was terminated
         (See Note 16).

         (E) On  October  31,  1997,  the  Company  (by  order  of the  Board of
         Directors) entered into an employment agreement with the new president.
         The term of the agreement is for forty months  beginning on November 1,
         1997.  The  agreement  provides  for  compensation  of $125,000 for the
         period from November 1, 1997 to October 31, 1998 with $25,000 increases
         in each of the next two  annual  periods.  Compensation  for the period
         from November 1, 2000 to March 31, 2001 will be $72,917 (five months at
         an annual rate of $175,000).
<PAGE>
NOTE 12 - STOCK OPTION PLAN

         On October 30, 1997, the Company's  Board of Directors  adopted a stock
         option plan reserving an aggregate 1,000,000 shares of common stock for
         issuance  pursuant  to options  which  under the plan may be granted to
         officers,  directors  and  key  employees  and  may be in the  form  of
         Incentve  Stock  Options  ("ISOs")  or   Non-Qualified   Stock  Options
         ("NQOs"). The Plan is subject to shareholder approval.

         On October 30, 1997 ISOs  exercisable  to purchase  200,000  shares and
         NQOs exercisable to purchase  445,000 shares were granted.  On December
         24, 1997 ISOs exercisable to purchase an additional 100,000 shares were
         granted. See Note 16 as to the grant of NQOs exercisable to purchase an
         additional  200,000 shares under the plan. All of the above options are
         subject to shareholder approval of the plan.

NOTE 13 - OPERATING LEASE

         On May 15, 1996, the Company  entered into a five year operating  lease
         expiring  May 31, 2001 for a 14,000  square foot  warehouse  and office
         facility in  Fairfield  New Jersey.  The Company had an option to renew
         the lease for a 5 year period at an adjusted annual rent.

         Minimum  future rental  payments  under this  non-cancelable  operating
         lease for each of the remaining years were

         1997                     $110,808
         1998                      110,808
         1999                      110,808
         2000                      110,808
         2001                       46,263
                                  --------
         Total Minimum Future
         Rental Payments          $489,495
                                  ========

         In October 1997,  the Company  entered into an agreement of termination
         of this lease with its landlord. The Company agreed to pay the landlord
         the sum of $11,000 and release the  security  deposit of $18,500 to the
         landlord.  The lease between the parties was  surrendered and cancelled
         as of midnight on December 31, 1997. The rent for November and December
         was reduced to $6,000 per month.

         On  December  8, 1997 the Company  entered  into a five year  operating
         lease expiring  December 31, 2002 for 1,500 square feet of office space
         in Melville,  Long Island,  New York.  Minimum  future rental  payments
         under this operating lease, including electric is $35,735.58 per annum.


<PAGE>
NOTE 14 - PENDING LITIGATION

         On March 4, 1996 the Company  commenced an action entitled  Electronics
         Communications  Corp. against Toshiba America Consumer  Products,  Inc.
         ("Toshiba") and Audiovox Corporation ("Audiovox"),  case number 96 Civ.
         1365, in the United States  District Court of the Southern  District of
         New York.  The  Complaint  asserted  claims  for  antitrust,  breach of
         contract, tortious interference with contract and tortious interference
         with  prospective  economic  advantage  and  business  relations.   The
         Complaint  sought  damages  in excess of  $3,000,000.  This  action was
         commenced  because the Company  appeared to have  expended  significant
         monies and  resources  including  the issuance of 16,667  shares of the
         Company's  common  stock to a  consultant  in  anticipation  of a South
         American cellular telephone program, which the Company was to undertake
         exclusively  on behalf of Toshiba,  due to the  withdrawal of Toshiba's
         commitment   based  on  what  the  Company  believed  was  an  unlawful
         conspiracy with Audiovox.  Immediately prior to the commencement of the
         program,  Toshiba  discontinued  manufacturing  the  line  of  cellular
         telephones that the program was designed to offer. The Company believed
         this decision had been caused by Audiovox

