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

                                 FORM 10-KSB

              Annual Report pursuant to Section 13 or 15(d)
                  of the Securities Exchange Act of 1934

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

           For the fiscal year ended MAY 31, 2001
                                     ------------

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

           For the transition period from _________ To __________


                        Commission File No.000-17058


                    PHOENIX INTERNATIONAL INDUSTRIES INC.
     -----------------------------------------------------------------
     (Exact name of small business issuer as specified in its charter)

                                   FLORIDA
       --------------------------------------------------------------
       (State or Other Jurisdiction of incorporation or organization)

                                 59-2564162
                     ---------------------------------
                     (IRS Employer Identification No.)

               1750 OSCEOLA DR. WEST PALM BEACH, FLORIDA 33409
               -----------------------------------------------
                   (Address of Principal Executive Offices)

                                561-688-0440
              --------------------------------------------------
              (Issuer's telephone - number, including area code)

Check whether the issuer (1) filed all reports required to be filed by
Section  13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

                                 Yes [ ]

                                 No  [X]

State the number of shares outstanding of each of the issuer's classes
of common equity as of the latest practicable date:  as of May 31, 2001
there were  48,901,557 shares of the issuer's Common Stock, $.001 par value,
outstanding.

                Transitional Small Business Disclosure Format

                               Yes [ ] No [X]

                        Common Stock, $.001 par value


<PAGE>    1


                    PHOENIX INTERNATIONAL INDUSTRIES, INC.

                              INDEX TO 10-KSB


                                  PART I

ITEM I   DESCRIPTION OF BUSINESS
ITEM 2   DESCRIPTION OF PROPERTY
ITEM 3   LEGAL PROCEEDINGS
ITEM 4   RESULTS OF VOTES OF SECURITY HOLDERS

                                  PART II

ITEM 5   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
ITEM 6   MANAGEMENT'S DISCUSSIONS OF DISCONTINUED OPERATIONS

ITEM 7   FINANCIAL STATEMENTS
ITEM 8   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

                                  PART III

ITEM 9   MANAGEMENT AND DIRECTORS
ITEM 10  EXECUTIVE COMPENSATION
ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT
ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13  EXHIBITS AND REPORTS



<PAGE>   2


                               PART I

ITEM 1	DESCRIPTION OF BUSINESS

HISTORICAL DEVELOPMENT

     The Company was incorporated on July 22 1985, pursuant to the
laws of the State of Florida under the name "Hydrobac, Inc. On July 7,
1986, the Company's name was changed to "ProBac, Inc." and on October
5, 1994, its name was changed to Trident Environmental Systems, Inc.
During those periods the Company's primary business was in various
types of products and systems for use in the environmental clean-up
industry. On October 2, 1996 the Company's name was changed to Phoenix
International Industries, Inc. ("Phoenix" or the "Company" and the
Company's Common Stock was reverse split 15 to 1. The shareholders
approved Amendments to the Articles of Incorporation, changing the
authorized capital to 20,000,000 shares of Common Stock, par value
$.001 per share, and up to 5,000 shares of Preferred Stock for use as
needed. From January 1996 through May 31, 1997, the Company sought
acquisitions as it wound down and closed its original environmental
clean-up business. The Company, therefore, treats all matters relating
to the environmental clean-up business as discontinued operations.

     On June 13, 1998, the Company acquired 100% of the stock of
Intuitive Technology Consultants, Inc. ("ITC") of Atlanta, Ga.  ITC
was engaged in the business of computer system design and computer
related  (MIS) employee placement.  As of June 1999, the Company sold
its Intuitive Technology Consultants Inc subsidiary ("ITC") to a group
headed by the current management of ITC.

     Only July 21, 1997 the Company acquired 100% of the stock of HDX
9000, Inc. ("HDX"), a company specializing in compliance methodology
for the Y2K problem and for the various types of "ISO" compliance
certification. Since the demand for HDX's primary product, a
compliance methodology to solve the Year 2000 date change problem, has
become understandably non-existent, and due to HDX's inability to
establish a new marketable product in a timely fashion, on March 20,
2000, it was the decision of the Board of Phoenix in concert with the
previous shareholder of 100% of HDX's stock, to rescind the agreement
by which HDX was acquired by Phoenix.  This was done and the stock of
each company which was originally exchanged to effect the acquisition
was returned to the original holder or issuer.

     On April 9, 1998, the Company acquired 100% of the outstanding
stock of Mic Mac Investments, Inc., a long distance telephone service
"reseller" specializing in the hospitality industry.

     Based on an agreement entered into on December 14, 1998, the
Company acquired 100% of the stock of Cambridge Gas Transport
Corporation (CGTC), a Cayman Islands Corporation, in the business of
owning and operating specialized chemical/fuel tanker transport ships.
Due to unspecified disagreements, an agreement between the holders the
majority of CGTC stock,  and the Company, to rescind the acquisition
has been executed by the parties.   Phoenix filed litigation to recoup
their payments to CTCG, resulting in an out of court settlement on
December 15, 2000.

     During fiscal 2000 the Company acquired 100% of the stock of
Telephone Company of Central Florida, Inc. ("TCCF").   TCCF is a
"competitive local exchange carrier ("CLEC") telephone company and a
reseller of other telecommunications services.  TCCF was at that time
operating under the protection of "Chapter 11"of the federal
bankruptcy laws.  The effective date of the closing was ten days after
the Order of Confirmation is issued by the Bankruptcy court. The Order
of Confirmation was issued on June 9, 1999 and TCCF began operating as
a reorganized debtor on that date. The Company acquired TCCF within
ten days of the Confirmation Order.

     On July 28, 2000, the Company acquired 100% of the stock of Moye
& Associates, Inc. of St. Simons Island Georgia.  Moye & Associate's
primary business was that of an Internet Service Provider (ISP) known
as TheBest.Net.  This move was seen by the company as synergetic with,
and a possible future merger into TCCF.  On January 17, 2001 the name
of the Telephone Company of Central  was changed to EPICUS, Inc.


<PAGE>   3


BUSINESS OF AFFILIATES

     During the year ending on May 31, 2001, the Company consisted of
Phoenix International Industries, Inc., the parent company and three
wholly owned subsidiaries, EPICUS, Inc. (fka. Telephone Company of
Central Florida, Inc. ("TCCF"), Moye & Associates ("TheBest.Net"), and
Mic-Mac Investments, Inc.


TELEPHONE COMPANY OF CENTRAL FLORIDA, INC. ("TCCF")

     A Florida corporation, TCCF is a Competitive Local Exchange
Carrier, ("CLEC") and long distance service supplier currently serving
the Orlando, Florida area.  In August of 1996, via negotiations with
BellSouth, TCCF was not only the first, but the only Florida based
company to take advantage of the Telecommunications Act of 1996, which
mandated that competition be allowed in the local telephone service
market.  TCCF's agreement with BellSouth allows them to provide CLEC
services in all 9 states BellSouth serves.  In addition to CLEC
services, TCCF is moving aggressively into the prepaid calling
business throughout the southeastern United States.

     In 1997, their first full year of operations, TCCF reached $35.8
million in revenues, and for calendar 1998, TCCF had gross revenues of
approximately $46.5 million with a net pre-tax profit of $6.8 million.

     Due to "gross overbilling" by one of the major suppliers (later
proven in court) and not having sufficient capital to survive a multi-
million dollar demand for payment by its service providers, TCCF was
forced to file for bankruptcy protection and was operating under
Chapter 11 of the federal bankruptcy laws until it was acquired by
Phoenix in June of 1999 as part of the plan of re-organization filed
with, and accepted by, the federal bankruptcy court.

     Since that time TCCF has expanded its agreements with BellSouth
to include the capability of supplying of DSL Internet services
throughout all nine southeastern states of the BellSouth system.  TCCF
now has the ability to market DSL services via an arrangement with
AT&T and BellSouth but it is in the process of developing its own
Virtual Private Network capability which will provide both high speed
voice and data services nationwide.

MOYE & ASSOCIATES, INC. (TheBest.Net)

     A Georgia Corporation, Moye & Associates, dba "TheBest.Net" is an
Internet Service Provider (ISP) with approximately 2,000 customers.
They are also involved in the computer repair and e-commerce business.
However TheBest.Net accounts for more than 90% of their income.
COMPETITION

     Many similar companies, both large and small, offer similar
services as Phoenix and its subsidiaries. The Company believes that
the competitive factors affecting its markets include features such as
functionality, adaptability, ease of use, quality, performance, price,
customer service and support, effectiveness of sales and marketing
efforts and Company reputation- Although the Company believes that it
currently competes favorably with respect to such factors, there can
be no assurance that the Company can maintain its competitive position
against current and potential competitors, especially those with
greater financial marketing support and other resources than the
Company.

PATENTS

     The Company owns two patents for solidification of environmental
waste, which were acquired when the Company was involved in that
business. However, the Company is no longer in such business and it is
believed by the Company that these patents are of very little value
today, as they have been rendered obsolete due to the rapid
development of the environmental clean-up industry.


<PAGE>    4


EMPLOYEES

    As of May 31, 2001, the Company and its affiliates had 45
employees.


ITEM 2	DESCRIPTION OF PROPERTY

     The Company's principal place of business is located at 1750
Osceola Drive, West Palm Beach, Florida 33409, which consists of
office and warehouse space. This space aggregates approximately 3,500
square feet including four offices and a conference room. The annual
lease cost is $3,500.00 per month, plus expenses and expires in August
2001.  The lease contains an option to renew for one year with an
increase tied to the rate of inflation.

These offices are leased from a third party.


ITEM 3	LEGAL PROCEEDINGS

     As if May 31, 2001, the primary legal proceedings to which the
Company is a party are: (1) the ongoing litigation filed by Phoenix in
an attempt to force CTCG and its principals to comply with what
Phoenix believes to be a valid and binding purchase contract, and (2)
the ongoing litigation filed by Phoenix against its former subsidiary
Intuitive Technology Consultants, Inc., (ITC) (now renamed Elite
Technologies, Inc.) to recover approximately $350,000 in loans
extended to ITC when it was a Phoenix subsidiary.

