UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            -------------------------

                                   FORM 10-KSB

(Mark One)

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
       1934 FOR THE FISCAL YEAR ENDED:  December 31, 2001

                                       OR

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT
      OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                         Commission file number: 0-30058

                                E*COMNETRIX INC.
              (Exact name of small business issuer in its charter)


           Canada                                     Not Applicable
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


    2000 Powell St., Ste 1205
      Emeryville, California                              94608
(Address of principal executive offices)                (Zip Code)

                    Issuer's telephone number: (510) 985-1033

Securities Registered Under Section 12(b) of the Exchange Act:   None

Securities Registered Under Section 12(g) of the Exchange Act:  Common Shares
                                                                --------------
                                                                (Title of class)

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

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

     Revenue for the most recent fiscal year: $5,802,426

     Aggregate  market  value of  voting  stock  held by  non-affiliates  of the
Registrant, as of February 28, 2001: $2,134,691.

     Number of shares outstanding of each of the Registrant's  classes of common
equity, as of February 28, 2001: 14,509,441 common shares.

     Documents Incorporated by Reference: None


<PAGE>


                                TABLE OF CONTENTS

PART I ......................................................................2

  ITEM 1.   DESCRIPTION OF BUSINESS..........................................2

  ITEM 2.   DESCRIPTION OF PROPERTY..........................................28

  ITEM 3.   LEGAL PROCEEDINGS................................................28

  ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............28

PART II .....................................................................28

  ITEM 5.   MARKET PRICE FOR COMMON EQUITY AND RELATED
            STOCKHOLDER MATTERS..............................................28

  ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS........................................38

  ITEM 7.   FINANCIAL STATEMENTS.............................................48

  ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
            ON ACCOUNTING AND FINANCIAL DISCLOSURES..........................48

PART III ....................................................................49

  ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT................49

  ITEM 10.  EXECUTIVE COMPENSATION...........................................53

  ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT.......................................................62

  ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................64

  ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.................................65



                                       i
<PAGE>

PART I

Note Regarding Forward-Looking Statements

     Except for statements of historical  fact,  certain  information  contained
herein constitutes "forward-looking  statements," including, without limitation,
statements  that express or involve  discussions  with  respect to  predictions,
expectations,  beliefs, plans,  projections,  objectives,  assumptions or future
events or  performance  (often,  but not always,  using words or phrases such as
"expects"  or "does  not  expect",  "is  expected",  "anticipates"  or "does not
anticipate", "plans", "estimates" or "intends", or stating that certain actions,
events or results "may", "could",  "would", "might" or "will" be taken, occur or
be achieved) are not statements of historical  fact and may be  "forward-looking
statements." Such  forward-looking  statements  involve known and unknown risks,
uncertainties   and  other  factors  which  may  cause  the  actual  results  or
achievements  of the Company to be materially  different from any future results
or  achievements  of the Company  expressed  or implied by such  forward-looking
statements.  Such factors include,  among others,  the following:  the Company's
limited  operating  history,   competition,  the  telecommunications  regulatory
environment,   dependency  upon  facility  based  carriers,  dependency  on  the
integrity of call records,  minimum volume commitments,  dependency on effective
information systems, dependency on key personnel and other risks associated with
the  telecommunications  industry. See "Description of Business - Risk Factors."
Such  statements  are included,  among other places,  in this document under the
headings   "Description   of  Business,"   "Description   of   Properties"   and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

Currency and Exchange Rates

     The  following  table sets out the exchange  rates for one Canadian  dollar
("C$")  expressed in terms of one United States dollar  ("US$") in effect at the
end of the  following  periods,  and the average  exchange  rates  (based on the
average of the exchange rates on the last day of each month in such periods) and
the range of high and low exchange rates for such periods.

<TABLE>
                                        U.S. Dollars Per Canadian Dollar
                                        Fiscal Year Ended December 31,

                                 2001           2000           1999            1998            1997
                                 ----           ----           ----            ----            ----
<S>                             <C>           <C>             <C>             <C>             <C>
End of period                   0.6260        0.6676          0.6944          0.6504          0.6999
High for the period             0.6697        0.6983          0.6944          0.7105          0.7487
Low for the period              0.6241        0.6397          0.6534          0.6341          0.6945
Average for the period          0.6442        0.6740          0.6742          0.6714          0.7197
</TABLE>


     Exchange  rates are based  upon the noon  buying  rate in New York City for
cable transfers in foreign  currencies as certified for customs  purposes by the
Federal Reserve Bank of New York. The noon rate of exchange on March 15, 2002 as
reported  by the  United  States  Federal  Reserve  Bank  of New  York  for  the
conversion of Canadian dollars into United States dollars was US$0.6304 (US$1.00
= Cdn.  $1.5863).  Unless  otherwise  indicated,  in this annual  report on Form
10-KSB (the  "Annual  Report" or "Form  10-KSB")  all  references  herein are to
United



                                       1
<PAGE>

States dollars. In addition, the Company's consolidated financial statements are
presented in U.S. dollars.


ITEM 1. DESCRIPTION OF BUSINESS.

     HISTORY OF THE COMPANY

     E*Comnetrix  Inc.  (the  "Company"  or  "Registrant")   markets  and  sells
telecommunications   voice  and  data,  and  electronic  customer   relationship
management,  electronic document delivery and Internet marketing solutions.  The
Company was incorporated  under the Company Act of British Columbia,  Canada, on
December  23, 1991,  under the name  "Jackpine  Mining Co.  Inc." The  Company's
common shares listed for trading on the Vancouver  Stock Exchange  ("VSE") under
the symbol "UVT" on December  20, 1993 and delisted  from the VSE on January 31,
2000. The Company's  common shares have been quoted on the NASD Over the Counter
Bulletin Board since September 7, 1999,  first,  under the symbol  "YDSLF",  and
from June 20, 2000 through the present under the symbol "ECNXF."

     On  June  19,  2000,  the  Company  continued  under  the  Canada  Business
Corporations Act and changed its name to E*Comnetrix Inc.

     On September 15, 2000,  the Company  acquired  90.28% of the common capital
stock of Exstream  Data,  Inc.  ("EDI"),  a California  corporation,  in a share
exchange  transaction.  As a  result  of the  transaction,  the  Company  issued
2,703,036 common shares and assumed 199,515 share purchase options with exercise
prices  ranging from $0.48 to $1.00.  The remaining  9.72% of the common capital
stock  of  EDI  was  retained  by two  dissenting  shareholders.  See  "Material
Agreements - Perell  Lawsuit." The Company  consolidated  the accounts of EDI in
its financial  statements and  information  subsequent to September 15, 2000. On
January  19,  2001,  the  Company  purchased  the  9.72%  interests  held by the
dissenting  shareholders by issuing 291,128  restricted common shares,  bringing
the Company's interest in EDI to 100%.

     On September 15, 2000,  the Company  acquired  89.5% of the common  capital
stock of MovingBytes.com Inc. ("MBCI"), a Nevada corporation, in a cash purchase
transaction  for $511.  The  Company  consolidated  the  accounts of MBCI in its
financial  reports  subsequent  to September  15, 2000.  In December  2000,  the
Company wound up and dissolved MBCI.

     On  September  19,  2000,  the  Company   formed  Moving  Bytes   Broadband
Corporation  ("MBB"),  a Nevada  Corporation,  and Layer 427, Inc.  ("L427"),  a
Nevada Corporation.

     On March 31, 2001, the Company merged USV Telemanagement Inc., a California
corporation and wholly-owned  subsidiary of the Company ("USVT"), and MBB. There
were no material financial effects as a result of the merger.

     On August 20, 2001 the Company renamed Moving Bytes  Broadband  Corporation
("MBB") to Moving Bytes, Inc. ("MBI").

     On September 30, 2001 the Company wound up and dissolved  L427.  During the
year ending December 31, 2001, L427 had no revenues, profits or material losses.

     On September 30, 2001 the Company merged EDI and MBI, with MBI remaining as
the surviving company and as the Company's sole subsidiary.



                                       2
<PAGE>

BUSINESS OF THE COMPANY

     The   Company,    through   its   wholly-owned    subsidiary   MBI,   sells
telecommunication     and    data,     transmission    and    access    services
("Telecommunications    Services"),   and   electronic   customer   relationship
management,  electronic  document  delivery  and  Internet  marketing  solutions
("Electronic Media Services") to commercial customers.

Telecommunications Services

     Overview

     In its December 3, 1999 release report "Statistics of Communications Common
Carriers,"  the  Industry  Analysis  Division  of  the  Federal   Communications
Commission's  Common Carrier Bureau estimated that, in the United States,  there
are over seven hundred (700) long distance  service  providers,  who, along with
incumbent local exchange carriers,  private carriers,  and resellers,  generated
total  telecommunications  revenue of approximately  $246 billion dollars in the
United States in 1998.

     MBI purchases  underlying  services on a wholesale basis, and resells it to
end users at retail prices typically below those of its major competitors, which
include AT&T,  MCI/WorldCom,  GTE California  Inc.,  Qwest  Communications,  and
Sprint.  MBI primarily  sells its services  through  independent  "interconnect"
companies   that  sell,   lease,   install  and  service   telephone  and  other
telecommunications   equipment  to  end  users.   The  Company   believes   that
interconnect companies are unique distribution channels.  Interconnect companies
are  generally  the  primary   installers  of  trunk  lines,   phone  lines  and
telecommunications  systems (phones, voice mail systems, switch boards, etc.) in
office buildings and often lease  telecommunications  systems equipment to MBI's
target  market,  business  end-users,  for terms of between three to five years.
Most interconnect companies service and upgrade their leased  telecommunications
systems and are frequently contacted when end-users seek to increase capacity or
require additional  telecommunications equipment, phone lines or other services.
As a result  of this  relationship,  interconnect  companies  generally  develop
long-term  relationships  with their customers and are frequently in position to
recommend local,  long-distance and other telecommunication service providers to
their  customers.  MBI  intends  to  position  itself as a  provider  of network
services solutions sold through independent interconnect companies. To date, MBI
has  developed  a  network  of  30+  independent  interconnect  distributors  in
California  and has  expanded  its  authority  to do  business  in the states of
Colorado,  New Jersey,  Ohio,  Pennsylvania,  Texas,  and  Washington  D.C.  See
"Telecommunications   Services  Marketing  and  Sales  Strategy  -  Interconnect
Companies."

     MBI  believes  that  its  relationships   with  its  interconnect   company
distributors   has  allowed  MBI  to  position  itself  in  the  marketplace  to
effectively  sell business  Telecommunications  Services to end users.  With the
advent of the  deregulation  of the local  services  market,  MBI  believes  its
interconnect  distributors  are uniquely  positioned  to market MBI's  telephony
services  because the  interconnect  company is generally the end user's primary
point of contact for the  installation  of incumbent  central  office trunks and
office  phone  lines.  This  means  that  new and  existing  telephone  services
customers,  under the guidance of their  interconnect  equipment vendor, may now
select the local telephony  services  provider of their choice, as well as their
provider for long distance and other telephony services.



                                       3
<PAGE>

     In the future,  MBI may offer and sell  additional  products  and  services
including Internet telephony based solutions  ("Internet  Telephony").  Internet
Telephony solutions may consist of local, long distance,  data, Internet,  video
and  other  media  transmitted  in  a  packet  switched  format  using  Internet
protocols.

     The Telecommunications Services Industry

     Prior to 1974, AT&T and the Bell System all but exclusively  controlled the
entire  U.S.  telecommunications  services  market.  In  the  early  1980s,  the
telecommunications  industry was deregulated,  and in 1984, AT&T divested itself
of 22 local telephone companies.  The deregulation of the long distance industry
was designed to open competition in the telecommunications  industry. The market
is now  dominated  by several  companies  rather than one,  and  competition  is
intense among the more than 900 carriers and resellers of long distance services
nationwide.  However,  because  of  its  power  in the  market,  AT&T  is  still
considered by the Federal  Communications  Commission ("FCC"), the Department of
Justice and the U.S. judiciary as the industry's  "dominant"  carrier.  As such,
its services are offered through  tariffs filed with the FCC  prescribing  terms
and conditions that apply to all customers.

     A long distance  telephone call  originates  with a customer within a local
exchange network and travels along the local exchange network to a long distance
carrier (a "Carrier").  The long distance  carrier  combines the call with other
calls and sends them along a long distance network to a different local exchange
network where the call terminates.

     The major  U.S.  telecommunications  carriers  ("Carriers")  include  AT&T,
Sprint and  MCI/WorldCom,  Inc.  Carriers  own and manage  switching  systems to
create  their  own long  distance  networks.  Carriers  have  built up an excess
capacity,  allowing them to "rent" switch,  line and network management services
to telecommunications resellers.

     In the late 1980's,  telecommunications  resellers,  like MBI,  which owned
neither switching equipment nor their own transmission lines, emerged to provide
discounted  long distance  services to end-users.  Telecommunications  resellers
purchase  services  from  Carriers at  wholesale  prices and offer them to their
subscribers at discount prices. Telecommunications resellers sell services under
their  own  names  and  maintain  provider-customer   relationships  with  their
subscribers.

     By "renting" the principal physical elements,  telecommunications resellers
are able to become "Virtual  Carriers",  differentiating  them from  traditional
Carriers. To become a Virtual Carrier, a reseller must have a significant volume
of  traffic  and  enough  working  capital  to  sustain  operational  cash  flow
requirements.

     Telecommunications Services Business Strategy

     MBI's target market for its  Telecommunications  Services is the segment of
end-users  constituting  small-to-medium  sized  businesses.   Currently,  MBI's
customers consist of businesses with telecommunications  usage of less than five
thousand dollars ($5,000) per month.

     MBI's basic marketing  strategy has been, and continues to be, to build and
maintain a network of independent  interconnect  companies through which MBI can
sell and market its  services to  end-users.  See  "Telecommunications  Services
Marketing and Sales Strategy -  Interconnect  Companies."  MBI currently  serves
customers in  California  and has  expanded its  authority to do business in the
states of Colorado, New Jersey, Ohio, Pennsylvania, Texas, and



                                       4
<PAGE>

Washington  D.C.  MBI  intends  to  expand  its  operations  to serve  customers
throughout the United States.

     MBI  believes  that it will  be  successful  in  acquiring  new  customers,
cross-selling  enhanced  products  and services to its  existing  long  distance
customers and maintaining customer retention. MBI's business strategy is to :

     o    be  a   one-stop   telephony   service   provider   offering   quality
          Telecommunications  Services at competitive  prices and in the future,
          Internet Telephony solutions;

     o    acquire  and  retain   market   share   through  its  sales  force  of
          interconnect companies and through focused customer service;

     o    build and retain market share  through  advanced  technologies  and an
          advanced operational support system;

     o    target  the  market of small and  medium-sized  businesses,  which MBI
          believes to be  under-served,  with a focus on the Western  regions of
          the United States (specifically, California); and

     o    expand  through  strategic  growth  into  other  regions of the United
          States.

     The Company  currently  intends to fund operating and expansion  costs from
cash flow from operations,  but may require additional  financing as MBI expands
its service  areas and offers  additional  services  and  products to end users.
There can be no assurance that MBI will successfully  expand its operations into
other markets or that revenues  from its  operations  will be sufficient to fund
such expansions.  Any material changes to the current regulatory  environment or
to the MBI's  current  market may have an adverse  effect on MBI's  business and
results of operations. See "Note Regarding Forward-Looking Statements."

     Telecommunications Services Operations

     MBI's  underlying   services  are  provided  by  one  or  more  independent
companies,  which provide switching,  network and billing services to MBI. These
services must be operational twenty-four (24) hours a day, seven (7) days a week
and must be available to MBI on a cost-effective basis.

     MBI  contracts  with  Carriers  and  other  providers  to  provide  network
transmission  and  therefore has not needed to commit,  and does not  anticipate
committing,  capital  for its own  network  and  transmission  facilities.  As a
result,  MBI  believes  its  ability  to  expand  is not  limited  by  capacity,
geographic coverage or configuration of a particular Carrier's network.

     MBI has entered into  carrier  services  contracts  with  Carriers  such as
MCI/WorldCom and Qwest Communications. See "Material Agreements." If Carriers or
other  providers  were to lower  rates made  available  to MBI's  target  market
without a  corresponding  reduction  in MBI's  costs,  MBI's  Telecommunications
Services business and results of operations could be adversely effected.

     MBI  experiences a timing gap in its billing and  collection  cycle arising
from its  obligations  to pay  underlying  Carriers  from fifteen to thirty days
prior to when MBI's  customers  pay for those  services  delivered  by MBI.  The
timing gap requires substantial working capital to finance  receivables,  and it
is anticipated  that MBI may require  additional  working capital to fund future
growth if MBI elects to aggressively  expand into new geographical  areas and to
offer new



                                       5
<PAGE>

services to end users.  Currently,  MBI believes it will have sufficient working
capital  and cash  flows  from  operations  to fund its  planned  operating  and
expansion costs. However,  there can be no assurance that MBI will not encounter
delays or suffer  adverse  consequences  if  additional  working  capital is not
available or if the gap between the billing and collection cycle is increased.

     MBI Telecommunications Services

     MBI's  Telecommunications  Services consist of traditional 1+ and 800 (toll
free) telecommunications services, data services and audio conferencing.  In the
future,  MBI may  offer a  variety  of  value-added  services  that may  include
Frame-Relay  and  Asynchronous  Transfer  Mode  data  transmission   (permitting
interactive  data transfer),  video  conferencing  and other  telecommunications
services. See "Note Regarding Forward-Looking Statements."

     Both current and future  Telecommunications  Services are anticipated to be
fully  developed by third parties and re-sold by MBI. MBI  contracts  with other
providers,  primarily with  MCI/WorldCom  and Qwest  Communications,  to provide
network  transmission and all other related products and services currently sold
by MBI. MBI therefore currently has no materially significant development costs,
and MBI has no plans to develop its own transmission  network or services in the
future.  Instead,  as new  services  are  developed  in the  industry and become
available  to MBI to be  re-sold,  MBI may  enter  new  markets  and  offer  new
services.  There can be no assurance that MBI will be able to successfully offer
new  services or that MBI will be capable of  obtaining  the services of current
providers in the future on terms acceptable to MBI.

     Telecommunications Services Competition

     MBI operates in a highly competitive industry and competes with competitors
with substantially greater resources and significantly greater market share than
MBI. MBI expects that  competition  will continue to intensify in the future due
to  regulatory  changes and the  increase in the size,  resources  and number of
market  participants.  In each of its markets,  MBI will face  competition  from
larger, better capitalized competitors with greater resources.

     There are several providers of services similar to MBI's. MBI believes that
the market is dominated by four major Carriers, AT&T, MCI/WorldCom,  Sprint, and
Qwest  Communications  (the "Major  Carriers") whose collective  market share is
eroding as independents expand and compete for market share.

     MBI believes that the Major Carriers and other large competitors  generally
battle for large shares of major market sectors (e.g.  Fortune 1000  businesses,
residential   and   large   800  user   services),   while   other   independent
telecommunication   service  providers,   including  MBI,  target   specialized,
regional,   local  and  niche  markets  consisting  of  small  to  medium  sized
businesses.

     Competition for the MBI's Telecommunications Services is generally based on
price,  quality,  reputation,  name recognition,  network  reliability,  service
features,  billing services,  perceived quality and responsiveness to customers'
needs.  A continuing  trend toward  business  combinations  and alliances in the
telecommunications  industry may create significant new competitors to MBI. Many
of MBI's existing and potential competitors have financial,  technical and other
resources  significantly  greater than those of MBI. In addition, in December of
1997,  the FCC issued  rules to  implement  the  provisions  of the World  Trade
Organization  Agreement  on  Basic  Telecommunications,  which  was  drafted  to
liberalize  restrictions  on foreign  ownership  of domestic  telecommunications
companies and to allow foreign telecommunications companies



                                       6
<PAGE>

to enter  domestic  markets.  The new FCC rules went into  effect in February of
1998  and are  expected  to make  it  substantially  easier  for  many  non-U.S.
telecommunications  companies to enter the U.S. market,  thus further increasing
the number of competitors. The new rules will also give non-U.S. individuals and
corporations  greater  ability to invest in U.S.  telecommunications  companies,
thus increasing the financial and technical resources  potentially  available to
the MBI and its existing and potential competitors.  See "Risk Factors - Intense
Competition", and "Risk Factors - Regulation and Pending Regulation."

     The  telecommunications  industry is highly competitive and affected by the
introduction of new services and technologies by, and the market  activities of,
major industry participants.  MBI competes against various national and regional
carriers,  including  both  facilities-based  providers  and  telecommunications
resellers  offering  essentially  the same  services as MBI.  MBI's success will
depend upon its  ability to provide  high-quality  services at prices  generally
competitive with, or lower than, those charged by its competitors.  In addition,
the  long  distance  industry  is  characterized  by a high  level  of  customer
attrition or "churn." Such  attrition is  attributable  to a variety of factors,
including  initiatives of  competitors as they engage in advertising  campaigns,
marketing programs and cash payments and other incentives to entice end users to
subscribe  for  services.  End users are often not  obligated  to  purchase  any
minimum usage amount and can  discontinue  service  without penalty at any time.
MBI's revenue has been, and is expected to continue to be, affected by churn.

     The Major  Carriers and other  Carriers  have  implemented  new price plans
aimed at residential  customers with  significantly  simplified rate structures,
which  may have the  impact of  lowering  overall  prices.  There can also be no
assurance that carriers will not make similar  offerings  available to the small
to  medium-sized  businesses  that MBI primarily  targets and serves.  While MBI
believes small and medium-sized business customers are not aggressively targeted
by large providers such as the Major  Carriers,  there can be no assurance MBI's
customers  and  potential  customers  will  not be  targeted  by  these or other
providers  in  the  future.  Additional  pricing  pressure  may  come  from  "IP
transport,"  which is a developing use of  packet-switched  technology  that can
transmit  voice  communications  at a cost that may be below that of traditional
circuit-switched long distance service.  While IP transport is not yet available
in all areas,  requires the dialing of additional digits and generally  produces
sound quality inferior to traditional long distance service, it could eventually
be perceived as a substitute for traditional  long distance  service and may put
pricing  pressure on long  distance  rates.  Any  significant  reduction in long
distance prices may have a material  adverse effect on MBI's  Telecommunications
Services business and results of operations.

     Some of MBI's principal competitors are also major suppliers of services to
MBI.  MBI  is not a  facilities-based  provider  and  relies  on  the  services,
transmission  lines and switching  facilities of Carriers to provide services to
MBI's clients.  There can be no assurance that such competitors will continue to
offer services to MBI at competitive  rates or on attractive  terms,  if at all,
and  any  failure  to do so  could  have a  material  adverse  effect  on  MBI's
Telecommunications Services business and results of operations.

     Telecommunications Services Marketing and Sales Strategy

     In an  effort  to  generate  a  maximum  amount  of  minutes  to cover  its
transmission  and  switching  costs at the highest  competitive  margins,  MBI's
strategy is to focus its marketing  efforts on  interconnect  distributors.  MBI
intends to differentiate itself from competitors offering



                                       7
<PAGE>

similar  services to  distributors  by allowing its  distributors to have market
identity with MBI. Certain interconnect distributors that market MBI's telephony
services are  permitted to use,  display and promote MBI's  trademarks,  service
marks and other promotional materials for marketing purposes.  Such interconnect
distributors  use the MBI  name  and  logo on their  business  cards  and  other
promotional  materials.  MBI  also  promotes  its  affiliation  with  individual
interconnect distributors in MBI's monthly statements and invoices to end-users.
MBI believes that this strategic marketing affiliation is mutually beneficial to
MBI and the interconnect distributor.

     Interconnect Companies

     MBI does not maintain a direct sales force for Telecommunications  Services
and it  directs  its sales  effort  exclusively  through  distributors.  MBI has
developed  relationships  with 30+ independent  interconnect  companies (located
throughout  California) who for a commission  recommend and sell MBI's telephony
services to their customers.  Approximately  ninety-five  percent (95%) of MBI's
revenues from  Telecommunications  Services are derived from  services  provided
through interconnect companies.

     MBI grants non-exclusive rights to interconnect  companies and distributors
to market the MBI's services to end-users, and pays an ongoing commission to the
interconnect  company of approximately six percent (6%), which commission figure
is based on the revenues received from the referred end-user. MBI's relationship
with the interconnect  company is non-exclusive and the interconnect  company is
free to market other providers services.

     Business end users generally select independent  interconnect  companies to
install office phone lines and systems,  and often lease these systems for terms
between three to five years. Most interconnect companies provide maintenance and
service during the term of the lease,  which may create a long term relationship
with the end-user.  Some interconnect  companies offer bundled "system packages"
to end-users that include the system lease,  service and maintenance  follow-up,
extended warranty  coverage,  local and long distance service coverage and other
telecommunications  systems services.  Interconnect  companies can generate long
term  commitments  from their  customers  by  bundling  a package of  discounted
services (discounts on equipment purchases,  service,  maintenance,  consulting,
etc.) to the sale of MBI's  services.  This  sales  strategy  includes  offering
customers a "one stop shopping" and a "single point of contact" alternative that
MBI believes creates brand loyalty and reduces customer attrition. MBI positions
itself to facilitate  the bundling of system  packages by offering  seamless and
transparent  quality  long  distance  services  to the  end-user  and paying the
interconnect company a commission based on telecommunications  services revenues
received  from  the  end-user.   The  bundling  of  system   packages   provides
interconnect  companies  with a  stream  of  revenues  for the  duration  of the
end-user's commitment, while providing stability in MBI's end-user service base.

     The  interconnect  companies are also the primary contract when an end-user
seeks to increase  capacity,  upgrade or change their phone systems,  to install
new equipment  and/or lines or service warranty claims for  manufacturers.  As a
result, the interconnect company frequently builds long-term  relationships with
the end-user and may have frequent contact with the decision-maker for selecting
telephony services.  This means that interconnect companies are generally in the
unique  position to recommend  telephony  service  providers to customers at the
time of installation, service or maintenance.



                                       8
<PAGE>

     MBI believes  that the  matching of the  interconnect  customer,  which has
traditionally   purchased   its   telephone   equipment  and  service  from  the
interconnect supplier, with  telecommunications  services at reduced rates is an
ideal strategy.  Interconnect  companies generally have customer bases that rely
on the interconnect  companies for a variety of services  including  repairs and
system  maintenance,  system  additions and  rearrangements  and  training.  MBI
believes that it is not uncommon for the customers of interconnect  companies to
rely on the various  interconnect  representatives  with whom they  interact for
advice about related telephone services.

     MBI's primary sales  strategy is to develop  strategic  relationships  with
interconnect companies by:

     o    offering quality, reliable transmission and customer services,

     o    paying  commissions  for  end-user  referrals  based  on the  revenues
          generated from such referrals,

     o    understanding   the   interconnect   market   and  the  needs  of  the
          interconnect provider,

     o    providing competitive rates for services to end-users,

     o    promoting  and  reinforcing  the   interconnect-MBI   relationship  in
          communications (such as billing statements and promotional  materials)
          to end-users,

     o    designing  flexible  and  innovative  service  programs  to permit the
          bundling of the MBI's services into system packages;

     o    maintaining existing relationships with interconnect companies through
          marketing communications,

     o    developing  new  relationships  with  interconnect  companies  through
          networking, and

     o    developing  incentive  programs  designed  to  encourage  interconnect
          companies to refer MBI as the service provider to end-users.

     MBI believes  that  changes in the  telecommunications  markets,  which are
designed to increase  competition by removing  regulatory barriers to entry, may
make  interconnect   companies  even  more  valuable  as  distributors   because
interconnect  companies  generally  are the primary  installers  of office phone
lines,   telecommunications   systems,   central   office   trunks,   and  other
telecommunications  equipment for businesses.  Interconnect  providers generally
compete  with other  independent  interconnect  companies  and,  in some  cases,
subsidiaries of  telecommunications  equipment  manufacturers to install,  sell,
service and maintain office phone lines and equipment.

     Although  MBI  has  been  successful  in  developing   relationships   with
interconnect companies,  there is generally no exclusive or long-term commitment
on the part of the interconnect company to offer MBI Telecommunications Services
as part of their systems  packages or to refer end-users to MBI's services.  MBI
must  maintain and offer a high level of  transmission  quality and must provide
responsive   customer   support   and   service   to   the   end-user   and   to
telecommunications  companies.  There  can  be no  assurance  that  interconnect
companies will continue to bundle MBI's  services into their system  packages or
recommend  MBI  services  to  end-users  in the  future.  There  can  also be no
assurance that the  interconnect  companies  will not switch  telecommunications
services providers for their system packages or that MBI will



                                       9
<PAGE>

successfully  maintain existing  relationships  with the interconnect  companies
that market MBI's services. MBI's ability to build and maintain its interconnect
company  network and to sell its  services to end-users is dependent on a number
of factors,  including changes in market condition,  increased competition among
interconnect companies, lower rate and higher commission structures,  changes in
the  economy  that  affect the demand for phone  systems,  switching  of service
providers by  interconnect  companies,  the demand for system packages and other
factors, many of which are beyond MBI's control.

     Independent Agents

     MBI also sells service through  independent agents who are not interconnect
companies.  Agents, as sellers of telecommunications  services,  neither own nor
operate a business  dedicated to a single customer base.  Instead,  they sell on
behalf of  telecommunications  resellers  and  Carriers  for a  commission.  The
customer  becomes  that of the  telecommunications  reseller  or Carrier and the
agent has little  motivation to actively  manage that  customer  except to avoid
attrition. However, many agents in effect control and manage large quantities of
telecommunications   revenue  through  personal  relationships  with  customers.
Approximately  five  percent  (5%) of  MBI's  revenues  from  telecommunications
services are derived from sales made through  independent  agents. To the extent
that MBI depends on  independent  marketing  agents to obtain  customers for its
services, MBI will be subject to risks associated with agent attrition.  Several
other telecommunication  marketing firms utilize independent marketing agents to
sell telecommunications services, and may compete with MBI for marketing agents.
Independent  marketing  agents  may elect to work for  competitors  and  solicit
MBI's, which may adversely effecting MBI's business and results of operations.

     Telecommunications Services Pricing

     MBI believes  that MBI's  prices are in line with other  Telecommunications
Services  providers.  MBI  anticipates  it will maintain a  competitive  pricing
strategy  and  attempts  to  differentiate   its  services  from  those  of  its
competitors based on quality.


Electronic Media Services

     Overview

     Since  1989,  MBI has been  providing  email  and fax  electronic  document
delivery  services to organizations  of all sizes.  Beginning with fax broadcast
services,  MBI has broadened its product line to include  enhanced fax services,
e-mail broadcast, electronic customer relationship management tools ("eCRM") and
other  Internet-based   marketing  services  to  develop  a  complete  suite  of
Electronic Media services.

     Fax based  services  represent  the  majority of MBI's  revenue mix and are
generally  based on usage.  MBI  purchases  underlying  services  on a wholesale
basis,  and resells it to end users in the form of facsimile  transmissions.  In
addition, certain of MBI's inbound fax based services contain fixed monthly fees
which may be in addition to usage fees. Cost of services  consists  primarily of
the cost of long  distance  transmission  and other  telecommunications  related
charges, including Internet access charges.



                                       10
<PAGE>

     E-mail based services  represent the majority of MBI's growth in revenue in
Electronic  Media  Services  and are  generally  based on usage.  MBI  purchases
underlying  services  on a wholesale  basis,  and resells it to end users in the
form of  e-mail  transmissions.  In  addition,  certain  of MBI's  e-mail  based
services contain fixed monthly fees which may be in addition to usage fees. Cost
of services consists primarily of the cost of Internet access charges.


     The eCRM, Electronic Document Delivery and Internet Marketing Industry

     Although  fax  technology  is  acknowledged  to  be  mature,  according  to
Dataquest,  a  communications  research  firm, in 1999 more than 6.6 million fax
machines were sold an increase of 16.5% over the prior year.  Further,  by 2004,
the number of sheet fed fax  machines  sold is expected to rise to 8.4  million.
Dataquest  also forecasts that during that same time frame the average cost of a
fax machine  will fall by more than 33%.  MBI plans to target its fax  customers
for  conversion to email related  services  which will forestall the loss of fax
customers over the long run.