         The defendants, Toshiba and Audiovox, moved to dismiss a portion of the
         case,  claiming  that the Company had not pled a  cognizable  antitrust
         cause of action,  and  claiming  that the  remaining  claims  should be
         dismissed for the lack of supplemental  jurisdiction,  which could then
         be prosecuted in state courts.  On August 12, 1996,  the Court ruled in
         favor of the motion of defendants  Toshiba and  Audiovox,  and the case
         was dismissed on such date.  The Company  appealed the Court's  ruling,
         which ruling was  affirmed by the U.S.  Court of Appeals for the Second
         Circuit  October 8,  1997. New  management  and  counsel  reviewed  the
         possibility  of  successfully  asserting  State Law  Claims  and,  as a
         result,  determined  that it was advisable to resolve all claims by and
         between  Toshiba  and  the  Company,   including  Toshiba's  claim  for
         merchandise  shipped of  $379,384.54.  This  claim was  settled on what
         management  believes  were  favorable  terms  for the  Company.  Mutual
         releases were exchanged by Toshiba, Audiovox and the Company.

         On or about March 11,  1997,  the Company was served with a Summons and
         complaint in an action entitled:  "Daily News, L.P. v. Free Trade a/k/a
         Free Trade Distributors,  Inc. and Electronics  Communications  corp.,"
         pending in the United States  District Court for the Southern  District
         of New York. The Plaintiff,  the Daily News, claims breach of a certain
         Advertising  Contract,  in that the Company's  subsidiary failed to pay
         for



<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14- PENDING LITIGATION - (Continued)
 
         certain   advertising  and  failed  to  meet  the  minimum  advertising
         expenditures set forth therein, resulting in the Imposition of a "short
         rate" with higher payment requirements.  As a result, Plaintiff claimed
         damages   aggregating   $156,284.87.   This   matter  and   outstanding
         obligations of the Company to The Daily News was settled for $50,000.

         On or about July 11,  1997,  the  Company was served with a Summons and
         Complaint  in an action  entitled:  Brightpoint,  Inc.  v.  Free  Trade
         Distributors,  Inc. and Electronics  Communications Corp, in the United
         States   District   Court  for  the   southern   District  of  Indiana,
         Indianapolis  Division.  Brighpoint is a former supplier of the Company
         and  claims  that  the  Company  owed it  approximately  $400,000  plus
         interest for merchandise delivered,  consisting principally of cellular
         telephones.  New management and counsel,  after a review of the matter,
         participated in a one-day  mediation in Indianapolis  and resolved this
         claim on what management believes were favorable terms for the Company.
         A General Release was delivered to the Company.

NOTE 15- BUSINESS PLAN AND LIQUIDITY

         Since  September 30, 1997 the Company  issued 10% one year  convertible
         promissory  notes in the amount of  $500,000  (See Note 5). The Company
         issued 30 shares and 15 shares  respectively  on December 24, 1997, and
         January 20, 1998 of Series C Preferred Stock  ("Preferred  Stock") (See
         Note 8) and received a total of $3,897,500  after  placement agent fees
         and other offering expenses.  The proceeds of these offerings were used
         to repay past due  indebtedness  and a $105,000 loan made by a director
         of the Company with the balance being added to working capital.

         If the  Company  determines  not to avail  itself  of one of the  three
         options  with its regard to its PCS  licenses  offered  by the  Federal
         Communications  Commission  ("FCC"),  which options must be chosen by a
         revised  date of  February  26,  1998,  it will be  required  to pay an
         interest  payment of  approximately  $2,000,000  to the FCC on or about
         March  31,  1998  (See  Note  3).  To date,  management  has not made a
         decision  as to  which  financial  restructuring  option,  if any,  the
         Company will elect.