     Although there has been a settlement agreement drafted and
executed to withdraw the litigation against CTCG and its principals,
they have defaulted on the second payment and new litigation is being
drafted by the Phoenix's counsel.

     As to the suit against ITC to collect on the money owed to
Phoenix; on June 11, 2001, the day before the trial was to begin, ITC
and the ITC Acquisition Group filed for bankruptcy under Chapter 7 of
the Federal Bankruptcy Laws.

     The suit against the company for breech of a lease from 1995 is
being contested by Phoenix's counsel.  All other litigation as
referred to in Note 20 of the financial statement, is in the process
of being negotiated. There are no other material legal proceedings
against the company or any of its Officers and/or Directors acting in
their capacities for the Company, or to which the property of the
Company is subject, and no such material proceeding is known by
management of the Company to be pending.


ITEM 4  RESULTS OF VOTES OF SECURITY HOLDERS

     During fiscal 2000 the majority of the shareholders of Phoenix
voted to increase the authorized number of shares from 20,000,000 to
200,000,000 and the authorized number of preferred shares from 10,000
to 20,000,000.


<PAGE>    5

                               PART II


ITEM 5	MARKET  FOR COMMON  EQUITY AND RELATED STOCKHOLDERS MATTERS

     The following table sets forth the range of high and low bid
prices as reported on the OTCBB during the periods commencing:

<TABLE>
<CAPTION>
                                                 CLOSING BID                CLOSING ASK
                                        ----------------------------------------------------
                                        HIGH              LOW           HIGH             LOW
                                        ----              ---           ----             ---
<S>                                     <C>               <C>           <C>              <C>
1998
07/01/98 through 09/30/98                .843            .4375           .875            .4687
10/01/98 through 12/31/98               1.28             .4062          1.37             .435

1999
01/02/99 through 03/31/99               1.00             .88            1.06             .94
04/01/99 through 06/30/99                .62             .47             .65             .50
07/01/99 through 09/30/99                .56             .36             .59             .39
10/01/99 through 12/31/99               1.62             .31            1.65             .34

2000
01/02/00 through 03/31/00               1.37             .34            1.41             .38
04/01/00 through 06/30/00               1.06             .43            1.06             .46
07/01/00 through 09/30/00		     .43		   .14		 .46		     .16
10/31/00 through 12/31/00		     .139		   .03		 .153		     .032

2001
01/01/01 through 03/31/01		     .26		   .03		 .23  	     .032
04/01/01 through 06/30/01		     .129		   .06		 .145		     .072

</TABLE>


The price of shares have been adjusted for all stock splits, and are
based on inter-dealer prices as the company is listed on the
electronic over the counter bulletin board.


Dividends

     The Company has paid no dividends during the past five fiscal
years on any class of its issued and outstanding securities.

     The payment by the Company of dividends, if any, in the future
rests within the discretion of its Board of Directors and will depend,
among other tier things, upon the Company's earnings, its capital
requirements and its financial condition, as well; as other relevant
factors. By reason of the Company's present financial condition, the
Company does not contemplate or anticipate paying any dividends on,
the Common Stock in the foreseeable future.


COMPANY CAPITALIZATION

      There are 200,000,000 shares of Common Stock authorized for
issuance. Of this amount, 48,901,557 shares are currently issued and
outstanding There are 20,000,000 shares of Preferred Stock authorized,
the designation and rights of which are to be determined by the Board
of Directors, none of which are issued and outstanding.


<PAGE>    6


ITEM 6	MANAGEMENT DISCUSSIONS

STATEMENT OF OPERATIONS

     With regard to the Statements of Operations for the year ending
May 31, 2001. The Company had an operating loss of $4,053,453 a
substantial portion of which was due to funding the operating losses
of EPICUS, as well as ongoing legal and accounting expenses incurred
in the implementation of the plan of reorganization of  EPICUS (fka
TCCF).

Continued  Operations

     In addition to the Telephone Company of Central Florida, the
company plans to increase its presence in the telecommunications
industry.  With that plan in mind on February 2, 2000, Phoenix
announced execution of a letter of intent between the Telephone
Company of Central Florida, Inc. ("TCCF"), and Moye & Associates,
Inc., of St. Simons, Georgia, owner/operator of "The Best Net" an
Internet Service Provider (ISP), Web Site Host and E-commerce Company.

     The Best Net is a rapidly growing ISP with over 2,500 Internet
subscribers, a profitable web site hosting service and an E-commerce
business.

     The Best Net ISP customers are ideal potential local and long
distance customers for TCCF, and TCCF's customers are potential
customers for The Best.Net's Internet services.  This type of cross
selling is part of the overall Phoenix marketing plan.

     The Company's HDX subsidiary was acquired July 21, 1997 in a
stock for stock transaction. For the 10 months and 10 days through May
31, 1998, HDX had revenues of $160,039 and expenses of $132,656.

     For the year ended May 31, 1999, HDX had no income and an
operating loss of $33,500. This was due to the expiration of the
market for HDX's primary product, a methodology for dealing with the
Y2K computer problem. HDX has returned to the status of a
developmental organization while it re-designs its other methodologies
in preparation to introduce them to the market.

     On March 20, 2000 it was the decision of the Board of Phoenix in
concert with the previous shareholder of 100% of HDX's stock, to
rescind the agreement by which HDX was acquired by Phoenix.  This was
done and the stock of each company which was originally exchanged to
effect the acquisition was returned to the original holder or issuer.

     With the exception of historical facts, the matters discussed
above include forward-looking statements that may involve a number of
risks and uncertainties.  Actual results may vary based upon a number
of factors, including, but not limited to, risks in product and
technology development, market acceptance of new products and
technology, continuing demand, the impact of competitive products and
pricing, and changing economic conditions.


Discontinued Operations

MIC-MAC INVESTMENTS, INC. ("Mic-Mac")

     Mic-Mac Investments, Inc. and Hospitality Telecom (together
"Hospitality") were acquired on April 1, 1998. For the period from the
date of acquisition through May 31, 1998, Hospitality had revenues of
$ 15,634 and expenses of $30,404.

     Hospitality ceased to operate late in the third quarter of fiscal
1999, claiming they could not meet their business plan projections or
continue without Phoenix acquiring a long distance telephone company
or other telephone service organization to give them support and
additional product. Mic-Mac Investments, Inc and Hospitality Telecom
had no remaining assets or liabilities as of May 31, 1999, and Phoenix
wrote off its remaining investment in them in that fiscal year.
Although it has ceased to operate, Mic-Mac, Inc., remains the property
of the Company until a decision is made as to its future.


<PAGE>    7

     As of June 1, 1998, the Company sold its ITC subsidiary to the
ITC Acquisition Group, a group headed by ITC management. The Company
received $60,900 in cash. $290,000 in Notes and 1,413,000 shares of
the Company' Common Stock, plus relief from obligations totaling
approximately $800,000 in return for said sale. The Shares of Common
Stock have been returned to the treasury of the Company and have been
cancelled. To date, no payment of interest or principal on the Notes
has been made and said payments are past due. Additionally, the
Company has not received any confirmation of relief from the $800,000
in obligations. The operations of ITC have been treated as
discontinued operations.  As of May 31, 2000 there had been no change
or decision regarding this situation and the matter remains in
litigation.  On June 11, 2001 ITC and the ITC Acquisition Group, Inc.,
filed for Chapter 7 Bankruptcy in the US Bankruptcy Court in Atlanta,
Georgia.  Phoenix is an unsecured creditor to that action, and has
little or hope of recovery of its loss.


CAMBRIDGE GAS TRANSPORT CORPORATION ("CGTC")

     CGTC is a holding company whose primary business is to act as
the majority shareholder of Navigator, and to issue and oversee the
management contracts for the construction and operation of Navigator's
ships. Purchased on December 14th of 1998, CGTC is the owner of 58%
(plus an option to purchase an additional 10%) of NAVIGATOR GAS
TRANSPORT PLC ("NAVIGATOR").  Navigator has contracted to build five
(5) 22,000 cubic meter semi-refrigerated gas carriers. These vessels
will be capable of carrying all types of petrochemical gases, including
ethylene and LPG. Navigator has raised the $304,000,000 required for
the funding of these vessels through a bond offering via Credit Suisse
First Boston.  The vessels are being built by Jiangnan Shipyard in
China. The vessels will be "state of the art" and the largest of their
type ever built.

     Note: The entire CTCG purchase agreement was published in
Phoenix's 10-KSB of May 31, 1998 and is incorporated herein by
reference.


ITEM 7  FINANCIAL STATEMENTS

    The financial statements of the Registrant, and the related notes,
together with the report of Wieseneck, Andres & Company, P.A. dated
August 11, 2000 and are set forth at pages F-1 through F-20
attached hereto.


CAPITAL RESOURCES AND LIQUIDITY

     During the year ending May 31, 2001 the Company issued 29,048,710
shares of common stock for acquisitions, consulting services, the
employee stock option plan, private placement, offshore investment
under Regulation S, and the convertible debenture.

     Previously, the Company has funded its capital requirements
for operating cash flow, by loans against its accounts receivable,
loans from shareholders, sales of equity securities and the issuance
of equity securities in exchange for assets acquired and services
rendered. During the 12 months ended May 31, 2001 the Company has been
and is continuing to attempt to attract new investment capital, which
the Company believes will be necessary to sustain its ongoing
operations and to facilitate growth. To that end on July 11, 2001, the
Company sold $2,000,000 in convertible debentures to two firms in New
York.  The Company continues to explore opportunities to raise private
equity capital and, in conjunction therewith, to provide credit
support for the Company's operations and potential acquisitions.
Although the Company has in the past been, and continues to be, in
discussions with potential investors, there can be no assurance that
its efforts to raise any substantial amount of private capital will be
successful. Any substantial private equity investment in the Company
will result in voting dilution of the Company's existing stockholders
and could also result in economic dilution. If the Company is unable
to obtain new capital, the Company will be unable to carry out its
strategy of growth through acquisitions and the long-term ability of
the Company to continue its operations may be in doubt.