     E-mail  based  technologies  are more  recent and  provide a  significantly
higher  probability  for growth than fax based  technologies.  Estimates for the
size of the U.S. on-line advertising market,  which includes e-mail,  range from
$4.7  billion  to  $12.6  billion.  GartnerG2,  an  on-line  media  consultancy,
estimates that the US online advertising market will grow from an estimated $7.9
billion in 2001 to $18.8 billion by 2005.

     According  to a recent study by the  Winterberry  Group,  an on-line  media
consultancy, e-mail marketing and customer relationship management will grow 41%
annually to $3.5 billion by 2005 up from $910 million in 2001.  Permission-based
commercial e-mail accounts for about 10 percent of the 300 billion messages sent
today and by 2005 it will account for 25 percent of 600 billion messages.


     Electronic Media Services Business Strategy

     MBI provides  highly  scalable,  ultra high volume e-mail and fax broadcast
services and other services adjunct to e-mail broadcasting, commonly referred to
as eCRM  services,  including  e-mail  personalization,  HTML and click  through
tracking and reporting,  data management and hosting, viral marketing, and other
forms of Internet marketing based upon its e-mail delivery  technology and other
services  adjunct to facsimile  technology such as fax to e-mail  conversion and
delivery, fax overflow and fax on demand.

     MBI's  services have been  continually  refined to  accommodate  changes in
technology as well as the  evolution of client  requirements.  As a result,  the
Company has adapted both  hardware and  software  infrastructure  to address the
needs of its target markets.  MBI currently  provides  services to approximately
300  businesses  world-wide  and has the engine,  technology  and  expertise  to
provide highly customized  solutions for a wide variety of high volume messaging
needs.  In the future,  MBI is anticipated  to provide a set of scalable,  fully
automated  and  seamlessly   integrated,   e-mail  messaging   solutions  on  an
application  service provider basis for use by global online direct marketers or
'e-marketers.'

     MBI's  current  business  strategy  is to expand  from  being  primarily  a
provider of fax broadcast,  enhanced fax, and e-mail broadcast services in North
America  to  becoming  a  provider  of direct  e-mail  marketing  and  ancillary
services. MBI also continues to integrate multiple



                                       11
<PAGE>

transmission approaches like fax, Internet and e-mail in unique ways to meet its
customers'  needs. MBI has a thirteen year operating history in Electronic Media
Services  and  intends  to  capitalize  on  MBI's  existing  customer  base  and
development  capabilities in order to acquire new customers,  cross-sell new and
enhanced products and services to its existing customers.

     This  strategy  consists of three primary  elements:  (i)  identifying  new
applications based upon MBI's existing e-mail and fax technologies;  (ii) adding
new and enhanced  e-mail and  Internet-based  services to MBI's product mix; and
(iii)  selling  Electronic  Media  Services both directly and through as similar
strategy  as  currently  deployed  by  MBI in  its  Telecommunications  Services
business.

     MBI  recognizes  that the  facsimile  messaging  format has and will likely
continue  to lose  market  share to  e-mail  messaging.  MBI  believes  that its
strategy  to develop  e-mail  messaging  services  will  provide it a stable and
growing client and revenue base.

     Specifically with respect to developing  e-mail related  services,  MBI has
established  a triple  service  layer  approach  which  capitalizes  on its core
technology landscape:

     o    The  first  service  layer  is the  customization  of MBI'  electronic
          document broadcast engine for advanced applications.

     o    The  second  service  layer on the core  technology  landscape  is the
          ongoing  development  of  high  level  applications  which  may  serve
          succeeding service layers;

     o    The third service layer, and MBI's primary business  initiative,  is a
          global,  business  mass  market,  on-line  Electronic  Media  Services
          toolkit,  'gooeymailTM', to be sold primarily through an agent network
          strategy.

     MBI may choose to  develop  these  services,  applications  and  additional
features  in-house,  or may  procure  them from  third-party  sources.  This may
involve licensing  software or reselling services provided by third-parties on a
fee basis.

     MBI currently  intends to fund operating and expansion costs from cash flow
from  operations,  but may  require  additional  financing  as MBI  expands  its
services  offerings and target markets.  There can be no assurance that MBI will
successfully  expand its services  offerings and target markets or that revenues
from its  operations  will be sufficient to fund such  expansions.  Any material
changes to the current  regulatory  environment  or to MBI's current  market may
have an adverse effect on MBI's Electronic  Media Services  business and results
of operations. See "Note Regarding Forward-Looking Statements."

     Electronic Media Services Operations

     MBI's network services are provided by one or more  independent  companies,
which provide  switching  and network  services to MBI.  These  services must be
operational  twenty-four  (24)  hours a day,  seven  (7) days a week and must be
available to MBI on a  cost-effective  basis.  MBI's client  services group both
trains and maintains new and existing accounts.

     MBI  has  built a  proprietary,  high-throughput,  multi-threaded  delivery
engine  for  e-mail  and fax  delivery,  giving  clients  confidence  that their
messages  will be delivered  in a timely  manner.  MBI  continues to develop its
proprietary systems to ensure leading-edge technology and reliability.



                                       12
<PAGE>

     MBI maintains and operates a proprietary 24 x 7 network  operations  center
located in Emeryville,  California.  The operations center is tied directly into
long-distance  carriers  to  ensure  the best and  fastest  connections,  and is
connected  directly  to  the  Internet  through  high-speed   connections.   The
operations center also has complete power-backup and fail-safe systems.

     In order to provide  MBI's  services,  the Company has entered into carrier
services contracts with Qwest Communications, Inc., and ICG Communications, Inc.
See   "Material   Agreements".   In  the   future,   MBI   expects   its   total
telecommunications  costs per minute of fax traffic to decrease  resulting  from
revised or new carrier contracts.

     MBI  experiences a timing gap in its billing and  collection  cycle arising
from its  obligations  to pay  underlying  Carriers  from fifteen to thirty days
prior to when MBI's clients pay for those services  delivered by MBI. The timing
gap  requires  substantial  working  capital to finance  receivables,  and it is
anticipated  that MBI may  require  additional  working  capital to fund  future
growth if MBI elects to aggressively  expand into new geographical  areas and to
offer new services to end users. Currently, MBI believes it will have sufficient
working capital and cash flows from operations to fund its planned operating and
expansion costs. However,  there can be no assurance that MBI will not encounter
delays or suffer  adverse  consequences  if  additional  working  capital is not
available or if the gap between the billing and collection cycle is increased.


     MBI Electronic Media Services

     MBI serves customers who require high-quality,  cost- effective, rapid, and
confirmed electronic communications.  MBI has developed applications that enable
customers to deliver  common or customized  documents to an unlimited  number of
recipients  around the world via e-mail and fax using its document  distribution
network.

     e-Mail Broadcast

     E-mail broadcast services enable rapid distribution of e-mail documents and
attachments  to multiple  recipients  by sending a single  transmission  through
MBI's system to a list of e-mail  recipients.  MBI gooeymailTM  software has the
ability  to  reliably  deliver  high-volumes  of  e-mail  messages  to  targeted
audiences.  Messages can be in text format or may be richly  formatted  messages
with graphics, attached files, and multi-media content.

     eCRM services

     MBI has the ability to augment with e-mail  broadcasts  with added features
which  customize  e-mails and which  track  recipient  response  behavior to the
e-mail message.

     Fax Broadcast

     Fax broadcast  services enable rapid  distribution of documents to multiple
recipients  by sending a single  transmission  through MBI's system to a list of
fax recipients.  MBI's gooeymailTM software enables clients to launch broadcasts
directly  from their PC's via the  Internet.  MBI's  overlay  messaging  service
typically involves the processing of a large volume of individual communications
(i.e., a single document to a single recipient or from a single sender), each of
which is in the same format but contains different information.



                                       13
<PAGE>

     Enhanced Fax Services - Fax to e-Mail  Gateway,  Fax  Overflow,  and Fax on
     Demand

     Fax to E-mail Gateway.  Enables clients to receive and store incoming faxes
as e-mail attachments and to receive copies via e-mail or the web.

     Fax Overflow  Service.  Incoming  faxes are received at EDI and stored with
EDI's system.  Faxes can then be downloaded  anytime, 24 hours a day, via fax or
FTP.

     Fax on Demand. Enables clients to distribute selected, pre-stored documents
by fax to those requesting them. Requests are fulfilled instantly, regardless of
length or type of content. End users request documents  automatically via fax by
dialing an assigned access number and following the custom voice prompts.

     Electronic Media Services Competition

     Applications for MBI's messaging  services are utilized by a broad array of
customers  including  those in  industries  including,  but not  limited to, the
publishing,   public  relations  and  investor   relations,   mortgage  banking,
manufacturing,  travel, electronics,  legal and pharmaceutical industries. MBI's
customer  base is broadly  diversified,  and with respect to  telecommunications
services  revenues  generally,   MBI  has  no  single  domestic  industry  group
accounting  for greater than five percent  (5%) of such  revenues.  MBI believes
that this  diversification  limits its  susceptibility to the business cycles of
any particular industry or a general business downturn in any particular sector.
MBI competes based on a number of factors, such as customer service and support,
service  feature set and price.  Of these  factors,  MBI believes  that service,
support,  and feature set are the most important for Electronic  Media Services,
with price being less of a critical competitive component.

     In a  service  industry  in which a broad  range of  optional  features  is
offered,   MBI's   competitive   strategy   emphasizes,   price,   technological
capabilities,  and a  sales  and  support  network  that is  well-versed  in the
capabilities of the services  offered to customers.  E-mail  marketing  services
providers,  list management companies, and e-mail and fax -mail service bureaus,
provide certain fax and e-mail communications services in competition with MBI.

     Many service bureaus face  considerable  obstacles in developing a business
competitive  with  MBI's.  While  it may be easy to begin  service  with a small
personal computer-based system, considerable system development expenditures are
required to enable  such a system to grow to support  the  volumes and  features
needed  to be an  effective  competitor  in the  marketplace.  Further,  smaller
service  bureaus  may not have a  sufficient  volume of traffic  to develop  the
economic  leverage  necessary  to obtain  telecommunications  services  at rates
enabling  it to compete  cost-effectively  with MBI. In  addition,  considerable
investment  in a sales and  marketing  organization  is  required  to  develop a
substantial business base.

     Another  alternative to using MBI's services is for a potential customer to
fulfill  its  own  needs  for  e-mail  and  fax  communications   services.  The
"enterprise"  solution  may  simply be an  individual  at a fax  machine  or may
involve the customer acquiring its own computerized  communications  systems and
enterprise level software. MBI believes that the enterprise solution is suitable
in some  applications,  but is generally not feasible for MBI's  customers,  who
require  the  capacity to effect a  significant  volume of  electronic  document
deliveries in a short period of time.  The  enterprise  solution for  Electronic
Media Services requires the customer to obtain and



                                       14
<PAGE>

maintain a large number of  telephone  and data  transmission  lines which would
remain idle for significant periods of time and therefore are not typically cost
effective.

     In addition  to being  concerned  with the  irregular  nature of demand,  a
customer selecting an enterprise solution must consider the total cost of system
acquisition, ongoing technical support, reliability,  technological obsolescence
and  accountability.  Based on the  foregoing,  MBI believes  that a substantial
percentage of customers in the market for Electronic Media Services will elect a
service provider rather than the enterprise solution.

     Delivery of electronic information via the Internet provides an alternative
to MBI's fax based  services.  However,  delivery by the  Internet  cannot be an
alternative if a sender or recipient of information  does not have access to the
Internet.  MBI currently has the  capability  to deliver  information  using the
Internet and utilizes  this  network both as an optional  access  vehicle to its
services and as an e-mail delivery vehicle.

     Electronic Media Services Marketing and Sales Strategy

     MBI employs a direct sales force  consisting of inside sales  professionals
and sells through agent  networks.  The current  primary source for new customer
accounts  are  inbound  inquiries  generated  from  MBI's web  sites and  direct
marketing.  Members of the inside sales team focus their direct sales efforts on
specific  industries  verticals.  The role of the inside  sales  staff  includes
servicing existing accounts. MBI is also pursuing third party distributor (sales
agents and resellers) relationships with its Telecommunications Services channel
partners as well as other third party entities.

     Inside Sales.  MBI employs a direct sales force  consisting of inside sales
professionals and sell through an agent networks. The current primary source for
new customer  accounts are inbound  inquiries  generated  from the Company's web
sites and direct marketing.  Members of the inside sales team focus their direct
sales  efforts on specific  industries  verticals.  The role of the inside sales
staff includes servicing existing accounts.

     Agent  Sales.  In an effort to  generate  a maximum  amount of  minutes  to
utilize its  transmission  capacity  MBI's  strategy  has  expanded to focus its
marketing  efforts on agent  distributors.  MBI intends to differentiate  itself
from competitors by offering Electronic Media services through distributors.  By
owning and maintaining a proprietary  on-line distributor  fulfillment  facility
MBI believes that it can significantly  increase its exposure to the marketplace
at  little  upfront  cost.  MBI  will  deploy  similar  strategies  that  it has
successfully deployed in its Telecommunications  Services business. MBI believes
that its agent distribution  strategy is unique to the Electronic Media Services
marketplace. See "Note Regarding Forward-Looking Statements."

     Electronic Media Services Pricing

     The Company  believes  that MBI's  prices are in line with other e-mail and
fax  services  bureaus.  MBI  anticipates  that it will  maintain a  competitive
pricing  strategy and attempts to  differentiate  its services from those of its
competitors based on quality and feature. MBI anticipates that retail prices for
its services  will  continue to face downward  pressure.  However,  renegotiated
carrier contracts may enable MBI to maintain or improve its gross margins, while
enhanced feature sets may enable MBI to gain market share.



                                       15
<PAGE>

Material Agreements

     Telecommunication Agreements

     The Company or MBI have entered into telecommunications  service agreements
as follows:

     With  MCI/WorldCom  effective  July 15, 1994, as amended  December 31, 1998
(the  "MCI/WorldCom  Agreement"),  with  a  term  expiring  December  31,  2001.
Thereafter,  the MCI/WorldCom  Agreement continues on a month-to-month basis and
is in full effect as of the date of the filing of this Annual Report.  Under the
terms of the  MCI/WorldCom  Agreement,  MBI would  either  purchase a minimum of
$10,000  per month in  services  on a take or pay basis or purchase a minimum of
$360,000 in  cumulative  services  during the term of the  agreement,  whichever
should occur first. In the event that the actual  calculated  costs for services
purchased  by MBI  should  fall  below  $10,000  in a given  month  prior to the
purchase of $360,000 in cumulative  services,  MBI would be responsible  for the
payment of the monthly  minimum  amount of $10,000.  By March 31, 1999,  MBI had
purchased  in excess of  $360,000  in  cumulative  services  and has no  further
minimum payment obligation under the MCI/WorldComAgreement. There are no minimum
purchase requirements and the  MCI/WorldComAgreement  Agreement is terminable by
either party on a thirty day advance notice to the other party.

     With Qwest Communications  Corporation  ("Qwest") effective May 1, 2002 and
June 5, 2001 (the "Qwest Agreement"),  with a term expiring May 1, 2003 and June
5,  2003  respectively.  Under the terms of the  Qwest  Agreements,  Qwest  will
provide MBI with switched and dedicated  telecommunications  and Internet access
services at specified rates. There are no minimum purchase  requirements and the
Qwest Agreement is generally  terminable by either party on a thirty day advance
notice to the other party.

     With Digital Communications of America, Inc. ("Digital") effective July 15,
1994, and amended  effective  December 16, 1998,  with a term expiring April 15,
1999,  automatically  renewed for  additional  one hundred and twenty  (120) day
periods  unless  either  party gives notice prior to the end of the then current
term (the "Digital Agreement").  The Digital Agreement was automatically renewed
for a term of one  hundred  and  twenty  (120) days on April 15,  1999,  and has
subsequently  been  renewed for  successive  one  hundred  and twenty  (120) day
periods. Under the Digital Agreement, Digital agreed to provide customer billing
services on behalf of the Company at specified  rates. The Company must purchase
a minimum of ten thousand  dollars  ($10,000) per month in services on a take or
pay basis. In the event that the actual calculated costs for services  purchased
by the Company falls below ten thousand  dollars  ($10,000) in a given month the
Company would be  responsible  for the payment of the monthly  minimum amount of
ten thousand dollars ($10,000).

     With   ICG    Communications    Inc.    ("ICG")    whereby   ICG   provides
telecommunications  services at specified  rates.  There are no minimum purchase
requirements and the ICG Agreement is generally  terminable by either party on a
thirty day advance notice to the other party.



                                       16
<PAGE>

     Acquisition of Exstream Data, Inc., a California Corporation

     On September 15, 2000,  the Company  acquired  90.28% of the common capital
stock of EDI in a share exchange  transaction.  As a result of the  transaction,
the Company issued  2,703,036  common shares and assumed  199,515 share purchase
options  with  exercise  prices  ranging  from $0.48 to $1.00.  The 9.72% of the
common  capital  stock  of EDI  which  was  not  acquired  was  retained  by two
dissenting  shareholders.  See "Perell  Lawsuit." Of the 2,703,036 common shares
issued as result of the  transaction,  1,303,036  shares were issued directly to
the selling  shareholders of EDI and 1,400,000 shares were issued into an escrow
arrangement to mitigate  against the outcome of the Perell  Lawsuit.  On January
19, 2001,  the Company  purchased the remaining  9.72%  interest in EDI from the
dissenting  shareholders by issuing 291,128 common shares. See "Perell Lawsuit."
The Company  consolidated  the accounts of EDI in its financial  statements  and
information subsequent to September 15, 2000.

     Perell Lawsuit

     On July 10, 2000, William S. Perell ("Perell"), a shareholder of EDI, filed
a complaint in the Superior  Court of the State of  California  in the county of
Alameda  against EDI and certain EDI  affiliates  alleging  that the  defendants
denied  Perell the right to exercise  stock  purchase  warrants of EDI allegedly
held by Perell (the "Perell Lawsuit").

     On January 19, 2001, the Company,  Perell and certain other parties entered
into a settlement agreement with respect to the Perell Lawsuit.  Under the terms
of the agreement, the Company agreed to issue 50,000 common shares to Perell.

     On January 19, 2001, the Company,  Perell and certain other parties entered
into a Share Exchange  Agreement  pursuant to which the Company purchased 56,053
shares of common stock of EDI, bringing the Company's  ownership of EDI's common
stock to 100%, in exchange for 291,128 restricted common shares of the Company.

     On March 13, 2001, the Company  received  34,000 common shares of its stock
in recovery of certain legal expenses incurred to defend the Perell Lawsuit from
the  shareholders  of EDI  pursuant to the terms of an escrow  agreement.  These
shares were returned to the corporate treasury on March 22, 2001.

     Consulting and employment agreements

     The Company has entered into management agreements with J. Erik Mustad, the
Company's  Chief Executive  Officer and a director,  for the period June 1, 2001
through February 28, 2003, with Mark M. Smith, the Company's President and Chief
Financial Officer and a director, for the period January 1, 2000 to December 31,
2002, as amended June 1, 2001 and with Joseph Karwat,  a director of the Company
and the  President  of EDI, on a month to month basis  effective  September  15,
2000. At December 31, 2001 payments under the agreements  aggregate  $40,000 per
month. See "Employment and Employee Incentive Contracts."

     Bonus Compensation Agreements

     On September 30, 2000, the Company entered into performance agreements with
two  employees of MBI.  Under the  agreements  MBI would pay an  aggregate  cash
amount of up to $370,000  dependent  upon the closing bid price of the Company's
stock on dates through August 31, 2001. The  performance  agreements  terminated
under their terms on March 31, 2001



                                       17
<PAGE>

and  April 30,  2001  with no  payments  having  been  made and with no  further
obligation on behalf of MBI.

     Premises Lease

     On October 28, 2000, the Company  relocated under the premises lease of EDI
at, Oakland,  California (the "Oakland  Lease").  Under the terms of the Oakland
Lease, upon a change of control of EDI, the landlord could terminate the Oakland
Lease and raise the monthly lease payment  amount.  The EDI landlord  terminated
this lease effective  December 1, 2000 and increased the Company's lease payment
to $24,728 per month.  The Company vacated the Oakland Lease premises on July 1,
2001.

     On April 25, 2001, the Company entered into a sixty-month  triple net lease
for  2,595  square  feet in  Emeryville,  California  at $2.75 per  square  foot
commencing June 1, 2001 (the "Horton Street Lease").  A security  deposit in the
amount of $23,407 was paid to secure the Horton Street Lease. After vacating the
Oakland  Lease on July 1, 2001,  the Company  relocated  under the Horton Street
Lease. Under the Horton Street Lease the Company is responsible for its pro-rata
share of operating expenses including insurance, taxes and utilities.

     On June 28, 2001, the Company entered into a an additional  lease for 1,601
square feet full service in Emeryville, California for sixty-months at $2.85 per
square  foot  commencing  August 1, 2001 (the  "Watergate  Lease").  A  security
deposit in the amount of $10,000  was paid to secure the  Watergate  Lease.  The
Company  has  relocated  its  corporate  and  accounting  operations  under  the
Watergate Lease.


Regulation

     With respect to Telecommunications  Services, MBI is federally regulated by
the Federal Communications  Commission (the "FCC") and at the state level by the
Public Utilities  Commissions in the states in which it operates (the "CPUC's").
MBI must obtain regulatory  approval on a state by state basis as it expands its
geographical  territory.  MBI is not  regulated  by the FCC or the  CPUC's  with
respect to Electronic Media Services.

     State Regulation. The Company believes that the CPUC's are generally active
proponent of deregulation  of state  telecommunications  industries.  The CPUC's
have also indicated that they are committed to reducing  tariffing  requirements
on non-dominant telecommunications carriers and has proposed major modifications
to General  Order 96-A,  the rules  regulating  rates,  rules and  contracts for
regulated utilities including the telecommunications industry.

     Taxes currently applicable to MBI's services include the Universal Lifeline
Telephone Service (ULTS), which helps subsidize low-income users; the California
Relay Service and Communications Devices Surcharge, which funds the placement of
equipment for the deaf and hearing  impaired;  the California  High Cost Fund A,
which provides subsidies to 17 small independent telephone companies so that the
disparity between rural and metropolitan consumers is minimized;  the California
High Cost Fund B, which  provides  subsidies  to  carriers  of last  result like
Pacific Bell and GTE; the California Teleconnect Fund, which provides discounted
telecommunications  services to qualifying entities; and the PUC User Fee, which
finances  the  CPUC  annual  operating  budget.  In  addition,  there is also an
Emergency  Telephone  Surcharge  tax that  provides  the funding  mechanism  for
emergency  911  service.  Various  cities and  counties may also apply taxes for
calls that originate or terminate in their jurisdictions.



                                       18
<PAGE>

     Federal  Regulation.   The  FCC  is  the  federal  entity  responsible  for
regulating  interstate and international  telecommunications  services under the
Communications  Act  of  1934,  as  amended  (the  "Communications   Act").  The
Communications  Act generally  imposes more extensive  requirements  on Carriers
that have some  degree of market  power,  such as the  original  local  exchange
carriers,  than it imposes on  non-dominant  Carriers that lack market power and
telecommunications  resellers,  such as MBI. The FCC  regulates  interstate  and
American  international  inbound and outbound traffic and applies taxes on these
calls.  Basically,  the FCC is responsible  for the subscriber  line charge that
provides a fund for local  telephone  companies to recover the costs  associated
with  connecting  their  customers  to long  distance  networks.  The  FCC  also
regulates the federal excise tax on telephone bills.

     Other  Regulations.  As MBI expands its service areas to other states,  its
telecommunications  operations  will also be subject  to various  state laws and
regulations.  MBI will be required to obtain and maintain certificates of public
convenience and necessity from regulatory authorities in most states in which it
may offer  intrastate  service.  In most  states,  MBI must also file and obtain
prior  regulatory  approval  of tariffs  for  intrastate  services.  MBI will be
required to update or amend its tariffs  when rates are adjusted or new products
are added to services  offered by MBI. MBI will also be subject to challenges by
third  parties to the MBI's  Federal or state  tariffs,  if any, and  complaints
about  MBI   practices   could  cause  MBI  to  incur   substantial   legal  and
administrative  expenses.  There can be no  assurance  that MBI will  expand its
service  area  into  other  states  or that MBI  will  successfully  obtain  the
necessary regulatory approval to operate in such jurisdictions.

     The  Company  believes  that  within  a  three-to-four   year  period,  the
telecommunication and cable industries may be further deregulated,  allowing all
market  participants  to engage in a broader range of business  activities.  The
Company  believes  future   deregulation  will  allow  Regional  Bell  Operating
Companies ("RBOCs") and other long distance companies to enter new markets.  See
"Risk Factors - Intense  Competition."  New regulations may also allow companies
like the  Company  to  compete  for local  toll  business.  See "Risk  Factors -
Regulation  and  Pending   Regulation"  and  "Note   Regarding   Forward-Looking
Statements."

Billing and Collection Cycle

     MBI  experiences a timing gap in its billing and  collection  cycle arising
from its  obligations to pay underlying  Carriers from five to twenty days prior
to when MBI's customers pay for those services  delivered by MBI. The timing gap
requires  substantial  working  capital  to  finance  receivables,   and  it  is
anticipated  that MBI may  require  additional  working  capital to fund  future
growth if MBI elects to aggressively  expand into new geographical  areas and to
offer new services to end users. Currently, MBI believes it will have sufficient
working capital and cash flows from operations to fund its planned operating and
expansion costs. However,  there can be no assurance that MBI will not encounter
delays or suffer  adverse  consequences  if  additional  working  capital is not
available or if the gap between the billing and collection cycle is increased.

Selling, General and Administrative Expenses

     Selling,  general and  administrative  expenses  include salaries and wages
associated with customer service, operations,  research and development,  direct
sales,  marketing  and  administrative  functions,  sales  commissions,   direct
marketing and advertising  costs,  travel and entertainment  expenses,  bad debt
expense, rent and facility expense, professional and consulting



                                       19
<PAGE>

fees, and other operating and  administrative  expenses.  The Company  estimates
that it spent only nominal  amounts during fiscal year 2001 and fiscal year 2000
on research and development activities.

Depreciation and Amortization

     Depreciation  and  amortization  includes  depreciation  of  furniture  and
fixtures,   computer  and  telecommunications   equipment  and  amortization  of
goodwill.  The Company provides for depreciation using the straight-line  method
of depreciation over the estimated useful lives of the assets. Intangible assets
being  amortized  include  goodwill  created in the acquisition of EDI, which is
being amortized over 10 years.

Personnel

     As of February 28, 2002, the Company had sixteen (16) full-time  personnel,
including  two (2) officers.  None of the  Company's  personnel are members of a
labor  union or are covered by a  collective  bargaining  agreement.  Management
believes that the Company's relationship with its personnel is good.

Trademarks

     The brand names "Moving Bytes" and "gooeymail" are registered trademarks of
the  Company in the United  States.  The  Company  may also apply for  trademark
protection  for  additional  marks as the  Company  develops  new  products  and
variants of its current  services.  There can be no  assurance  that the Company
will receive  registration for any applied for trademarks or that any registered
trademark  will provide the Company with any  significant  marketing or industry
recognition, protection, advantage or benefit.


RISK FACTORS

     The  securities  of the  Company  are  highly  speculative.  A  prospective
investor or other person reviewing the Company should not consider an investment
unless the  investor is capable of  sustaining  an  economic  loss of the entire
investment.  Certain risks are associated with the Company's business, including
the following:

     Future Operations and Going Concern

     The auditors' report on the 2001 audited financial  statements  includes an
additional  explanatory  paragraph that states that due to recurring losses from
operations and cash flows used in operating activities, substantial doubt exists
about  the  Company's  ability  to  continue  as a going  concern.  The  audited
financial  statements  include a future  operations  and going concern note that
provides  further  information with respect to this uncertainty and management's
plans. Management believes the Company is a going concern. However, there can be
no assurance that the Company will be able to continue as a going concern in the
future.  The  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.

     Limited Operating History; History of Losses

     The  Company  has been  operating  since  March  1991.  The Company had net
earnings during only one fiscal year to date,  which was net earnings of $16,646
in the year ended  December 31, 1999. The Company has a history of losses before
and after such fiscal year,  including losses of $2,093,471 in 2001, $265,566 in
2000, $130,479 in 1998, $134,845 in 1997



                                       20
<PAGE>

and $1,131,542 in 1996. There can be no assurance that the Company will generate
enough  revenues from its operations to generate net earnings in the future,  if
at all.

     Need for Additional Resources for Growth

     Subject to the  sufficiency of its cash  resources,  the Company intends to
continue to expand its  business by entering  into new markets and  offering new
services. If the Company expands into new geographic markets on a rapid basis or
aggressively  introduces new services,  the Company may require  additional cash
resources to fund its growth and operations.  The Company currently  anticipates
that its growth can be  financed  through  working  capital  and cash flows from
operations. However, there can be no assurance that the Company will not require
additional  financing or that such  financing  will be  available on  acceptable
terms, if at all.

     The  Company's  future  performance  will depend,  in large part,  upon its
ability to implement and manage its growth effectively. The Company's growth has
placed,  and in the future will continue to place,  a significant  strain on its
administrative,  operational and financial  resources.  The Company  anticipates
that if successful in expanding its business, it will be required to recruit and
hire a substantial  number of new sales and other  personnel.  Failure to retain
and attract additional qualified sales and other personnel, including management
personnel  who can  manage  the  Company's  growth  effectively  and  failure to
successfully  integrate such personnel  could have a material  adverse effect on
the Company.  To manage its growth  successfully,  the Company will also have to
continue  to  improve  and  upgrade  operational,   financial,   accounting  and
information systems,  controls and infrastructure,  as well as expand, train and
manage its  employee  base.  In the event the  Company is unable to upgrade  its
financial controls and systems adequately to support its anticipated growth, the
Company's  business  and results of  operations  could be  materially  adversely
affected.

     Lack of Experience Offering Certain Telecommunications Services

     MBI's  future  strategy  includes  offering  additional  telecommunications
services,  including  local,  voice  over  Internet  and other  Internet  access
services.  MBI has limited  experience  providing local, voice over Internet and
other Internet access services. To be successful,  MBI must compete successfully
with companies that have greater financial resources and experience than MBI. To
provide  these  additional  services,  MBI expects  that it will be necessary to
negotiate  agreements with Carriers and other service providers in advance.  MBI
may be required to develop technical and marketing expertise in other markets to
effectively market and sell such additional services. In addition, the provision
of certain of these services may involve technical  requirements with respect to
which MBI has little  experience.  The provision of these  services must also be
successfully  integrated  into MBI's  business.  There can be no assurance  that
MBI's future services will receive market  acceptance in a timely manner,  if at
all, or that prices and demand for these  services will be sufficient to provide
profitable operations.

     Lack of Experience Offering Certain Electronic Media Services

     MBI's future strategy  includes  offering  additional eCRM,  e-mail and fax
broadcasting and Internet marketing services,  including permission based opt-in
list development and management services,  voice and fax over Internet, and HTML
and multimedia formatted e-mail messaging.  MBI has limited experience providing
permission based opt-in list development and management services,  voice and fax
over Internet, and HTML and multimedia formatted e-mail



                                       21
<PAGE>

messaging.  To be successful,  MBI must compete successfully with companies that
have greater  financial  resources  and  experience  than MBI. To provide  these
additional  services,  MBI  expects  that  it  will be  necessary  to  negotiate
agreements  with  Carriers and other  service  providers in advance.  MBI may be
required  to develop  technical  and  marketing  expertise  in other  markets to
effectively market and sell such additional services. In addition, the provision
of certain of these services may involve technical  requirements with respect to
which MBI has little  experience.  The provision of these  services must also be
successfully  integrated  into MBI's  business.  There can be no assurance  that
MBI's future services will receive market  acceptance in a timely manner,  if at
all, or that prices and demand for these  services will be sufficient to provide
profitable operations.