         The Company's  financial  statements for the nine months ended December
         31,  1997  have  been  prepared  on  a  going  concern   basis,   which
         contemplates  the  realization  of assets and settlement of liabilities
         and  commitments  in the normal  course of  business.  The  Company has
         incurred  net  losses of  $(6,076,012)  and  $(5,958,578)  for the nine
         months ended December 31, 1997, and 1996 respectively.  The Company has
         a working  capital  deficiency of $1,767,934 at December 31, 1997.  The
         Company's financial  statements for the three months ended December 31,
         1997 have been prepared on a going concern  basis,  which  contemplates
         the realization of assets and settlement of liabilities and commitments
         in the normal  course of business.  The Company has incurred net losses
         of $(1,353,467)  for the quarter ended December 31, 1997,  $(2,927,722)
         for the quarter ended December 31, 1996 and  ($5,604,054)  for the year
         ended December 31, 1996.

<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15- BUSINESS PLAN AND LIQUIDITY - (Continued)

         The  Company  has   reconsidered   the  possible  sale  of  its  paging
         operations.  New management  previously  reported in the Company's 10-Q
         for the quarter  ending  September  30, 1997 that it determined to sell
         the assets and  liabilities  of its  paging  operations.  On January 2,
         1998,   the  Company   acquired   the   remaining   49%  of   Threshold
         Communications  Inc.  ("Threshold") for a purchase price of $90,000. On
         January 22, 1998, Threshold entered into a letter of intent with Paging
         Source and Mobile  Partners  (the  "Manager")  whereby the Manager will
         enter  into a  management  service  agreement  (the  "Agreement").  The
         Agreement has, among other things,  performance  requirements that call
         for the manager to add a minimum of 4,000  subscribers  per month.  The
         manager will bear all expenses  including  but not limited to equipment
         costs,  billing  and  customer  service.  The  Manager  will make fixed
         payments  to  Threshold  Communications  Inc.  during a ramp up period.
         Beginning in February of 1999,  the Manager will pay Threshold on a per
         subscriber basis.

         The  Company  is  currently  discussing  financing  options  with major
         wireless  equipment  vendors  regarding  the  build  out of a  wireless
         communications network that will utilize the Company's six PCS licenses
         in Vermont,  Maine and parts of upstate New York,  Pennsylvania and New
         Hampshire.  Should  management  be  successful  in obtaining  favorable
         vendor  financing,  the Company  would  still need to raise  additional
         funds,  which may include the issuance of equity  securities,  to cover
         operating costs for the first several years or until such time that the
         network  will  generate  sufficient  cash flows to cover all  operating
         costs and FCC  license  payments.  There can be no  assurance  that the
         Company will be able to secure  favorable vendor financing or raise the
         necessary funds,  through the issuance of additional  securities or any
         other  means,  needed to cover  operating  costs and the  required  FCC
         license  payments.  Furthermore,  if the Company is not  successful  in
         obtaining favorable vendor financing and raising additional capital and
         the Company  chooses any of the FCC's financial  restructuring  options
         other than the amnesty option (See Note 3), the Company may be required
         to surrender all of its PCS licenses and/or sell the bulk of its assets
         and/or  seek  protection  from  creditors  in a  bankruptcy  or similar
         filing.

         The  report of the  Company's  independent  auditors  on the  Company's
         financial  statements for each of the two years ended December 31, 1996
         contains an explanatory  paragraph  expressing  substantial  doubt with
         respect to the Company's ability to continue as a going concern without
         obtaining additional financing or modifying operations.