ITEM 8	CHANGES IN, AND DISAGREEMENT WITH, ACCOUNTANTS ON
        ACCOUNTING AND FINANCIAL DISCLOSURE

     There have been no disagreements with any of our accounts on
accounting and financial disclosure. The Company's auditor for the
period ending May 31, 2001 and May 31, 1999 is Wieseneck, Andres, and
Associates, PA. 772 US Hwy. One, North Palm Beach, Florida 33408. For
the year ending May 31, 1998, the Company's auditor was Kane, Hoffman
& Danner, P.A., 1101 Brickell Ave., suite M-1-1, Miami, Florida 33131.
(See SEC Form 8-K as filed on August 31, 1998 and incorporated herein
by reference).


<PAGE>    8


                             PART III

ITEM 9  MANAGEMENT AND DIRECTORS

The current Management and Directors of the Company as of May 31, 1999
are as follows:

    Name                   Age                 Position(s)
----------------          -----       -----------------------------------
Gerard Haryman             57         President, CEO, acting CFO and
                                      Chairman of the Board of Directors
Thomas Donaldson           58         Vice President, Secretary and
                                      Director
Timothy Palmer             56         Director


     Set forth below is a brief background of the executive officers
and directors of the Company, based on information supplied by them

     GERARD HARYMAN has been Chairman of the Board, President and
Chief Executive Officer of the Company since January 1996.
Concurrently, until September 1996, he was President of American
Diversified Group, Inc., a public company based in West Palm Beach,
Florida, importing and exporting pharmaceuticals since June 1,994 to
the present, Mr. Haryman has been President of Aptek Communications,
Inc., a private company, based in West Palm Beach, Florida in the
business of selling and servicing portable computers. From January
1994 to the present he has been President of Aspen Marine Group, boat
builders and distributor of Portable computers, a public company in
West Palm Beach, Florida that is currently in Chapter II Bankruptcy
proceedings. Mr. Haryman is one of about 20 defendants in a lawsuit
brought by the Trustee of Aspen and believes that the lawsuit will
have no adverse consequences to the Company. Since 1981 to the
present, he has been President and CEO of SA, Sitmo developers and
builders of commercial and residential properties, with corporate
offices in Paris, France. In the period from March 1995 to September
1995, Mr. Haryman was Chairman of Life Industries, Inc., a public
company, which intended to import mineral water and other products
from, Mexico, which, did not materialize, leading to his resignation
from the Board, Mr. Haryman was a Finance Major at the Institute
General de Finance in Paris, France. He devotes approximately 95 % of
his time to the business of the Company.

     THOMAS DONALDSON has been Vice President, Director of Operations
and a Director of the Company (formerly Trident Environmental Systems,
Inc.) since February 1993. Additionally, from March 1996 to March
1997, he was Assistant Manager, Marketing for CCS Financial, Inc., a
finance company in Ft. Lauderdale, Florida. In the period January 1991
to February 1993, he was Director of Marketing for Professional
Locators, Inc., a placement firm in Boca Raton, Florida. Mr. Donaldson
attended the University of Paris (Sorbonne) and the University of
Miami.

     TIMOTHY PALMER has been President of HDX 9000, Inc., West Palm
Beach, Florida, a computer and business-consulting firm since October
1993, now a wholly owned subsidiary of the Company, and a Director of
the Company since July 1997. From March 1997 to the present, he has
been President of Quality Advantage, Ltd. of Kingston, Jamaica, a
computer and business consulting firm. Prior to October 1993, he was
manager of the Palmer Family Trust in London, England. Mr. Palmer
holds a Bachelor of Commerce Degree from McGill University in
Montreal, Canada.


OPTIONS & WARRANTS

   As of May 31, 2001, except as listed below and in Part II, ITEM 7
herein, there are no options, warrants, rights, etc., of any kind
issued and outstanding.


<PAGE>    9


STOCK OPTION PLAN

     On May 31, 1998, the Company's Board of Directors adopted a Stock
Option Plan far its employees, directors and consultants. On April 24,
2001 file a form S-8 to register 5,000,000 underlying shares of that
stock option plan.


ITEM 10	EXECUTIVE COMPENSATION

     During fiscal year 2001, the Company had two employees earning in
excess of $100,000 (see following chart)

                        SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                               ANNUAL COMPENSATION         LONG-TERM COMPENSATION
                               -----------------------     ----------------------
                                                                  AWARDS
                                                           --------------------
   Name and                                                      Securities
Principal Position      Year     Salary          Bonus           Underlying
------------------      ----     -------         -----           ----------
<S>                     <C>      <C>             <C>             <C>

Gerard Haryman,         2000     250,000(l)       -0-                -0-
President & CEO

Thomas N. Donaldson     2000     104,000(1)       -0-                -0-
Vice President/COO

</TABLE>

(1) Due to the cash position of the Company, Mr. Haryman and Mr.
    Donaldson have deferred payment of their salaries and bonuses.


                        EMPLOYMENT AGREEMENTS

The Company currently has no Employment Contracts in effect.


COMPENSATION OF DIRECTORS

     Each Director of Phoenix will receive 12,000 shares of Common Stock
for each year of service plus reimbursement of out-of-pocket expenses.
Currently, the Company has no outside Directors.


ITEM 11   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

Principal Shareholders

     The following table sets forth. certain information, as of May
31, 2001 regarding the Company's Common Stock owned of record or
beneficially by, (i) each stockholder who is known by the Company to
beneficially own in excess of 4.9% of the outstanding shares of Common
Stock; and (ii) all Directors and executive officers as a group,
Except as otherwise indicated, each stockholder listed below has sole
voting and investment power with respect to shares beneficially owned
by such person.

     In accordance with Rule 13-d3 promulgated under the Securities
Exchange Act of 1934, as amended, shares that are not outstanding but
that are issueable within 60 days upon exercise of outstanding
options, warrants, rights or conversion privileges or which are
otherwise required by Rule 13-d3 to be included have been deemed to be
outstanding for the purpose of computing the percentage of outstanding
shares owned by the person owning such right, but have not been deemed
outstanding for the purpose of computing the percentage for any other


<PAGE>   10


person. As of May 31, 2001, there are 48,901,557 shares of Common
Stock issued and outstanding and no options, warrants, etc. are
outstanding.

<TABLE>
<CAPTION>
                       COMMON  STOCK
                       -------------

                                  AMOUNT AND NATURE
                                    OF BENEFICIAL         % OF
NAME AND ADDRESS                      OWNERSHIP           CLASS
----------------                  -----------------       ------
<S>                               <C>                     <C>
Gerard Haryman, Pres./CEO, Dir.       2,444,941             5.6%
1750 Osceola Drive                     +280,000*
West Palm Beach, FL  33409            ---------
                                      2,724,941

Thomas Donaldson, VP/COO, Dir.          190,000             .03%
1750 Osceola Drive
West Palm Beach, FL 33409

Timothy Palmer
1750 Osceola Drive
West Palm Beach, FL 33409               500,000            1.03%

All shareholding Directors and
Officers as a Group (3 persons)       3,414,941            6.98%

</TABLE>

(*)  Mr. Haryman owns 2,444,941 shares directly and 280,000 shares are
     owned by Mr. Haryman's wife and thus are deemed beneficially owned
     by him.


ITEM 12	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In June 1995, the Company received a loan in the amount of Two
Hundred Forty Thousand Dollars ($240,000) from Mark-us A. Gertsch then
Chief Executive Officer of the Company. The loan was for a term of
three years at twelve and one-half percent 12.5% simple interest. In
September 1995 the Company received a loan of Thirty Thousand One
Hundred Thirty Four Dollars ($30,134) from Mr. Gertsch This loan was
for twelve (12) months.

     Both of these loans were repaid to Mr. Gertsch by the issuance of
220,000 shares of the, Company's Common Stock. These shares have not
been registered under the Securities Act of 1933.


ITEM 13	EXHIBITS AND REPORTS

INDEX TO EXHIBITS

(3)	ARTICLES OF INCORPORATION AND BY-LAWS

        "The Articles of Incorporation and Articles of Amendment to
	The Articles of Incorporation and By-Laws of the Registrant


<PAGE>    11

	were pre-filed as Exhibits 3-1, 3.2, and 3.3, respectively,
        to the registrant's Form I 0-KSB, for the fiscal year 1995,
        under the Securities and Exchange Act of 1934, filed April 1,
        1998, with the Securities and Exchange Commission and are
	incorporated herein by reference.

(10)    MATERIAL CONTRACTS. Some of the Material Contracts of the
        Registrant were filed as Exhibits 10.1, 10.2, 10.3, 10.4, and
        10.5, respectively, to the Registrant's Form 10-KSB as of May
        31, 1995 under the Securities and Exchange Ad: of 1934, filed
        April 1, 1998 with the Securities and Exchange Commission -
        The Contracts for the sale of ITC and the purchases of
        Hospitality Telecom Corp (formerly Mic Mac Investments, Inc.)
        and Cambridge Gas Transport Corporation, were included in
        Phoenix's 10-KSB for the year ended May 31, 1998 and are
        incorporated herein by reference.

(16)	LETTERS RE- CHANGE IN CERTIFYING ACCOUNTANTS

	See SEC Form 8-K as filed on August 31, 1999 and incorporated
        herein by reference

(16a)	BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

(21)	SUBSIDIARIES OF THE REGISTRANT

        EPICUS, Inc. , Mic-Mac Investments, Inc. and Moye & Associates,
        Inc.

ANY LOANS OR TRANSACTIONS BETWEEN OFFICERS OR DIRECTORS OF THE COMPANY

The Company has made a loan of $15,000 to one of its Officers: Thomas
Donaldson, see Note 1 of the included Consolidated Financial
Statements.