     Working Capital Requirements

     As of December 31, 2001,  the Company had net working  capital of $752,838.
The Company currently anticipates that it will fund its growth from revenues and
cash flow from operations.  However,  the Company's working capital requirements
may  increase  substantially  in  order to  accommodate  growth  if the  Company
identifies new opportunities to expand its operations and elects to aggressively
pursue new markets or to offer new services.

     MBI  currently  experiences  negative cash flow from  operations  and until
MBI's  cash flow from  operations  is  sufficient  to meet its  working  capital
requirements,  any  shortfall  must be  covered  by a credit  facility  or other
sources, such as vendor financing or the sale of the Company's securities. There
can be no assurance that  sufficient  financing will be available to sustain the
Company's growth.

     MBI  experiences a timing gap in its billing and  collection  cycle arising
from its  obligations  to pay  underlying  Carriers  from fifteen to thirty days
prior to when MBI's clients pay for those services  delivered by MBI. The timing
gap  requires  substantial  working  capital to finance  receivables,  and it is
anticipated  that MBI may  require  additional  working  capital to fund  future
growth if MBI elects to aggressively  expand into new geographical  areas and to
offer new services to end users. Currently, MBI believes it will have sufficient
working capital and cash flows from operations to fund its planned operating and
expansion costs. However,  there can be no assurance that MBI will not encounter
delays or suffer  adverse  consequences  if  additional  working  capital is not
available or if the gap between the billing and collection cycle is increased.

     There can be no assurance  that the Company will be successful in obtaining
the  required  financing  for its  operations  or  expansion  strategy  on terms
acceptable to the Company,  if at all. If the Company  cannot obtain  sufficient
capital  to fund  its  planned  expenditures,  some or all of its  plans  may be
significantly delayed or abandoned.

     Intense Competition

     MBI operates in a highly  competitive  environment  and currently  does not
have a significant market share in the markets it serves. Most of its actual and
potential competitors have substantially greater financial, technical, marketing
and other resources  (including brand or corporate name  recognition)  than MBI.
Also, the continuing trend toward business  alliances in the  Telecommunications
Services and Electronic Media Services industries and the absence of substantial
barriers  to entry  in the  Telecommunications  Services  and  Electronic  Media
Services



                                       22
<PAGE>

markets could give rise to significant new  competition.  The Company's  success
will depend upon MBI's ability to provide  high-quality  services at competitive
prices. See "Competition."

     In addition, MBI faces the following specific competitive risks:

     Effect  of New Rate  Plans.  AT&T,  MCI,  Sprint  and other  carriers  have
implemented  new price plans aimed at residential  customers with  significantly
simplified rate  structures,  which may have the impact of lowering overall long
distance prices.  There can be no assurance that long distance carriers will not
make similar  offerings  available to the small to medium-sized  businesses that
MBI primarily serves.

     The  Competitive  Implications  of Other  Technologies.  MBI will also face
competition from fixed wireless  services;  wireless devices that do not require
site or network licensing;  cellular, personal communications service, and other
commercial mobile radio service providers; and Internet telephony. Such services
may provide  competitive  advantages  over MBI's  services,  including  wireless
convenience, lower unit costs and increased communications capabilities.

     Entrance of the Regional Bell  Operating  Companies into the In-Region Long
Distance Market.  Section 271 of the  Telecommunications  Act prohibits any RBOC
from  providing  long distance  service that  originates  (or, in certain cases,
terminates) in one of its in-region states until the RBOC has satisfied  certain
statutory  conditions in that state and has received the approval of the FCC. To
date, the FCC has denied several  applications for such approval;  however,  the
Company anticipates that a number of RBOCs will file additional applications for
in-region long distance  authority in 2002.  Once the RBOCs are allowed to offer
widespread in-region long distance services, they will be in a position to offer
single-source   local  and  long  distance  service  that  may  provide  certain
competitive marketing advantages and cost efficiencies to such RBOC's.

     Entrance  of  Foreign  Companies  into U.S.  Markets  -  Telecommunications
Services.  New FCC  rules  went  into  effect  in  February  1998  that  make it
substantially easier for many non-U.S. telecommunications companies to enter the
U.S. market, thus potentially further increasing the number of competitors.  See
"Business of the Company-- Regulation."

     Intense Competition in  Telecommunications  Services.  The market for voice
and data  communications and Internet access services is extremely  competitive.
There  are no  substantial  barriers  to entry,  and the  Company  expects  that
competition will intensify in the future. See "Business  --Overview,"  "Business
of the Company -- Competition" and "Business of the Company -- Regulation".

     Effect of Major  Competitors.  Major  competitors  have not yet entered the
market for small to medium-sized  business users that MBI will target. There can
be no  assurance  that  larger  and  better-financed  competitors  will not make
similar  offerings  available to the small to  medium-sized  businesses that the
Company primarily serves.

     Charging by Internet Service Providers (ISPs). ISPs may begin to charge for
e-mail delivery to their subscribers.  Because ISPs control a crucial checkpoint
between marketers and consumers they may restrict access to their subscribers or
charge a fee for access to their subscribers. Any limitation of MBI's ability to
deliver  e-mail  messages  or any  cost  associated  with  such  delivery  could
materially  harm MBI's  business and results of  operations  could be materially
adversely affected.



                                       23
<PAGE>

     Blocking of MBI's Services Due to Spam. ISPs, such as America On-Line, AT&T
Worldnet,  Mindspring, etc. have realized that the volume of spam or junk e-mail
has a  significant  effect on their ability to service their users as the volume
of junk e-mail  traveling  through and stored on their systems  increases.  They
have responded by blocking incoming  messages from known spammers.  If a company
or service provider became known as a spammer,  they would run the risk of being
blocked by one or more major on-line  services.  If MBI, as a service  provider,
were unable to send any  messages to any ISP, due to spam  blocking,  that would
prevent MBI from providing e-mail marketing  services to substantial  quantities
of consumers, significantly reducing the effectiveness of MBI's.

     Entrance  of  Foreign  Companies  into  U.S.  Markets  -  Electronic  Media
Services.  Because the Internet is transparent,  eCRM,  e-mail  broadcasting and
Internet  marketing  services  such  as  those  offered  by the  Company  can be
fulfilled and delivered  from anywhere in the world.  This means that the number
of competitors could increase substantially as more of the world gains access to
the Internet.

     Regulation and Pending Regulation

     Telecommunications  services are subject to  significant  regulation at the
federal,  state, local and international levels,  affecting MBI and its existing
and potential competitors.  Delays in receiving required regulatory approvals or
the  enactment  of  new  and  adverse  legislation,  regulations  or  regulatory
requirements  may have a  material  adverse  effect on the  Company's  financial
condition, results of operations and cash flow. In addition, future legislative,
judicial and regulatory agency actions could alter competitive conditions in the
markets  in which the MBI is  operating  or  intends to operate in ways that are
materially adverse to the Company. See "Description of Business - Regulation."

     E-mail  and fax  broadcasting  and  Internet  marketing  are not  currently
regulated at the Federal,  State or local level.  However, due to privacy issues
and spam there is  considerable  effort  underway to  legislate  regulations  on
e-mail   broadcasting  and  Internet  marketing.   Regulatory   restrictions  or
impositions  and other new and adverse  legislation,  regulations  or regulatory
requirements  may have a  material  adverse  effect on the  Company's  financial
condition, results of operations and cash flow. In addition, future legislative,
judicial and regulatory agency actions could alter competitive conditions in the
markets  in which  MBI is  operating  or  intends  to  operate  in ways that are
materially adverse to the Company.

     In particular, MBI faces the following regulatory risks:

     Legal  and   Administrative   Burden  of  Compliance   with  Diverse  State
Regulations.  MBI's  telecommunications  operations  and future  operations  are
subject to state laws and regulations. MBI must obtain and maintain certificates
of public  convenience and necessity from regulatory  authorities in most states
in which it may  offer  intrastate  service.  In most such  states,  MBI will be
required to file and obtain prior regulatory  approval of tariffs for intrastate
services.  Challenges  by third  parties to MBI's  Federal or state  tariffs and
complaints about MBI's practices could cause MBI to incur  substantial legal and
administrative expenses.

     Uncertainty  of  the  Impact  of  the   Telecommunications  Act  and  Other
Regulatory   Changes.   In  February  1996,   comprehensive   telecommunications
legislation was enacted. The  Telecommunications Act has resulted in significant
changes in the regulatory environment for the  telecommunications  industry as a
whole, and will have a material impact on the local



                                       24
<PAGE>

exchange  industry and the  competitive  environment in which MBI operates.  The
Company cannot predict how the relevant provisions of the Telecommunications Act
will be interpreted  and  implemented by the FCC, state  regulators,  courts and
other regulatory agencies.

     Uncertainty of the Evolving Regulatory  Environment.  On July 18, 1997, the
United  States Court of Appeals for the Eighth  Circuit  overturned  many of the
rules the FCC had established pursuant to the Telecommunications Act. The Eighth
Circuit decision  substantially  limits the FCC's jurisdiction and expands state
regulators'  jurisdiction  to set and enforce rules governing the development of
local competition. As a result, it is more likely that the rules governing local
competition will vary substantially from state to state. If a patchwork of state
regulations  were to  develop,  it  could  increase  MBI's  cost  of  regulatory
compliance  and could make entry into and conduct of  business  in some  markets
more  expensive  than in others.  The United States  Supreme Court (the "Supreme
Court")  reviewed  the  decision of the Eighth  Circuit and on January 25, 1999,
reversed the Eighth Circuit in part and reinstated,  with one exception,  all of
the FCC local  competition  rules. The Supreme Court vacated and remanded to the
FCC for  reconsideration  the rule determining  which unbundled network elements
much be provided by incumbent local exchange carriers to new entrants. There can
be no assurance as to how these decisions will affect MBI's business and results
of operations in fiscal year 2002 and beyond.  Federal and state regulations and
pending regulations and court decisions may have in the future both positive and
negative  effects on MBI and its  ability to  compete.  However,  under  pending
federal and state legislation,  significant  additional  competitors could enter
the market for MBI's services which additional  competitors  have  significantly
greater financial and resources than are available to the Company.

     Dependence on Billing, Customer Service and Information Systems

     MBI currently relies on external billing  solutions for  Telecommunications
Services and internal billing  solutions for Electronic Media Services.  Billing
for services and related  information  processing  capability  is vital to MBI's
growth and its ability to monitor costs, bill customers, provide customer orders
and achieve operating efficiencies.  As MBI continues to provide a wider variety
of  Electronic   Media   Services  to  a  growing  client  base,  the  need  for
sophisticated  billing and information systems will increase  significantly.  If
MBI that it has exceeded the  capabilities of its in-house  systems there can be
no  assurance  that MBI will be able to obtain  such  services  from third party
vendors  on  acceptable  terms,  if at all,  and the cost of  implementing  such
systems internally may be substantial. Failure of the MBI's vendors and possible
future  vendors to deliver the required  information  in a timely and  effective
manner and at  acceptable  costs,  failure  of MBI to  adequately  identify  and
integrate all of its  information  and processing  needs,  failure of MBI's data
processing or information  systems, or the failure of the MBI to upgrade systems
as necessary could have a material  adverse effect on MBI's business and results
of operations.

     MBI is dependent  upon the prompt  collection of payment of its  customers'
bills and, in turn, upon the creditworthiness of its customers and the continued
implementation  of  adequate  revenue  assurance  programs.  The  failure of its
customers to pay their bills in a timely  manner or MBI's  failure to accurately
assess the  creditworthiness  of its customers and  implement  adequate  revenue
assurance  programs  could have a material  adverse effect on MBI's business and
results of operations.



                                       25
<PAGE>

     Dependence Upon Facility Based Carriers

     MBI's underlying services are provided by one or more independent companies
that provide  switching  and network  services to MBI.  These  services  must be
operational  24  hours a day,  seven  days a week  and  these  services  must be
available to MBI on a cost-effective basis. There can be no assurance that these
services  will be  adequately  provided to MBI on a permanent or cost  effective
basis and the failure of these  providers or their  inability to provide quality
services  could  jeopardize  the  success of MBI,  its  business  and results of
operations.

     MBI relies on other  companies  to supply  certain  key  components  of its
service and  operating  infrastructure,  including  telecommunications  and data
services, network capacity and switching and networking equipment, which, in the
quantities and quality  demanded by MBI, are available only from sole or limited
sources.  MBI is also  dependent  upon  carriers  to provide  telecommunications
services  and  facilities  to MBI and its  customers.  MBI has from time to time
experienced  delays or other problems in receiving  telecommunications  services
and facilities which it requests, and there can be no assurance that MBI will be
able to obtain  such  services  or  facilities  on the scale and within the time
frames  required  by MBI at an  affordable  cost,  or at all. As MBI expands its
service offerings to include other services, it will compete increasingly with a
variety of new competitors,  which may serve as a disincentive for such entities
to cooperate with MBI. Any failure to obtain components,  services or additional
capacity  required to service  MBI's  clients on a timely basis at an affordable
cost,  or at all,  would have a material  adverse  effect on MBI's  business and
results of operations.

     Dependence on Distributors

     MBI does not maintain a direct sales force for Telecommunications Services.
It directs its sales effort exclusively through distributors. To the extent that
MBI depends on distributors and independent marketing agents to obtain customers
for its  telecommunications  services,  MBI will be subject to risks  associated
with agent  attrition.  Many other  telecommunication  marketing  firms  utilize
independent  marketing  agents  to  sell  telecommunications  services,  and may
compete with MBI for marketing agents. Independent marketing agents may elect to
work for competitors and solicit MBI's clients, which may adversely effect MBI's
business and results of operations.

     While MBI maintains a direct sales force for  Electronic  Media Services it
may in the  future  direct  substantially  all of its sales  effort  exclusively
through  distributors.  To the  extent  that MBI  depends  on  distributors  and
independent  marketing  agents  to obtain  customers  for its  Electronic  Media
Services, MBI will be subject to risks associated with agent attrition.  Several
other  Electronic Media Services firms utilize  independent  marketing agents to
sell Electronic Media Services,  and may compete with MBI for marketing  agents.
Independent marketing agents may elect to work for competitors and solicit MBI's
clients, which may adversely effect MBI's business and results of operations.

     Dependence on Third Party Agreements

     To further  develop its network and to continue  providing  services to its
existing clients,  MBI will need to maintain existing  contractual and strategic
relationships  with third party  entities and build new strategic  relationships
with other  third  party  entities  that  provide  capacity  and other  services
required by MBI to implement its business  strategy.  Executing  MBI's  business
strategy will require that MBI enter into agreements, on acceptable terms and



                                       26
<PAGE>

conditions,  with various providers of infrastructure  capacity,  in particular,
interconnection  agreements  with  Carriers.  There can be no assurance that MBI
will be able to obtain and maintain such contractual and strategic relationships
on  acceptable   terms.   Although  MBI  does  not  believe  that  any  existing
arrangements will be canceled or will not be renewed as needed,  cancellation or
non-renewal  of  such  arrangements  could  materially  adversely  effect  MBI's
business and results of operations.

     Dependence upon Network Infrastructure

     The Company's success in attracting and retaining  customers  requires that
the Company provide adequate  reliability,  capacity and security in its network
infrastructure  and the service  systems.  The systems and networks on which MBI
depends are  subject to  physical  damage,  power  loss,  capacity  limitations,
software  defects,  breaches  of  security  (by  computer  virus,  break-ins  or
otherwise)  and other  factors,  certain  of which may  cause  interruptions  in
service  or  reduced  capacity  for MBI's  clients.  Interruptions  in  service,
capacity  limitations or security  breaches could have a material adverse effect
on MBI's business and results of operations.

     Dependence on Key Personnel

     The Company  believes that its success will depend to a significant  extent
upon the abilities and continued efforts of its management; particularly J. Erik
Mustad,  the Company's Chief Executive  Officer and Mark M. Smith, the Company's
President and Chief Financial  Officer.  The loss of the services of any of such
individuals could have a material adverse effect on the Company.  The success of
the Company will also depend,  in part,  upon the Company's  ability to hire and
retain  additional key personnel,  including  senior  management,  technical and
sales personnel, who are also being sought by other businesses.  Competition for
qualified  personnel  is  intense.  Difficulty  in  hiring  and  retaining  such
personnel could have a material adverse effect on the Company.  The Company does
not maintain `key man' life insurance on any of its officers or key employees.

     Impact of Technological Change

     Both  the  Telecommunications   Services  and  Electronic  Medias  Services
industries have been, and are likely to continue to be,  characterized  by rapid
technological  change,  frequent new service introductions and evolving industry
standards.  Increases or changes in  technological  capabilities or efficiencies
could create an incentive for  additional  competitors  to enter the business in
which MBI currently competes or may in the future. Existing competitors are also
likely  to  continue  to  develop  new  services.   Increased   competition  and
technological  changes  could result in lower retail rates for  services,  which
could  have a material  adverse  effect on MBI's  ability to price its  services
competitively or profitably.  Future  technological  changes,  including changes
related  to  emerging   wireline  and  wireless   transmission   and   switching
technologies and Internet-related  services and technologies,  also could have a
material adverse effect on MBI. The ability of MBI to compete effectively in the
future will depend  partly on MBI's ability to develop  additional  products and
services which appeal to its intended end users.

     MBI relies and will  continue to rely in part on third  parties  (including
certain of its competitors and potential competitors) for the development of and
access to communications and networking technology.  The effect of technological
changes on the business of MBI cannot be predicted with any degree of certainty.
The Company  believes  that MBI's future  success will depend,  in part,  on its
ability to anticipate or adapt to such changes and to offer, on a timely



                                       27
<PAGE>

basis,  services that meet  customer  demands and evolving  industry  standards.
There can be no assurance  that MBI will obtain  access to new  technology  on a
timely basis or on satisfactory terms, or that MBI will be able to adapt to such
technological  changes,  offer such  services on a timely  basis or establish or
maintain a competitive  position.  Any  technological  change,  obsolescence  or
failure to obtain access to important technologies could have a material adverse
effect on MBI's business and results of operations.


ITEM 2.  DESCRIPTION OF PROPERTIES.

     On April 25, 2001, the Company entered into a sixty-month  triple net lease
for  2,595  square  feet in  Emeryville,  California  at $2.75 per  square  foot
commencing June 1, 2001 (the "Horton Street Lease").  A security  deposit in the
amount of $23,407 was paid to secure the Horton Street  Lease.  Under the Horton
Street Lease,  the Company is  responsible  for its pro-rata  share of operating
expenses including insurance, taxes and utilities.

     On June 28, 2001, the Company entered into a an additional  lease for 1,601
square feet full service in Emeryville, California for sixty-months at $2.85 per
square  foot  commencing  August 1, 2001 (the  "Watergate  Lease").  A  security
deposit in the amount of $10,000  was paid to secure the  Watergate  Lease.  The
Company  has  relocated  its  corporate  and  accounting  operations  under  the
Watergate Lease.


ITEM 3. LEGAL PROCEEDINGS.

     To the best of its  knowledge,  the Company is not subject to any active or
pending legal  proceedings  or claims  against it or any of its  properties.  On
January  19,  2001,  the  Company  settled  its sole  outstanding  lawsuit.  See
"Material Agreements - Perell Lawsuit." However,  from time to time, the Company
may become  subject  to claims  and  litigation  generally  associated  with any
business venture.


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

     No matters were  submitted to a vote of security  holders during the fourth
quarter of 2001.



PART II

ITEM 5. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER  MATTERS.

     The Company's  common shares were listed for trading on the Vancouver Stock
Exchange  ("VSE") on December 20, 1993 under the symbol "UVT" and were  delisted
from the VSE on January 31, 2000. The Company's shares began quoting on the NASD
Over the Counter  Bulletin  Board under the symbol "YDSLF" on September 7, 1999.
On June 20, 2000, in  conjunction  with the Company's  name change and change of
corporate  jurisdiction,  the  Company's  shares began  trading under the symbol
"ECNXF."



                                       28
<PAGE>

     The following  table sets forth the nature of the Company's  trading market
on the NASD Over the Counter Bulletin Board (the "OTCBB") during the period from
January 1, 2000 to the Company  fiscal year ended December 31, 2001, and for the
period ending February 28, 2002.

     NASD Over-the-Counter Bulletin Board

         2000             High (US$)          Low (US$)            Volume
         ----             ----------          ---------            ------
       1st Quarter          $7.25               $0.44              12,555,900
       2nd Quarter          $4.38               $0.72              3,776,766
       3rd Quarter          $1.50               $0.50              1,348,104
       4th Quarter          $1.00               $0.22              1,681,236

         2001             High (US$)          Low (US$)            Volume
         ----             ----------          ---------            ------
       1st Quarter          $1.00               $0.25              696,200
       2nd Quarter          $0.63               $0.30              687,900
       3rd Quarter          $0.32               $0.17              420,600
       4th Quarter          $0.20               $0.06              855,000


         2002             High (US$)          Low (US$)            Volume
         ----             ----------          ---------            ------
         Jan 1 - Feb 28     $0.19               $0.08              573,100


     The above quotations reflect inter-dealer  prices,  without retail mark-up,
mark-down or commission.

     The Company's  common shares are issued in  registered  form.  Based on the
records of Pacific Corporate Trust Company, the Company's registrar and transfer
agent,  as of February  28, 2002,  there were one seven  hundred  fifty  (1,750)
holders of record of the  Company's  common  shares.  Holders with United States
addresses  collectively  held 8,243,928 common shares,  or  approximately  fifty
three and  six-tenths  percent  (56.8%) of the Company's  14,509,441  issued and
outstanding common shares.

     The  Company  has never paid  dividends  on its common  shares and does not
anticipate paying any dividends in the foreseeable future.

     Recent Sales of Unregistered Securities.

     On September  15, 2000,  the Company  issued  2,703,036  common  shares and
assumed  199,515 share purchase  options with exercise prices ranging from $0.48
to $1.00 in exchange  for 90.28% of the common  capital  stock of EDI in a share
exchange transaction. On January 19,



                                       29
<PAGE>

2001, the Company issued  291,128  restricted  common shares in exchange for the
remaining  9.72% of the common  capital  stock of EDI,  bringing  the  Company's
interest in EDI to 100%. All of the securities issued by the Company in exchange
for EDI's common capital stock were issued to the previous  security  holders of
EDI. See "Material Agreements - Acquisition of Exstream Data, Inc., a California
Corporation."

     On March 9, 2001, the Company issued 400,000  restricted common shares in a
private  placement  at $0.50  per share  common  share  for  total  proceeds  of
$200,000. No commissions were paid in connection with the private placement. The
shares  were  issued to one  non-U.S.  persons  outside of the United  States in
reliance upon an exemption available under Regulation S of the Securities Act of
1933, as amended. In conjunction with this private placement, the Company issued
200,000 non-transferable  warrants to purchase 200,000 common shares exercisable
at $1.00 per share.  These  warrants have a two-year term and expire on March 9,
2003.

     On February  28,  2002,  the Company  issued  1,000,000  common  shares and
1,000,000  common share purchase  warrants to one of the Company's  officers and
directors,  Mark  Smith,  in a  private  placement  under  Regulation  D of  the
Securities  Act of 1933,  as amended.  This  private  placement is subject to an
escrow  arrangement.  See  generally  "Management's  Discussion  and Analysis of
Financial  Condition  and  Results  of  Operations  --  Private  Placement  with
Affiliate."


     Exchange Controls

     There are no  governmental  laws,  decrees or  regulations  in Canada  that
restrict  the  export or import of  capital or that  affect  the  remittance  of
dividends, interest or other payments to nonresident holders of the Registrant's
securities.  However, any such remittance to a resident of the United States may
be subject to a withholding  tax pursuant to the  reciprocal  tax treaty between
Canada  and  the  United  States.  For  further   information   concerning  such
withholding tax, see "Item 7. Taxation" below.

     There are no limitations under the laws of Canada,  the Province of British
Columbia,  or in the charter or other  constituent  documents of the  Registrant
with respect to the right of  non-resident or foreign owners to hold and/or vote
shares of the Registrant's  common shares.  However,  the Investment  Canada Act
(the "Investment Act"), enacted on June 20, 1985, as amended, requires the prior
notification  and,  in  certain  cases,  advance  review  and  approval  by  the
Government of Canada of the  acquisition by a  "non-Canadian"  of "control" of a
"Canadian  business," all as defined in the Investment  Act. For the purposes of
the Investment Act,  "control" can be acquired through the acquisition of all or
substantially all of the assets used in the Canadian business,  or the direct or
indirect  acquisition  of  interests  in an entity  that  carries  on a Canadian
business or which  controls the entity that  carries on the  Canadian  business.
Under the  Investment  Act,  control of a  corporation  is deemed to be acquired
through the acquisition of a majority of the voting shares of a corporation, and
is presumed to be acquired where more than one-third,  but less than a majority,
of the voting shares of a corporation are acquired, unless it can be established
that the  corporation  is not controlled in fact through the ownership of voting
shares.  Other  rules apply with  respect to the  acquisition  of  non-corporate
entities.

     Investments  requiring  review and approval  include direct  acquisition of
Canadian  businesses  with assets with a gross book value of $5,000,000 or more;
indirect acquisitions of



                                       30
<PAGE>

Canadian   businesses   with  assets  of   $50,000,000  or  more;  and  indirect
acquisitions of Canadian  businesses  where the value of assets of the entity or
entities  carrying on business in Canada,  control of which is indirectly  being
acquired,  is greater than $5,000,000 and represents  greater than fifty percent
(50%) of the total value of the assets of all of the entities,  control of which
is being acquired.

     Pursuant to the Word Trade Organization  Agreement  Implementation Act, the
Investment Act was amended to provide that the value of the business acquisition
threshold  (the  "Threshold")  above  described is  increased  from those levels
outlined where the acquisition is by a World Trade Organization Investor or by a
non-Canadian other than a World Trade  Organization  Investor where the Canadian
business  that is the  subject  of the  investment  is  immediately  before  the
investment controlled by a World Trade Organization  Investor.  The Threshold is
to be determined yearly in accordance with a formula set forth in the Investment
Act. For 2001, the Threshold was determined to be $209,000,000.

     A World Trade  Organization  Investor includes an individual,  other than a
Canadian, who is a national of a World Trade Organization Member, or who has the
right of  permanent  residence  in  relation  to that World  Trade  Organization
Member.

     If an  investment  is  reviewable,  an  application  for review in the form
prescribed by  regulation is normally  required to be filed with the Ministry of
Industry,  Director of Investment  prior to the investment  taking place and the
investment  may not be  consummated  until the  review  has been  completed  and
ministerial  approval  obtained.  Applications  for review  concerning  indirect
acquisitions  may be filed up to 30 days after the  investment  is  consummated.
Applications concerning reviewable investments in culturally sensitive and other
specified  activities  referred to in the preceding  paragraph are required upon
receipt of a notice for review.  There is, moreover,  provision for the Minister
(a person  designated as such under the Investment  Act) to permit an investment
to be  consummated  prior to completion of review if he is satisfied  that delay
would cause undue  hardship to the acquirer or  jeopardize  the operation of the
Canadian business that is being acquired.

     Taxation

     The following is a summary of the  principal  Canadian  federal  income tax
considerations  that would  generally  apply to holders of the Company's  common
shares.  This  summary  is based  upon the  provisions  of the Income Tax Act of
Canada  and the  regulations  thereunder  (collectively,  the "Tax Act") and the
Canada-United  States Tax Convention  (the "Tax  Convention")  as at the date of
this Annual Report and the current  administrative  practices of Revenue Canada,
Taxation.  This  summary  does not  take  into  account  provincial  income  tax
consequences.

     Certain Canadian Federal Income Tax Consequences

     The following is a general summary of certain  Canadian  federal income tax
considerations  generally  applicable to a holder of the Company's common shares
who is not a resident of Canada for the purposes of the Tax Act). The discussion
does not address all potentially relevant federal income tax matters and it does
not address  consequences  peculiar to persons subject to special  provisions of
federal income tax law.

     The  summary  is based  on the  current  provisions  of the Tax Act and the
Company's  understanding of the current  administrative  practices published by,
and Press announcements



                                       31
<PAGE>

released by Revenue Canada,  Customs,  Excise and Taxation and the Department of
Finance.  This  summary  takes  into  account  proposals  to  amend  the Tax Act
announced  prior to the date hereof  (although no  assurances  can be given that
such  changes  will be enacted in the form  presented  or at all),  but does not
otherwise take into account or anticipate  any other changes in law,  whether by
judicial,  governmental or legislative  action or decision nor does it take into
account  any  provincial,  territorial,  local or  foreign  tax  considerations.
Accordingly,  holders and  prospective  holders of the  Company's  common shares
should   consult  their  own  tax  advisors   about  the  federal,   provincial,
territorial,  local and  foreign  tax  consequences  of  purchasing,  owning and
disposing of such shares.

     The  Tax Act  provides  in  subsection  212(2)  that  dividends  and  other
distributions which are deemed to be dividends and which are paid or credited or
are  deemed  to  be  paid  or  credited  by a  Canadian  resident  Company  to a
non-resident of Canada shall be subject to non-resident withholding tax equal to
twenty-five  percent  (25%)  of the  gross  amount  of the  dividend  or  deemed
dividend.

     Subsections  2(3) and  115(1) of the Tax Act  provide  that a  non-resident
person  is  subject  to tax in  Canada  at the  rates  generally  applicable  to
residents of Canada on any "taxable  capital gain" arising on the disposition of
the shares of a company which are listed on a prescribed  stock exchange if such
non-resident,  together with persons with whom he does not deal at arm's length,
owned twenty-five percent (25%) or more of the issued shares of any class of the
capital stock of the Company at any time in the five years immediately preceding
the date of disposition of the shares.  Subsections 2(3) and 115(1) also provide
that a non-resident  person is subject to tax in Canada on taxable capital gains
arising on the  disposition of shares that constitute  capital  property used in
carrying on a business in Canada. The taxable portion of a capital gain is equal
to one-half of the amount by which the proceeds of  disposition  of such shares,
net of any  reasonable  costs  associated  with  the  disposition,  exceeds  the
adjusted  cost  base to the  holder  of the  shares.

     Provisions in the Tax Act relating to dividend and deemed dividend payments
and gains  realized by  non-residents  of Canada who are residents of the United
States are subject to the Canada-United  States Income Tax Convention (1980), as
amended (the "1980 Convention").

     Article  X of the 1980  Convention  provides  that for 1997 and  subsequent
taxation years pursuant to the Third Protocol to the 1980 Convention the rate of
Canadian  non-resident  withholding tax on dividends paid to a U.S. company that
beneficially  owns at least ten percent (10%) of the voting stock of the Company
shall not exceed five percent (5%) of the  dividends.  Otherwise,  and except in
the case of dividends received by a resident of the United States who carries on
business in Canada through a Canadian permanent  establishment and the shares in
respect of which the  dividends  are paid are  effectively  connected  with that
permanent  establishment,  the rate of non-resident withholding shall not exceed
fifteen  percent  (15%) of the  dividend.  Where the dividends are received by a
United States person carrying on business in Canada through a Canadian permanent
establishment  and the  shares in respect  of which the  dividends  are paid are
effectively  connected  with that  permanent  establishment  the  dividends  are
generally  subject  to  Canadian  tax as  business  profits,  generally  without
limitation under the 1980 Convention.

     Article  XIII of the 1980  Convention  provides  that gains  realized  by a
United States  resident on the  disposition of shares of a Canadian  company may
not generally be taxed in



                                       32
<PAGE>

Canada  unless  the  value of those  shares  is  derived  principally  from real
property  situated in Canada or the shares form part of the business property of
a permanent  establishment  which the United  States  shareholder  has or had in
Canada within the twelve (12) month period  preceding  the date of  disposition.
Canada also  retains  the right to tax gains on  property  owned at the time the
individual  ceased to be  resident  in Canada if it is sold by a person  who was
resident in Canada for one hundred  and twenty  (120)  months in any twenty (20)
consecutive  years  preceding  the sale and who was a resident  in Canada at any
time in the ten (10) years preceding sale.