NOTE 16 - SUBSEQUENT EVENTS

         In  January  1998,  the  Company  entered  into  purported   settlement
         agreements with three former officer/directors,  William S. Taylor, his
         mother Brenda Taylor and Les Winder.  Pursuant to the agreements,  each
         of the  three  individuals  agreed  to  cancel  his  or her  employment
         agreement  and proposed  consulting  agreement  with the  Company,  any
         rights to  warrants  exercisable  to purchase  shares of the  Company's
         common  stock  and any  rights  to  shares  of the  Company's  Series B
         Preferred Stock. Each individual also agreed to rescind the transaction
         by which he or she had  purchased 6% of the stock of the  Company's PCN
         subsidiary for $6,000. In consideration  therefor,  the Company agreed,
         unless required to do so by court order, to take no action to challenge
         the issuance to each  individual of shares of its common stock (176,923
         shares to William S. Taylor, 50,000 shares to Brenda Taylor and 103,846
         shares to Les Winder) pursuant to options granted to such individual by
         the September 29, 1997 unanimous written consent of the Company's board
         of directors.  The Company issued W-2s to each of such  individuals and
         to the IRS for 1997  indicating  in addition to any other  compensation
         paid to the individual by the Company in 1997, additional  compensation
         in an amount  equal to the  difference  between the value of the shares
         issued based upon the mean between the closing bid and asked prices for
         the Company's common stock in the over-the-counter market on October 8,
         1997 on the one hand, and the net amount of the loans and advances owed
         by the  Company to the  individual  (or in Mr.  Winder's  case,  by Mr.
         Winder to the Company) as indicated by the Company's  books of account,
         plus the $6,000 credit for  rescission  of the PCN stock  purchase plus
         legal  fees paid by the  individual  on behalf of the  Company,  or the
         other. The Company's books of account reflected net amounts owed by the
         Company  to  William  S.  Taylor  and  Brenda  Taylor of  $109,671  and
         approximately $65,000 respectively, and by Les Winder to the Company of
         $11,806.24.  William S.  Taylor  and Brenda  Taylor  have  advised  the
         Company  that it is  their  position  that  certain  General  Releases,
         Indemnity  and Hold  Harmless  Provisions  adopted by the  directors on
         September 29, 1997 when William S. Taylor, Brenda Taylor and Les Winder
         constituted  three  of the  six  members  of the  board  of  directors,
         indemnifying  them from any  claims  asserted  in  connection  with any
         action  taken for or their role with the Company are in full force.  It
         is present  management's  position that such releases and hold harmless
         provisions are not in effect.

         On  February  5, 1997,  the  Company  entered  into  agreements  with a
         director,  Robert DePalo and his wife which  resulted in the rescission
         by Mr. DePalo of his previous purchase for $4,000 of 4% of the stock of
         the PCN  subsidiary and the purchase by the Company from Ms. DePalo for
         $67,000  of 2% of the  stock  of  the  PCN  subsidiary  which  she  had
         purchased for $2,000 in August 1996. As a result of the agreements with
         William S. Taylor,  Mr. Winder and Mr. and Mrs. DePalo, PCN is now 100%
         owned by the Company.

         Robert  DePalo  pursuant  to his  February 5, 1996  agreement  with the
         Company,  agreed to cancel his prior  employment  agreement and a prior
         proposed consulting  agreement with the Company, any rights to warrants
         exercisable  to purchase  shares of the Company's  common stock and any
         rights to shares of the  Company's  Series B Preferred  Stock.  He also
         agreed to waive any and all  options he held  exercisable  to  purchase
         shares of the Company's  common stock  excluding (a) options granted to
         him pursuant to the September 29, 1997 unanimous written consent of the
         directors  and  exercised  by him to  purchase  192,308  shares  of the
         corporation's common stock, (b) five-year options previously granted to
         him and exercisable to purchase  80,000 shares of the Company's  common
         stock at $2.00 per share, and (c) five-year options to purchase 150,000
         shares of the Company's  common stock at $2.25 per share  pursuant to a
         consulting  agreement with the Company executed on February 6, 1998 and
         hereinafter described.

         Pursuant to the agreement with Mr. DePalo,  the Company issued a W-2 to
         him  and to the  IRS for  1997  indicating  in  addition  to any  other
         compensation   paid  to  him  by  the   Company  in  1997,   additional
         compensation in an amount equal to the difference  between the value of
         the  192,308  shares  issued to him  based  upon the mean  between  the
         closing bid and asked  prices for the  Company's  commmon  stock in the
         over-the-counter market on October 8, 1997 on the one hand, and the net
         amount of the loans and advances  owed by the Company to Mr.  DePalo as
         indicated by the Company's  books of account,  plus a $4,000 credit for
         rescission of his purchase of the PCN stock plus legal fees paid by Mr.
         DePalo  on  behalf  of the  Company.  The  Company's  books of  account
         reflected net amounts owed by the Company to Mr. DePalo of $198,746.