<PAGE>    12


                           SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the
City of West Palm Beach, Florida on September 12, 2001.

PHOENIX INTERNATIONAL INDUSTRIES, INC.

By:  /s/ Gerard Haryman
   --------------------------------
   Gerard Haryman President, Chief
   Executive Officer and acting
   Chief Financial Officer

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

SIGNATURE                         TITLE                      DATE
---------                 --------------------------      ------------

/s/ Gerard Haryman
--------------------
Gerard Haryman            President, CEO, acting CFO
                          and Chairman of the Board       September 12, 2001

/s/ Thomas Donaldson
--------------------
Thomas  Donaldson         Vice President, Secretary       September 12, 2001
                           and Director


<PAGE>    13












                   PHOENIX INTERNATIONAL INDUSTRIES, INC.

                      CONSOLIDATED FINANCIAL STATEMENTS

                                   May 31, 2001


<PAGE>



                     PHOENIX INTERNATIONAL INDUSTRIES, INC.


                                      INDEX


Financial Information

      Financial Statements:

Independent Auditors' Report - May 31, 2001 and 2000                  1

Consolidated Balance Sheets as of May 31, 2001 and 2000               2

Consolidated Statements of Operations for the years ended
May 31, 2001 and 2000                                                 4

Consolidated Statements of Stockholders' Deficit for the
years ended May 31, 2001 and 2000                                     5

Consolidated Statements of Cash Flows for the years ended
May 31, 2001 and 2000                                                 6

Notes to the Consolidated Financial Statements                        8



<PAGE>


                       WIESENECK, ANDRES & COMPANY, P.A.
                         Certified Public Accountants
                         772 U.S. HIGHWAY 1, SUITE 200
                       NORTH PALM BEACH, FLORIDA  33408
                                (561) 626-0400

THOMAS B. ANDRES, C.P.A.*, C.V.A.                          FAX (561) 626-3453
PAUL M. WIESENECK, C.P.A.

*Regulated by the State of Florida




                       INDEPENDENT AUDITORS' REPORT


To the Board of Directors
Phoenix International Industries, Inc.
West Palm Beach, Florida

We have audited the accompanying consolidated balance sheets of
Phoenix International Industries, Inc. and subsidiaries as of May 31,
2001 and 2000 and the related consolidated statements of operations,
stockholders' deficit, and cash flows for the years then ended.  These
consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of the Company and subsidiaries as of May 31, 2001 and 2000, and the
results of its operations and its cash flows for the years then ended
in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in Note 22
to the consolidated financial statements, the Company has accumulated
losses of approximately $13,000,000 as of May 31, 2001, has
insufficient working capital and may continue to incur selling,
general and administrative expenses.  Realization of certain assets is
dependent upon the Company's ability to meet its future financing
requirements, the success of future operations and the continued
funding of the parent Company's operations by its chief executive
officer and sale of common stock.  The conditions raise substantial
doubt about the Company's ability to continue as a going concern.
Management's plans regarding those matters are described in Note 22.
The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


        /s/Wieseneck, Andres & Company, P.A.


August 10, 2000




                              Page 1 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
May 31, 2001 and 2000


<TABLE>
<CAPTION>
                   ASSETS
                                                                    2001             2000
                                                                ------------     ------------
<S>                                                             <C>              <C>

Current Assets
  Cash                                                          $     58,565     $     46,905
  Accounts receivable net of allowance for doubtful
    accounts of $10,000 and $5,000.                                1,014,827          331,654
  Refundable deposit                                                       -          110,000
  Loans receivable stockholder                                        15,000           15,000
  Prepaid Expenses                                                     2,875           61,765
                                                                ------------     ------------
     Total Current Assets                                          1,091,267          565,324
                                                                ------------     ------------
Property and Equipment
  Property and equipment, net of $268,155 and $91,792
    accumulated depreciation                                         800,648          624,807
                                                                ------------     ------------
Other Assets
  Restricted cash                                                    203,365                -
  Reorganization value in excess of amounts allocable
    to identifiable assets, net of accumulated
    amortization of $17,109 in 2001                                  661,242          678,351
  Intangible assets, net of $131,053 accumulated
    amortization                                                      99,972                -
  Other assets                                                             -            8,929
  Deposits                                                           302,414                -
                                                                ------------     ------------
      Total Other Assets                                           1,266,993          687,280
                                                                ------------     ------------
      Total Assets                                              $  3,158,908     $  1,877,411
                                                                ============     ============
</TABLE>



See accompanying summary of accounting policies and
notes to financial statements.


                             Page 2 of 20


<PAGE>

PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
May 31, 2001 and 2000


<TABLE>
<CAPTION>

              LIABILITIES AND STOCKHOLDERS' DEFICIT
                                                                    2001             2000
                                                                ------------     -------------
<S>                                                             <C>              <C>

Current Liabilities
  Bank overdraft                                                $      3,916     $           -
  Accounts payable                                                 1,766,994           976,979
  Accrued expenses                                                   416,552            80,711
  Taxes payable                                                      151,495                 -
  Loans payable                                                      106,006           611,199
  Notes payable - current portion                                  3,142,315           250,000
                                                                ------------     -------------
     Total Current Liabilities                                     5,587,278         1,918,889
                                                                ------------     -------------
Long-Term Debt
  Long-term debt - net of current portion                            200,000         1,170,820
  Loan payable stockholder                                           437,699           558,820
                                                                ------------     -------------
     Net Long-Term Debt                                              637,699         1,729,640
                                                                ------------     -------------
Commitments and Contingencies                                              -                 -

Stockholders' Deficit
  Preferred stock, $.001 par value: 5,000
    shares authorized: no shares outstanding                               -                 -
  Common stock, $.001 par value: 200,000,000 shares
    authorized 48,901,557. Issued and outstanding                     48,902            19,354
  Additional paid-in-capital                                      10,272,420         7,543,466
  Accumulated deficit                                            (13,387,391)       (9,333,938)
                                                                ------------     -------------
     Total Stockholders' Deficit                                  (3,066,069)       (1,771,118)
                                                                ------------     -------------
     Total Liabilities and Stockholders' Deficit                $  3,158,908     $   1,877,411
                                                                ============     =============

</TABLE>




See accompanying summary of accounting policies and
notes to financial statements.



                             Page 3 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended May 31, 2001 and 2000


<TABLE>
<CAPTION>
                                                                    2001             2000
                                                                ------------     -------------
<S>                                                             <C>              <C>

Revenues                                                        $  3,671,015     $   1,748,220

Cost of Sales                                                     (2,791,754)        1,729,033
                                                                ------------     -------------
Gross Profit                                                         879,261            19,187
                                                                ------------     -------------
Operating Expenses
  Selling, general and administrative                              4,997,834         2,268,997
  Loan facility fees                                                       -           678,000
  Write off of, and impairment of goodwill, HDX                            -            65,594
                                                                ------------     -------------
    Total Operating Expenses                                       4,997,834         3,012,591
                                                                ------------     -------------
        Operating Loss                                            (4,118,573)       (2,993,404)
                                                                ------------     -------------
Other Income and Expense
  Interest income                                                     56,569            20,000
  Interest expense                                                  (362,269)         (154,602)
                                                                ------------     -------------
    Total Other Income and Expenses                                 (305,700)         (134,602)
                                                                ------------     -------------

Loss Before Income Taxes and Extraordinary Item                 $ (4,424,273)    $  (3,128,006)

Provision For Income Taxes                                                 -                 -
                                                                ------------     -------------
Loss Before Extraordinary Item                                    (4,424,273)       (3,128,006)
                                                                ------------     -------------

Extraordinary Item - Extinguishment of Debt                          370,820                 -
                                                                ------------     -------------
Net Loss                                                        $ (4,053,453)    $  (3,128,006)
                                                                ============     =============
Loss Per Share

  Extraordinary items                                           $      (0.01)    $           -
                                                                ============     =============

  Net loss                                                      $      (0.12)    $       (0.18)
                                                                ============     =============

  Fully diluted                                                 $      (0.09)    $       (0.11)
                                                                ============     =============

  Weighted average common shares                                  34,902,572        17,349,553
                                                                ============     =============

  Fully diluted common shares                                     46,340,000        28,790,000
                                                                ============     =============

</TABLE>





See accompanying summary of accounting policies and
notes to financial statements.


                                Page 4 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the years ended May 31, 2001 and 2000


<TABLE>
<CAPTION>
                                       Common Stock
                                --------------------------       Additional                           Total
                                Number of           At            Paid In        Accumulated       Stockholders'
                                 Shares          Par Value         Capital         Deficit           Deficit
                               ----------        ----------     ------------    -------------      -------------
<S>                            <C>               <C>            <C>             <C>                <C>

Balance, May 31, 1999          12,138,694        $   12,139     $  5,996,046    $  (6,205,932)     $   (197,747)

Sale of common stock            2,565,153             2,565          778,820                -           781,385
Issuance of stock for
  services rendered               150,000               150           95,100                             95,250
Issuance of stock for
  loan facility fees            2,000,000             2,000          676,000                            678,000
Stock issued as
  collateral for note           3,000,000             3,000           (3,000)                                 -
Recission of HDX stock           (500,000)             (500)             500                -                 -
Net Loss                                                                           (3,128,006)        (3,128,006)
                               ----------        ----------     ------------    -------------       ------------
Balance, May 31, 2000          19,353,847            19,354        7,543,466       (9,333,938)        (1,771,118)

Sale of common stock           18,264,869            18,264          781,954                -            800,218
Issuance of stock for
  services rendered,
  debt conversion, and
  compensation                 11,282,841            11,284        1,947,000               -           1,958,284
Net Loss                                -                 -                -      (4,053,453)         (4,053,453)
                               ----------        ----------     ------------    -------------      -------------
Balance, May 31, 2001          48,901,557        $   48,902     $ 10,272,420    $(13,387,391)      $  (3,066,069)
                               ==========        ==========     ============    =============       ============

</TABLE>




See accompanying summary of accounting policies and
notes to financial statements.