     United States Federal Income Tax Consequences

     The  following is a general  discussion of certain  possible  United States
federal income tax consequences,  under current law,  generally  applicable to a
U.S.  Holder (as  hereinafter  defined) of common  shares of the  Company.  This
discussion does not address all potentially  relevant federal income tax matters
and it does not  address  consequences  peculiar  to persons  subject to special
provisions of federal income tax law, such as those  described below as excluded
from the definition of a U.S.  Holder.  In addition,  this  discussion  does not
cover any state,  local or foreign tax  consequences.  (see "Taxation - Canadian
Federal Tax Consequences" above).

     The following discussion is based upon the sections of the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury Regulations,  published Internal
Revenue Service ("IRS") rulings,  published  administrative positions of the IRS
and court decisions that are currently applicable,  any or all of which could be
materially and adversely  changed,  possibly on a retroactive basis, at any time
and which are subject to differing  interpretations.  This  discussion  does not
consider the potential  effects,  both adverse and  beneficial,  of any recently
proposed  legislation  that,  if  enacted,  could  be  applied,  possibly  on  a
retroactive basis, at any time. This discussion is for general  information only
and it is not  intended to be, nor should it be  construed  to be,  legal or tax
advice to any holder or  prospective  holder of common shares of the Company and
no opinion or  representation  with respect to the United States  federal income
tax consequences to any such holder or prospective holder is made.  Accordingly,
holders and  prospective  holders of common shares of the Company should consult
their  own tax  advisors  about the  federal,  state,  local,  and  foreign  tax
consequences  of  purchasing,  owning  and  disposing  of  common  shares of the
Company.

     U.S. Holders

     As used  herein,  a "U.S.  Holder"  means a holder of common  shares of the
Company  who is a  citizen  or  individual  resident  of the  United  States,  a
corporation  or  partnership  created or  organized  in or under the laws of the
United States or of any political subdivision thereof, an estate whose income is
taxable in the United  States  irrespective  of source or a trust subject to the
primary  supervision of a court within the United States and control of a United
States fiduciary as described Section 7701(a)(30) of the Code. This summary does
not address the tax consequences  to, and U.S. Holder does not include,  persons
subject to specific  provisions  of federal  income tax law,  such as tax-exempt
organizations,  qualified retirement plans,  individual  retirement accounts and
other tax-deferred accounts,  financial institutions,  insurance companies, real
estate  investment  trusts,  regulated  investment  companies,   broker-dealers,
nonresident  alien  individuals,  persons or  entities  that have a  "functional
currency"  other than the U.S.  dollar,  shareholders  who hold common shares as
part of a straddle,  hedging or conversion  transaction,  and  shareholders  who
acquired  their common shares  through the exercise of employee stock options or
otherwise as compensation for services.  This summary is limited to U.S. Holders
who



                                       33
<PAGE>

own  common  shares  as  capital  assets.  This  summary  does not  address  the
consequences  to a person or entity  holding an interest in a shareholder or the
consequences  to a person  of the  ownership,  exercise  or  disposition  of any
options, warrants or other rights to acquire common shares.

     Distribution on Common Shares of the Company

     U.S.  Holders  receiving  dividend  distributions  (including  constructive
dividends)  with respect to common shares of the Company are required to include
in gross income for United States  federal  income tax purposes the gross amount
of such  distributions,  equal to the U.S. dollar value of such distributions on
the date of receipt  (based on the  exchange  rate on such date),  to the extent
that the  Company has  current or  accumulated  earnings  and  profits,  without
reduction  for any Canadian  income tax withheld from such  distributions.  Such
Canadian tax withheld may be credited,  subject to certain limitations,  against
the U.S.  Holder's  federal  income  tax  liability  or,  alternatively,  may be
deducted in computing  the U.S.  Holder's  federal  taxable  income by those who
itemize  deductions.  (See more  detailed  discussion  at  "Foreign  Tax Credit"
below). To the extent that distributions  exceed current or accumulated earnings
and profits of the Company, they will be treated first as a return of capital up
to the U.S.  Holder's adjusted basis in the common shares and thereafter as gain
from the sale or  exchange  of the  common  shares.  Preferential  tax rates for
long-term  capital gains are applicable to a U.S.  Holder that is an individual,
estate or trust.  There are  currently no  preferential  tax rates for long-term
capital gains for a U.S. Holder that is a corporation.

     In the  case  of  foreign  currency  received  as a  dividend  that  is not
converted  by the  recipient  into U.S.  dollars on the date of receipt,  a U.S.
Holder will have a tax basis in the foreign  currency  equal to its U.S.  dollar
value on the date of  receipt.  Generally  any  gain or loss  recognized  upon a
subsequent  sale or other  disposition  of the foreign  currency,  including the
exchange  for  U.S.  dollars,  will be  ordinary  income  or loss.  However,  an
individual  whose  realized  gain does not exceed two  hundred  ($200)  will not
recognize  that gain, to the extent that there are no expenses  associated  with
the  transaction  that meet the  requirements  for  deductibility  as a trade or
business expense (other than travel expenses in connection with a business trip)
or as an expense for the production of income.

     Dividends  paid on the common  shares of the Company will  generally not be
eligible for the dividends received deduction provided to corporations receiving
dividends  from certain  United States  corporations.  A U.S.  Holder which is a
corporation may, under certain  circumstances,  be entitled to a seventy percent
(70%)  deduction of the United States source portion of dividends  received from
the  Company  (unless  the  Company  qualifies  as a "foreign  personal  holding
company" or a "passive  foreign  investment  company," as defined below) if such
U.S.  Holder owns shares  representing  at least ten percent (10%) of the voting
power and value of the Company. The availability of this deduction is subject to
several complex limitations that are beyond the scope of this discussion.

     Foreign Tax Credit

     A U.S. Holder who pays (or has withheld from distributions) Canadian income
tax with  respect  to the  ownership  of  common  shares of the  Company  may be
entitled,  at the option of the U.S. Holder,  to either receive a deduction or a
tax credit for such  foreign tax paid or  withheld.  Generally,  it will be more
advantageous  to claim a credit  because a credit  reduces United States federal
income taxes on a dollar-for-dollar basis, while a deduction merely reduces the



                                       34
<PAGE>

taxpayer's income subject to tax. This election is made on a year-by-year  basis
and  applies to all foreign  taxes paid by (or  withheld  from) the U.S.  Holder
during that year.  There are significant and complex  limitations  that apply to
the credit,  among which is the general limitation that the credit cannot exceed
the proportionate  share of the U.S. Holder's United States income tax liability
that the U.S.  Holder's  foreign  source  income  bears to his or its  worldwide
taxable income. In the determination of the application of this limitation,  the
various  items of income and  deduction  must be  classified  into  foreign  and
domestic sources. Complex rules govern this classification process. In addition,
this  limitation is calculated  separately  with respect to specific  classes of
income such as "passive  income," "high  withholding  tax interest,"  "financial
services  income,"  "shipping  income,"  and certain  other  classifications  of
income.  Dividends distributed by the Company will generally constitute "passive
income" or, in the case of certain U.S. Holders, "financial services income" for
these purposes. The limitation and classification rules described above will not
apply to an  individual  U.S.  Holder who makes a special  election  if the U.S.
Holder's  sole  source of foreign  income is passive  income and his  creditable
foreign taxes do not exceed three hundred  dollars ($300).  The  availability of
the foreign tax credit and the  application of the limitations on the credit are
fact specific,  and U.S.  Holders of common shares of the Company should consult
their own tax advisors regarding their individual circumstances.

     Disposition of Common Shares of the Company

     A U.S. Holder will recognize gain or loss upon the sale of common shares of
the Company equal to the difference, if any, between (i) the amount of cash plus
the fair market value of any property  received,  and (ii) the shareholder's tax
basis in the  common  shares of the  Company.  Preferential  tax rates  apply to
long-term capital gains of U.S. Holders that are individuals, estates or trusts.
This  gain or loss  will be  capital  gain or loss if the  common  shares  are a
capital asset in the hands of the U.S. Holder,  which will be long-term  capital
gain or loss if the  common  shares  of the  Company  are held for more than one
year. Deductions for net capital losses are subject to significant  limitations.
In the  case of U.S.  Holders  that are not  corporations,  capital  losses  are
allowed as a deduction against ordinary income up to a maximum of three thousand
dollars ($3,000). For U.S. Holders that are not corporations, any unused portion
of such net capital loss may be carried over to be used in later tax years until
such  net  capital  loss  is  thereby  exhausted.  For  U.S.  Holders  that  are
corporations  (other than corporations  subject to Subchapter S of the Code), an
unused net capital loss may be carried back three years and carried forward five
years  from the loss year to be offset  against  capital  gains  until  such net
capital loss is thereby exhausted.

     Other Considerations

     In the following  circumstances,  the above sections of this discussion may
not describe the United States  federal income tax  consequences  resulting from
the holding and disposition of common shares:

     Foreign Personal Holding Company

     If at any time during a taxable year more than fifty  percent  (50%) of the
total  combined  voting  power or the total value of the  Company's  outstanding
shares is owned,  directly or indirectly,  by five (5) or fewer  individuals who
are citizens or residents of the United  States and sixty  percent (60%) or more
of the  Company's  gross income for such year was derived  from certain  passive
sources (e.g., from dividends received from its  subsidiaries),  the Company may
be treated as a "foreign  personal holding company." In that event, U.S. Holders
that hold



                                       35
<PAGE>

common  shares  would be required to include in gross income for such year their
allocable  portions of such  passive  income to the extent the Company  does not
actually  distribute such income. The Company does not believe that it currently
qualifies  as a  foreign  personal  holding  company.  However,  there can be no
assurance  that the Company will not be  considered a foreign  personal  holding
company for any future taxable year.

     Foreign Investment Company

     If fifty percent (50%) or more of the combined  voting power or total value
of the Company's outstanding shares is held, directly or indirectly, by citizens
or  residents of the United  States,  United  States  domestic  partnerships  or
corporations,  or estates or trusts  other  than  foreign  estates or trusts (as
defined by the Code Section 7701(a)(31)), and the Company is found to be engaged
primarily in the business of investing,  reinvesting,  or trading in securities,
commodities,  or any interest  therein,  it is possible  that the Company may be
treated  as a "foreign  investment  company"  as defined in Section  1246 of the
Code,  causing  all or part of any gain  realized  by a U.S.  Holder  selling or
exchanging  common  shares to be treated as ordinary  income rather than capital
gain.  The Company  does not believe  that it  currently  qualifies as a foreign
personal  holding company.  However,  there can be no assurance that the Company
will not be considered a foreign personal holding company for any future taxable
year.  The Company  does not believe  that it  currently  qualifies as a foreign
investment company. However, there can be no assurance that the Company will not
be considered a foreign investment company for any future taxable year.

     Passive Foreign Investment Company

     As a foreign  corporation with U.S. Holders,  the Company could potentially
be treated  as a passive  foreign  investment  company  ("PFIC"),  as defined in
section 1297 of the Code,  depending upon the percentage of the Company's income
which is passive, or the percentage of the Company's assets which produce or are
held for the production of passive income.  U.S. Holders owning common shares of
a PFIC are subject to the highest  rate of tax on ordinary  income in effect for
the  applicable  taxable  year and to an interest  charge  based on the value of
deferral of tax for the period  during  which the common  shares of the PFIC are
owned,  in addition to the  treatment  of gain  realized on the  disposition  of
common shares of the PFIC as ordinary income rather than capital gain.  However,
if the U.S.  Holder  makes a  timely  election  to  treat a PFIC as a  qualified
electing fund ("QEF") with respect to such shareholder's  interest therein,  the
above-described  rules  generally  will not apply.  Instead,  the electing  U.S.
Holder  would  include  annually  in his gross  income his pro rata share of the
PFIC's ordinary  earnings and net capital gain regardless of whether such income
or gain was actually distributed.  A U.S. Holder of a QEF can, however, elect to
defer the payment of United States federal income tax on such income inclusions.
Special  rules apply to U.S.  Holders who own their  interests in a PFIC through
intermediate  entities or persons. In addition,  subject to certain limitations,
U.S. Holders owning (actually or constructively) marketable stock in a PFIC will
be  permitted  to elect to mark that stock to market  annually,  rather  than be
subject  to the excess  distribution  regime of section  1291  described  above.
Amounts  included in or deducted from income under this  alternative (and actual
gains and losses realized upon disposition, subject to certain limitations) will
be treated as ordinary gains or losses.  This  alternative will apply to taxable
years of U.S.  Holders  beginning  after  1997  and  taxable  years  of  foreign
corporations ending with or within such taxable years of U.S. Holders.



                                       36
<PAGE>

     The  Company  believes  that it was not a PFIC for its  fiscal  year  ended
December  31,  2000 and does not  believe  that it will be a PFIC for the fiscal
year ending  December 31, 2001.  There can be no  assurance  that the  Company's
determination  concerning  its PFIC status will not be challenged by the IRS, or
that it will be able to satisfy record keeping requirements that will be imposed
on QEFs.

     Controlled Foreign Corporation

     If more than fifty percent (50%) of the total combined  voting power of all
classes  of  shares  entitled  to vote or the total  value of the  shares of the
Company is owned,  actually or  constructively,  by citizens or residents of the
United States,  United States domestic  partnerships and corporations or estates
or trusts other than foreign estates or trusts,  each of which own,  actually or
constructively,  ten percent (10%) or more of the total combined voting power of
all  classes  of  shares  entitled  to  vote  of  the  Company  ("United  States
Shareholder"),  the Company could be treated as a controlled foreign corporation
("CFC")  under  Subpart F of the Code.  This  classification  would  effect many
complex  results,  one of which is the inclusion of certain income of a CFC that
is subject to current  U.S.  tax.  The United  States  generally  taxes a United
States  Shareholder  of a CFC  currently on its pro rata shares of the Subpart F
income of the CFC.  Such  U.S.  Shareholders  are  generally  treated  as having
received a current  distribution  out of the CFC's Subpart F income and are also
subject  to  current  U.S.  tax on their pro rata  shares of the CFC's  earnings
invested in U.S. property. The foreign tax credit described above may reduce the
U.S. tax on these  amounts.  In addition,  under section 1248 of the Code,  gain
from the sale or  exchange  of shares by a U.S.  Holder of common  shares of the
Company  which is or was a United  States  Shareholder  at any time  during  the
five-year  period ending with the sale or exchange is treated as ordinary income
to the extent of earnings and profits of the Company  attributable to the shares
sold or  exchanged.  If a  foreign  corporation  is both a PFIC  and a CFC,  the
foreign  corporation  generally  will not be treated  as a PFIC with  respect to
United States Shareholders of the CFC. This rule generally will be effective for
taxable years of United States Shareholders beginning after 1997 and for taxable
years of foreign corporations ending with or within such taxable years of United
States  Shareholders.  Special rules apply to United States Shareholders who are
subject to the special  taxation rules under section 1291  discussed  above with
respect to a PFIC. Because of the complexity of Subpart F, and because it is not
clear  that  Subpart  F would  apply to U.S.  Holders  of  common  shares of the
Company,  a more detailed  review of these rules is outside of the scope of this
discussion.  The Company does not believe that it currently  qualifies as a CFC.
However, there can be no assurance that the Company will not be considered a CFC
for any future taxable year.



                                       37
<PAGE>


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.

SUMMARY FINANCIAL DATA

     The  following  table sets forth  selected  financial  data  regarding  the
Company's  consolidated  operating results and financial position.  The data has
been derived from the Company's  consolidated  financial statements,  which have
been prepared in accordance with accounting principles generally accepted in the
United  States  ("U.S.  GAAP").  See  "Management's  Discussion  and Analysis of
Financial Condition and Results of Operation."

     The Company acquired 100% of USVT pursuant to a Share Exchange in July 1996
and 90.28% of EDI and MBI on  September  15,  2000.  The  Company  acquired  the
remaining  9.72% of EDI on January 19,  2001.  The  financial  data for the year
ended  December 31, 2000  consolidates  EDI and MBI from  September 15, 2000 and
reflects  minority interest for the 9.72%. The financial data for the year ended
December 31, 2001  consolidates EDI and reflects minority interest for the first
19 days of the year when the Company acquired the remaining 9.72%. The following
selected  financial  data is qualified in its entirety by, and should be read in
conjunction  with,  the  consolidated  financial  statements  and notes  thereto
included  elsewhere  this Annual  Report.  The selected  financial  data and the
Company's consolidated financial statements are expressed in U.S. dollars.

<TABLE>
                                                                        Fiscal Year Ended December 31
                                      --------------------------------------------------------------------------------
                                               2001(2)         2000(1)            1999           1998            1997
                                      --------------------------------------------------------------------------------
<S>                                         <C>             <C>             <C>            <C>             <C>
Revenue                                     $5,802,426      $5,293,937      $5,277,171     $5,206,984      $3,750,458
General & Administrative Expenses           $4,861,520      $2,492,530      $1,678,466     $1,283,870      $1,154,819
Net Income (Loss) from Operations         $(2,129,143)      $(362,193)            $688     ($160,252)      ($189,682)
Net Income (Loss) for the Year            $(2,093,471)      $(265,566)         $16,646     ($130,479)      ($134,848)
Net Income (Loss)  per Share                   $(0.16)         $(0.03)           $0.01        ($0.02)         ($0.02)
----------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
                                                Fiscal Year Ended December 31
                                      --------------------------------------------------------------------------------
                                              2001(2)         2000(1)           1999            1998            1997
                                      --------------------------------------------------------------------------------
<S>                                          <C>           <C>              <C>             <C>             <C>
 Working Capital                             $752,838      $1,328,838       $999,144        $853,181        $820,717
 Total Assets                              $2,251,936      $4,044,579     $1,601,179      $1,650,270      $1,501,717
 Total Liabilities                           $482,943        $520,959       $544,611        $721,931        $596,434
 Shareholders' Equity                      $1,768,993      $3,523,620     $1,056,568        $928,339        $905,283
 Long-term Obligations                            Nil             Nil            Nil             Nil             Nil
----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       38
<PAGE>

(1)  On September 15, 2000,  the Company  acquired  90.28% of the common capital
     stock  including  stock  options  of EDI for  2,703,036  common  shares and
     199,515  vested stock options of the Company,  for total  consideration  of
     $2,640,834.  This  business  combination  has  been  accounted  for  by the
     purchase method. Accordingly, the consolidated statements of operations and
     deficit and cash flows for the year ended December 31, 2000 and the results
     of  operations  and cash flows of the Company  from  September  15, 2000 to
     December 31, 2000 include the results of EDI and reflect minority  interest
     for the 9.72% not yet acquired.

(2)  On January 19, 2001, the Company acquired the remaining 9.72% of the common
     capital stock of EDI for 291,128 common capital stock of the Company with a
     fair market value of $172,844.  As a result, the financial  statements only
     reflect the minority interests for the first 19 days of the year.


     You should read the following  discussion and analysis in conjunction  with
the audited financial  statements and notes thereto appearing  elsewhere in this
Form 10-KSB.

Management's Discussion and Analysis of Financial Condition
and Results of Operations

     The following  discussion  and analysis  discusses  trends in the Company's
financial  condition  and results of  operations  for the two fiscal years ended
December  31,  2001 and 2000.  This  discussion  and  analysis of the results of
operations and financial  condition of the Company should be read in conjunction
with  the  audited  financial  statements  and  the  related  notes,  as well as
statements  made elsewhere in this Form 10-KSB.  The financial  statements  have
been prepared in accordance with U.S. generally accepted  accounting  principles
(GAAP) and are expressed in United States  dollars.  Unless noted  otherwise the
presentation  represents the consolidated  financial  results of the Company and
MBI (jointly and severally, the "Company").

     Results of Operations

     Year Ended December 31, 2001 ("fiscal  2001") Compared to December 31, 2000
("fiscal 2000")

     Revenue for the twelve month period ended December 31, 2001 ("fiscal 2001")
increased to $5,802,426  from  $5,293,937 for the same period ended December 31,
2000 ("fiscal 2000"), an increase of 9.6%.  Telecommunications  Services revenue
comprised 73% of total revenue and Electronic Media Services  revenue  comprised
27% of total, in fiscal 2001.

     Telecommunications Services revenues fell to 11.1% to $4,264,570 for fiscal
2001 year down from  $4,796,197 in fiscal 2000.  Contributing to reduced revenue
in  Telecommunications  Services was a drop in total usage during the year.  The
Company  believes  that the  combined  effects of current  economic  conditions,
downward pressure on pricing in the  telecommunications  industry and the events
of   September   11,   2001,   caused  the   Company  to   experience   negative
Telecommunications  Services  revenue  growth  during  fiscal 2001.  The Company
believes that  Telecommunications  Services  revenues have  stabilized as of the
filing  date  of  this  Annual  Report.  See  "Note  Regarding   Forward-Looking
Statements."

     The revenue  reduction  in  Telecommunications  Services in fiscal 2001 was
compensated for by the addition of the Electronic  Media Services revenue gained
due to the acquisition of



                                       39
<PAGE>

EDI.  Electronic Media Services revenues increased 235% to $1,537,856 for fiscal
2001 up from $459,073 in fiscal 2000.

     The  Company  believes  that  billing  rates for e-mail  and fax  broadcast
services may decline in the future and that there may be continued  slow down in
Electronic Media Services  spending in general.  Additionally,  current economic
conditions  and the events of  September  11,  2001,  have caused the Company to
experience  a  decline  in  Electronic  Media  Services  revenue.   The  Company
anticipates a modest rebound in Electronic Media Services  spending at such time
as current  economic  conditions  improve.  The Company believes that Electronic
Media  Services  revenues  will grow  relative  to  Telecommunications  Services
revenues at such time as the Company is able to commercialize services currently
under  development and there is an anticipated macro increase in demand for such
services. See "Note Regarding Forward-Looking Statements."

     The  Company  believes  that the  combined  effects of i) current  economic
conditions,  ii) a slow  down in  e-marketing  and  advertising  spending,  iii)
downward  pressure  on pricing in the  telecommunications  industry  and iv) the
events of  September  11,  2001,  caused  the  Company  to  experience  negative
sequential  revenue  growth  during fiscal 2001.  The Company  believes that the
events of  September  11,  2001,  in  particular  caused  the  Company to suffer
material  negative  revenue growth during fiscal 2001. The Company  expects that
the current political and economic conditions will continue to negatively impact
its results in fiscal year 2002.

     Gross Margin (Revenue less Cost of Goods Sold).

     Gross margin for fiscal 2001  increased to  $2,732,377  from  $2,130,337 in
fiscal  2000,  an increase of 28.3%.  Gross  margin was 47.1% of sales in fiscal
2001 as  compared to 40.2% in fiscal  2000.  Telecommunications  Services  gross
margin comprised 60% of total gross margin and Electronic Media Services revenue
comprised 40% of total gross margin for fiscal 2001.

     In fiscal 2001,  Telecommunications  Services  gross margin was 39% (2000 -
37%) as compared to Electronic  Media Services gross margin of 71% (2000 - 70%).
The Company's total gross margin increased over the comparative  period due to a
higher  percentage of revenue being  generated by the Electronic  Media Services
segment of the Company's  business,  which segment produces higher gross margin,
and the lowering of carrier  costs for both  Telecommunications  and  Electronic
Media Services.

     During  fiscal 2001,  the Company  negotiated  lower carrier rates with MCI
Communications its primary carrier in the  Telecommunications  Services segment.
During fiscal 2001,  the Company  relocated its  Electronic  Media Services data
center from Oakland,  California to Emeryville,  California. As a result of this
relocation,  the  Company  began  operating  exclusively  under  a  new  carrier
agreement with Qwest Communications.

     During  fiscal 2001,  the Company  reduced  transmission  costs to 43.6% of
revenue or $2,531,346  down from 51.3% of revenues or  $2,717,176  during fiscal
2000, a decrease of 6.8%.  This 6.8%  decrease was realized  even as the Company
increased  revenue by 9.6% over the  period.  The  Company  believes  that these
results  demonstrate  that the Company's  efforts to lower its carrier costs are
producing results and are currently  offsetting  reductions in retail pricing in
the  Telecommunications  Services segment.  However,  despite these results, the
margins on the Company's  Telecommunications  Services  business are expected to
decline  as a result of  industry  wide  downward  pressure  on prices  for long
distance services. This decline may be offset if the



                                       40
<PAGE>

Company  can  increase  its revenue in  Electronic  Media  Services  relative to
Telecommunications Services. See "Note Regarding Forward-Looking Statements."

     Commissions  paid  increased to $347,495 or 6% of revenue in fiscal 2001 up
from  $274,283 or 5.2% of revenue in fiscal  2000,  an  increase  of 26.7%.  The
increase  occurred due to new  Telecommunications  Services sales which incurred
commissions and which replaced  declining  revenues on which the Company was not
paying  commissions.  Due to the  nature  of  the  Company's  Telecommunications
Services business customers on whom it pays commission are more likely to remain
with the  Company  due to their  relationship  with the sales  agent to whom the
Company is paying  commissions to, in effect,  retain the customer.  The Company
anticipates that as it expands its distribution  network to encompass more sales
agents,  including for Electronic Media Services,  its commission  expenses as a
percentage of revenue will increase.

     Other expenses, primarily related to Telecommunications Services, including
costs of billing and telecommunications usage tax preparation,  were $191,208 in
fiscal 2001 as compared to $172,141 in fiscal 2000.

     Personnel Expenses.

     The  Company's  costs for salaries and benefits  increased to $1,980,238 or
34.1% of revenue in fiscal 2001 up from $1,065,081 or 20.1% of revenue in fiscal
2000, an increase of 85.9%.  The increase in personnel  costs during fiscal 2001
resulted  from an increase in the number of  employees of the Company due to the
Company's  acquisition  of EDI.  The  Company  was able to lower  the  number of
personnel and reduce  salaries and benefits costs during fiscal 2001 in order to
somewhat mitigate declining revenues but not to the same extent as the declining
revenues.  There were no special  payments or bonuses paid to  employees  during
fiscal 2001.

     Because the Company's Electronic Media Services business (which it acquired
in  the  EDI  transaction)  requires  the  ongoing  development  of  proprietary
Electronic  Media  Services  software  and  accompanying  systems,  the  cost of
personnel to support this segment relative to its current sales is substantially
higher than that of the Telecommunications  Services segment. To the extent that
the Company  continues to pursue  development of its  Electronic  Media Services
software and accompanying  systems,  it will continue to incur personnel related
costs which are substantially higher than when it was engaged exclusively in the
Telecommunications Services segment.

     Consulting  services  costs  decreased to $361,030  during fiscal 2001 from
$536,855 in fiscal 2000.  Consulting  services  decreased  due to the  Company's
efforts to hire consultants as employees which occurred during fiscal year 2001.

     Amortization.

     Amortization during fiscal 2001 was $341,429 up from $121,389 during fiscal
2000. The increase was primarily due to amortization of the goodwill  associated
with the  acquisition  of EDI.  The Company  anticipates  further  increases  in
amortization  expense in its  fiscal  year 2002  related  to  ongoing  equipment
purchases but this will be more than offset by the reduction in  amortization of
goodwill due to the write-down of goodwill  (discussed  below) and the change in
accounting policy in 2002.



                                       41
<PAGE>

     Legal and Accounting, Rent, and Bad Debt.

     Legal and accounting expenditures decreased to $149,736 in fiscal 2001 from
$189,881 in fiscal 2000, or 21.1%.  Legal and accounting  expenditures in fiscal
2000 included costs  associated  with the  acquisition of EDI. The Company's has
implemented  internal  controls designed to lower customary legal and accounting
expenditures.

     Rent  increased to $222,042 in fiscal 2001 up from $150,907 in fiscal 2000.
As a result of the  acquisition of EDI the Company  incurred  higher than market
rents prior to its relocation from Oakland, California to Emeryville, California
in July 2001. As a result of relocating its premises,  the Company believes that
rent for its fiscal  year 2002 will return to fiscal  2000  levels.  The Company
believes that it has sufficient  space in which to expand its operations for the
foreseeable future.

     Bad debt  expense was  $168,144  in fiscal  2001 up from  $34,589 in fiscal
2000.  The increase in bad debts was primarily due to non-payment of amounts due
from a single customer,  Prime T.V. The Company filed a complaint  against Prime
T.V. alleging breach of contract, fraud and intentional tort associated with the
non-payment  of  $119,313 in services  provided to Prime T.V.  during  March and
April 2001.  The complaint  seeks relief of $144,313 plus  additional  sums plus
interest accrued thereon and attorney fees. The Company believes that it will be
successful  in its efforts to collect  some or all of the amounts due from Prime
T.V. However, the potential recovery,  if any, has not been included in earnings
in 2001 and will only be included when and if received.

     Other  General  and  Administrative  Expenses  -  excluding  write-down  of
goodwill.

     Other general and administrative costs were $443,740 in fiscal 2001 up from
$393,828 in fiscal 2000. The increase in other general and administrative  costs
in  fiscal  2001  over  fiscal  2000  were  largely  due to a rise in  operating
expenditures  resulting  from the  acquisition  of EDI.  The Company  managed to
maintain  general  and  administrative  costs at 7.6% (2000 - 7.4%) year on year
despite  a larger  revenue  base and  expanded  operations  largely  due to cost
controls.  The Company  believes  that it can  continue  to control  general and
administrative  costs  relative  to  changes  in  revenue.  See "Note  Regarding
Forward-Looking Statements."

     Write-down of Goodwill

     The Company wrote down the value of goodwill by $1,195,161  from $1,795,161
to $600,000. The Company has experienced a 60% decline in the monthly revenue of
EDI since  acquisition  due to the Company's focus on improving EDI's cash flows
by  reducing  infrastructure  and other  costs.  The Company  believes  that the
changes made will benefit the Company in the long-term but at the expense of the
current year's results.  However, the decline in revenues and the decline in the
Company's share price indicate that the goodwill acquired has been impaired. The
write-down  amount of  $1,195,161  was  required  to reduce the  goodwill to its
estimated  fair value of $600,000.  The fair market value  estimate was based on
two sources of evidence - the fair market value of the  Company's  net assets as
estimated by the market  capitalization  of the Company using trading  prices at
December 31, 2001; and the estimated  discounted  cash flows from the electronic
document delivery business.



                                       42
<PAGE>

     Net Loss.

     Net loss from  operations  before other income  (expense) was $2,129,143 in
fiscal 2001 as compared to  $362,193 in fiscal  2000.  Net loss from  operations
before other  income  (expense)  in fiscal 2001  includes  bad debt  expenses of
$168,144  compared to $34,589 in 2000 and a goodwill  write-down of  $1,195,161.
Adjusted  for all non cash items,  including  bad debts,  amortization,  and the
goodwill  write-down net loss from operations  before other income (expense) was
$424,409 in fiscal 2001 up 97.3% from $205,765 in fiscal year 2000. Increases in
net operating loss were  primarily due to a substantial  change in the Company's
business  (the  addition  of  Electronic  Media  Services)  as a  result  of the
acquisition of EDI.  During fiscal year 2001, the Company was able to streamline
Electronic Media Services operations and reduce these losses each quarter.

     The Company had a net loss of  $2,093,471 or $0.16 per share in fiscal 2001
as compared to a net loss of  $265,566  or $0.03 per share in fiscal  2000.  The
Company  believes that the increase in the net loss is due to the  write-down of
goodwill,  the increase in bad debts and costs  associated with  integrating EDI
with the Company in 2001.

     Liquidity and Capital Resources.

     At December  31,  2001 ("FYE  2001"),  the  Company had working  capital of
$752,838  including  cash and  equivalent  balances  of  $367,868 as compared to
respective balances of $1,328,838 (working capital) including $825,859 (cash and
cash equivalents) at December 31, 2000 ("FYE 2000").

     A large  percentage of the change in working capital balances from FYE 2000
to FYE 2001 were as a result of operating losses in fiscal 2001. In addition, in
fiscal 2001,  the Company had $202,947 in  unfinanced  software,  equipment  and
furniture and fixture purchases,  and $44,370 in leasehold  improvements.  These
capital  expenditures  were directly  related to the relocation of the Company's
network  operations  center and included  significant  upgrades to the companies
networking  equipment and the  installation of a self contained power generation
facility.