         In consideration for Mr. DePalo's  agreements and waivers,  the Company
         and Mr. DePalo  executed a two-year  consulting  agreement  pursuant to
         which   Mr.  DePalo   was   retained   as  a  consultant  at  an annual
         salary of $75,000 and was  granted  five-year  options  pursuant to the
         Company's  October 30, 1997 Stock Option Plan,  exercisable to purchase
         150,000  shares of the  Company's  common  stock at $2.25 per share but
         subject to shareholder approval of the Plan.

         On  February  4,  1998  the  Company  granted  five-year  ISOs to a key
         employee  exercisable  to purchase  50,000  shares of common  share but
         subject to shareholder approval of the plan.

         On January 20, 1998, the Company completed its December 1997 Regulation
         S Private  Offering  through the sale of an additional 15 shares of its
         1997 Series C Convertible  Preferred Stock and received  $1,302,500 net
         of $197,500 in expenses. (See Note 8.)

 
<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The  following  discussion  should  be read  in  conjunction  with  the
consolidated financial statements and notes thereto.


Overview

The Company currently operates a state of the art digital  900-megahertz Glenyre
satellite-based  Flex paging  system  which  covers  South-Western  Connecticut,
Southern New York,  New Jersey and the downtown  Philadelphia  area. The Company
also operates a trunked  two-way radio system  covering New York and New Jersey.
The  Company  through its PCN  subsidiary  successfully  bid,  through the FCC's
C-Block auction,  for six 30MHz baseband PCS licenses  covering  portions of New
York, Pennsylvania,  Vermont, Maine, and New Hampshire. The Company is currently
discussing financing options with major wireless equipment vendors regarding the
build out of a wireless  communications  network that will utilize the Company's
six PCS licenses.

Results of Operations

FOR THE THREE  MONTHS AND NINE  MONTHS  ENDED  DECEMBER  31,  1997 AND THE THREE
MONTHS AND NINE MONTHS ENDED DECEMBER 31, 1996

Revenues from paging and two-way  radio for the three months ended  December 31,
1997 were $592,813  compared to $353,461 for the three months ended December 31,
1996.

Revenue  from paging and two-way  radio for the nine months  ended  December 31,
1997 were $1,745,386 compared to $984,851 for the nine months ended December 31,
1996.

On June 28, 1996, the Company entered the paging and two-way radio business with
the acquisition of a 51% stake in Threshold Communications, a reseller of paging
air time. On January 3, 1998 the Company acquired the remaining 49% of Threshold
Communications.  During May of 1997, the Company  completed the build out of its
900 MHz Glenayre  paging system thereby  becoming a paging  carrier.  New paging
subscribers  are now placed  directly on the  Company's own paging  system.  The
Company transmits and receives paging signals on 929.0875 MHz and 929.2625 MHz.

Commissions  on  activations  of cellular  telephones for the three months ended
December  31, 1997 were zero  compared to $307,394  for the three  months  ended
December 31, 1996.

Commissions  on  activations  of cellular  telephones  for the nine months ended
December 31, 1997 were $422,428 compared to $2,114,646 for the nine months ended
December 31, 1996.

On May 15, 1997, the Company entered into a "Settlement & Separation  Agreement"
whereby  the  Company  severed  its  agency   relationship   with  NYNEX  Mobile
Communications,  Inc.  ("NYNEX") and Bell Atlantic  Mobile  Communications  Inc.
("Bell Atlantic") with respect to the solicitation of cellular activation's. The
contract  with  NYNEX and Bell  Atlantic  was the  Company's  largest  source of
commission income. As a result of the Settlement and Separation  Agreement,  the
Company's inability to establish a profitable relationship with another cellular
carrier, a lack of available resources and continuing losses, the Company ceased
cellular phone activations.