                                Page 5 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended May 31, 2001 and 2000


<TABLE>
<CAPTION>
                                                                    2001             2000
                                                                ------------     -------------
<S>                                                             <C>              <C>

Cash Flows From Operating Activities
  Cash received from customers                                  $  2,782,841     $   1,436,564
  Interest income                                                     56,569            10,000
  Cash paid to suppliers and employees                            (4,745,761)       (2,884,940)
  Interest paid                                                      (35,544)          (47,219)
  Income taxes paid                                                        -                 -
                                                                ------------     -------------
      Net Cash Flows Used in Operating Activities                 (1,941,895)       (1,485,595)

Cash Flows From Investing Activities
  Purchase of equipment                                             (176,477)          (10,555)
  Proceeds from sale of equipment                                          -             4,000
  Cash paid to develop name                                          (23,524)                -
  Cash paid for deposits                                            (222,998)                -
                                                                ------------     -------------
      Net Cash Flows Used in Investment Activities                  (422,999)           (6,555)

Cash Flows From Financing Activities
  Proceeds from sale of stock                                        800,218           895,310
  Purchase of a certificate of deposit                              (200,000)                -
  Collection of Refunable deposit                                     90,000                 -
  Proceeds from convertible debt                                   1,792,500                 -
  Payments on notes to trustee                                       (50,000)         (687,508)
  Repayment of loan to stockholder                                   (69,659)          (35,722)
  Proceeds from note payable                                         674,182           628,000
  Repayment of note payable                                         (410,000)                -
  Repayment of loans payable                                        (250,687)                -
  Proceeds from loans payable                                              -           611,199
                                                                ------------     -------------
     Net Cash Flows Provided by Financing Activities               2,376,554         1,411,279
                                                                ------------     -------------
Net Increase (Decrease) in Cash                                       11,660           (80,871)

Cash and Cash Equivalents at Beginning of Year                        46,905           127,776
                                                                ------------     -------------
Cash and Cash Equivalents at End of Year                        $     58,565     $      46,905
                                                                ============     =============

</TABLE>



See accompanying summary of accounting policies and
notes to financial statements.



                              Page 6 of 20

<PAGE>



PHOENIX INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended May 31, 2001 and 2000


<TABLE>
<CAPTION>

Reconciliation of Net Loss to Net Cash Flows Used in Operating Activities:

                                                                    2001             2000
                                                                ------------     -------------
<S>                                                             <C>              <C>
Net Loss                                                        $ (4,053,453)    $  (3,128,006)
   Add items not requiring outlay of cash:
     Depreciation                                                    130,344            87,141
     Amortization                                                    148,162                 -
     Bad debts                                                       220,000            48,850
     Expenses paid by issuance of common stock                     1,624,618           773,250
     Loss from write off and partial impairment
       of Goodwill, HDX                                                    -            65,594
     Loss on sale of assets                                                -            13,951
   Cash was provided by:
     Decrease in refundable deposit                                  110,000           100,000
     Decrease in loan receivable                                           -             5,526
     Increase in accounts payable                                    908,775           866,860
     Increase in accrued liabilities                                 133,472            73,211
     Increase in other taxes payable                                  36,652                 -
     Increase in accrued interest payable                            153,327                 -
   Cash was used in:
     Increase in accounts receivable - net                          (888,174)         (331,654)
     Increase in other current assets                                      -           (53,765)
     Increase in prepaid expenses                                     (2,667)                -
     Increase in intangible assets                                  (231,927)                -
     Increase in other assets                                       (231,024)           (6,553)
                                                                ------------     -------------
        Net Cash Flows Used in Operating Activities             $ (1,941,895)    $  (1,485,595)
                                                                ============     =============

Supplemental Schedule of Non Cash Activities:
  Stock issued to reduce debt                                   $    284,500     $           -
  Stock issued to pay interest on debt                                88,672                 -
  Stock issued to pay facility fee                                         -           628,000
  Issuance of common stock as collateral for loan                          -                 1

</TABLE>




See accompanying summary of accounting policies and
notes to financial statements.


                              Page 7 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 1 - Summary of Significant Accounting Policies and General
         Matters
---------------------------------------------------------------

Organization
------------

Phoenix International Industries, Inc., A Florida Corporation (the
Company), and its subsidiary, Epicus, Inc. (formerly known as The
Telephone Company of Central Florida, Inc.) purchase wholesale long
distance and local telecommunication services and resell these
services to its customers throughout the United States.  Epicus, Inc.,
formerly the Telephone Company of Central Florida, Inc. changed its
name in January 2001 to better reflect the scope of its business
purpose and to eliminate the limitations imposed by its previous name.
Epicus, a wholly owned subsidiary, was acquired July 1999 as a
reorganized debtor to facilitate these activities.

The Company acquired 100% of the outstanding common stock of Moye and
Associates, Inc. a Georgia Corporation, doing business as The Best Net
(Best Net, Moye) on July 28, 2000.  Moye provides computer consulting
primarily to commercial business and Internet provider services, (dial
up and domain hosting) primarily to individual customers in the
Southeastern United States.  The Company had provided similar computer
services through May 1999 as Best Net by way of its then wholly owned
subsidiary HDX.

The Company reactivated Mic Mac, Inc. a company incorporated in the
State of South Carolina, with the intent of selling the company in the
future.  Mic Mac, a wholly owned subsidiary of the Company,
discontinued operating in the fiscal year ended May 31, 1999.

Principals of Consolidation
---------------------------

The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary Epicus Inc. and Moye and
Associates, Inc. at May 31, 2001 and May 31, 2000.  All intercompany
accounts and transactions have been eliminated.

Use of Estimates
----------------

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

Revenue Recognition
-------------------

Local telephone services for business and residence are a fixed
monthly amount per telephone line and are billed to the customer at
the beginning of each billing cycle for use in that month.  The
monthly billings are recorded as income when billed.  The prorated
portion of unused local services that remain once a customer
terminates service are recognized as a customer payable until the
refund check is issued.  Long distance services for the prior months
use are included in the current months bill and are recognized as
income when billed.  Epicus discontinued servicing the debit card
industry (prepaid telephone cards) in May 1998.  Epicus' remaining
commitments, if any, for unused prepaid telephone cards outstanding
are expensed through monthly billings received from the long distance
carrier.

Cash and Cash Equivalents
-------------------------

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

Goodwill
--------

Goodwill represents the excess of the purchase price over the fair
values of the net assets and liabilities acquired resulting from
business combinations and is being amortized on a straight-line basis
over five to ten years.  The Company periodically reviews the value of
its goodwill to determine if an impairment has



                            Page 8 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000

NOTE 1 - Summary of Significant Accounting Policies and General
         Matters (continued)
---------------------------------------------------------------

occurred.  The Company measures the potential impairment of recorded
goodwill by the undiscounted cash flows method.

Property and Equipment
----------------------

Property and equipment are stated at cost.  The Company provides for
depreciation over the estimated useful lives of the related assets,
which range from five to twelve years, primarily using the straight-
line method.

The Company capitalized the cost to develop, design and implement the
billing and accounts receivable software used for the Company's
internal use.  Capitalized costs consist of contract labor charges
incurred by the Company for computer programmers.  The software
development costs are being amortized on a straight-line basis over
their estimated useful life of seven years.

Income Taxes
------------

The Company accounts for income taxes under the asset and liability
method, whereby deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between
financial statement carrying amounts of existing assets and
liabilities and their respective tax basis.  Deferred tax assets and
liabilities are measured using tax rates expected to apply to taxable
income in the years in which those temporary differences are expected
to be recovered or settled.  The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.  The realizability of
deferred tax assets is assessed throughout the year and a valuation
allowance is established accordingly.

Earnings (Loss) Per Share
-------------------------

In March 1997, the FASB issued SFAS No. 128, "Earnings per Share."
This Statement was effective for interim and fiscal periods ending
after December 15, 1997.  This Statement requires the presentation of
(1) diluted earnings per share, whose calculations includes not only
average outstanding common share but also the impact of dilutive
potential common shares such as outstanding common stock options; and
(2) basic earnings per share which includes the effect of outstanding
common shares but excludes dilutive potential common shares.

The weighted average common shares outstanding during the years ended
May 31, 2001 and 2000 were 34,902,572 and 17,349,553 respectively.

Fair Value of Financial Instruments
-----------------------------------

The carrying amount of accounts receivable, accounts payable, accrued
expenses and loan payable to related party approximate fair value
because of the short maturity of these items.

Concentrations of Credit Risk
-----------------------------

Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of accounts
receivable.  Management performs regular evaluations concerning the
ability of its customers to satisfy their obligations and records a
provision for doubtful accounts based upon these evaluations.

The Company holds cash in one banking institution in excess of FDIC
insurance limits.


NOTE 2 - Loans Receivable
-------------------------

At May 31, 2001 and 2000, loans receivable consisted of a $15,000 non-
interest bearing, non-collateralized loan from an Officer and
Stockholder of the Company.  There is no specified date for repayment.



                              Page 9 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 3 - Restricted Cash
------------------------

Restricted cash consists of an eighteen-month certificate of deposit
paying 6.19% and maturing January 7, 2002.  The certificate of deposit
is held by a bank to collateralize a letter of credit of an equal
amount for the benefit of Bell South.


NOTE 4 - Reactivation of Subsidiary
-----------------------------------

The Company acquired 100% of the outstanding stock of Mic Mac on April
9, 1998 by issuing 250,000 shares of restricted common stock. The
Company ceased operating in the third quarter of the year ending May
31, 1999.  The net income from the disposition of Mic Mac was
recognized as income from discontinued operations in the May 31, 1999
financial statement.  The Company reactivated the company by filing
the appropriate documents with the State of South Carolina with the
intention of selling the asset.