     During fiscal 2001, the Company used $460,230 in cash to fund operations as
compared to $70,867 in fiscal  2000.  The  Company  believes  that cost  control
programs designed to reduce cash consumption  related to operations are having a
positive effect on the Company's  results.  See "Note Regarding  Forward-Looking
Statements."

     Non-cash net working capital  decreased to $384,970 at FYE 2001 as compared
to $502,979 at FYE 2000. The Company maintains a policy of matching cash inflows
from receivables with cash outflows in payment of its outstanding obligations to
the extent possible.  However, there is a lag between the collection of accounts
receivable  from customers and the required  payment to  transmission  carriers.
Reductions  in  non-cash  working  capital  were  largely  due to the decline in
accounts  receivable  which was only partially offset by the decline in accounts
payable to transmission carriers

     Accounts receivable decreased to $824,661 at FYE 2001 down from $924,197 at
FYE 2000. Accounts receivable  primarily represent  collectable amounts from the
previous  ninety days sales.  During  September  2001, the Company  migrated its
billing  systems for Digital  Media  Services  from an Access  platform to a SQL
platform. The change in platform is expected to result in more stable,  reliable
and timely billing for Digital Media Services. The Company does not believe that
the growth in accounts receivable relative to sales reflects any increase in



                                       43
<PAGE>

doubtful  accounts,  however,  there  can be no  assurance  that  political  and
economic  conditions will not adversely affect the Company's  ability to collect
accounts receivable on a timely basis.

     In fiscal 2001, the Company  increased its capital  assets by $247,317.  Of
this amount  $202,947 was for  software,  equipment  and  furniture  and fixture
purchases, and $44,370 was for in leasehold improvements.

     Current  liabilities  fell to $448,914 at FYE 2001 down 15.5% from $500,683
at FYE 2000.  Reductions  in accounts  payable were largely due to downsizing of
the Company's operations.

     The Company  financed  $45,915 in equipment  purchases  during  fiscal 2001
through a capital  lease,  of this  obligation,  $5,000 was repaid in 2001.  The
Company has no long-term debt or other long-term liabilities.

     The Company  received  $200,000  during  fiscal  2001 from the  issuance of
capital stock.

     The Company  believes that its working capital together with cash flow from
its operations will be sufficient to fund its cash  requirements  through fiscal
2002, however,  there can be no assurance that political and economic conditions
will not adversely affect revenue from operations, collections, costs related to
the Company's  business or other factors,  which may affect the Company's future
cash  requirements.  If the Company  requires  additional  cash to fund  capital
additions or operations,  the Company will likely fund any such  requirements by
issuing  capital  stock.  There is no certainty that the Company will be able to
issue additional stock if required.

     Subsequent Events

     Termination of Joseph Karwat Agreement

     On January 29,  2002,  pursuant to an  employment  agreement  (the  "Karwat
Agreement")  dated August 7, 2000,  between  Joseph  Karwat  ("Karwat")  and the
Company,  the board of  directors  terminated  the Karwat  Agreement.  Under the
Karwat Agreement, in the event of the termination of the Karwat Agreement by the
Company  other than for cause,  including  constructive  dismissal,  the Company
would be required to pay to Karwat a single  lump sum  severance  payment of One
Hundred and Fifty Thousand dollars  ($150,000) (the "Severance Pay") and, in the
event of the termination of Karwat by the Company,  other than for cause, Thirty
Seven  Thousand Five Hundred  dollars  ($37,500)  under a ninety (90) day notice
requirement (the "Notice Pay").

     The Company  believes that it terminated the Karwat Agreement for cause and
that it therefore  has no  obligation  to pay to Karwat the Severance Pay or the
Notice Pay generally described in the Karwat Agreement.

     Issuance of Stock Options.

     On February 25, 2002,  certain  directors and employees were issued 229,020
incentive  stock  options.  The  following  table  sets forth  their  cumulative
issuances as a group:

    =========================================================================
    Group                       Number   Price (USD$)       Expiry
    -------------------------------------------------------------------------
    Directors                   75,000    $   0.10          February 25, 2005
    Employees                  154,020    $   0.10          February 25, 2005
    =========================================================================



                                       44
<PAGE>

     Repricing of Stock Options.

     On February 25, 2002,  the  Company's  board of directors  approved a stock
option repricing program for the Company.  Under the repricing program,  certain
holders of stock  options,  including  directors and officers,  were entitled to
exchange their existing stock options,  which had an exercise price of $0.25 per
share,  for repriced  stock  options to purchase the same number of shares at an
exercise  price of $0.10 per share.  At this  repricing,  the new exercise price
exceeded the market price of the Company's  common  shares.  Each repriced stock
option has terms  substantially  equivalent to the terms of the original  grant,
including the same vesting terms,  number of shares and expiration date. Options
to purchase a total of 4,510,100 common shares were repriced.

     The following table sets forth the cumulative repricing as a group:

     -------------------------------------------------------------------
                                 Number of   Exercise         Exercise
     Group                       options      price           Price new
                                 repriced    old (USD$)        (USD$)
     -------------------------------------------------------------------
     Officers/Directors         3,790,000     $0.25            $ 0.10
     Employees                    720,100     $0.25            $ 0.10
     -------------------------------------------------------------------

     Amendment of Certain Stock Option Expiry Dates.

     On February  25, 2002,  the board of directors  amended the expiry dates of
certain stock option agreements of certain officers and directors. The following
table sets forth the changes in expiry dates:

     ---------------------------------------------------------------------------
                            Number of     Prior Expiry            New Expiry
     Group                   Options          Date                    Date
     ---------------------------------------------------------------------------
     Officer/Director        500,000     January 25, 2003       January 25, 2005
     Officer/Director        500,000     January 25, 2005       January 25, 2007
     ---------------------------------------------------------------------------

     Private Placement with Affiliate.

     On  February  28, 2002 in  consideration  of  $50,000,  the Company  issued
1,000,000 units to Mark Smith ("Smith"),  one of our officers and directors (the
"Smith Unit Private Placement").  Each unit consists of one Company common share
and one non-transferable  share purchase warrant which is exercisable to acquire
one Company  common share at a price of $0.05 per share until March 1, 2007. The
common shares issued had a deemed price of $0.05.  On February 25, 2002, the day
that the transaction was approved by the board of directors of the Company,  the
closing price of the Company's common shares on the NASD OTCBB was $0.10.



                                       45
<PAGE>

     The  securities  issued in the Smith Unit Private  Placement were issued to
Smith  in  reliance  upon an  exemption  from  registration  under  Rule  506 of
Regulation D and Section 4(2) of the Securities Act of 1933, as amended.

     The  securities  issued in the Smith Unit  Private  Placement  and the cash
consideration  paid by Smith in the Smith Unit Private  Placement are subject to
the terms and conditions of an escrow  agreement  dated February 28, 2002 by and
among the Company,  Mark Smith, and J. Erik Mustad,  one of our officers and one
of our directors (the "Escrow Agreement").  Under the Escrow Agreement,  J. Erik
Mustad acts as escrow agent.

     Under the terms of the Escrow Agreement, the securities issued in the Smith
Unit Private  Placement are only to be released from an escrow maintained by Mr.
Mustad upon the occurrence of one or more triggering  events,  which include the
following:

     o    The average of the closing bid and ask prices for the Company's common
          shares on the OTCBB or any other  major  stock  exchange in the United
          States of America for any period of 30  consecutive  calendar  days is
          equal to or greater than $0.50; or
     o    The Company has two consecutive  fiscal quarters of positive  earnings
          before  interest,   taxes,   depreciation  and  amortization   charges
          ("EBITDA"); or
     o    The  Company  (or the board of  directors  approves)  any  contract or
          agreement that could reasonably be expected, in principle or intent or
          outcome, to result in a change of control of the Company; or
     o    The  Company  enters  into (or the board of  directors  approves)  any
          contract or agreement that could reasonably be expected,  in principle
          or intent or outcome,  to result in a merger or  consolidation  of the
          Company with one or more corporations; or
     o    The  Company  enters  into (or the board of  directors  approves)  any
          contract or agreement that could reasonably be expected,  in principle
          or intent or outcome, to result in a sale or disposition of a majority
          of the assets of the Company or any of its subsidiaries; or
     o    Smith is removed as President of the Company by the Company's Board of
          Directors; or
     o    The board of directors,  by the approval of a majority  (including the
          affirmative vote of J. Erik Mustad if he is then a member of the Board
          but not  including  the vote of Smith),  approves  the  release of the
          Shares and Warrants from the escrow.

     The  Escrow  Agreement  also  contains a  redemption  right in favor of Mr.
Smith.  Under certain conditions set forth in Section 2.3 and Section 2.4 of the
Escrow  Agreement,  including but not limited to the  bankruptcy of the Company,
Mr.  Smith has the  right to  require  the  Company  redeem  the  securities  by
returning  to Mr.  Smith  all of the  cash  consideration  which he paid for the
securities in connection with the Smith Unit Private Placement. In addition, the
Escrow  Agreement  provides  in  Section  2.4 that in the event  the  triggering
conditions  discussed  above do not occur and the securities are not released to
Smith by August 1, 2003 then,  in that event,  the Company will be forced to pay
Smith $50,000 in redemption of the securities.  Under this provision,  the Smith
Unit Private  Placement  could be  effectively  canceled.  The Escrow  Agreement
expires on August 1, 2003.



                                       46
<PAGE>

     Business Outlook

     Current economic slowdown and industry  conditions may affect the Company's
future results of operations,  which may result in material adverse  fluctuation
of  revenues,  expenses  and  gross  margin  in future  periods.  The  events of
September 11, 2001 have had a material adverse affect on the Company's operating
results,  the total extent of which is difficult to predict.  A material decline
in the demand for the Company's products or services may have a material adverse
affect on the  Company's  results of  operations  and plan of  operations in its
fiscal year 2002. The economic  uncertainty  in the markets and industries  that
the Company  competes  makes it difficult to predict the  Company's  results for
fiscal year 2002.

     Although the Company  believes it has sufficient  working  capital and will
receive sufficient revenues from operations to fund its operations, there can be
no assurance that the Company's  actual  expenditures  will not exceed projected
expenditures or that the Company will have  sufficient  revenues from operations
to meet its actual  expenditure  requirements.  In  addition,  the  Company  may
require additional working capital if the Company elects to aggressively  expand
into new geographic markets or offers new products and services to end users. If
the Company's  revenues from operations are insufficient to fund its operations,
there  can also be no  assurance  that  additional  financing,  if any,  will be
available on terms  acceptable to the Company.  If the actual  expenditures  for
such cost exceed the estimated costs or if events occur that require  additional
expenditures,  the Company will be required to raise additional  financing or to
defer  expenditures  to meet other  obligations.  The  failure  to meet  certain
expenditures  may cause the Company to default on material  obligations and such
default may have a material adverse effect on the Company's business and results
of operations.


OTHER MATTERS

     E*Comnetrix  Inc.  (the  "Company")  is formed  under the  Canada  Business
Corporations Act. Prior to June 19, 2000 the Company was incorporated  under the
Company Act of British  Columbia,  Canada.  The Company's  financial results are
quantified  in U.S.  dollars and a majority  of the  Company's  obligations  and
expenditures with respect to its operations are incurred in U.S. dollars. In the
past,  the  Company has raised  equity  funding  through the sale of  securities
denominated  in  Canadian  dollars,  and the  Company  may in the  future  raise
additional equity funding or financing denominated in Canadian dollars. Although
the Company does not believe it currently has any materially  significant market
risks relating to its operations  resulting from foreign  exchange rates, if the
Company  enters into  financing or other  business  arrangements  denominated in
currency  other than the U.S.  dollar,  variations in the exchange rate may give
rise to foreign exchange gains or losses that may be significant.

     The Company currently has no long-term debt  obligations.  The Company does
not use  financial  instruments  for trading  purposes and is not a party to any
leverage derivatives. In the event the Company experiences substantial growth in
the future,  the Company's  business and results of operations may be materially
effected by changes in interest  rates and certain other credit risk  associated
with its operations.



                                       47
<PAGE>

     Recently Issued Accounting Standards

     During  2001,  the  Financial  Accounting  Standards  Board issued four new
pronouncements which may effect the Company:

     o    Statement 141, "Business  Combinations",  requires the purchase method
          of  accounting  for  all  business  combinations  and  applies  to all
          business  combinations  initiated  after  June  30,  2001  and  to all
          business  combinations  accounted for by the purchase  method that are
          completed after June 30, 2001.
     o    Statement 142, "Goodwill and Other Intangible  Assets",  requires that
          goodwill as well as other  intangible  assets be tested  annually  for
          impairment and is effective for fiscal years  beginning after December
          15, 2001.
     o    Statement 143, "Accounting for Asset Retirement Obligations", requires
          entities  to  record  the  fair  value  of a  liability  for an  asset
          retirement  obligation  in the  period in which it is  incurred  and a
          corresponding   increase  in  the  carrying   amount  of  the  related
          long-lived  asset and is effective  for fiscal years  beginning  after
          June 15, 2002.
     o    Statement  144,   "Accounting   for  the  Impairment  or  Disposal  of
          Long-lived Assets",  provides that long-lived assets to be disposed of
          by sale be measured at the lower of carrying amount or fair value less
          cost  to  sell,  whether  reported  in  continuing  operations  or  in
          discontinued  operations,  and broadens the reporting of  discontinued
          operations to include all components of an entity with operations that
          can be  distinguished  from the rest of the  entity  and that  will be
          eliminated  from the  ongoing  operations  of the entity in a disposal
          transaction.  Statement  144 is effective  for fiscal years  beginning
          after December 15, 2001.

     The adoption of Statements  141, 143 and 144 are not expected to effect the
current consolidated  financial  statements or historically  reported results of
operations but may impact future financial statements and results of operations.
The adoption of Statement 142 will result in cessation of goodwill amortization,
which, in 2001, was $218,289 (excluding the goodwill write-down).


ITEM 7. FINANCIAL STATEMENTS

     The information required by this item is included in pages F-1 through F-22
attached  hereto  and  incorporated  herein  by  reference.  The  index  to  the
consolidated financial statements can be found on page F-1.


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURES.

     None.



                                       48
<PAGE>

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

     All  of  the  directors  of  the  Company  are  elected   annually  by  the
shareholders   and  hold  office  until  the  next  annual  general  meeting  of
shareholders  or until their  successors are duly elected and qualified,  unless
they sooner  resign or cease to be directors in  accordance  with the  Company's
Articles or the Canada  Business  Corporations  Act. The  Company's  last annual
regular  general  meeting was held on June 22,  2001.  The  Company's  executive
officers are appointed by and serve at the pleasure of the Board of Directors.

     On September 27, 1999, the Board of Directors of the Company appointed Mark
M. Smith as President and Secretary.  J. Erik Mustad remained as Chairman of the
Board and Chief  Executive  Officer.  On June 26, 2000 the Board of Directors of
the Company appointed Mark M. Smith as Chief Financial Officer.

     As of December 31,  2001,  the  following  persons  were  directors  and/or
executive officers of the Company:

<TABLE>
Name and present office held            Director/Officer since(2)   Principal occupation and if not at
                                                                    present an elected director,
                                                                    occupation during the preceding five
                                                                    years
--------------------------------------------------------------------------------------------------------
<S>                                     <C>                         <C>
J. Erik Mustad                          July 11, 1996               Director, Chairman and CEO,
Green Brae, California U.S.A.                                       E*Comnetrix Inc.
Chief Executive Officer and Director
--------------------------------------------------------------------------------------------------------
Mark M. Smith (1)                       July 11, 1996               Director, President, Chief Financial
Sparks, Nevada U.S.A.                                               Officer and Secretary, E*Comnetrix Inc.
President, Chief Financial Officer
and Director
--------------------------------------------------------------------------------------------------------
Joseph Karwat                           September 18, 2000          Director, President of MBI.
Oakland, California U.S.A.
Director
--------------------------------------------------------------------------------------------------------
Stuart Rogers (1)                       October 11, 1995            November, 1990 to present, President,
Coquitlam, B.C. Canada                                              West Oak Capital Group, a corporate
Director                                                            finance and venture capital company
--------------------------------------------------------------------------------------------------------
Trevor Gibbs (1)                        December 20, 1995           1993 - 1998, Director Brimm Energy
North Vancouver, B.C.                                               Corp.; September, 1994 to 1996, Senior
Canada                                                              Vice-President Northstar Trade Finance
Director                                                            Corp., 1989 to 1994, Director, Export
                                                                    Finance, B.C. Trade and Development
                                                                    Corporation
--------------------------------------------------------------------------------------------------------
</TABLE>



                                       49
<PAGE>

<TABLE>
Name and present office held            Director/Officer since(2)   Principal occupation and if not at
                                                                    present an elected director,
                                                                    occupation during the preceding five
                                                                    years
--------------------------------------------------------------------------------------------------------
<S>                                     <C>                         <C>
Thomas Wharton(1)                       December 20, 1995           Self-employed Businessman
Vancouver, B.C. Canada
Director
--------------------------------------------------------------------------------------------------------
(1)  Member of the Company's audit committee.
(2)  Directors  serve until their  successors  are  nominated and elected by the
     shareholders  and Officers  serve until their  successors are nominated and
     appointed by the Board of Directors.
(3)  The Company  terminated the employment of Mr. Karwat on January 29, 2002.
     Mr.Karwat continues to serve as a director.
</TABLE>


J. Erik Mustad, Chief Executive Officer and Director, Age 61

Mr. Mustad has over 30 years of experience  in the  telecommunications  services
industry,  serving in a broad range of executive  positions  with several public
and  privately  held  companies.  Since 1975, he has been an investor in various
start-up ventures and has materially contributed to the successful  development,
growth and public  offering  of over $500  million of market  capitalization  in
telecommunications stock.

Mr. Mustad was a founder of Centex Telemanagement,  Inc. and participated in its
initial public offering in 1987. Subsequently,  Centex was acquired by WorldCom,
Inc., (NASDAQ:WCOM), the second largest long distance carrier in the U.S.

Mr.  Mustad was an investor in Phoenix  Network,  Inc. and  responsible  for all
sales and marketing  during a time when Phoenix Network  experienced 400% growth
within  a 2-year  time  frame.  Phoenix  Network,  Inc.  was  acquired  by Qwest
Communications International Inc. (NASDAQ:Q) in 1998.

In 1975, he formed his own interconnect company, TCI, Inc. Under his leadership,
TCI was acquired in 1981 by Inter-Tel,  Inc.  (NASDAQ:INTL).  Subsequently,  Mr.
Mustad served as director of Inter-Tel.


Mark M. Smith, President, Chief Financial Officer  and Director, Age 43

Mr. Smith has over 15 years of experience in the  telecommunications and venture
capital  industries,  and has served in a variety of  executive  positions  with
several public and privately held companies.  He has been a financial consultant
providing  strategic  planning  in public  markets  and  finance.  He joined the
Company as its acting Chief Financial Officer and subsequently  assumed the role
of President in September 1999.

During his business tenure, Mr. Smith has spent considerable time advising small
cap public companies with respect to the public markets and has orchestrated and
negotiated international agreements with large telecommunications and investment
banking firms.



                                       50
<PAGE>

From 1990 to 1992,  he was Professor of Corporate  Finance at  California  State
University.  Prior to this position, he was associated with Richland Partners, a
venture capital firm specializing in technology investments. Mr. Smith performed
research  for the Pension  Research  Institute in 1989 and 1990 and received his
Masters degree in International Finance in 1990. For his research work in global
asset management, he received a Wall Street Journal Award. Mr. Smith is a member
of the Association for Investment Management and Research.


Joseph Karwat, Director, Age 48

Mr.  Karwat was appointed as a director of the Company upon its  acquisition  of
Exstream Data, Inc. in September 2000. Mr. Karwat founded  Exstream Data and has
served as its President  since that time. The Company  terminated the employment
of Mr. Karwat on January 29, 2002.  Mr. Karwat  continues to serve as one of our
directors.

Prior to  founding  Exstream  Data,  Mr.  Karwat  was  employed  by The  FaxPlus
Corporation as a product  development manager for the firm's PC-based public fax
kiosks. Previously, Mr. Karwat held product development and management positions
with PNC Financial and Bank of America.  During his banking  career,  Mr. Karwat
led the development and/or market  introduction of numerous  interactive on-line
banking systems.

From 1995 to 1996,  Mr.  Karwat  served as a Director of publicly  traded speech
recognition software company, Kolvox Communications, Inc. He regularly speaks on
a wide variety of topics concerning electronic communications.

Over the  period  1996-97,  Mr.  Karwat  served a  two-year  term on the City of
Oakland's telecommunications Advisory Committee. He has been an active member of
the Oakland Chamber of Commerce for many years.

Mr. Karwat holds an MBA in Finance from Boston  University and a BA in Economics
from the University of Buffalo.


Stuart Rogers, Director, Age 45

Mr. Rogers,  founder of his own investment  banking firm West Oak Capital Group,
Inc., was appointed as a director of the Company in 1995. West Oak Capital Group
is primarily  focused on arranging  public  listings  through mergers or initial
public offerings on the CDNX.

Prior to founding West Oak Capital  Group,  Mr. Rogers was vice president of The
Genesis Group, a technology consulting company. Concurrent with his role in both
Genesis Group and West Oak Capital  Group,  he was a Director and Vice President
for Brimm Energy Corporation, a NASDAQ small cap listed company.

Mr.  Rogers is  currently  a Director of Westfort  Energy  Ltd.,  an oil and gas
company listed on The Toronto Stock Exchange.

In the past five years,  Mr.  Rogers has been a Director of Leopardus  Resources
Ltd., a CDNX listed company,  Randsburg  International Gold Corporation,  a CDNX
listed company, AVC



                                       51
<PAGE>

Venture Capital Corporation, a CDNX listed company, Cusil Venture Corporation, a
CDNX listed company, and Consolidated Global Cable Systems,  Inc., a CDNX listed
company.


Trevor Gibbs, Director, Age 60

Mr. Gibbs is a principal with The Osborne Group, acting as a financial mentor to
information technology and biomedical companies with over 25 years experience in
finance, venture capital and public markets. Prior to joining the Osborne Group,
he was Chief Operating Officer of Odyssey Petroleum Corporation.

From 1993 to 1998, Mr. Gibbs was a Director of Brimm Energy Corporation.


Thomas Wharton, Director, Age 59

Mr. Wharton, a professional in the medical field, was appointed as a director of
the Company in 1995. Since 1983, he has run his own consultancy firm, T. Wharton
and Associates,  Ltd.,  which focuses on policy review,  operations  procedures,
quality assurance and executive evaluation in private sector healthcare.

Mr.  Wharton is  currently  a director  of West  Oak/Telesis  and Cusil  Venture
Corporation, both CDNX listed companies.

In the past five years,  Mr. Wharton has been a Director of Conquistador  Mines.
Ltd. and Zahara Petroleum.

     Members  of the  Board of  Directors  are  elected  by the  holders  of the
Company's  common  shares to represent the  interests of all  shareholders.  The
Board  of  Directors  meets  periodically  to  review  significant  developments
affecting the Company and to act on matters  requiring Board approval.  Although
the Board of Directors  delegates  many matters to others,  it reserves  certain
powers and functions to itself.

     Board Committees

     The only standing  committee of the Board of Directors of the Company is an
Audit  Committee.  The  Audit  Committee  of the  Company's  Board of  Directors
currently consists of four (4) individuals,  being Mark M. Smith, Stuart Rogers,
Trevor Gibbs and Thomas Wharton. This committee is directed to review the scope,
cost and results of the  independent  audit of the Company's  books and records,
the  results  of the  annual  audit  with  management  and the  adequacy  of the
Company's accounting, financial and operating controls; to recommend annually to
the Board of Directors the selection of the  independent  auditors;  to consider
proposals made by the Company's independent auditors for consulting work; and to
report  to the Board of  Directors,  when so  requested,  on any  accounting  or
financial  matters.  Such  reviews are carried  out with the  assistance  of the
Company's  auditors  and  senior  financial  management.  None of the  Company's
directors or executive  officers are parties to any arrangement or understanding
with any other  person  pursuant  to which  said  individual  was  elected  as a
director or officer of the Company.



                                       52
<PAGE>

     Board and Committee Meetings

     During 2001, the Board of Directors met 12 times including  participants by
telephone and by consent. During 2001, the Audit Committee met once.

     From December 31, 2001 to February 28, 2002,  the Board of Directors of the
Company has met 3 times.  The Company  believes that the Board of Directors will
meet in March of 2002 to discuss,  among other  things,  the timing of an annual
general  meeting  of  shareholders  for  2002.

     There are no arrangements or  understandings  among any of the directors or
officers of the Company regarding their election as directors or officers.

     Section 16(a) Beneficial Ownership Reporting Compliance

     Federal  securities  laws require the  Company's  directors  and  executive
officers and persons who own more than 10% of the Company's common stock to file
with the Securities  and Exchange  Commission  initial  reports of ownership and
reports of changes in ownership of any securities of the Company.

     To  the  Company's  knowledge  all of the  Company's  directors,  executive
officers, and greater-than-10%  beneficial owners made all required filings on a
timely basis for the fiscal year ended December 31, 2001.


ITEM 10. EXECUTIVE COMPENSATION.

     Directors are entitled to  reimbursement  for  reasonable  travel and other
out-of-pocket expenses incurred in connection with attendance at meetings of the
Board of Directors.  The Board of Directors  makes separate  remuneration to any
director  undertaking  services  on behalf of the  Company  other than  services
ordinarily  required  of a director.  Other than  indicated  below,  no director
received  any  compensation  for  his  services  as a  director,  including  any
committee participation or special assignments.

     The Company  grants  stock  options to  directors,  executive  officers and
employees. See "Options Grants and Option Exercises".

     The  following  table sets forth the  compensation  paid to J. Erik Mustad,
Mark M. Smith and Joseph Karwat (the "Named  Executive  Officers") for the years
indicated.  No other Named Executive  Officer of the Company earned a salary and
bonus for such fiscal year in excess of $100,000.






                                       53
<PAGE>

<TABLE>
                                           Annual Compensation                Long Term Compensation
                                     --------------------------------- -------------------------------------
                                                                                Awards            Payouts
                                                                       ------------------------- -----------
                                                                       Securities    Restricted
                                                             Other        Under      Shares or
                                                            Annual      Options/     Restricted               All Other
                                                          Compensation   SARs(2)    Share Units   LTIP(3)   Compensation
Name and Principal                   Salary(1)     Bonus       ($)        Granted        ($)      Payouts      ($)
     Position          Year Ended       ($)         ($)                     (#)                     ($)
------------------------------------------------------------------------------------------------------------------------
<S>                      <C>           <C>       <C>        <C>         <C>
 J. Erik Mustad          2001/12/31    $140,000     Nil         Nil         Nil          Nil       Nil         Nil
 Chairman & Chief        2000/12/31    $204,000     Nil         Nil      1,225,000       Nil       Nil         Nil
 Executive Officer       1999/12/31    $270,000     Nil         Nil        490,000       Nil       Nil         Nil

------------------------------------------------------------------------------------------------------------------------
 Mark M. Smith           2001/12/31    $185,000     Nil         Nil        340,000       Nil       Nil         Nil
 President               2000/12/31    $239,800     Nil         Nil      2,225,000       Nil       Nil         Nil
 Chief Financial         1999/12/31    $243,600     Nil         Nil        490,000       Nil       Nil         Nil
 Officer
------------------------------------------------------------------------------------------------------------------------
 Joseph Karwat(4)        2001/12/31    $150,000     Nil         Nil         Nil          Nil       Nil         Nil
 President               2000/12/31     $58,750     Nil         Nil        525,000       Nil       Nil         Nil
 MBI
------------------------------------------------------------------------------------------------------------------------
(1)  All dollar amounts are in US dollars.
(2)"SAR" or "stock  appreciation right" means a right granted by the Company, as
     compensation  for  services  rendered,  to  receive a payment of cash or an
     issue or transfer of  securities  based wholly or in part on changes in the
     trading  price of  publicly  traded  securities  of the  Company.  Does not
     include  250,000 SAR's formerly  granted to Mr. Smith on March 10, 2000 and
     which were cancelled effective November 7, 2000.
(3)"LTIP"  or  "long  term   incentive   plan"  means  any  plan  that  provides
     compensation intended to serve as incentive for performance to occur over a
     period longer than one financial year, but does not include option or stock
     appreciation  right  plans or plans  for  compensation  through  restricted
     shares or restricted share units.
(4)  The Company terminated the employment of Mr. Karwat on January 29, 2002.
</TABLE>


DIRECTOR COMPENSATION

     The Company has no standard  arrangement pursuant to which any of the other
directors are compensated by the Company for their services in their capacity as
directors except for the granting from time to time of incentive stock options.


OPTION GRANTS

     The aggregate  direct  remuneration  paid or payable by the Company and its
subsidiaries to the directors and Named Executive  Officers of the Company,  for
their services in all capacities, during the fiscal year ended December 31, 2001
was $475,000.

     The following table sets forth information regarding stock option grants to
the Company's  executive  officers and directors  during the year ended December
31, 2001:



                                       54
<PAGE>

<TABLE>
    Individual                                             Option Grants
-------------------   --------------------------------------------------------------------------------
        (a)                 (b)                    (c)                  (d)               (e)
                        Number of                % of Total
                        Securities            Options Granted        Exercise or
                     Underlying Options       to Employees in        Base Price
       Name             Granted (#)           Fiscal Year(2)        ($/Sh)(3)(4)       Expiration Date
------------------------------------------------------------------------------------------------------
<S>                        <C>                  <C>                   <C>                <C>
Mark M. Smith              100,000                  1.8%                $0.50(1)          5/24/2004
                           240,000                  4.4%                 $0.25            12/6/2005
------------------------------------------------------------------------------------------------------
(1)  Repriced to $0.25 per share on October 24, 2001.
(2)  Based on  options  exercisable  to  acquire  a total  5,481,300  shares  to
     officers, directors, employees and consultants.
(3)  As of the date of grant.
(4)  The  exercise  price per share was equal to or greater than the fair market
     value of the common  shares on the date of grant as determined by the Board
     of Directors.
</TABLE>


OPTION EXERCISES

     The  following  table sets forth  details of each exercise of stock options
during the  financial  year ended  December 31, 2001 by any of the directors and
Named  Executive  Officers,  and the  financial  year end  value of  unexercised
options on an aggregate  basis.  During the Company's  most  recently  completed
fiscal year ended December 31, 2001, and through the period ending  February 28,
2002,  no options and other  rights to purchase  securities  of the Company were
exercised by the directors  and executive  officers of the Company other than as
set forth below.