Revenues  from the sale of  electronics  were $9,614  for the nine  months ended
December 31, 1997 reflecting the Company's exit from the business.  However, the
Company,  having  been  advised  of the  affirmation  of its  October  28,  1997
dismissal of the federal lawsuit  against  Toshiba and in consultation  with its
new  auditors and counsel,  reinstated  the account  payable and charged cost of
sales in the amount of $379,854.  This matter was settled on favorable terms for
the Company.  The difference between the original account payable and the amount
paid to settle this claim is reflected on the Company's  statement of operations
as an extraordinary item.

Selling  General and  Administrative  expenses  decreased  approximately  45% to
$1,274,830 for the three months ended December 31, 1997 from  $2,802,565 for the
three  months  ended  December 31,  1996.  Selling,  General and  Administrative
expenses  decreased  approximately  71% to $4,576,120  for the nine months ended
December 31, 1997 from  $6,467,137  for the nine months ended December 31, 1996.
Included in Selling,  General and Administrative expenses for the three and nine
months  ended  December 31, 1997 is a one-time  non  recurring  charge to salary
expense of $327,640  which  represented  amounts  paid to previous  officers and
directors of the Company in exchange for, among other things,  the rescission of
all employment agreements. The decrease in expenses is the direct result of cost
saving measures instituted by new management which includes, among other things,
layoffs, improved controls over purchasing,  and the relocation of the Company's
officers.

Interest  expense was  $883,955  for the three  months  ended  December 31, 1997
compared to $74,396 for the three  months  ended  December  31,  1996.  Interest
expense was  $2,291,499  for the nine months ended December 31, 1997 compared to
$165,098 for the nine months ended December 31, 1996. Interest expense increased
for the three  months and nine  months  ended  December  31, 1997 as a result of
leases for office equipment and paging equipment, increased bank borrowings, the
private  placement  of 8%  convertible  debentures  on August 7,  1997,  and the
issuance of a total of $500,000 10% one year promissory notes. In addition,  the
Company incurred a non-cash interest expense of $2,264,143 in the three and nine
months ended December 31, 1997 due to EITF Bulletin D-60 discussed more fully in
Note 2 and the subsequent amortization of deferred finance charge on the sale of
the Company's 8% convertible debentures.

For the three and nine months  ended  December 31,  1997,  the Company  recorded
$599,146 as extraordinary  income. This amount represents the difference between
amounts  recorded in accounts  payable and amounts  actually paid by the Company
through non judicial settlements with certain of the Company's creditors.

LIQUIDITY AND CAPITAL RESOURCES


The Company  incurred  net losses of  $1,353,467  and  $2,927,722  for the three
months  ended  December  31,  1997  and 1996  respectively  and  $6,076,012  and
$5,958,578 for the nine months ended December 31, 1997 and 1996 respectively.

The Company has a working capital deficiency of $810,073 at December 31, 1997 as
compared  to a working  capital  deficiency  of  $3,775,300  Included in current
liabilities  is accrued  interest on the FCC notes of $957,861.  Since March 31,
1997 there has been a  moratorium  on the  payment of  interest  until March 31,
1998. The amount recorded in the company's  fianancial  statements  assumes that
the  Company  will not elect one of the three  financial  restructuring  options
offered by the FCC. If the Company  elects one of the three  options  more fully
discussed  in Note 3 of the  consolidated  financial  statements,  the amount of
accrued  interest  on the FCC notes  could  range from no amounts  due under the
amnesty  option  to  50%  of  the  amount  currently  recorded  in  the  current
liabilities  section  of the  Company's  consolidated  financial  statements  or
$478,930, less the return of 50% of previous interest payments or $143,000 which
amounts to $335,930 under the disaggregation option. The total amount of accrued
interest on FCC Notes will be spread over eight quarters upon the lifting of the
moratorium.   Management  has  not  made  a  decision  as  to  which   financial
restructuring option, if any, the Company will elect.

Net cash used in  operrating  activities  decreased to  $1,614,928  for the nine
months ended  December 31, 1997 compared to $2,221,398 for the nine months ended
December 31, 1996.

Net cash used in  investing  activities  increased  to  $1,775,700  for the nine
months ended  December 31, 1997 from $586,292 for the nine montbs ended December
31, 1996.  The increase in investing  activities  is primarily the result of the
Company's investment in its PCS licenses.