NOTE 5 - Refundable Deposit
---------------------------

The Company negotiated the refund of a deposit that the Company had
made towards the acquisition of another company in a prior year.  The
settlement included the deposit of $200,000 plus a total of $20,000
interest.  $110,000 was received in the fiscal year May 31, 1999.  The
Company settled for $90,000 and charged the remaining $20,000 to bad
debt in the current fiscal year.


NOTE 6 - Allowance for Doubtful Accounts, Bad Debts
---------------------------------------------------
The Company established an allowance for doubtful accounts for the
years ending May 31, 2000 and 2001.  Activity in the allowance for
doubtful accounts and bad debt expense are summarized as follows:

<TABLE>
<CAPTION>
                                                   Allowance
                                                 For Doubtful       Bad Debt
                                                   Accounts          Expense
                                                -------------     -------------
<S>                                             <C>               <C>

May 31, 2000 provision for doubtful accounts    $       5,000     $       5,000
Direct write off of accounts receivable                     -            43,850
                                                -------------     -------------
                                                        5,000            48,850
                                                                  =============

May 31, 2001 provision for doubtful accounts            5,000                 -
Direct write off of accounts receivable                     -           200,000
Write off of refundable deposit
(See note 5 above).                                         -            20,000
                                                -------------     -------------
                     Total                      $      10,000     $     220,000
                                                =============     =============
</TABLE>



Management estimated that approximately $400,000 of accounts
receivable are no longer customers and may not be collectible.  The
Company has instituted various actions in an effort to collect these
accounts, i.e. turned over to collection agencies and to legal counsel
as well as various in-house collection efforts.  The following is the
calculation used to estimate the current years bad debt expense.


Estimated dollar amount of noncurrent customers          $   400,000
Estimated uncollectable, 35% ($400,000 x .35)               (140,000)
Estimated collection expense, 25% of collections
  ($260,000 x 25%)                                           (65,000)
                                                         -----------
Estimated uncollectable accounts receivable (rounded)    $   200,000
                                                         ===========



                            Page 10 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


Note 7 - Deposits
-----------------

Deposits at May 31, 2001 and 2000 consist of the following


     Security deposit                     $   229,192       $        -
     Utilities                                  2,695             5,450
     Office Leases                              2,490             3,000
     Equipment Lease                              480               479
     Deposit on purchase of equipment          61,557            61,765
     Other contracts                            6,000                 -
                                          -----------       -----------
                                          $   302,414       $    70,694
                                          ===========       ===========

NOTE 8 - Business Combinations
------------------------------

Epicus, Inc.

The Company acquired 100% of the issued and outstanding voting common
stock of TCCF (a reorganized debtor) on July 27, 1999.  The
consideration and terms were as follows.  All administrative claims
and expenses are not to exceed $570,000.  Priority claims and taxes,
not exceeding $300,000 to be paid in $25,000 installments over a
period of six years with interest payable at 8%.  In addition, Phoenix
will deposit a total of $500,000 into a creditor trust fund.  The
initial deposit of $100,000 to the trust fund was made at the
confirmation order and the balance will be deposited in four
consecutive semi-annual installments of $100,000 (see Note 12). The
"effective date" of the closing was ten days after the Bankruptcy
Court issued the Order of Confirmation.  At the execution of the
Letter of Intent of the Company to acquire TCCF, the Company deposited
50,000 shares of its common stock with council for TCCF as security
for the performance of its obligations under the agreement.  The
shares of stock remain issued and outstanding with council as of May
31, 2001.

The United States Bankruptcy Court issued the Order of Confirmation on
June 9,1999.  The Bankruptcy Court reserved comprehensive and
expansive jurisdiction to resolve any dispute and questions arising in
connection with the plan and Confirmation Order.   The court has
jurisdiction over any remaining cases.

The Company began operating as a Reorganized Debtor using Fresh Start
Accounting in compliance with Accounting Statement of Position (SOP)
90-7 on July 28, 1999.  Except as expressly provided in the Plan, the
Confirmation Order shall discharge any and all debts or claims
whatsoever and any prior equity interests in the Company.  The
property and equipment of the Company were restated to properly
reflect their reorganized value, the liabilities subject to compromise
were reduced to the settlement amounts and those that are not subject
to compromise are segregated, prior stockholder's deficit of
$1,113,130 was eliminated by recording income forgiveness as an
extraordinary item.

TCCF purchases wholesale long distance and local telecommunications
services and resells these services to their customers throughout the
United States.  This acquisition was recorded using the purchase
method of accounting as prescribed by APBO 16.  All intercompany
accounts were removed through eliminating entries for the
consolidation.  The cost of acquiring TCCF was $1,370,000.  The excess
of the purchase price over the total assets has been recorded as
Reorganization Value in Excess of Amounts Allocable to Identifiable
Assets and will be amortized over its estimated useful life of 40
years.

The following condensed proforma reflects the results of operations of
the company had TCCF been included for the full twelve months ended
May 31, 2000 respectively.



                          Page 11 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 8 - Business Combinations (continued)
------------------------------------------

                                         For the Twelve Months
                                             ended 5/31/00
                                         ---------------------

      Revenues                           $           1,926,330
      Operating Expenses                             5,243,252
      Depreciation & Amortization                      163,287
      Interest Income                                   20,000
      Interest Expense                                 154,747
      Loss before Income Taxes                      (3,614,956)
      Provision for Income Taxes                           -0-
      Loss before extraordinary items              (3,614,956)
      Net Loss                           $         (3,614,956)
      Loss Per Share                                     (.21)


Moye and Associates, Inc.

In accordance with an Agreement and Plan of Share Exchange the Company
acquired 100% of the outstanding shares of common stock of Moye and
Associates, Inc., a Georgia Corporation, doing business as Best Net
(Moye, Best Net) on July 28, 2000.  The agreement states that all
1,000 outstanding shares of Moye and Associates shall be exchanged for
600,000 shares of common stock of the Company, a 600 to 1 ratio.  The
agreement contemplates a tax-free share exchange of Best Net into the
Company in reorganization pursuant to Code Section 368(a)(I)(A).  In
accordance with the terms of the Agreement, the first 200,000 shares
of the Company stock were issued immediately after the effective date,
the second 200,000 shares were issued 135 days subsequent to the
effective date and the final 200,000 shares are to be issued 270 days
subsequent to the effective date.  The final 200,000 shares were
issued in June 2001.  The transaction was accounted for using the
purchase method of accounting.  Goodwill is normally recorded when the
purchase price exceeds the fair value of the net assets and
liabilities acquired.  Management reviewed the prospects of recovery
of Goodwill that was recorded on the date of purchase and determined
that the goodwill was 100% impaired based on the Letter of Intent to
sell Moye & Associates (see below).  The excess of the fair value of
the liabilities assumed over the fair value of the assets acquired
(negative book value) was not recorded as negative Goodwill.

As part of an Employment Agreement also dated July 28, 2000, between
the Moye & Associates, Inc. and Tully Moye, former stockholder of the
Company, Moye & Associates will employ Mr. Moye for three years
beginning July 28, 2000 at an annual base salary of $50,000 in year
one, $60,000 in year two and $70,000 in year three.  The above
represents a $10,000 increase in base salary each year.  This will
occur only if the financial state of the Company is such that it can
meet this increase based on revenue generated by the Company; and the
Company will not be forced to go to sources outside the Company to
meet the increase.  Should that not be the case employee's annual base
salary will remain at $50,000 until the above condition can be met, at
which time the increase will go into effect.

If, one year from the anniversary date of this agreement, the closing
bid price of Phoenix International Stock is less than one dollar
($1.00) per share, making the value of 600,000 shares less than
$600,000 dollars, employee will receive the difference between
$600,000 and the actual value in additional stock of Phoenix
International Industries, Inc.

Another provision of the Employment Agreement, Moye will reimburse
Tully Moye $100,000 for interest free loans Tully made to Moye. The
loan will be paid as follows:  $25,000 at the closing of the Share
Exchange Agreement, $50,000 on September 1, 2000, and $25,000 180 days
form the execution of the Share Exchange Agreement.  The second two
payments have not been made but the payable has been reduced by the
amount of personal expense paid by the Company on behalf of Mr. Moye
(see Note 12.)




                          Page 12 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 8 - Business Combinations (continued)
------------------------------------------

On July 19, 2001, the Company signed a Letter of Intent to sell the
active clients of Best Net.  The buyer will pay $133.33 for each
existing "dial-up" and "domain hosting client".  It is estimated that
there are between approximately 1,500 and 2,672 active, fee for
service clients at Best Net on the date of signing the Letter of
Intent.  The buyer deposited a down payment of $150,000 with the
Company and an additional $50,000 into an interest bearing account at
the date of signing.  The buyer then has 120 days to verify the exact
number of clients delivered by the Company.  There will then be a
"true up" of the number of paying clients in good standing at the end
of the verification period.

NOTE 9 - Property and Equipment
-------------------------------

Property and equipment consists of the following at May 31:

                                           2001                  2000
                                       ------------         -------------

Computer Equipment                     $    234,681         $     268,687
Furniture, fixtures and equipment           390,722               147,913
Software development                        443,400               300,000
                                       ------------         -------------
Total cost                                1,068,803               716,600
Accumulated depreciation                    268,155                91,793
                                       ------------         -------------
  Net Property and equipment           $    800,648         $     624,807
                                       ============         =============
Depreciation expense included in
  the cost of sales for the years
  ended are:                           $    130,344         $      87,141
                                       ============         =============


The Company capitalized the cost to develop, design and implement the
billing and accounts receivable software used for the Company's
internal use.  Capital costs consist of contract labor charges
incurred by the Company in the year ended May 31, 2001 and 2000 for
computer programmers.

The Software Development costs are being amortized on a straight-line
basis over their estimated useful life of seven years.