<TABLE>
 ----------------------------------------------------------------------------------------------------------------
        Name                  Securities     Aggregate Value      Unexercised Options       Value of Unexercised
                              Acquired on    Realized ($)(1)         At FY-End (#)          in the Money-Options
                              Exercise(#)                           Exercisable/                  at FY-End
                                                                   Unexercisable              ($) Exercisable/
                                                                                              Unexercisable(2)
 ----------------------------------------------------------------------------------------------------------------
<S>                           <C>             <C>               <C>                           <C>
 J. Erik Mustad                  Nil               Nil          1,225,000(exercisable)        Nil(exercisable)
                                                                  Nil (unexercisable)         Nil (unexercisable)
 ----------------------------------------------------------------------------------------------------------------
 Mark M. Smith                   Nil               Nil          2,565,000 (exercisable)       Nil (exercisable)
                                                                  Nil (unexercisable)         Nil (unexercisable)
 ----------------------------------------------------------------------------------------------------------------
 Joseph Karwat(3)                Nil               Nil            525,000 (exercisable)       Nil (exercisable)
                                                                  Nil (unexercisable)         Nil (unexercisable)
 ----------------------------------------------------------------------------------------------------------------
 West Oak Capital Group Inc.     Nil               Nil             60,000 (exercisable)       Nil (exercisable)
 (Stuart Rogers)                                                  Nil (unexercisable)         Nil (unexercisable)
 ----------------------------------------------------------------------------------------------------------------
 Trevor Gibbs                                                      10,000 (exercisable)       Nil (exercisable)
                                 Nil               Nil            Nil (unexercisable)         Nil (unexercisable)
 ----------------------------------------------------------------------------------------------------------------
 Thomas Wharton                  Nil               Nil             10,000 (exercisable)       Nil (exercisable)
                                                                  Nil (unexercisable)         Nil (unexercisable)
 ----------------------------------------------------------------------------------------------------------------
(1)Based on NASD OTCBB closing price on the date of exercise.
(2)In-the-money  options  are those  where the  market  value of the  underlying
     securities  at the  fiscal  year-end  exceeds  the  exercise  price  of the
     options.  The closing price of the  Company's  shares on December 31, 2001,
     being the last day the  Company's  common  shares traded during 2001 on the
     NASD Over the Counter Bulletin Board, was $0.13.
(3)The Company terminated the employment of Mr. Karwat on January 29, 2002.
</TABLE>


     Report on Repricing of Options

     On March 16, 2001 the Company's board of directors  approved a stock option
repricing program for the Company. Under the repricing program,  certain holders
of stock options,  including  directors and officers,  were entitled to exchange
their existing  stock  options,  which had an exercise price of $1.00 per share,
for repriced  stock options to purchase the same number of shares at an exercise
price of $0.50 per share. At this repricing, the new exercise price exceeded



                                       55
<PAGE>

the market price of the Company's common shares.  Each repriced stock option has
terms substantially equivalent to the terms of the original grant, including the
same vesting terms,  number of shares and expiration date. Options to purchase a
total of 4,936,440 common shares were repriced.

     On October 24, 2001 and October 25, 2001 the  Company's  board of directors
approved a stock option repricing  program for the Company.  Under the repricing
program,  certain  holders of stock options,  including  directors and officers,
were entitled to exchange their  existing  stock options,  which had an exercise
price of $0.50 per share, for repriced stock options to purchase the same number
of shares at an exercise price of $0.25 per share.  At this  repricing,  the new
exercise  price exceeded the market price of the Company's  common shares.  Each
repriced  stock option has terms  substantially  equivalent  to the terms of the
original  grant,  including  the  same  vesting  terms,  number  of  shares  and
expiration  date.  Options to purchase a total of 4,492,300  common  shares were
repriced.

     Repricing of Options

     During  the  Company's  fiscal  year  ended  December  31,  2001,   options
previously  granted to three (3) Named  Executive  Officers  were  amended as to
exercise price only.

     By agreement  dated January 25, 2000, the Company granted to J. Erik Mustad
options to purchase up to five hundred  thousand  (500,000)  common  shares at a
price of four dollars and forty three and three  quarters  cents  ($4.4375)  per
common  share (the  "January  25,  2000  Mustad  stock  options").  Pursuant  to
amendments  to the  agreement  in  fiscal  year 2000 the  exercise  price of the
January  25,  2000 Mustad  stock  options was reduced to one dollar  ($1.00) per
share,  and arch 16, 2001, the exercise price was reduced to fifty cents ($0.50)
per common  share,  and on October 24, 2001,  the exercise  price was reduced to
twenty five cents ($0.25) per common share.

     By  agreement  dated June 26, 2000,  the Company  granted to J. Erik Mustad
options to purchase up to two hundred and fifty thousand (250,000) common shares
at a price of one  dollar  ($1.00)  per common  share (the "June 26,  2000 stock
options").  Pursuant to an amendment to the  agreement,  on March 16, 2001,  the
exercise  price of the June 26,  2000 stock  options  was reduced to fifty cents
($0.50)  per common  share,  and on October 24,  2001,  the  exercise  price was
reduced to twenty five cents ($0.25) per common share.

     By  agreement  dated  September  15, 2000,  the Company  granted to J. Erik
Mustad options to purchase up to one hundred thousand (100,000) common shares at
a price of one dollar  ($1.00) per common share (the  "September 15, 2000 Mustad
stock options").  Pursuant to an amendment to the agreement,  on March 16, 2001,
the exercise price of the September 15, 2000 Mustad stock options was reduced to
fifty cents  ($0.50) per common  share,  and on October 24,  2001,  the exercise
price was reduced to twenty five cents ($0.25) per common share.

     By  agreement  dated  September  29, 2000,  the Company  granted to J. Erik
Mustad options to purchase up to three hundred  seventy five thousand  (375,000)
common shares at a price of one dollar ($1.00) per common share (the  "September
29, 2000 Mustad stock  options").  Pursuant to  amendments  to the  agreement in
fiscal year 2000 Pursuant to an amendment to the  agreement,  on March 16, 2001,
the exercise price of the September 29, 2000 Mustad stock options was reduced to
fifty cents  ($0.50) per common  share,  and on October 24,  2001,  the exercise
price was reduced to twenty five cents ($0.25) per common share.



                                       56
<PAGE>

     By agreement  dated January 25, 2000, the Company  granted to Mark M. Smith
options to purchase up to five hundred  thousand  (500,000)  common  shares at a
price of four dollars and forty three and three  quarters  cents  ($4.4375)  per
common  share  (the  "January  25,  2000  Smith  stock  options").  Pursuant  to
amendments  to the  agreement  in fiscal year 2000,  the  exercise  price of the
January  25, 2000 Smith  stock  options  was  reduced to one dollar  ($1.00) per
share,  and on March 16,  2001,  the  exercise  price was reduced to fifty cents
($0.50)  per common  share,  and on October 24,  2001,  the  exercise  price was
reduced to twenty five cents ($0.25) per common share.

     By  agreement  dated March 10, 2000,  the Company  granted to Mark M. Smith
options to purchase  up to seven  hundred and fifty  thousand  (750,000)  common
shares at a price of seven dollars ($7.00) per common share (the "March 10, 2000
stock options"). Pursuant to amendments to the agreement in fiscal year 2000 the
exercise  price of the March 10,  2000 stock  options  was reduced to one dollar
($1.00) per share,  and on March 16,  2001,  the  exercise  price was reduced to
fifty cents  ($0.50) per common  share,  and on October 24,  2001,  the exercise
price was reduced to twenty five cents ($0.25) per common share

     By  agreement  dated June 26,  2000,  the Company  granted to Mark M. Smith
options to purchase up to two hundred and fifty thousand (250,000) common shares
at a price of one  dollar  ($1.00)  per common  share (the "June 26,  2000 Smith
stock options").  Pursuant to an amendment to the agreement,  on March 16, 2001,
the exercise price of the June 26, 2000 Smith stock options was reduced to fifty
cents ($0.50) per common share,  and on October 24, 2001, the exercise price was
reduced to twenty five cents ($0.25) per common share.

     By agreement dated September 15, 2000, the Company granted to Mark M. Smith
options to purchase  up to one hundred  thousand  (100,000)  common  shares at a
price of one dollar  ($1.00)  per common  share (the  "September  15, 2000 Smith
stock options").  Pursuant to an amendment to the agreement,  on March 16, 2001,
the exercise  price of the September 15, 2000 Smith stock options was reduced to
fifty cents  ($0.50) per common  share,  and on October 24,  2001,  the exercise
price was reduced to twenty five cents ($0.25) per common share.

     By agreement dated September 29, 2000, the Company granted to Mark M. Smith
options to purchase up to six hundred  twenty  five  thousand  (625,000)  common
shares at a price of one dollar  ($1.00) per common  share (the  "September  29,
2000 Smith stock options").  Pursuant to an amendment to the agreement, on March
16, 2001,  the exercise  price of the September 29, 2000 Smith stock options was
reduced to fifty cents  ($0.50) per common share,  and on October 24, 2001,  the
exercise price was reduced to twenty five cents ($0.25) per common share.

     By agreement  dated February 8, 2000, the Company  granted to Joseph Karwat
options to purchase  up to two hundred  thousand  (200,000)  common  shares at a
price of six dollars and six and one quarter  cents  ($6.0625)  per common share
(the "February 8, 2000 stock options"). Pursuant to amendments to the agreement,
on April 19, 2000,  the exercise price of the February 8, 2000 stock options was
reduced  to three  dollars  ($3.00)  per common  share,  on June 26,  2000,  the
exercise  price was reduced to one dollar  ($1.00)  per share,  and on March 16,
2001, the exercise price was reduced to fifty cents ($0.50) per common share.

     By agreement  dated June 26,  2000,  the Company  granted to Joseph  Karwat
options to purchase up to three hundred  twenty five thousand  (325,000)  common
shares at a price of one dollar  ($1.00)  per common  share (the "June 26,  2000
Karwat stock options"). Pursuant to an



                                       57
<PAGE>

amendment to the  agreement,  on March 16, 2001,  the exercise price of the June
26, 2000  Karwat  stock  options  was reduced to fifty cents  ($0.50) per common
share.

     Stock Option Plan

     On May 17,  1999,  the  board of  directors  of the  Company  approved  the
Company's Stock Option Plan (1999) (the "1999 Plan"). The 1999 Plan subsequently
received  shareholder  approval.  Under the 1999 Plan, options may be granted to
directors,  officers, employees and others providing substantial services to the
Company  and its  affiliates  to purchase  from the  Company  such number of its
common  shares as the board of directors of the Company may  designate.  Options
may be granted to acquire  common shares up to but not exceeding an aggregate of
1,900,000 common shares under the 1999 Plan.

     Pursuant  to section 11 of the 1999 Plan,  the Board of  Directors  has the
power to amend the 1999 Plan.

     On March 30,  2000,  the board of  directors  of the  Company  amended  the
Company's  1999 Plan and renamed it the Amended and  Restated  Stock Option Plan
(2000) (the "2000  Plan").  The 2000 Plan  increased the number of common shares
available for issuance from the 1,900,000 common shares available under the 1999
Plan to a total of 5,000,000  common shares  available  under the 2000 Plan. The
2000 Plan, received shareholder approval at the Company's annual meeting held on
May 3, 2000. On November 3, 2000, the board of directors of the Company  amended
the 2000 Plan (the  "Amended  2000 Plan").  The Amended 2000 Plan  increased the
number of common shares  available for issuance from the 5,000,000 common shares
available  under the 2000 Plan to a total of 8,000,000  common shares  available
under the  Amended  2000  Plan.  The  Amended  2000 Plan,  received  shareholder
approval at the Company's annual meeting held on June 22, 2001.

     As of December 31, 2001,  there were options to purchase  2,526,370  common
shares  issued and  outstanding  under the Amended 2000 Plan,  1,060,000  common
shares  have been issued  pursuant  to options  granted,  103,625  options  have
expired  unexercised  and 4,311,005  common shares were  available to be granted
after  December  31,  2001 under the  Amended  2000 Plan.  All of the  remaining
options  available for grant  pursuant to the terms of the Amended 2000 Plan may
be granted without further regulatory or shareholder approvals.

     Employment and Employee Incentive Contracts

     The Company has no plan or arrangement  whereby any Named Executive Officer
may be  compensated  in an  amount  exceeding  $100,000  in the  event  of  that
officer's resignation,  retirement or other termination of employment, or in the
event of a change of control of the Company or a  subsidiary  or a change in the
Named Executive Officer's  responsibilities  following such a change of control,
except as set out below:

     Pursuant to a consulting  services agreement (the "Mustad Agreement") dated
June 1, 2001,  between J. Erik Mustad  ("Mustad")  and the Company,  Mustad will
provide  certain  services to the Company in  consideration  of $7,500 per month
through December 31, 2001 and $6,000 per month thereafter.  The Mustad Agreement
will expire February 28, 2003 with no provision for renewal.  Under the terms of
the Mustad Agreement the Company would pay Mustad five percent (5%) of the first
$2,000,000  in capital  raised for the  Company by Mustad ten percent 10% of any
additional capital raised for the Company by Mustad (the "Incentive Fees").



                                       58
<PAGE>

On June 1, 2001,  the Company  entered into a management  agreement with J. Erik
Mustad ("Mustad") the Company's Chief Executive Officer and a director,  for the
period June 1, 2001 to February  28, 2003 (the "Mustad  Agreement").  The Mustad
Agreement  canceled and superceded all prior agreements  between the Company and
Mustad.  Pursuant to the Mustad Agreement,  Mustad will provide certain services
to the Company in  consideration  of $7,500 per month through  December 31, 2001
and $6,000 per month thereafter.  In addition, the Company would pay to Mustad a
5% finders fee on any  financing  proceeds it receives as a result of the direct
efforts  of Mustad up to  $2,000,000  in  cumulative  financings  and 10% of any
financing  proceeds  it  receives  as a result of the  direct  efforts of Mustad
exceeding  $2,000,000 in cumulative  financings.  In the event of termination of
the Mustad  Agreement by the Company prior to February 28, 2003,  other than for
cause,  the Company must pay to Mustad the full balance of fees which would have
been payable to Mustad had Mustad been  engaged for the entire term.  The Mustad
Agreement  will expire  February 28, 2003 with no provision  for renewal.  As of
February 28, 2002 no event had occurred  which would  require the Company to pay
Mustad any finders fees.

     Pursuant to a consulting  services  agreement (the "Smith Agreement") dated
January 1, 2000 and as amended April 19, 2000 with an effective  date of June 1,
2000, between Interven Capital Corporation ("Interven"), Mark M. Smith ("Smith")
(Interven and Smith are referred to  collectively as the  "Consultant")  and the
Company,  the  Consultant  will  provide  certain  services  to the  Company  in
consideration of the Company paying to Consultant  $15,000 per month through May
31, 2000 and $20,000 per month  thereafter.  The Smith Agreement as amended will
expire December 31, 2002 (the "Initial Term") and will be automatically  renewed
for  additional  one year  terms  unless  earlier  terminated.  In the  event of
termination  by the Company  during the Initial  Term other than for cause,  the
Company  must pay to  Interven  the full  balance of fees which  would have been
payable to Interven had the Consultant been engaged for the entire Initial Term,
payable at a rate of $20,000 per month.  In the event of the  termination by the
Company  after the Initial  Term other than for cause,  the Company  must pay to
Interven  the full balance of fees which would have been payable to Interven had
the Consultant been engaged for the entire then current term,  payable at a rate
of $20,000 per month. In the event of termination other than for cause, Interven
will be paid a  severance  payment in the amount of $50,000 in  addition  to any
other fees due under the Smith Agreement.

     Pursuant to an  amendment  of the Smith  Agreement  dated June 1, 2001 (the
"First Amended Smith  Agreement"),  beginning June 1, 2001 the Consultant  would
defer $5,000 per month in  consideration  due to the Consultant  under the Smith
Agreement.  Payment of  deferred  amounts to  Consultant  would be made upon the
occurrence of certain events. No consideration,  contingent or otherwise, was or
will be paid to the  Consultant to induce the Consultant to enter into the First
Amended Smith  Agreement.  No other terms or  conditions of the Smith  Agreement
were amended pursuant to the First Amended Smith Agreement.

     Pursuant to an amendment of the Smith  Agreement dated January 1, 2002 (the
"Second  Amended Smith  Agreement"),  beginning  January 1, 2002 the  Consultant
would be paid  $10,000 per month  through  June 30,  2002 with no  deferral  and
$20,000 per month  thereafter  of which the  Consultant  would defer  $5,000 per
month in  consideration  due to the Consultant  under the Smith Agreement as set
forth in the First  Amended Smith  Agreement.  No  consideration,  contingent or
otherwise,  was or will be paid to the  Consultant  to induce the  Consultant to
enter into the Second



                                       59
<PAGE>

Amended Smith Agreement.  No other terms or conditions of the Smith Agreement or
First Amended Smith Agreement were amended  pursuant to the Second Amended Smith
Agreement.

     Pursuant to an employment  agreement (the "Karwat  Agreement") dated August
7, 2000,  between Joseph Karwat ("Karwat") and the Company,  Karwat will provide
certain  services to the Company in consideration of $12,500 per month on an "at
will" basis. Under the Karwat Agreement,  in the event of the termination of the
Karwat  Agreement by the Company  other than for cause,  including  constructive
dismissal,  the Company would pay to Karwat a single lump sum severance  payment
of One Hundred and Fifty Thousand dollars  ($150,000) (the "Severance Pay") and,
in the event of the termination of Karwat by the Company,  other than for cause,
Thirty Seven  Thousand Five Hundred  dollars  ($37,500)  under a ninety (90) day
notice requirement (the "Notice Pay").

     Director Compensation

     The Company does not currently pay any cash  compensation  to directors for
serving on its Board of  Directors,  however  it does  reimburse  directors  for
out-of-pocket expenses for attending board and committee meetings. The Company's
independent  directors  receive stock  options to purchase  common shares of the
Company  as  compensation  for their  service as  directors.  The terms of stock
option  grants made to  independent  directors  are  determined  by the Board of
Directors.  See  "Option  Grants."  The  Company  does  not  provide  additional
compensation for committee  participation or special assignments of the Board of
Directors.

     Indemnification of Directors, Officers and Others

     The by-laws of the Company  provide that subject to the  provisions  of the
Canada  Business  Corporations  Act,  the  Company  may  indemnify a director or
officer or former  director  or officer of the  Company or of a  corporation  of
which the Company is or was a  shareholder  or creditor  and the heirs and legal
representatives  of any such  person  against all costs,  charges and  expenses,
including  an amount paid to settle an action or satisfy a judgment,  reasonably
incurred  by him or them in  respect of any civil,  criminal  or  administrative
action  or  proceeding  to which he is or they are made a party by reason of his
being or having  been a  director  or officer  of the  Company or a director  or
officer of such corporation,  including any action brought by the Company or any
such corporation. Each director or officer of the Company, upon being elected or
appointed,  shall be deemed to have  contracted with the Company on the terms of
the indemnity set forth in the Company's by-laws.

     The by-laws of the Company  further  provide that the failure of a director
or officer of the Company to comply with the  provisions of the Canada  Business
Corporations  Act or of the  articles or the  by-laws of the  Company  shall not
invalidate any indemnity to which he is entitled to under the Company's by-laws.

     The  by-laws of the  Company  further  provide  that the  directors  of the
Company may cause the Company to purchase and maintain insurance for the benefit
of any person who is or was serving as a director, officer, employee or agent of
the Company or as a director,  officer,  employee or agent of any corporation of
which  the  Company  is  or  was  a  shareholder   and  his  heirs  or  personal
representatives,  against  any  liability  incurred  by  him as  such  director,
officer, employee or agent.

     Under the Canada Business  Corporations Act, except in respect of an action
by or on behalf of the Company to procure a judgment  in its favor,  the Company
may indemnify a



                                       60
<PAGE>

director or officer of the Company,  a former director or officer of the Company
or a person who acts or acted at the Company's  request as a director or officer
of a body  corporate of which the Company is or was a  shareholder  or creditor,
and his  heirs  and  legal  representatives,  against  all  costs,  charges  and
expenses,  including  an amount  paid to settle an action or satisfy a judgment,
reasonably  incurred by him in respect of any civil,  criminal or administrative
action  or  proceeding  to which he is made a party by reason of being or having
been a director or officer of the Company or body corporate if he acted honestly
and in good faith with a view to the best  interests  of the Company and, in the
case of a criminal or administrative  action or proceeding that is enforced by a
monetary penalty,  he had reasonable  grounds for believing that his conduct was
lawful.

     Further under the Canada Business  Corporations  Act, the Company may, with
the  approval  of a court,  indemnify a director  or officer of the  Company,  a
former  director  or officer of the Company or a person who acts or acted at the
Company's  request as a director  or  officer of a body  corporate  of which the
Company  is  or  was  a  shareholder  or  creditor,  and  his  heirs  and  legal
representatives,  in respect of an action by or on behalf of the Company or body
corporate  to  procure a judgment  in its favor,  to which he is made a party by
reason of being or having  been a director  or an officer of the Company or body
corporate, against all costs, charges and expenses reasonably incurred by him in
connection  with such action if he acted  honestly and in good faith with a view
to the  best  interests  of the  Company  and,  in the  case  of a  criminal  or
administrative  action or proceeding that is enforced by a monetary penalty,  he
had reasonable grounds for believing that his conduct was lawful.

     Further under the Canada Business  Corporations  Act, a director or officer
of the Company,  a former  director or officer of the Registrant or a person who
acts or acted at the  Company's  request  as a  director  or  officer  of a body
corporate  of which the Company is or was a  shareholder  or  creditor,  and his
heirs and legal  representatives,  is entitled to indemnity  from the Company in
respect  of all  costs,  charges  and  expenses  reasonably  incurred  by him in
connection with the defense of any civil,  criminal or administrative  action or
proceeding  to which  he is made a party by  reason  of being or  having  been a
director  or officer of the  Company or body  corporate,  if the person  seeking
indemnity  was  substantially  successful  on the  merits in his  defense of the
action or proceeding  and if he acted  honestly and in good faith with a view to
the  best  interests  of  the  Company  and,  in  the  case  of  a  criminal  or
administrative  action or proceeding that is enforced by a monetary penalty,  he
had reasonable grounds for believing that his conduct was lawful.

     Further  under the  Canada  Business  Corporations  Act,  the  Company  may
purchase and maintain  insurance for the benefit of a director or officer of the
Company,  a former  director  or officer of the  Company or a person who acts or
acted at the Company's  request as a director or officer of a body  corporate of
which the Company is or was a shareholder  or creditor,  and his heirs and legal
representatives,  against any  liability  incurred  by him in his  capacity as a
director or officer of the Registrant, except where the liability relates to his
failure to act honestly  and in good faith with a view to the best  interests of
the  Company,  or in his  capacity  as a director  or  officer  of another  body
corporate  where he acts or acted in that  capacity  at the  Company's  request,
except  where the  liability  relates to his failure to act honestly and in good
faith with a view to the best interest of the body corporate.

     The Company maintains  Directors' and Officers' Liability Insurance for its
directors.



                                       61
<PAGE>

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be  permitted  to  directors,  officers or persons  controlling  the
registrant  pursuant  to the  foregoing  provisions,  the  registrant  has  been
informed  that in the opinion of the  Securities  and Exchange  Commission  such
indemnification  is  against  public  policy  as  expressed  in the  Act  and is
therefore unenforceable.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The Company is  authorized  to issue an unlimited  number of common  shares
without par value ("Common Shares"), and 10,000,000 are Class A Preferred Shares
(the  "Class A Preferred  Shares")  without par value,  and  20,000,000  Class B
Preferred  Shares  (the  "Class B Preferred  Shares")  without par value.  As of
December 31, 2001,  13,509,441 Common Shares and no Preferred Shares were issued
and  outstanding.  As of February  28,  2002,  14,509,441  Common  Shares and no
Preferred Shares were issued and outstanding.

     Rule 13d-3 under the Securities Exchange Act defines the term,  "beneficial
ownership".  Under this rule, the term includes  shares over which the indicated
beneficial owner exercises voting and/or  investment  power. The rules also deem
common shares subject to options currently exercisable, or exercisable within 60
days, to be outstanding  for purposes of computing the  percentage  ownership of
the person holding the options but do not deem such stock to be outstanding  for
purposes of computing the percentage ownership of any other person.

     The  following  table  sets forth  information  concerning  the  beneficial
ownership of the  Company's  outstanding  Common  Shares as of December 31, 2001
for, each of the Company's directors and executive officers  individually,  each
person or group that the  Company  knows owns  beneficially  more than 5% of the
Company's  Common Shares,  and all directors and executive  officers as a group.
Except as otherwise indicated, the Company believes the beneficial owners of the
Common Shares listed below,  based on information  furnished by them,  have sole
voting and  investment  power over the number of shares  listed  opposite  their
names.

<TABLE>
---------------------------------------------------------------------------------------------
Title of Class       Identity of                   Number of           Percentage of Class(1)
                     Persons or Group            Shares Owned
---------------------------------------------------------------------------------------------
<S>                  <C>                          <C>                    <C>
Common Shares        J. Erik Mustad               1,830,800(2)                  13.6%(2)

Common Shares        Mark M. Smith                2,565,000(3)                  19.0%(3)

Common Shares        Stuart Rogers                   60,000(5)                - (4)

Common Shares        Trevor Gibbs                    10,000(6)                - (4)

Common Shares        Thomas Wharton                  10,000(6)                - (4)

Common Shares        Joseph Karwat                2,193,427(7)                  16.2%(7)

Common Shares        Officers and Directors,      6,669,227(8)                  49.4%(8)
                     as a group
---------------------------------------------------------------------------------------------
(1)  Based on the 13,509,441 shares outstanding as of December 31, 2001.
(2)  Includes  605,800  common  shares and vested  options to acquire  1,225,000
     common shares of the Company  exercisable within sixty days of December 31,
     2001.
(3)  Includes vested options to acquire  2,565,000  common shares of the Company
     exercisable within sixty days of December 31, 2001.
</TABLE>



                                       62
<PAGE>
(4)  Less than one percent (1%).
(5)  Consists of vested  options to acquire  60,000 common shares of the Company
     exercisable within sixty days of December 31, 2000.
(6)  Consists of vested  options to acquire  10,000 common shares of the Company
     exercisable within sixty days of December 31, 2000.
(7)  Includes  1,668,427  common  shares and vested  options to acquire  525,000
     common shares of the Company  exercisable within sixty days of December 31,
     2001.  The Company  terminated  the employment of Mr. Karwat on January 29,
     2002.
(8)  Includes  2,274,227  common shares and vested options to acquire  4,395,000
     common shares of the Company within sixty days of December 31, 2001.


     The  following  table  sets forth  information  concerning  the  beneficial
ownership of the  Company's  outstanding  common  shares as of February 28, 2002
for, each of the Company's directors and executive officers  individually,  each
person or group that the  Company  knows owns  beneficially  more than 5% of the
Company's  common shares,  and all directors and executive  officers as a group.
Except as otherwise indicated, the Company believes the beneficial owners of the
common shares listed below,  based on information  furnished by them,  have sole
voting and  investment  power over the number of shares  listed  opposite  their
names.

<TABLE>
---------------------------------------------------------------------------------------------
Title of Class       Identity of                   Number of           Percentage of Class(1)
                     Persons or Group            Shares Owned
---------------------------------------------------------------------------------------------
<S>                  <C>                          <C>                    <C>
Common Shares        J. Erik Mustad               1,830,800(2)               12.6%(2)

Common Shares        Mark M. Smith                4,565,000(3)               31.5%(3)

Common Shares        Stuart Rogers                   85,000(5)                   - (4)

Common Shares        Trevor Gibbs                    35,000(6)                   - (4)

Common Shares        Thomas Wharton                  35,000(6)                   - (4)

Common Shares        Joseph Karwat                1,993,427(7)               13.7%(7)

Common Shares        Officers and Directors,      8,544,227(8)               36.0%(8)
                     as a group
---------------------------------------------------------------------------------------------
(1)  Based on the 14,509,441 shares outstanding as of February 28, 2002.
(2)  Includes  605,800  common  shares and vested  options to acquire  1,225,000
     common shares of the Company  exercisable within sixty days of February 28,
     2002.
(3)  Includes  1,000,000  common  shares,  and 1,000,000  common share  purchase
     warrants,  and vested  options to acquire  2,565,000  common  shares of the
     Company exercisable within sixty days of February 28, 2002.
(4)  Less than one percent (1%).
(5)  Includes  vested  options to acquire  85,000  common  shares of the Company
     exercisable within sixty days of February 28, 2002.
(6)  Includes  vested  options to acquire  35,000  common  shares of the Company
     exercisable within sixty days of February 28, 2002.
(7)  Includes  1,668,427  common  shares and vested  options to acquire  325,000
     common shares of the Company  exercisable within sixty days of February 28,
     2002.  The Company  terminated  the employment of Mr. Karwat on January 29,
     2002.
(8)  Includes  3,274,227  common  shares,  and 1,000,000  common share  purchase
     warrants,  and vested  options to acquire  4,270,000  common  shares of the
     Company exercisable within sixty days of February 28, 2002.
</TABLE>


     There are no  arrangements  known to the Company  that may, at a subsequent
date, result in a change in control of the Company.

     The Company's  common shares are issued in  registered  form.  Based on the
records of Pacific Corporate Trust Company, the Company's registrar and transfer
agent,  as of February  28, 2001,  there were one seven  hundred  fifty  (1,750)
holders of record of the  Company's  common  shares.  Holders with United States
addresses collectively held 8,243,928 common shares, or



                                       63
<PAGE>

approximately  fifty  three and  six-tenths  percent  (56.8%)  of the  Company's
14,509,441 issued and outstanding common shares.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Except for (a) the  transactions  described below, (b) the ownership of the
Company's securities, (c) the compensation described herein, and (d) advances to
and by certain  officers to or from the Company to cover expenses,  all of which
were  reimbursed or repaid without  interest,  none of the directors,  executive
officers,  holders of ten percent of the Company's outstanding Common Shares, or
any  associate  or  affiliate  of such  person,  have,  to the  knowledge of the
Company,  had a material  interest,  direct or  indirect,  during the two fiscal
years  ended  December  31,  2001  and  2000,  in any  transaction  or  proposed
transaction which may materially affect the Company.

     On  February  28, 2002 in  consideration  of  $50,000,  the Company  issued
1,000,000 units to Mark Smith ("Smith"),  one of our officers and directors (the
"Smith Unit Private Placement").  Each unit consists of one Company common share
and one non-transferable  share purchase warrant which is exercisable to acquire
one Company  common share at a price of $0.05 per share until March 1, 2007. The
common shares issued had a deemed price of $0.05.  On February 25, 2002, the day
that the transaction was approved by the board of directors of the Company,  the
closing price of the Company's common shares on the NASD OTCBB was $0.10.

     The  securities  issued in the Smith Unit Private  Placement were issued to
Smith  in  reliance  upon an  exemption  from  registration  under  Rule  506 of
Regulation D and Section 4(2) of the Securities Act of 1933, as amended.

     The  securities  issued in the Smith Unit  Private  Placement  and the cash
consideration  paid by Smith in the Smith Unit Private  Placement are subject to
the terms and conditions of an escrow  agreement  dated February 28, 2002 by and
among the Company,  Mark Smith, and J. Erik Mustad,  one of our officers and one
of our directors (the "Escrow Agreement").  Under the Escrow Agreement,  J. Erik
Mustad acts as escrow agent.

     Under the terms of the Escrow Agreement, the securities issued in the Smith
Unit Private  Placement are only to be released from an escrow maintained by Mr.
Mustad upon the occurrence of one or more triggering  events,  which include the
following:

     o    The average of the closing bid and ask prices for the Company's common
          shares on the OTCBB or any other  major  stock  exchange in the United
          States of America for any period of 30  consecutive  calendar  days is
          equal to or greater than $0.50; or
     o    The Company has two consecutive  fiscal quarters of positive  earnings
          before  interest,   taxes,   depreciation  and  amortization   charges
          ("EBITDA"); or
     o    The  Company  (or the board of  directors  approves)  any  contract or
          agreement that could reasonably be expected, in principle or intent or
          outcome, to result in a change of control of the Company; or
     o    The  Company  enters  into (or the board of  directors  approves)  any
          contract or agreement that could reasonably be expected,  in principle
          or intent or outcome,  to result in a merger or  consolidation  of the
          Company with one or more corporations; or



                                       64
<PAGE>

     o    The  Company  enters  into (or the board of  directors  approves)  any
          contract or agreement that could reasonably be expected,  in principle
          or intent or outcome, to result in a sale or disposition of a majority
          of the assets of the Company or any of its subsidiaries; or

     o    Smith is removed as President of the Company by the Company's Board of
          Directors; or

     o    The board of directors,  by the approval of a majority  (including the
          affirmative vote of J. Erik Mustad if he is then a member of the Board
          but not  including  the vote of Smith),  approves  the  release of the
          Shares and Warrants from the escrow.