Net cash provided by the financing  activities  increased to $4,981,747  for the
nine months ended  December 31, 1997 from  $2,932,549  for the nine months ended
December 31, 1996.  During the three months ended  December 31, 1997 the Company
issued  30 shares  of new  Series C  Convertible  Preferred  Stock and  received
$2,595,000  net of $405,000  in  expenses.  The  Company  also issued a total of
$500,000 10% one year  convertible  notes.  The proceeds of these offerings were
used to repay past due  indebtedness and $105,000 loan made by a director of the
company with the balance being added to working capital.

Year 2000 Issue

Many  existing  computer  programs use only two digits to identify a year in the
date field.  These programs were designed and developed without  considering the
impact of the upcoming  change in the century.  If not corrected,  many computer
applications  could fail or create erroneous results by or at the Year 2000. The
Year 2000 issue affects virtually all companies and organizations.  There can be
no assurance that the Company's  suppliers,  creditors,  customers and financial
service  organizations may not be adversely  affected by the Year 2000 issue and
as a result,  there can be no  assurance as to the impact of the Year 2000 issue
on the Company.


<PAGE>

Financial Condition, Liquidity and Capital Resources


<PAGE>
Forward-Looking Statements
   
This quarterly  report on Form 10-Q for  the quarter ended  December 31, 1997 as
well as other public documents of the Company contain forward-looking statements
which involve risks and  uncertainties.  The Company's actual results may differ
materially  from  those  discussed  in  such  forward-looking   statements. Such
statements include, without limitation,  the Company's expectation and estimates
as to future financial performance,  including growth in net sales and earnings,
cash flows from operations,  improved results from business consolidations,  the
possibility  of gains from  dispositions  of the  Company's  PCs network and the
availability of  funds  from  the  sale   of  additional  shares  of  Electronic
Communications  Corp.  Readers  are urged to consider  statements  which use the
terms  "believes,"  "no  reason  to  believe,"  "expects,"  "plans,"  "intends,"
"estimates,"    "anticipated,"    or   "anticipates"   to   be   uncertain   and
forward-looking.  Such statements  reflect the current views of the Company with
respect to future  events and are subject to certain  risks,  uncertainties  and
assumptions.  In  addition to factors  that may be  described  in the  Company's
Commission filings,  including this filing, the following factors, among others,
could  cause the  Company's  actual  results  to differ  materially  from  those
expressed  in  any   forward-looking   statements  made  by  the  Company;   (I)
difficulties or delays in building out the Company PCS network;  (ii) actions by
competitors,  including business combinations,  technological breakthroughs, new
product offerings and marketing and promotional  successes;  (iii) the inability
to secure capital  contributions or loans from outside  investors or sell assets
or additional  shares of  Electronic  Communications  Corp;  (iv) effects of and
changes in current  FCC rules and  regulations;  (v)  difficulties  or delays in
realizing  improved results from business  consolidations and in realizing gains
from the sale of  certain  assets  held for  sale;  and (vi)  insolvency  of any
potential joint venture partners.



<PAGE>
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES



                                     PART II


                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The Company incorporates herein the information set forth in Note 14 to
         the Financial Statements of this report.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         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

During the quarter  ended  December  31,  1997,  the  Company  filed two current
reports on Form 8-K as follows:


   Date of Report                                          Item
   --------------                                          ----
  October 10, 1997                          (5) Other Events--Resignation of
                                                Certain officers/directors and
                                                filling of vacancies

  October 31, 1997                          (5) Other Events--Conversion of
                                                Debentures
                                            (7) Financial Statements--ProForma
                                                balance sheet at September, 30,
                                                1997



<PAGE>
 
                ELECTRONICS COMMUNICATIONS CORP. AND SUBSIDIARIES


                                   SIGNATURES




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

DATED:     February   , 1998

                                                ELECTRONICS COMMUNICATIONS CORP.



                                                By: /s/ Joseph A. Rosio
                                                    ----------------------------
                                                    Joseph A. Rosio, President