NOTE 10 - Loan Payable - Related Party
--------------------------------------

                                                           May 31,
                                                 --------------------------
                                                     2001          2000
                                                 -----------    -----------
The note payable to shareholder and Chief
Executive Officer is noncollateralized and
due on demand.  Interest is accrued at
the Applicable Federal Rate (AFR) of
approximately 6.25%

        Principal                                 $  430,965    $  500,574
        Accrued Interest Payable                       6,734        58,246
                                                  ----------    ----------
                                                  $  437,699    $  558,820
                                                  ==========    ==========

NOTE 11 - Accrued Compensation
------------------------------

The Company issued 2.5 million shares of free trading common stock in
February 2000 to the Chief Executive and Chief Operating Officers of
the corporation as compensation for their services.  The value of the
compensation and paid-in capital was recorded at value per share
($.26) of the Company's closing market price on the day the stock was
issued.



                             Page 13 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 12 - Notes Payable
-----------------------

Notes payable at May 31, 2001 and May 31,2000 consisted of the
following:

<TABLE>
<CAPTION>
                                                                      2001                2000
                                                                  ------------        ------------
<S>                                                               <C>                 <C>

A one-year, 13%, $750,000 note payable from an offshore
corporation dated June 21, 1999 with interest payable
quarterly.  The note is renewed, in accordance with the
terms of the note, for additional twelve-month periods by
giving written notice prior to maturity.  In order to obtain
the financing, the Company issued a total of 5,000,000 shares
of restricted common stock as defined by Rule 230.144 under
the Securities Act of 2033, as amended.  1,000,000 shares of
the Company's restricted common stock were delivered to the
lender to facilitate the loan and an additional 1,000,000
shares were issued to a related company (100% owned by the
COO of the Company) that assisted in obtaining the loan. The
Company applied a 40% discount from quoted market price of
the Company's stock at the date of issuance to determine the
fair value of the 2,000,000 shares issued as a facility
fee. The "Facility Fees" associated with the one year note
were expensed in the year ended May 31, 2000.  Pursuant to
the terms of a Pledge and Security Agreement between borrower
and lender, the Company issued 3,000,000 shares of restricted
common stock to the lender to hold as collateral on the note.
The company shall grant the lender the option to purchase the
pledged shares at an exercise price of $.36 per share at any
time for a period of two years from the date of pledge.  The
purchase option, if exercised by the lender, will have no
effect on the outstanding balance of the note. Total accrued
interest which is included in accrued interest payable from
inception of the note through May 31, 2001 is $194,081.
Interest accrued for the year 2001 is $113,370.                   $    750,000        $    750,000

In accordance with an Employment Agreement between the
Company and Mr. Tully Moye (Tully), the former owner of
Moye & Associates, Inc., dated July 28, 2000, the Company
agreed to pay Tully $100,000 to repay loans he made to Moye
& Associates over the years.  The Agreement calls for Tully
to receive $25,000 at the execution of the closing documents
between the Company and Moye & Associates, $50,000 on
September 1, 2000 and $25,000 180 days after the execution of
the closing of the Share Exchange Agreement between the two
companies.  The second two payments have not been made but the
payable has been reduced by the amount of personal expense
paid by the Company on behalf of Tully.                                 54,000                   0

A non-interest bearing, non-collateralized loan due on demand
to a related company of the Chief Operating Officer.  The loan
was converted to a 10% Note Payable on March 21, 2001.
Principal and interest is due on demand but in no case later
than June 15, 2001.  The note is collateralized by a first
interest in all goods of the borrower (i.e.) computers, office
equipment, vehicles etc., all receivables, contract rights,
general intangibles and all real or intangible property of the
Company.  The note was renewed for an additional one year.             472,000                   0

</TABLE>


                             Page 14 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 12 - Notes Payable (continued)
-----------------------------------

<TABLE>
<CAPTION>
                                                                      2001                2000
                                                                  ------------        ------------
<S>                                                               <C>                 <C>

The Company issued $2 million of 12% secured convertible
debentures on June 22, 2000 that mature in December 2001.
Interest is payable quarterly commencing on June 30, 2000
and each quarter thereafter while such debentures are
outstanding.  All overdue and unpaid interest shall entail
a late fee at the rate of 15% per annum.  The debenture
shall be convertible into shares of common stock at the
option of the holder, in whole or in part at any time and
from time to time, after the original issue date.  The
number of shares of common stock issuable upon a conversion
shall be determined by a formula as specified in the
agreement.  The exercise price is equal to 65% of the
average of the per share market values of the common stock
during the five trading days immediately preceding the date
of exercise.  A holder may not convert debentures or receive
shares of common stock as payment of interest to the extent
such conversions or receipt of such interest payment would
result in the holder beneficially owning in excess of 9.999%
of the then issued and outstanding shares of common stock.
The holder converted 6,808,867 shares of common stock that
reduced principal by $284,500 and paid interest of $88,673.
Unpaid accrued interest that is included in accrued interest
payable at May 31, 2001 is $35,684.                                  1,715,500                   0


Two notes payable due to the creditor trust fund.  1) A
$500,000, 8% non-collateralized note with semi-annual
payments of $100,000 starting July 26, 1999.  The proceeds
from this note are for paying the allowed general unsecured
creditors (pre-petition accounts payable).  This note
matures July 26, 2001, and 2) A $300,000, 8% non-
collateralized note with semi-annual payments of $25,000
starting July 26, 1999.  The proceeds from this note are for
paying allowed priority tax claims.  The Company
renegotiated, with approval of the court, the terms of the
repayment of the remaining balances of the two notes due to
the Creditors Trust.  The new terms require the Company to
pay $50,000 on October 15, 2000 and fourteen equal quarterly
payments of $25,000 until the balance is paid in full. The
write down of this note in the amount of $270,820 is included
as an extraordinary item - extinguishment of debt in the May
31, 2001 Statement of Operations.  In the event the Company
fails to make any of the payments when due under the modified
schedule, the Creditors' Trust would then be entitled to the
immediate entry of judgment for the remaining amounts due,
upon the filing of an Affidavit of Non-Payment by the
Creditors' Trust.  The October 15, 2000 payment was made to
the Creditors' Trust.  This new note matures April 2004.               350,000             670,820
                                                                  ------------        ------------

                                       Total Long Term Debt          3,342,315           1,420,820

                                       Less Current Portion          3,142,315             250,000
                                                                  ------------        ------------
                                       Net Long Term Debt         $    200,000        $  1,170,820
                                                                  ============        ============

</TABLE>


                                  Page 15 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 12 - Notes Payable (continued)
-----------------------------------

Principal maturities are as follows for the next five years ending May
31:

                 Year                Amount
                 ----             ------------
                 2002                3,142,315
                 2003                  100,000
                 2004                  100,000
                                  ------------
                                  $  3,342,315
                                  ============


NOTE 13- Loans Payable, Line of Credit
--------------------------------------

At May 31 the company is obligated to the following loans payable:

<TABLE>
<CAPTION>
                                                          2001                 2000
                                                     -------------       --------------
<S>                                                  <C>                 <C>

Two non-interest bearing, non-collateralized
loans due on demand to current employees and
stockholders of the company.                         $           0       $      103,722

A non-interest bearing, non-collateralized
loan due on demand to a related company of
the Chief Executive Officer. (See Note 12.)                      0              208,419

Three non-interest bearing, non-collateralized
loans due on demand.  One loan remains at May 31,
2001.  The Company has been unable to locate one
payee and has been informed the company went out
of business.  The loan, in the amount of $100,000
was written down and included as an extraordinary
item - extinguishment of debt in the May 31, 2001
Statement of Operations.                                    97,878              299,058

A bank line of credit was established by Best Net
to cover overdrafts that may occur in the operating
demand account.  The line of credit is
noncollateralized and interest is payable monthly
on the unpaid principal balance at 9%.  The loan
is due on demand.                                            8,128                    0
                                                     -------------       --------------
    Total Loans Payable                              $     106,006       $      611,199
                                                     =============       ==============
</TABLE>


NOTE 14 - Income Taxes
----------------------

No provision for federal and state income taxes has been recorded
because the Company has incurred net operating losses since inception.
The Company's net operating loss carry-forward as of May 31, 2001
totals approximately $9,400,000.  These carry-forwards, which will be
available to offset future taxable income, expire beginning in 2009.

The Company does not believe that the realization of the related net
deferred tax asset meets the criteria required by generally accepted
accounting principles and, accordingly, the deferred income tax asset
arising from such loss carry forward has been fully reserved.


NOTE 15 - Effects Of Inflation
------------------------------

To date, inflation has not had a material impact on the Company's
consolidated financial results.



                            Page 16 of 20


<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 16 - Recent Accounting Pronouncements
------------------------------------------

In December 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 101 ("SAB 101"). SAB 101
summarizes certain areas of the Staff's views in applying generally
accepted accounting principles to revenue recognition in financial
statements.  We adopted SAB 101 in our fiscal quarter beginning June
1, 2000.  The adoption of SAB 101 had no impact to our operating
results and financial position.

The FASB issued SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS No. 133", as amended by SFAS No. 138).
This statement establishes accounting and reporting standards
requiring that every derivative instrument, including certain
derivative instruments embedded in other contracts, be recorded in the
balance sheet as either an asset or liability measured at its fair
value. The statement also requires that changes in the derivative's
fair value be recognized in earnings unless specific hedge accounting
criteria are met. We adopted SFAS No. 133 in our fiscal quarter
beginning June 1, 2000. The adoption of SFAS No. 133 had no impact to
our operating results and financial position, since we currently do
not invest in derivative instruments or engage in hedging activities.
In July 2001, the FASB issued SFAS No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. These standards,
among other things, eliminate the pooling of interests method of
accounting for future acquisitions and require that goodwill no longer
be amortized, but instead be subject to impairment testing at least
annually. SFAS No. 142 must be adopted in fiscal years beginning after
December 15, 2001 as of the beginning of the fiscal year. Companies
with fiscal years beginning after March 15, 2001 may early adopt
provided they have not yet issued their first quarter financial
statements.