     The  Escrow  Agreement  also  contains a  redemption  right in favor of Mr.
Smith.  Under certain conditions set forth in Section 2.3 and Section 2.4 of the
Escrow  Agreement,  including but not limited to the  bankruptcy of the Company,
Mr.  Smith has the  right to  require  the  Company  redeem  the  securities  by
returning  to Mr.  Smith  all of the  cash  consideration  which he paid for the
securities in connection with the Smith Unit Private Placement. In addition, the
Escrow  Agreement  provides  in  Section  2.4 that in the event  the  triggering
conditions  discussed  above do not occur and the securities are not released to
Smith by August 1, 2003 then,  in that event,  the Company will be forced to pay
Smith $50,000 in redemption of the securities.  Under this provision,  the Smith
Unit Private  Placement  could be  effectively  canceled.  The Escrow  Agreement
expires on August 1, 2003.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

     (a) Exhibits

          EXHIBIT INDEX

       Exhibit No.  Description
       -----------  -----------
        3.1(1)      Certificate of Incorporation  for Jackpine Mining Co., Inc.,
                    dated December 23, 1991, previously filed as Exhibit 1.1

        3.2(1)      Form 1 (Section 5) Company Act Memorandum of Jackpine Mining
                    Co.,  Inc.,  dated  December 13, 1991,  previously  filed as
                    Exhibit 1.2

        3.3(1)      Articles of Jackpine Mining Co., Inc.,  previously  filed as
                    Exhibit 1.3

        3.4(1)      Certificate  of name  change  for USV  Telemanagement  Inc.,
                    dated July 10, 1996, previously filed as Exhibit 1.4

        3.5(1)      Province of British  Columbia  Form 21 (Section 371) Company
                    Act Special Resolution filed July 10, 1996, previously filed
                    as Exhibit 1.5

       10.1(1)      Share Exchange  Agreement  among certain  shareholders of US
                    Voice  Telemanagement,  Inc. and Jackpine  Mining Co., Inc.,
                    dated  February 1, 1996,  as amended  February 27, 1996,  as
                    amended June 29, 1996, previously filed as Exhibit 3.1

       10.2(1)      Form of BC  Subscription  Agreement  for Private  Placement,
                    dated 1996, previously filed as Exhibit 3.2



                                       65
<PAGE>

       Exhibit No.  Description
       -----------  -----------

       10.3(1)      Escrow Agreement among the Bank of Nova Scotia Trust Company
                    of  New  York,   Jackpine   Mining  Co.,  Inc.  and  certain
                    shareholders,  dated  June  1,  1996,  previously  filed  as
                    Exhibit 3.3

       10.4(1)      Form of  Telecommunication  Service Dealer  Agreement by and
                    between  USV   Telemanagement   Inc.  and  certain  dealers,
                    previously filed as Exhibit 3.4

       10.5(1)      Office   Lease   Agreement   by   and   between   US   Voice
                    Telemanagement,  Inc. and Shoreline  Office  Center  Limited
                    Partnership,  dated  February 25, 1994,  as amended July 18,
                    1997, previously filed as Exhibit 3.5

       10.6(1)(2)   Service  Agreement by and between Digital  Communications of
                    America, Inc. and US Voice Telemanagement,  Inc., dated July
                    15, 1994, as amended December 16, 1998,  previously filed as
                    Exhibit 3.6

       10.7(2)(3)   Telecommunication  Service  Agreement by and between Wiltel,
                    Inc. and US Voice Telemanagement, Inc., dated July 15, 1994,
                    as amended  December 31, 1998,  previously  filed as Exhibit
                    3.7

       10.8(1)      Security  Agreement by and between US Voice  Telemanagement,
                    Inc. and Wiltel, Inc., dated July 20, 1994, previously filed
                    as Exhibit 3.8

       10.9(2)(3)   Integrated  Internet Access Service Agreement by and between
                    WorldCom Network Services, Inc. and US Voice Telemanagement,
                    Inc., dated March 17, 1999, previously filed as Exhibit 3.9

       10.10(1)(2)  Telecommunication  Service Agreement by and between IXE Long
                    Distance, Inc. and US Voice Telemanagement, Inc., dated July
                    15, 1996, as amended December 31, 1998,  previously filed as
                    Exhibit 3.10

       10.11(2)(3)  Network Resell  Services  Agreement by and between  Alliance
                    Group  Services,  Inc.  and US Voice  Telemanagement,  Inc.,
                    effective March 31, 1999, previously filed as Exhibit 3.11

       10.12(2)(3)  Commercial  Revolving  Loan and  Security  Agreement  by and
                    between Alliance Group Services, Inc. and USV Telemanagement
                    Inc., effective March 31, 1999,  previously filed as Exhibit
                    3.12

       10.13(1)     Consulting  Services Agreement by and between J. Erik Mustad
                    and  USV   Telemanagement   Inc.,  dated  January  1,  1998,
                    previously filed as Exhibit 3.13

       10.14(1)     Consulting   Services  Agreement  by  and  between  Interven
                    Capital Corporation, Mark Smith and USV Telemanagement Inc.,
                    dated January 1, 1998, previously filed as Exhibit 3.14

       10.15(1)     Subscription  Agreement  by and between  USV  Telemanagement
                    Inc.  and  P.E.   Development  A.S.,  dated  July  3,  1997,
                    previously filed as Exhibit 3.15

       10.16(1)     Nontransferable Share Purchase Warrant of USV Telemanagement
                    Inc. issued to P.E.  Development  A.S., dated July 16, 1997,
                    as amended  December  2, 1998,  previously  filed as Exhibit
                    3.16

       10.17(1)     Incentive   Stock  Option   Agreement  by  and  between  USV
                    Telemanagement  Inc. and J. Erik Mustad,  dated February 17,
                    1999, previously filed as Exhibit 3.17



                                       66
<PAGE>

       Exhibit No.  Description
       -----------  -----------
       10.18(1)     Incentive   Stock  Option   Agreement  by  and  between  USV
                    Telemanagement  Inc. and Lisa Barsocchini,  previously filed
                    as Exhibit 3.18

       10.19(4)     USV Telemanagement Inc. Stock Option Plan (1999), previously
                    filed as Exhibit 4.1

       10.20(5)     USV  Telemanagement  Inc.  Amended and Restated Stock Option
                    Plan (2000), previously filed as Exhibit 4.7

       10.21(5)     Incentive   Stock  Option   Agreement  by  and  between  USV
                    Telemanagement  Inc. and Mark Smith, dated March 10, 2000 as
                    amended April 19, 2000, previously filed as Exhibit 4.1

       10.22(5)     Incentive   Stock  Option   Agreement  by  and  between  USV
                    Telemanagement  Inc. and Joseph  Karwat,  dated  February 8,
                    2000, as amended April 19, 2000, previously filed as Exhibit
                    4.2

       10.23(5)     Incentive   Stock  Option   Agreement  by  and  between  USV
                    Telemanagement  Inc. and West Oak Capital Group, Inc., dated
                    January 25, 2000 as amended April 19, 2000, previously filed
                    as Exhibit 4.3

       10.24(5)     Incentive   Stock  Option   Agreement  by  and  between  USV
                    Telemanagement  Inc. and Mark Smith,  dated January 25, 2000
                    as amended April 19, 2000, previously filed as Exhibit 4.4

       10.25(5)     Stock  Appreciation  Right  Agreement  by  and  between  USV
                    Telemanagement  Inc.  and Mark Smith,  dated March 10, 2000,
                    previously filed as Exhibit 4.5

       10.26(5)     Incentive   Stock  Option   Agreement  by  and  between  USV
                    Telemanagement  Inc. and J. Erik Mustad,  dated  January 25,
                    2000 as amended April 19, 2000,  previously filed as Exhibit
                    4.6

       10.27(5)     Incentive  Stock  Option  Agreement  with Trevor Gibbs dated
                    April 19, 2000, previously filed as Exhibit 4.8

       10.28(5)     Incentive  Stock Option  Agreement with Thomas Wharton dated
                    April 19, 2000, previously filed as Exhibit 4.9

       10.29(6)     Letter of Intent with Exstream  Data,  Inc.,  dated February
                    21, 2000  addressed to Joseph  Karwat,  previously  filed as
                    Exhibit 3.31

       10.30(6)     Letter of Intent Amendment by and between USV Telemanagement
                    Inc. and Joseph Karwat dated May 1, 2000,  previously  filed
                    as Exhibit 3.32

       10.31(6)     Letter  of   Employment   Agreement   by  and   between  USV
                    Telemanagement  Inc. and Joseph  Karwat  dated  February 21,
                    2000, previously filed as Exhibit 3.33

       10.32(6)     Convertible  Debenture of Exstream  Data,  Inc., in favor of
                    holder  USV  Telemanagement  Inc.,  dated  March  27,  2000,
                    previously filed as Exhibit 3.34

       10.33(6)     Investment  Banking  Services  Agreement  by and between USV
                    Telemanagement  Inc.  and NC Capital  Markets,  Inc.,  dated
                    October 13, 1999, previously filed as Exhibit 3.35

       10.34(6)     Finder's  Fee  Agreement  by and between USV  Telemanagement
                    Inc. and  Rosenblum  Partners  LLC dated  February 25, 2000,
                    previously filed as Exhibit 3.36



                                       67
<PAGE>

       Exhibit No.  Description
       -----------  -----------
       10.35(6)     Subscription  Agreement  by and between  USV  Telemanagement
                    Inc. and Trafalgar  Resources  LLC dated  February 25, 2000,
                    previously filed as Exhibit 3.37

       10.36(6)     Consulting   Services   Agreement   by   and   between   USV
                    Telemanagement  Inc. and Interven  Capital  Corporation  and
                    Mark Smith dated June 1, 2000,  previously  filed as Exhibit
                    3.38

       10.37(6)     Consulting   Services   Agreement   by   and   between   USV
                    Telemanagement  Inc.  and J. Erik Mustad dated June 1, 2000,
                    previously filed as Exhibit 3.39

       10.38(7)     Incentive  Stock  Option  Agreement  with Mark  Smith  dated
                    September 29, 2000, previously filed as Exhibit 4.10

       10.39(7)     Incentive  Stock Option  Agreement with J. Erik Mustad dated
                    September 29, 2000, previously filed as Exhibit 4.11

       10.40(7)     E*Comnetrix  Inc.  Amended and  Restated  Stock  Option Plan
                    (2000), previously filed as Exhibit 4.12

       10.41(8)     Form of Amendment to Stock Option Agreement,  dated June 26,
                    2000

       10.42(8)     Form of Amendment to Stock Option Agreement, dated March 16,
                    2001

       10.43(8)     Termination of Stock  Appreciation  Rights  Agreement by and
                    between  E*Comnetrix Inc. and Mark Smith,  dated November 7,
                    2000

       10.44(8)     Employment  Agreement  by and between  E*Comnetrix  Inc. and
                    Joseph Karwat, dated August 7, 2000

       10.45(8)     Form of Bonus Compensation Agreement, dated August 21, 2000

       10.46(8)     Share Exchange Agreement by and between certain shareholders
                    of Exstream Data Inc. and E*Comnetrix  Inc., dated August 7,
                    2000

       10.47(8)     Share Exchange Agreement by and between certain shareholders
                    of Moving Bytes,  Inc. and E*Comnetrix Inc., dated August 7,
                    2000

       10.48(8)     Escrow  Agreement  by and between  certain  shareholders  of
                    Exstream  Data Inc. and  E*Comnetrix  Inc.,  dated August 7,
                    2000

       10.49(8)     Settlement  Agreement  and  Mutual  Release  by and  between
                    William  Perell,  Cheryl Harrison doing business as Harrison
                    Design  Group,  Extreme  Data,  Inc.,  Joseph  Karwat,  Eric
                    Karlson,  Robert Dumper and E*Comnetrix  Inc., dated January
                    19, 2001

       10.50(8)     Share Exchange  Agreement by and between  E*Comnetrix  Inc.,
                    Exstream  Data Inc.,  Harrison  Design  Group and William S.
                    Perell, dated January 19, 2001

       10.51(9)     Amendment to Employment Agreement with Mark Smith dated June
                    2001

       10.52(9)     Employment  Agreement with Erik Mustad Employment dated June
                    2001

       10.53(9)     Lease Agreement  related  Watergate  Property dated June 28,
                    2001

       10.54        Non-Transferable  Share  Purchase  Warrant issued to Mark M.
                    Smith by E*Comnetrix Inc. dated February 25, 2002.



                                       68
<PAGE>


       Exhibit No.  Description
       -----------  -----------

       10.55        Subscription  Agreement by and between  E*Comnetrix Inc. and
                    Mark Smith dated effective as of February 25, 2002.

       10.56        Escrow Agreement by and among  E*Comnetrix Inc., Mark Smith,
                    and J. Erik Mustad made as of March 1, 2002.

       21.1         List of Subsidiaries

       23.1

----------------------
(1)  Previously filed on Form 20-F dated April 20, 1999.
(2)  Confidential  treatment has been requested with respect to portions of this
     exhibit  pursuant to an application for  confidential  treatment filed with
     the  Commission  under Rule  24(b)-2(b) of the  Securities  Exchange Act of
     1934, as amended.
(3)  Previously filed on Form 20-F/A dated June 4, 1999.
(4)  Previously filed on Form S-8 dated September 8, 1999.
(5)  Previously filed on Form S-8 dated May 31, 2000.
(6)  Previously filed on Form 20-F dated June 12, 2000.
(7)  Previously filed on Form S-8 dated November 16, 2000.
(8)  Previously filed on Form 10-KSB dated May 8, 2001.
(9)  Previously filed on Form 10-QSB dated August 14, 2001.

     (b) Reports on Form 8-K.

     The Company filed no reports on Form 8-K during the fourth  fiscal  quarter
ended December 31, 2001.





                                       69
<PAGE>



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Auditors ....................................F-2

Consolidated Balance Sheets .......................................F-3

Consolidated Statements of Operations and Deficit  ................F-4

Consolidated Statements of Cash Flows .............................F-5

Notes to the Consolidated Financial Statements ....................F-6









                                      F-1
<PAGE>


INDEPENDENT AUDITORS' REPORT

The Board of Directors
E*Comnetrix Inc.


We have audited the accompanying consolidated balance sheets of E*Comnetrix Inc.
as of December 31, 2001 and 2000,  and the related  consolidated  statements  of
operations and deficit and cash flows for the years then ended.  These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of E*Comnetrix Inc. as
of December 31, 2001 and 2000,  and the results of its  operations  and its cash
flows for the  years  then  ended,  in  conformity  with  accounting  principles
generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  note 2 to the
financial statements,  the Company has suffered recurring losses from operations
that raise  substantial  doubt about its ability to continue as a going concern.
Management's  plans in regard to these matters are also described in note 2. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.




/s/ KPMG LLP
KPMG LLP (signed)



Chartered Accountants

Vancouver, Canada

February 28, 2002


                                      F-2
<PAGE>

E*COMNETRIX INC.
Consolidated Balance Sheets
(Expressed in United States dollars)

December 31, 2001 and 2000


<TABLE>
==============================================================================================
                                                                  2001                 2000
----------------------------------------------------------------------------------------------
<S>                                                          <C>                  <C>
Assets
Current assets:
  Cash and cash equivalents                                  $   367,868          $   825,859
  Accounts receivables, less allowance for doubtful
   accounts of $35,522 in 2001 and $58,901 in 2000               824,661              924,197
  Prepaid expenses                                                 9,223               79,465
----------------------------------------------------------------------------------------------
  Total current assets                                         1,201,752            1,829,521

Equipment (note 4)                                               409,202              235,778

Other assets (note 5)                                             40,982                7,765

Goodwill (net accumulated amortization and write-down
  of $1,476,914; 2000 - $63,464) (note 6)                        600,000            1,971,515
----------------------------------------------------------------------------------------------

Total assets                                                 $ 2,251,936          $ 4,044,579
----------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable                                           $   336,534          $   440,501
  Payroll accrued liabilities                                     35,000                    -
  Commissions payable                                             25,000               21,209
  Telecom taxes payable                                           46,294               38,973
  Current portion of obligation under capital
    lease (note 7)                                                 6,086                    -
----------------------------------------------------------------------------------------------
  Total current liabilities                                      448,914              500,683

Obligation under capital lease (note 7)                           34,029                    -

Minority interest (note 6)                                             -               20,276

Stockholders' equity:
  Capital stock (note 9)                                       6,458,658            6,125,514
  Additional paid-in capital (note 9)                            149,081              143,381
  Accumulated deficit                                         (4,838,746)          (2,745,275)
----------------------------------------------------------------------------------------------
  Total stockholders' equity                                   1,768,993            3,523,620
----------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                   $ 2,251,936          $ 4,044,579
==============================================================================================
</TABLE>


Future operations and going concern (note 2)
Related party transactions (note 10)
Contingency (note 11)
Subsequent event (note 14)


See accompanying notes to consolidated financial statements.



                                      F-3
<PAGE>

E*COMNETRIX INC.
Consolidated Statements of Operations and Deficit
(Expressed in United States dollars)

Years ended December 31, 2001 and 2000


<TABLE>
==============================================================================================
                                                                  2001                 2000
----------------------------------------------------------------------------------------------
<S>                                                          <C>                  <C>
Revenue                                                      $ 5,802,426          $ 5,293,937
Cost of goods sold:
  Transmissions and services                                   2,531,346            2,717,176
  Commissions                                                    347,495              274,283
  Other                                                          191,208              172,141
----------------------------------------------------------------------------------------------
                                                               3,070,049            3,163,600
----------------------------------------------------------------------------------------------
Gross Margin                                                   2,732,377            2,130,337

Expenses:
  Salaries and benefits                                        1,980,238            1,065,081
  Contracting and consulting services                            361,030              536,855
  Amortization                                                   341,429              121,389
  Rent                                                           222,042              150,907
  Bad debts                                                      168,144               34,589
  Advertising and promotion                                      150,439               82,098
  Legal and accounting                                           149,736              189,881
  Telephone                                                       86,016               37,031
  Office supplies and sundry                                      62,425               75,876
  Travel and entertainment                                        57,857               70,937
  Insurance                                                       44,705               38,985
  Dues and subscriptions                                          19,657               23,351
  Bank charges                                                     8,930                8,443
  Miscellaneous                                                    5,603               36,831
  Postage and freight                                              5,256                4,339
  State franchise tax                                              2,852                4,473
  Professional development seminars                                    -               11,464
  Write-down of goodwill (note 3 (d) and 6)                    1,195,161                    -
----------------------------------------------------------------------------------------------
                                                               4,861,520            2,492,530
----------------------------------------------------------------------------------------------
Loss before undernoted                                        (2,129,143)            (362,193)

Other income (expense):
  Interest income                                                 24,861               46,921
  Interest expense                                                (6,367)                 (11)
  Other                                                            4,306               25,039
----------------------------------------------------------------------------------------------
                                                                  22,800               71,949
----------------------------------------------------------------------------------------------
Loss before income taxes and minority interest                (2,106,343)            (290,244)

Income taxes (note 8)                                              2,400                1,919
----------------------------------------------------------------------------------------------
Loss before minority interest                                 (2,108,743)            (292,163)

Minority interest (note 6)                                        15,272               26,597
----------------------------------------------------------------------------------------------
Loss for the year                                             (2,093,471)            (265,566)

Accumulated deficit, beginning of year                        (2,745,275)          (2,479,709)
----------------------------------------------------------------------------------------------
Accumulated deficit, end of year                             $(4,838,746)         $(2,745,275)
----------------------------------------------------------------------------------------------
Loss per share - basic and diluted                           $     (0.16)         $     (0.03)

Weighted average number of shares outstanding                 13,150,308           10,424,302
==============================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.



                                      F-4
<PAGE>

E*COMNETRIX INC.
Consolidated Statements of Cash Flows
(Expressed in United States dollars)

Years ended December 31, 2001 and 2000



<TABLE>
==============================================================================================
                                                                  2001                 2000
----------------------------------------------------------------------------------------------
<S>                                                          <C>                  <C>
Cash provided by (used in):

Operations:
  Loss for the year                                          $(2,093,471)         $  (265,566)
  Items not involving cash:
    Amortization                                                 341,429              121,389
    Minority interest                                            (15,272)             (26,597)
    Write-down of goodwill                                     1,195,161                    -
  Change in non-cash operating working capital:
    Accounts receivable                                           99,536              267,082
    Prepaid expenses                                              70,242               (6,740)
    Accounts payable                                            (103,967)             (83,849)
    Payroll accrued liabilities                                   35,000               (7,399)
    Commissions payable                                            3,791              (42,857)
    Telecom taxes payable                                          7,321              (26,330)
  --------------------------------------------------------------------------------------------
  Cash flows used in operating activities                       (460,230)             (70,867)

Investments:
  Cash of subsidiary at acquisition date                               -               67,325
  Purchase of equipment                                         (247,317)             (10,613)
  Acquisition of subsidiary                                       88,573                    -
  Other assets                                                   (33,217)               6,968
  --------------------------------------------------------------------------------------------
  Cash flows provided by (used in) investing
    activities                                                  (191,961)              63,680

Financing:
  Issuance of common shares for cash                             200,000              264,627
  Capital lease obligation payments                               (5,800)                   -
  --------------------------------------------------------------------------------------------
  Cash flows provided by financing activities                    194,200              264,627
----------------------------------------------------------------------------------------------
Net increase (decrease) in cash and
  cash equivalents                                              (457,991)             257,440

Cash and cash equivalents, beginning of year                     825,859              568,419
----------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                       $   367,868          $   825,859
----------------------------------------------------------------------------------------------
Supplementary information:
  Interest received                                          $    24,861          $    46,921
  Interest paid                                                    6,367                   11
  Income taxes paid                                                2,400                1,919
  Non-cash transactions:
    Acquisition of equipment under capital lease                  45,915                    -
    Value assigned to common shares issued
      on acquisition of EDI (note 6)                             172,844            2,324,610
    Value assigned to stock purchase options
      issued on acquisition of EDI                                     -              143,381
    Value assigned to performance escrow
      stock returned to treasury (note 9(b)(ii))                   5,700                    -
    Value assigned to Perell escrow
      stock returned to treasury (note 9(b)(iii))                 34,000                    -
==============================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================

1.   Operations:

     E*Comnetrix Inc. (the "Company" or "E*Comnetrix") is incorporated under the
     Canada Business  Corporations Act and is listed on the National Association
     of  Securities  Dealers  Over-The-Counter  Bulletin  Board under the symbol
     "ECNXF". The Company through its operating subsidiary,  provides integrated
     telecommunications,  broadband communications, electronic document delivery
     and web based electronic marketing solutions to its commercial customers.

     The consolidated  financial  statements include the accounts of E*Comnetrix
     and the following  subsidiaries  from their respective dates of acquisition
     or formation.

     ==========================================================================
     Wholly owned operating subsidiaries at December 31, 2001:
        Moving Bytes, Inc. ("MBI") (formerly Moving Bytes Broadband
          Corporation ("MBB"))

     Wholly owned subsidiaries that operated during fiscal 2001:
        Exstream Data, Inc. ("EDI")
        Layer 427, Inc. ("L427")
        USV Telemanagement Inc. ("USVT")
     ==========================================================================

     On March 31, 2001,  the Company  merged USVT and MBB, with MBB remaining as
     the surviving company.

     On August 20, 2001 the Company renamed Moving Bytes  Broadband  Corporation
     ("MBB") to Moving Bytes, Inc. ("MBI").

     On September 30, 2001 the Company wound up and dissolved L427.

     On September 30, 2001 the Company merged EDI and MBI, with MBI remaining as
     the surviving company.

     All material intercompany balances and transactions have been eliminated.


2.   Future operations:

     These  consolidated  financial  statements  have been  prepared  on a going
     concern  basis,  which assumes that the Company will be able to realize its
     assets and discharge its obligations in the normal course of business.  The
     Company  incurred  net losses of  $2,093,471  and $265,566 in 2001 and 2000
     respectively. The Company also used cash to fund operations of $460,230 and
     $70,867 in 2001 and 2000, respectively. The Company acquired its electronic
     media services  business in September 2000 in order to expand the Company's
     operations solely from  telecommunications  services to include  electronic
     document delivery and electronic marketing solutions. During the year ended
     December 31, 2001, the Company focused on integrating the electronic  media
     services   business  into  the  Company  and  on  expanding  the  Company's
     technology and infrastructure to position the Company for future growth.



                                      F-6
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


2.   Future operations and going concern (continued):

     Management is projecting that the  investments  made in 2001 will result in
     future  revenue  growth and the  return to  profitability  in fiscal  2002.
     Management is also  projecting that the Company's cash at December 31, 2001
     of  $367,868  is  sufficient,  when  taken in  combination  with  projected
     operating cash flow, to fund its operations and any investments required in
     fiscal 2002,  although the Company will  continue to seek  additional  cash
     resources  through  equity  issuances  in order to position the Company for
     additional  acquisitions  or  investments in equipment and  technology.  If
     external  financings become required,  there can be no assurance that funds
     will be available on an economic basis to the Company.

     The ability of the  Company to continue as a going  concern and realize the
     carrying  value of its  assets is  dependent  on the  Company's  ability to
     increase its  revenues by  increasing  its  customer  base and reducing its
     operating costs so that the Company achieves profitable operations.

     These  financial  statements do not reflect any  adjustments  that would be
     necessary  should the Company be unable to continue as a going  concern and
     therefore be required to realize its assets and discharge  its  liabilities
     in other than the normal course of operations.


3.   Significant accounting policies:

     (a)  Cash and cash equivalents:

          Cash and cash equivalents are represented by highly liquid investments
          having terms to maturity of 90 days or less when acquired.

     (b)  Equipment:

          Equipment   is  stated  at  cost.   Amortization   is  provided  on  a
          straight-line basis over the following estimated useful lives:

         --------------------------------------------------------------
         Asset                                                   Years
         --------------------------------------------------------------

         Furniture and fixtures                                    7
         Computer and office equipment                             5
         Test and other equipment                                  7
         Equipment under capital lease                             5
         Leasehold improvements                                    5
         --------------------------------------------------------------

     (c)  Goodwill:

          The excess of the purchase price paid for the  acquisition of EDI over
          the  fair  value  of the net  identifiable  assets  acquired  has been
          recorded as goodwill.  It is being  amortized over ten years using the
          straight-line method.



                                      F-7
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


3.   Significant accounting policies (continued):

     (d)  Impairment of long-lived  assets and long-lived  assets to be disposed
          of:

          The Company accounts for long-lived  assets,  which includes equipment
          and  goodwill,  in  accordance  with the  provisions  of SFAS No. 121,
          "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
          Assets to Be Disposed Of".  This  Statement  requires that  long-lived
          assets and certain identifiable intangibles be reviewed for impairment
          whenever events or changes in circumstances indicate that the carrying
          amount of an asset may not be recoverable. Recoverability of assets to
          be held and used is measured by a comparison of the carrying amount of
          an asset to future  net cash flows  expected  to be  generated  by the
          asset. If such assets are considered to be impaired, the impairment to
          be recognized  is measured as the amount by which the carrying  amount
          of the  assets  exceed  the fair  value of the  assets.  Assets  to be
          disposed of are reported at the lower of the  carrying  amount or fair
          value less costs to sell.

          At December 31,  2001,  the Company  reviewed  the  carrying  value of
          goodwill  acquired on  acquisition of EDI. The review was initiated as
          monthly  revenues from EDI reduced  throughout  2001 and the Company's
          share price  declined  significantly  in 2001 and  indicated  that the
          value of the  Company's  net assets  had also  declined.  The  Company
          wrote-down  the goodwill by $1,195,161  to its  estimated  fair market
          value of  $600,000.  The fair market  value  estimate was based on two
          sources  of  evidence - the fair  market  value of the  Company's  net
          assets as estimated by the market  capitalization of the Company using
          trading prices at December 31, 2001; and the estimated discounted cash
          flows from the electronic document delivery business.

     (e)  Revenue recognition:

          Revenue, for long distance reselling, is recognized and billed monthly
          to customers  based upon customer usage as determined by the Company's
          telecommunication's carriers electronic switching and billing systems.

          Revenue,  for electronic  document delivery,  is recognized and billed
          monthly to customers  based upon  customer  usage as determined by the
          Company's internal billing systems.

     (f)  Income taxes:

          The Company follows the asset and liability  method for accounting for
          income taxes. Under this method,  deferred income taxes are recognized
          for the future income tax  consequences  attributable  to  differences
          between the financial  statement  carrying values and their respective
          income tax basis  (temporary  differences)  and loss  carry  forwards.
          Deferred tax assets and liabilities  are measured using  substantively
          enacted or enacted tax rates  expected  to apply to taxable  income in
          the years in which temporary  differences are expected to be recovered
          or settled.  The effect on deferred  income tax assets and liabilities
          of a change in tax rates is  included  in  income in the  period  that
          includes the substantive  enactment  date.  Deferred income tax assets
          are evaluated and if realization  is not considered  "more likely than
          not", a valuation allowance is provided.



                                      F-8
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


3.   Significant accounting policies (continued):

     (g)  Net earnings (loss) per share:

          Net earnings (loss) per share has been  calculated  using the weighted
          average number of shares  outstanding during the year. The performance
          escrow  shares (note  9(b)(ii)) and the Perell  lawsuit  escrow shares
          (note  9(b)(iii)) have been excluded from the weighted  average number
          of shares  outstanding.  Such shares will be included in the per share
          calculations  from the date that all  necessary  conditions  for their
          release from escrow have been satisfied.

          Dilutive  loss per  share  for the year is the same as basic  loss per
          share  due to the  loss  for  all  periods  presented.  The  following
          securities could  potentially  dilute basic EPS in the future but were
          not included in the  computation of diluted EPS because to do so would
          have been anti-dilutive for the periods presented:

         =======================================================================
                                                           2001           2000
         -----------------------------------------------------------------------
         Warrants (note 9(b)(i))                        200,000              -
         Escrow Shares (note 9(b)(ii) and (iii))              -      2,150,000
         Options (note 9(c))                          5,481,300      4,725,890
         =======================================================================


     (h)  Foreign currency translation:

          The  functional   currency  of  the  Company  and  its  subsidiary  is
          considered  to be the U.S.  dollar  as  substantially  all  operating,
          financing  and  investing  transactions  are  made in  that  currency.
          Accordingly,  monetary assets and liabilities and  non-monetary  items
          carried at market values which are  denominated  in Canadian  dollars,
          have been translated into U.S.  dollars using exchange rates in effect
          at  the  balance  sheet  date.   Statement  of  operations  items  are
          translated  at weighted  average  exchange  rates.  Exchange  gains or
          losses are included in the  determination  of net earnings  (loss) for
          the year.

     (i)  Use of estimates:

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that affect the  reported  amounts of the 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.   Significant   areas  requiring  the  use  of
          management  estimates relate to the determination of collectibility of
          accounts  receivable,  recoverability  of  equipment  and goodwill and
          rates for amortization.



                                      F-9
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


3.   Significant accounting policies (continued):

     (j)  Stock-based compensation plans:

          The Company  applies the  intrinsic  value-based  method of accounting
          prescribed by  Accounting  Principles  Board  ("APB")  Opinion No. 25,
          "Accounting   for   Stock   Issued   to   Employees",    and   related
          interpretations to account for its employee stock options plans. Under
          this  method,  compensation  expense is  recorded on the date of grant
          only if the current market price of the  underlying  stock exceeds the
          exercise price.  Repriced options granted to employees (note 9(c)) are
          accounted for by the variable  method,  whereby the intrinsic value is
          remeasured  at each  reporting  date,  with any  increase in intrinsic
          value charged against income,  until such time as the repriced options
          are  exercised,  expire  or are  otherwise  forfeited.  SFAS No.  123,
          "Accounting for Stock-Based Compensation",  established accounting and
          disclosure  requirements using a fair value-based method of accounting
          for stock-based  employee  compensation  plans. As allowed by SFAS No.
          123,  the  Company  has  elected to  continue  to apply the  intrinsic
          value-based method of accounting  described above, and has adopted the
          disclosure  requirements  of SFAS No. 123 for  employee  stock  option
          grants (note 9(c)).  Option grants to non-employees will be recognized
          at their fair  value as the  services  are  provided  and the  options
          earned.