Goodwill and intangible assets acquired prior to July 1, 2001 will
continue to be amortized and tested for impairment in accordance with
pre-SFAS No. 142 requirements until adoption of SFAS No. 142. Under
the provision of SFAS No. 142, intangible assets with definite useful
lives will be amortized to their estimatable residual values over
those estimated useful lives in proportion to the economic benefits
consumed. Such intangible assets remain subject to the impairment
provisions of SFAS No. 121. Intangible assets with indefinite useful
lives will be tested for impairment annually in lieu of being
amortized. The Company's current yearly amortization of intangible
assets is approximately $148,162.  The impact of adopting SFAS Nos.
141 and 142 will not cause a material change in the Company's
consolidated financial statements as of the date of this report.


NOTE 17 - Stock Issued For Services
-----------------------------------

The Company issued 150,000 shares and 8,782,841 shares of unrestricted
common stock in 2000 and 2001 respectively for payment to various
professionals for legal and consulting services rendered to the
Company.  The value of the various professional services rendered and
the corresponding paid-in capital was recorded at the value per share
of the Company's closing market price on the day of issuance of the
stock certificates.  The amount recorded for professional services and
paid-in capital for 2000 and 2001 are $773,250 and $1,285,783
respectively.


NOTE 18 - Rescission Of Restricted Stock
----------------------------------------

In prior years, the Company issued 230,354 shares of restricted common
stock to certain individuals and companies in contemplation of
services to be rendered.  The individuals did not perform.  Management
reacquired the stock and voided the transaction.  No value was placed
on the stock at the date of issuance.


NOTE 19 - Business Segments
---------------------------

The Company's reportable segments are strategic business units that
offer different products or services.  The Company has three
reportable segments: computer consulting, telecommunication services,
and acquisition services.  Intercompany loans have been eliminated
from reported segment assets.  There have been no intersegment sales,
expenses or transfers and there have been no allocation of expenses
between segments for the years ending May 31, 2001 and 2000.  The
accounting policy used by all reporting segments is the same as those
described in the summary of significant accounting policies.



                             Page 17 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 19- Business Segments (continued)
--------------------------------------

The following is a summary of segment activity:

<TABLE>
<CAPTION>
                                  Computer                 Telephone             Acquisition
                                  Consulting                Services               Services             Totals
                                --------------          ----------------        -------------      ---------------
<S>                             <C>                     <C>                     <C>                <C>

May 31, 2000                    $            -          $      1,748,218        $           -      $     1,748,218
Revenues                                     -                    20,000                    -               20,000
Interest income                              -                       643              153,959              154,602
Interest expense                             -                    84,557                2,584               87,141
Depreciation and amortization                -                (1,693,295)          (1,434,711)          (3,128,006)
Segment profit (loss)                        -                 1,695,790              181,621            1,877,411
Segment assets                               -                         -                    -                    -

May 31, 2001
Revenues                        $      425,729          $     3,244,648         $         638      $     3,671,015
Interest income                              -                   46,933                 9,636               56,569
Interest expense                             -                   47,515               314,754              362,269
Depreciation and amortization            6,637                  137,052               134,817              278,506
Segment profit (loss)                    7,849               (1,772,879)           (2,288,423)          (4,053,453)
Segment assets                         130,659                2,689,127               339,122            1,358,908

</TABLE>


NOTE 20 - Stock Incentive Plan
------------------------------

The Company instituted an Incentive Stock Option Plan by amending and
restating the Company's 1996 Stock Option Plan and registering
10,000,000 free trading common shares in the Registration Statement on
Form S-8.  The purpose of the plan is to promote success of the Company
by providing a method whereby eligible employees, directors and
independent contractors and consultants providing services to the
Company may be awarded additional remuneration for services rendered
and invest in the capital stock of the Company.  The plan will be
administered by the Compensation Committee of the Board of Directors
and will consist of not less than two people.  This committee shall
have the full power and authority to grant to eligible persons options
under the plan.  Persons eligible to participate in the plan include
officers and directors, employee, non-employee directors, independent
contractors and consultants of the Company, as the Committee shall
select.  The plan includes and participants may receive Incentive Stock
Options or Nonqualified Stock Options.  An option granted under the
plan shall remain exercisable during the term of the option to the
extent provided in the applicable agreement and the plan.  Shares of
Common Stock delivered in payment in connection with the exercise of an
Option, and shares of Common Stock withheld for such payment, shall be
valued for such purpose at their Fair Market Value as of the exercise
date.  By acceptance of an Award, the Award is a special incentive
compensation that will not be taken into account, in any manner, as
salary, compensation or bonus in determining the amount of any payment
under any pension, retirement or other employee benefit plan, program
or policy of the Company or any Subsidiary.

Employees of the Company who have been granted options are authorized
by the Committee to purchase the shares at a price equal to 55% of the
three day average closing bid price prior to the date of written
election to exercise.  At May 31, 2001 1,464,869 options have been
exercised totaling $102,210.  All options granted at May 31, 2001 have
been exercised.




                            Page 18 of 20

<PAGE>


PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 21 - Commitments and Contingencies
---------------------------------------

The Company leases its principal business location from a related
party, the spouse of the chief executive officer.  The lease, which
provides for annual rental of approximately $40,000, expires in
September 2001.  Rent expense for the years ended May 31, 2001 and
2000 was $42,400 and $40,000 respectively, of which $48,060 was
accrued for the year ended May 31, 2001.

The Company is obligated for the lease of an automobile for 36 months
with monthly payments of $508.  The lease expires in December 2001.

In accordance with a Judgment Payment Agreement dated February 15,
2001 between Epicus, Inc. (formerly Telephone Company of Central
Florida, Inc.) and Sprint - Florida, Inc. (Sprint), Epicus agrees to
pay Sprint $332,000 together with interest at a rate provided by law.
Principal payments of $10,000 each will be due commencing March 15,
2001 through September 15, 2002 (18 months).  The final balloon
payment of $142,000 is payable on October 15, 2002.  The $332,000
represents pre-petition and post petition costs to Epicus as a
reseller of local telecommunication services that were provided by
Sprint through a Master Resale Agreement.

A suit was filed against the Company for nonpayment of rents
subsequent to vacating office space occupied by the Company until
approximately November 1995.  A default judgment was obtained against
the Company.  To date, nobody has come forward to follow up on the
judgment or has made any effort to collect.  The potential cost to the
Company, if any, is not determinable at this time.

A suit has been filed by the Company in an attempt to recover
approximately $290,000 remaining from a promissory note receivable due
from ITC, see note 3.  As a part of the rescission agreement the
management of ITC agreed to relieve the Company from approximately
$800,000 of the tax obligations incurred by ITC prior to the
acquisition of ITC by this Company.  Management of ITC has supposedly
reneged on this portion of the agreement.  The entire matter remains
in litigation.  The management of the Company intends to pursue this
case.

A suit has been filed by a Canadian corporation for alleged breach of
contract regarding a licensing fee for use of billing software.  The
Company used the software for a short period of time and found it did
not meet the specific needs of the company and therefore stopped
payment.  The plaintiff is seeking damages for the loss of revenue
that would have been earned over the life of the agreement.  The
outcome of this litigation is not determinable at this time.
Management intends to aggressively defend this action to conclusion.

The Company signed a Consulting Agreement with an individual in Rio de
Janeiro, Brazil on April 1, 2001 for a period of one hundred eighty
(180) days.  The consultant will provide consulting services solely in
connection with the Company's "marketability, image and information
distribution" regarding its interest in expanding its market into
Brazil.  In consideration for the services provided by Consultant to
the Company, the Company will issue to the Consultant via the
Consultant's participation in the Employee Stock Option Plan, a total
amount of two hundred thousand, unrestricted, free trading shares of
the Company's common stock.  Consultant shall be vested in the
Company's Employee Stock Option Plan 30 days after the effective date
of this agreement.  All Consulting Fees paid to Consultant by Company
shall be deemed earned upon payment.

The Company also signed a Consulting Agreement with Gerald R. Shugard
(GRS) of West Palm Beach, Florida on May 24, 2000 for a term of one
year.  GRS will serve as a General Management Consultant to advise the
Company as to its performance associated with the growth and
development of the Company.  Compensation may be in the form of cash
payments, common stock, stock options or a mutually agreeable
combination of cash and common stock and/or stock options.  Any other
means of compensation must be mutually agreed upon, memorialized and
signed by both parties.

The owners of Mic Mac received 250,000 shares of restricted common
stock of the Company and were to receive another 250,000 shares if
certain budgeted financial targets were met.  The budgeted financial
targets were not met by Mic Mac and, therefore, the acquisition was
rescinded.  The Company requested that the 250,000 shares previously
issued also be returned.  The owners of Mic Mac requested that the
second 250,000 be issued and that all restrictions be removed from the
shares.  In an effort to amicably resolve the suit filed by the owners
of Mic Mac, the Company has advised the owners that they will not seek
recovery of the previously issued shares and have removed all
restrictions.  The owners of Mic Mac have not responded to this offer.
The final outcome is not determinable at this time.



                             Page 19 of 20

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PHOENIX INTERNATIONAL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2001 and 2000


NOTE 22 - Going Concern
-----------------------

The financial statements are presented on the basis that the Company
is a going concern.  Going concern contemplates the realization of
assets and satisfaction of liabilities in the normal course of
business over a reasonable length of time.

The Company has incurred losses in the last two years aggregating
approximately $7,000 and, as of May 31, 2001, has a deficit of
approximately $13,000,000 and insufficient working capital.

The Company has incurred significant selling, general and
administrative expenses which have been funded by loans from the
Company's chief executive officer and by the selling of common stock
in the United States and in foreign markets.  These conditions raise
substantial doubt about the Company's ability to continue as a going
concern.

The Company believes that the acquisitions of TCCF will become
profitable in the future and will generate future cash flows. However,
there can be no assurance that this will occur.  Also, the Company
believes it will be able to raise the funds necessary to provide
temporary working capital in the U.S. and foreign equity markets.  In
addition, the Company's Chief Executive Officer has committed to
continue to provide working capital to fund the selling, general and
administrative expenses of the parent company.





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