     (k)  Performance escrow shares:

          The   performance   escrow  shares  are  treated  as  a   compensatory
          arrangement.  Compensation expense will be recognized in the statement
          of  operations  equal to the fair  value of the shares  released  to a
          shareholder that provides services as an officer, director,  employee,
          consultant or contractor.  No  compensation  expense has been recorded
          for the years presented  relating to performance escrow shares as none
          of  the   performance   conditions   were  satisfied  prior  to  their
          cancellation (see note 9(b)(ii)).

     (l)  Recently adopted accounting standards:

          During 2001, the Financial  Accounting Standards Board has issued four
          new pronouncements:

          o    Statement  141,  "Business  Combinations",  requires the purchase
               method of accounting for all business combinations and applies to
               all business  combinations  initiated  after June 30, 2001 and to
               all business  combinations  accounted for by the purchase  method
               that are completed after June 30, 2001.

          o    Statement 142, "Goodwill and Other Intangible  Assets",  requires
               that  goodwill  as well as  other  intangible  assets  be  tested
               annually  for  impairment  and  is  effective  for  fiscal  years
               beginning after December 15, 2001.

          o    Statement 143,  "Accounting  for Asset  Retirement  Obligations",
               requires  entities to record the fair value of a liability for an
               asset retirement obligation in the period in which it is incurred
               and a  corresponding  increase  in  the  carrying  amount  of the
               related  long-lived  asset  and is  effective  for  fiscal  years
               beginning after June 15, 2002.



                                      F-10
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


     (l)  Recently adopted accounting standards (continued):

          o    Statement  144,  "Accounting  for the  Impairment  or Disposal of
               Long-lived  Assets",   provides  that  long-lived  assets  to  be
               disposed of by sale be  measured at the lower of carrying  amount
               or fair value less cost to sell,  whether  reported in continuing
               operations  or  in  discontinued  operations,  and  broadens  the
               reporting of discontinued operations to include all components of
               an entity with operations that can be distinguished from the rest
               of the  entity  and that  will be  eliminated  from  the  ongoing
               operations of the entity in a disposal transaction. Statement 144
               is effective for fiscal years beginning after December 15, 2001.

          The  adoption  of  Statements  141,  143 and 144 will not  effect  the
          current  consolidated  financial  statements or historically  reported
          results of  operations.  The adoption of Statement  142 will result in
          the cessation of goodwill  amortization  which,  in 2001, was $218,289
          (excluding the goodwill write-down).


4.   Equipment:

<TABLE>
     ======================================================================================
                                                              Accumulated        Net book
     2001                                        Cost        amortization          value
     --------------------------------------------------------------------------------------
    <S>                                  <C>                <C>                <C>
     Furniture and fixtures               $    73,421        $   21,478         $   51,943
     Computer and office equipment            512,970           253,051            259,919
     Test and other equipment                  18,625             1,776             16,849
     Equipment under capital lease             45,914             5,356             40,558
     Leasehold improvements                    44,370             4,437             39,933
     --------------------------------------------------------------------------------------
                                          $   695,300        $  286,098         $  409,202
     ======================================================================================
</TABLE>

<TABLE>
     ======================================================================================
                                                              Accumulated        Net book
     2001                                        Cost        amortization          value
     --------------------------------------------------------------------------------------
    <S>                                  <C>                <C>                <C>
     Furniture and fixtures               $    28,837        $   14,563         $   14,274
     Computer and office equipment            369,154           147,675            221,479
     Test and other equipment                     690               665                 25
     --------------------------------------------------------------------------------------
                                          $   398,681        $  162,903         $  235,778
     ======================================================================================
</TABLE>

     Amortization   expense  for  the  year  is   $117,018   (2000  -  $53,759).
     Amortization  of property  under  capital  leases of $6,122 (2000 - nil) is
     included in amortization expense.


5.   Other assets:

     ===========================================================================
                                                    2001                2000
     ---------------------------------------------------------------------------
     Deposits                                 $    40,982          $     6,980
     Other                                              -                  785
     ---------------------------------------------------------------------------
                                              $    40,982          $     7,765
     ===========================================================================



                                      F-11
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


6.   Acquisition of Exstream Data Inc.:

     On September 15, 2000, the Company  acquired  90.28% of the common stock of
     Exstream Data, Inc. ("EDI"), a California corporation, for 2,703,036 common
     shares of the Company with a fair value of  $2,334,610  and assumed  38,000
     EDI employee  share  purchase  options  which were  converted  into 199,515
     vested stock options of the Company.  The fair value of the options  issued
     was $143,381 calculated by an option pricing model.

     On January 19, 2001,  the Company  issued 291,128 common shares in exchange
     for  9.72% of the  common  capital  stock of EDI,  bringing  the  Company's
     interest  in EDI to 100%.  As  consideration,  the Company  issued  291,128
     common shares of the Company with a fair value of $172,844.  No commissions
     were paid in connection  with this issuance of Company common  shares.  The
     Company  common  shares  were  issued in a private  transaction  to certain
     shareholders  of EDI in reliance upon an exemption  available under Section
     4(2) of the Securities Act of 1933, as amended.

     This  acquisition  has been accounted for using the purchase  method and is
     summarized as follows:

     ===========================================================================
     Net assets acquired:
         Current assets, including cash of $67,325                $   490,811
         Equipment                                                    231,828
         Goodwill                                                   2,032,691
     ---------------------------------------------------------------------------
                                                                    2,755,330
     Liabilities assumed:
         Current liabilities                                          114,495
     ---------------------------------------------------------------------------
                                                                  $ 2,640,835
     ---------------------------------------------------------------------------
     Consideration:
         Common shares                                            $ 2,497,454
         Stock options recorded as additional paid-in capital         143,381
     ---------------------------------------------------------------------------
                                                                  $ 2,640,835
     ===========================================================================



                                      F-12
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


6.   Acquisition of Exstream Data Inc. (continued):

     A summarized  unaudited  pro forma  statement of  operations of the Company
     assuming  the 100%  acquisition  of EDI had occurred on January 1, 2001 and
     2000 financed by a common share  issuance of  $2,497,454  and stock options
     with a fair value of $143,381, is as follows:

<TABLE>
     ==================================================================================================
                                                                                   2001           2000
     --------------------------------------------------------------------------------------------------
     <S>                                                                    <C>            <C>
     Sales                                                                  $ 5,802,426    $ 6,607,583
     Cost of sales                                                            3,070,049      3,505,045
     --------------------------------------------------------------------------------------------------
                                                                              2,732,377      3,102,538

     Operating expenses (including write-down of goodwill of $1,195,161)      4,861,520      3,763,408
     --------------------------------------------------------------------------------------------------
     Loss before undernoted                                                   2,129,143        660,870

     Other income (expense):
         Interest income                                                         24,861         47,119
         Interest expense                                                        (6,367)        (8,957)
         Other                                                                    4,306         28,873
     --------------------------------------------------------------------------------------------------
                                                                                 22,800         67,035
     --------------------------------------------------------------------------------------------------
     Loss before income taxes                                                 2,106,343        593,835

     Provision for income tax expense                                             2,400         22,637
     -------------------------------------------------------------------------------------------------
     Loss for the year                                                      $ 2,108,743    $   616,472
     ==================================================================================================
</TABLE>


7.   Obligation under capital lease:

     =========================================================================
     Year ending December 31:
     2002                                                           $  14,163
     2003                                                              14,163
     2004                                                              14,163
     2005                                                              14,163
     2006                                                               5,902
     -------------------------------------------------------------------------
     Total minimum lease payments                                      62,554
     Amount representing interest at 19.33%                            22,439
     -------------------------------------------------------------------------
     Present value of net minimum capital lease payments               40,115
     Current portion of obligation under capital lease                  6,086
     -------------------------------------------------------------------------
                                                                    $  34,029
     =========================================================================

     Interest of $5,268 (2000 - nil) relating to capital lease  obligations  has
     been included in interest expense.



                                      F-13
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


8.   Income taxes:

     Income  tax  expense  (recovery)   attributable  to  earnings  (loss)  from
     operations  differs  from the amounts  computed by  applying  the  Canadian
     Federal tax rate of  approximately  29% to earnings  (loss)  before  income
     taxes as a result of the following:

     ===========================================================================
                                                            2001           2000
     ---------------------------------------------------------------------------
     At statutory rates                              $  (607,107)    $  (84,727)
     Losses and other timing differences
       not tax affected                                  607,107         84,727
     State income tax paid                                 2,400          1,919
     ---------------------------------------------------------------------------
                                                     $     2,400     $    1,919
     ===========================================================================


     The tax  effects of  temporary  differences  that give rise to  significant
     portions of the future tax assets and liabilities are as follows:

     ==========================================================================
                                                            2001          2000
     --------------------------------------------------------------------------
     Deferred tax assets:
         Losses carry forward                        $ 1,440,777    $  770,000

     Deferred tax liabilities:
         Accounting amortization in excess of cost        21,000        21,000
     ---------------------------------------------------------------------------
     Total gross deferred tax assets and liabilities   1,419,777       749,000
     Valuation allowance                              (1,419,777)      (749,000)
     ---------------------------------------------------------------------------
     Net deferred tax asset                          $         -   $         -
     ==========================================================================

     In assessing the realizability of future tax assets,  management  considers
     whether it is more likely  than not that some  portion or all of the future
     tax assets will be  realized.  The ultimate  realization  of the future tax
     assets is dependent upon the generation of future taxable income during the
     periods in which those temporary differences become deductible. A valuation
     allowance equal to the net deferred tax asset balance has been recorded, as
     the  realization of such losses at the balance sheet dates during the carry
     forward period cannot be considered to be more likely than not.



                                      F-14
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


8.   Income taxes (continued):

     The  Company  and its  subsidiary  have the  following  non-capital  losses
     available to reduce future taxable income, expiring as follows:

     =========================================================================
     Losses of Canadian parent (stated in U.S. dollars):
         2003                                                     $   152,342
         2004                                                          57,526
         2005                                                          82,791
         2006                                                          92,205
         2007                                                         580,342
     -------------------------------------------------------------------------
                                                                      965,206
     Losses of U.S. operating subsidiary:
         2009                                                         216,688
         2010                                                         669,021
         2011                                                         777,081
         2012                                                         116,722
         2015                                                         133,480
         2016                                                       2,090,000
     -------------------------------------------------------------------------
                                                                    4,002,992
     -------------------------------------------------------------------------
     Total losses                                                 $ 4,968,198
     =========================================================================


9.   Capital stock:

     (a)  Authorized:

          Unlimited number of common stock, no par value.

          10,000,000 class A preferred stock, no par value. No class A preferred
          shares have been issued as of December 31, 2001.

          20,000,000  class B preferred  shares,  with no par value.  No class B
          preferred shares have been issued as of December 31, 2001.

     (b)  Issued and fully paid common shares:

<TABLE>
          =================================================================================================
                                                                Number of         Common         Additional
                                                            common shares   share amount    paid-in capital
         --------------------------------------------------------------------------------------------------
         <S>                                                <C>             <C>               <C>
         Balance, December 31, 1999                             9,974,277      3,536,277                -

         Issued for cash on exercise of stock purchase
           options (note 9(c))                                    925,000        264,627                -
         Issued to acquire 90.28% interest in EDI (note 6)      2,703,036      2,324,610                -
         Value assigned to options issued in
           conjunction with acquisition of 90.28%
           interest in EDI (note 6)                                     -              -          143,381
         --------------------------------------------------------------------------------------------------
         Balance, December 31, 2000, carried forward           13,602,313      6,125,514          143,381
          =================================================================================================
</TABLE>



                                      F-15
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


9.   Capital stock (continued):

<TABLE>
          =================================================================================================
                                                                Number of         Common         Additional
                                                            common shares   share amount    paid-in capital
         --------------------------------------------------------------------------------------------------
         <S>                                                <C>             <C>               <C>
         Balance, December 31, 2000, brought forward           13,602,313      6,125,514          143,381

         Issued for cash on private placement
           (note 9(b)(i))                                         400,000        200,000                -
         Performance escrow stock returned to
           treasury (note 9(b)(ii))                              (750,000)        (5,700)           5,700
         Issued to acquire 9.72% interest in EDI (note 6)         291,128        172,844                -
         Stock returned to treasury on settlement
           of Perell lawsuit (note 9(b)(iii))                     (34,000)       (34,000)               -
         --------------------------------------------------------------------------------------------------
         Balance, December 31, 2001                            13,509,441    $ 6,458,658        $ 149,081
          =================================================================================================
</TABLE>

          (i)  Private placement:

               On March 9, 2001,  the Company  issued 400,000 common shares in a
               private  placement  at $0.50  per  share  common  share for total
               proceeds of $200,000. No commissions were paid in connection with
               the private  placement.  The shares  were issued to one  non-U.S.
               person outside of the United States in reliance upon an exemption
               available  under  Regulation S of the  Securities Act of 1933, as
               amended. In conjunction with this private placement,  the Company
               issued  200,000  non-transferable  warrants to  purchase  200,000
               common shares exercisable at $1.00 per share. These warrants have
               a two-year term and expire on March 9, 2003.

          (ii) Performance escrow shares:

               The issued shares at December 31, 1999 and 2000 included  750,000
               performance  escrow shares. On November 7, 2000, the officers and
               directors  voluntarily  terminated the escrow  agreement with the
               Company and returned the performance escrow shares to treasury on
               January 5,  2001.  The  Company  terminated  the shares  reducing
               capital  stock  and  increasing  additional  paid in  capital  by
               $5,700.

          (iii) Perell Lawsuit Escrow shares:

               As a contingency to closing the EDI acquisition,  the Company and
               certain shareholders of EDI entered into an escrow agreement (the
               "Perell Lawsuit Escrow  Agreement")  established to mitigate both
               the costs and outcome of a shareholder ("Perell") lawsuit against
               EDI (the "Perell Lawsuit"). Under the terms of the Perell Lawsuit
               Escrow  Agreement,  1,400,000 common shares of the Company issued
               as part of the  acquisition  of EDI  were put  into  escrow  (the
               "Escrowed Shares").

               On January  19,  2001,  the  Company,  Perell and  certain  other
               parties entered into a Share Exchange Agreement pursuant to which
               the Company  purchased  from Perell  56,053  shares of the common
               stock of EDI in exchange for 291,128  restricted common shares of
               the  Company,  bringing the  Company's  ownership of EDI's common
               stock to 100%.



                                      F-16
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


9.   Capital stock (continued):

     (b)  Issued and fully paid common shares (continued):

          (iii) Perell Lawsuit Escrow shares (continued):

               On March 13,  2001,  the  Perell  Lawsuit  Escrow  Agreement  was
               terminated  under its terms.  As a result,  the Company  received
               34,000  common  shares of its common stock in recovery of certain
               legal expenses incurred to defend the Perell Lawsuit.  The 34,000
               shares  were  returned  to treasury on March 22, 2001 at a deemed
               value of $1.00  per  share and a  $34,000  expense  recovery  was
               applied  against legal  expenses.  The remaining  Escrowed Shares
               were returned to the beneficial holders of the Escrowed Shares.

     (c)  Stock options:

          The Company has a stock option plan, which allows the Company,  at the
          discretion of the board of  directors,  to issue options to employees,
          directors and  consultants  to purchase  common shares of the Company.
          Stock purchase options are granted having exercise prices based on the
          market price at the date of grant. The stock options expire at various
          dates  ranging  from  February  28,  2002 to June  29,  2005  and vest
          according  to the terms of the  Company's  stock option plan as may be
          amended by the individual stock option agreements.

          The  following  summarizes  changes in stock  options for the last two
          reporting periods:

<TABLE>
         =====================================================================================
                                                             2001                        2000
                                           ----------------------       ----------------------
                                                         Weighted                    Weighted
                                                          average                     average
                                           Shares  exercise price       Shares exercise price
         -------------------------------------------------------------------------------------
         <S>                           <C>               <C>        <C>             <C>
         Outstanding,
           beginning
           of year                      4,725,890         $  1.00    1,075,000       $  0. 32
         Granted                        1,352,475            0.25    4,674,515           1.02
         Exercised                              -               -     (925,000)          0.29
         Forfeited                       (597,065)           0.59      (98,625)          1.34
         -------------------------------------------------------------------------------------
         Outstanding,
           end of year                  5,481,300         $  0.26    4,725,890        $  1.00
         =====================================================================================
</TABLE>

          The following summarizes the repricing of options during the year. The
          above weighted  average  exercise prices reflect the revised  exercise
          prices.

          ======================================================================
                 Number                       Initial              Net exercise
              of shares                exercise price                     price
          ----------------------------------------------------------------------
              1,050,000                      $ 4.4375                    $ 0.25
                200,000                        6.0625                      0.25
                750,000                        7.0000                      0.25
                 25,000                        5.0000                      0.25
                 10,000                        3.0000                      0.25
              2,573,700                        1.0000                      0.25
                408,600                        0.5000                      0.25
          ----------------------------------------------------------------------
              5,017,300
          ======================================================================

          On February  25, 2002 a total of  4,510,100  outstanding  options were
          repriced to $0.10.



                                      F-17
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


9.   Capital stock (continued):

     (d)  Options:

          The Company has the following stock purchase  options  outstanding and
          vested at December 31, 2001:

<TABLE>
         =======================================================================================
                                            Number               Price                   Expiry
         ---------------------------------------------------------------------------------------
         <S>                               <C>              <C>               <C>
         Officer/director                   200,000          $    0.25         February 8, 2002
         Directors                           30,000               0.25            June 20, 2002
         Employees                           20,000               0.25            June 26, 2002
         Employees                            5,250               0.25            June 29, 2002
         Employees                          100,000               0.25            July 31, 2002
         Officers/directors                 200,000               0.25       September 15, 2002
         Officers/directors/employees       550,000               0.25         January 25, 2003
         Employees                           25,000               0.25            April 1, 2003
         Directors                           10,000               0.25           April 19, 2003
         Employees                          150,000               0.25        September 3, 2003
         Employees                          100,000               0.25       September 18, 2003
         Employees                          167,200               0.25         January 16, 2004
         Employees                           20,000               0.25           March 14, 2004
         Employees                          175,000               0.25             May 24, 2004
         Employees                          213,600               0.25        September 13,2004
         Officers/directors               1,000,000               0.25       September 29, 2004
         Officer/director                   500,000               0.25         January 25, 2005
         Officer/director                   750,000               0.25            March 9, 2005
         Officer/director                   875,000               0.25            June 26, 2005
         Employees                           26,250               0.25            June 29, 2005
         Employees                          364,000               0.25         December 6, 2005
         ---------------------------------------------------------------------------------------
         Total                            5,481,300          $    0.25
         =======================================================================================
</TABLE>

          In October,  2001, the Company's  Board of Directors  approved a stock
          option repricing program. Under the repricing program, certain holders
          of stock options,  including directors and officers,  were entitled to
          exchange their existing stock options,  which had an exercise price of
          $0.50 per share,  for  repriced  stock  options to  purchase  the same
          number of  shares at an  exercise  price of $0.25 per  share.  At that
          date,  the  new  exercise  price  exceeded  the  market  price  of the
          Company's  common  shares.   Each  repriced  stock  option  has  terms
          substantially equivalent to the terms of the original grant, including
          the same vesting terms,  number of shares and expiration date. Options
          to  purchase a total of  4,937,300  common  shares  were  repriced  on
          October  24,  2001 and  options to  purchase a total of 80,000  common
          shares were repriced on October 25, 2001.



                                      F-18
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


9.   Capital stock (continued):

     (e)  Stock-based compensation:

          As discussed in note 3(j),  the Company  applies the  intrinsic  value
          principles of APB Opinion No. 25 in accounting for the Plan.  Based on
          the market price of the  Company's  common stock at December 31, 2001,
          no variable  plan  compensation  expense is required to be recorded in
          2001 for repriced  options.  As all other  options are granted  having
          exercise prices based on the market price at the date of the grant, no
          compensation  cost has been  recognized  for stock options  granted in
          these financial  statements.  Had the Company determined  compensation
          cost based on the fair  value at the grant date for its stock  options
          under SFAS No. 123, the Company's net earnings would have been reduced
          to the pro forma amounts indicated below. If the fair value method had
          been  used  compensation  for  stock  options  granted  to  directors,
          officers and employees of $260,403 (2000 - 9,136,165)  would have been
          recorded,  reducing net earnings or  increasing  the reported  loss by
          such  amount.  Accordingly,  the pro forma loss and loss per share for
          the years presented would be $2,353,874  (2000 - $9,401,731) and $0.18
          (2000 - $0.90), respectively.

          The  fair  value  of  employee  options  granted  during  the year was
          estimated  using  the  Black-Scholes  option-pricing  model  with  the
          following  weighted average  assumptions:  risk-free  interest rate of
          4.00%  (2000 - 6.26%) no annual  dividends;  expected  lives  equal to
          one-half the option lives;  and  volatility  ranging from 221% to 252%
          (2000 - 360%).


10.  Related party transactions:

     (a)  During the year, the Company paid  consulting fees of $185,000 (2000 -
          $235,000) to a company controlled by a director of the Company.

     (b)  On  June  1,  2001,  the  Company   entered  into  an  amendment  (the
          "Consulting Agreement Amendment") to the consulting services agreement
          (the  "Consulting  Agreement")  effective  of  June 1,  2000,  between
          Interven  Capital  Corporation  ("Interven"),  Mark M. Smith ("Smith")
          (Interven and Smith are referred to collectively as the  "Consultant")
          pursuant to which  beginning June 1, 2001 the  Consultant  would defer
          $5,000  per month in  consideration  due to the  Consultant  under the
          Consulting Agreement.  Payment of deferred amounts to Consultant would
          be  made  upon  the   occurrence   of  certain   future   events.   No
          consideration,  contingent  or  otherwise,  was or will be paid to the
          Consultant  to induce  the  Consultant  to enter  into the  Consulting
          Agreement  Amendment.  No other terms or conditions of the  Consulting
          Agreement were amended pursuant to the Consulting Agreement Amendment.



                                      F-19
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


11.  Commitments and contingencies:

     (a)  Lease commitments:

          At December 31, 2001, the Company is committed under operating  leases
          for office premises. Minimum lease payments are as follows:

         --------------------------------------------------------------
         2002                                             $    142,483
         2003                                                  146,773
         2004                                                  151,123
         2005                                                  155,709
         2006                                                   76,085
         --------------------------------------------------------------

     (b)  Bad debt expense:

          During the year, the Company wrote off $119,313 plus accrued  interest
          of $1,790 for a total of $121,103 for  non-payment of amounts due from
          a single customer, Prime T.V.

          In May 2001,  the Company  filed a complaint in the Superior  Court of
          the State of California in the county of Alameda  against Prime T.Vf.,
          LLC, Gatelinx Corporation,  Gatelinx Financial  Corporation,  Gatelinx
          Solutions  Corporation  and Thomas  O'Hanlon  (jointly  and  severally
          "Prime T.V.") alleging that Prime T.V.  committed  breach of contract,
          fraud and intentional tort associated with the non-payment of $119,313
          in services provided to Prime T.V. by EDI during March and April 2001.
          The  complaint  seeks  relief of $144,313  plus  additional  sums plus
          interest accrued thereon and attorney fees.

     (c)  Performance agreements:

          On September 30, 2000, the Company entered into performance agreements
          with two employees of EDI.  Under the agreements the Company would pay
          an aggregate cash amount of up to $370,000  dependent upon the closing
          bid price of the Company's stock on dates through August 31, 2001. The
          performance  agreements terminated under their terms on March 31, 2001
          and  April  30,  2001 with no  payments  having  been made and with no
          further obligation on behalf of the Company.

     (d)  Management agreements:

          On June 1, 2001, the Company entered into a management  agreement with
          J. Erik Mustad  ("Mustad") the Company's Chief Executive Officer and a
          director,  for the  period  June 1,  2001 to  February  28,  2003 (the
          "Mustad Agreement").  The Mustad Agreement canceled and superceded all
          prior  agreements  between the  Company  and  Mustad.  Pursuant to the
          Mustad Agreement,  Mustad will provide certain services to the Company
          in  consideration  of $7,500 per month  through  December 31, 2001 and
          $6,000 per month  thereafter.  In addition,  the Company  would pay to
          Mustad a 5% finders  fee on any  financing  proceeds  it receives as a
          result of the direct  efforts of Mustad up to $2,000,000 in cumulative
          financings  and 10% of any financing  proceeds it receives as a result
          of the direct  efforts of Mustad  exceeding  $2,000,000  in cumulative
          financings. In the event of termination of the Mustad Agreement by the
          Company prior to February 28, 2003,  other than for cause, the Company
          must pay to Mustad  the full  balance  of fees  which  would have been
          payable to Mustad had Mustad  been  engaged for the entire  term.  The
          Mustad  Agreement will expire  February 28, 2003 with no provision for
          renewal.



                                      F-20
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


12.  Financial instruments:

     The fair values of cash and cash equivalents, accounts receivable, accounts
     payable  and accrued  liabilities,  commissions  payable and telecom  taxes
     payable approximate their carrying values due to their short term nature.

     The  Company's  credit  risk is limited  to the  amounts  disclosed  on the
     balance sheet. The Company has no significant concentrations of credit risk
     as no amounts owing from a single  customer or class of customer  aggregate
     greater than 10% of the Company's outstanding accounts receivable.


13.  Segmented information:

     The Company operates two business segments:

     (a)  the  purchase  of  telecommunication  transmission  time  and  digital
          subscriber  access in bulk,  on a  wholesale  basis from  third  party
          carriers,  and  reselling  of time and access to end users,  primarily
          businesses, at competitive resale prices; and

     (b)  electronic document delivery and electronic marketing solutions.

          Operating  information  related to the  Company's  material  operating
          segments are as follows:

<TABLE>
         ================================================================================================
                                                                             Electronic
                                   Telecommunication                              media
         2001                               services       Corporate           services            Total
         ------------------------------------------------------------------------------------------------
        <S>                           <C>                 <C>             <C>                <C>
         Revenue                      $    4,264,570      $        -      $   1,537,856      $ 5,802,426
         Gross margin                      1,645,401               -          1,086,976        2,732,377
         Amortization                         31,103               -            310,326          341,429
         Segment assets                      665,813         367,868          1,218,255        2,251,936
         Expenditures for segment
           equipment                          75,242               -            172,075          247,317
         ================================================================================================
</TABLE>


<TABLE>
         ================================================================================================
                                                                             Electronic
                                   Telecommunication                              media
         2000                               services       Corporate           services (i)        Total
         ------------------------------------------------------------------------------------------------
        <S>                           <C>                 <C>             <C>                <C>
         Revenue                      $    4,796,197      $   38,667      $     459,073      $ 5,293,937
         Gross margin                      1,768,849          38,667            322,821        2,130,337
         Amortization                         23,037               -             98,352          121,389
         Segment assets                    1,091,457         513,460          2,439,662        4,044,579
         Expenditures for segment
           equipment                           7,740               -              2,873           10,613
         ================================================================================================
         (i)  from date of acquisition on September 15, 2000.
</TABLE>



                                      F-21
<PAGE>

E*COMNETRIX INC.
Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Years ended December 31, 2001, 2000 and 1999
================================================================================


13.  Segmented information (continued):

     The Company  operates  primarily in the United States through MBI, its U.S.
     subsidiary.  All of the  Company's  revenues  are  generated  in the United
     States.  The following table sets out the location of the Company's  assets
     for the years presented:

     -------------------------------------------------------------------------
                          United States           Canada         Consolidated
     -------------------------------------------------------------------------
     2001              $    1,884,068          $  367,868       $    2,251,936
     2000                   3,532,558             512,021            4,044,579
     -------------------------------------------------------------------------


14.  Subsequent event:

     On February 25, 2002, the Board of Directors  approved a private  placement
     to one of the  directors.  The terms of the private  placement are that the
     Company  would issue  1,000,000  common shares at $0.05 per share and issue
     warrants to purchase up to an additional  1,000,000  common shares at $0.05
     per share  which are  exercisable  until  March 1, 2007.  These  shares and
     warrants  will be held in escrow and released  only in the event of certain
     events or  conditions,  specified  by the escrow  agreement.  This  private
     placement closed on February 28, 2002.

     The Company also granted  229,020  options to  employees  and  directors at
     $0.10 per share on February 25, 2002.








                                      F-22
<PAGE>

                                   SIGNATURES


     Pursuant to the  requirements of Section 12 of the Securities  Exchange Act
of 1934, the  registrant  certifies  that it meets all of the  requirements  for
filing on Form 10-KSB and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.



                                    E*COMNETRIX INC.



Date:  March 27, 2002               /s/ Mark Smith
                                    ------------------------------------------
                                    Mark M. Smith, President



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
to be signed by the following persons on behalf of the Registrant in the
capacities and on the dates indicated.

Signature                       Title                            Date


/s/ Mark M. Smith               President and Director           March 27, 2001
-------------------------       (principal executive officer)
Mark M. Smith


/s/ Mark M. Smith               Chief Financial Officer          March 27, 2001
-------------------------       (principal financing officer)
Mark M. Smith


/s/ Stuart Rogers               Director                         March 27, 2001
-------------------------
Stuart Rogers


/s/ Trevor Gibbs                Director                         March 27, 2001
-------------------------
Trevor Gibbs


/s/ Thomas Wharton              Director                         March 27, 2001
-------------------------
Thomas Wharton



<PAGE>

                                  EXHIBIT INDEX

Exhibit No.  Description
-----------  -----------
 3.1(1)      Certificate of Incorporation  for Jackpine Mining Co., Inc.,
             dated December 23, 1991, previously filed as Exhibit 1.1

 3.2(1)      Form 1 (Section 5) Company Act Memorandum of Jackpine Mining
             Co.,  Inc.,  dated  December 13, 1991,  previously  filed as
             Exhibit 1.2

 3.3(1)      Articles of Jackpine Mining Co., Inc.,  previously  filed as
             Exhibit 1.3

 3.4(1)      Certificate  of name  change  for USV  Telemanagement  Inc.,
             dated July 10, 1996, previously filed as Exhibit 1.4

 3.5(1)      Province of British  Columbia  Form 21 (Section 371) Company
             Act Special Resolution filed July 10, 1996, previously filed
             as Exhibit 1.5

10.1(1)      Share Exchange  Agreement  among certain  shareholders of US
             Voice  Telemanagement,  Inc. and Jackpine  Mining Co., Inc.,
             dated  February 1, 1996,  as amended  February 27, 1996,  as
             amended June 29, 1996, previously filed as Exhibit 3.1

10.2(1)      Form of BC  Subscription  Agreement  for Private  Placement,
             dated 1996, previously filed as Exhibit 3.2

10.3(1)      Escrow Agreement among the Bank of Nova Scotia Trust Company
             of  New  York,   Jackpine   Mining  Co.,  Inc.  and  certain
             shareholders,  dated  June  1,  1996,  previously  filed  as
             Exhibit 3.3

10.4(1)      Form of  Telecommunication  Service Dealer  Agreement by and
             between  USV   Telemanagement   Inc.  and  certain  dealers,
             previously filed as Exhibit 3.4

10.5(1)      Office   Lease   Agreement   by   and   between   US   Voice
             Telemanagement,  Inc. and Shoreline  Office  Center  Limited
             Partnership,  dated  February 25, 1994,  as amended July 18,
             1997, previously filed as Exhibit 3.5

10.6(1)(2)   Service  Agreement by and between Digital  Communications of
             America, Inc. and US Voice Telemanagement,  Inc., dated July
             15, 1994, as amended December 16, 1998,  previously filed as
             Exhibit 3.6

10.7(2)(3)   Telecommunication  Service  Agreement by and between Wiltel,
             Inc. and US Voice Telemanagement, Inc., dated July 15, 1994,
             as amended  December 31, 1998,  previously  filed as Exhibit
             3.7

10.8(1)      Security  Agreement by and between US Voice  Telemanagement,
             Inc. and Wiltel, Inc., dated July 20, 1994, previously filed
             as Exhibit 3.8

10.9(2)(3)   Integrated  Internet Access Service Agreement by and between
             WorldCom Network Services, Inc. and US Voice Telemanagement,
             Inc., dated March 17, 1999, previously filed as Exhibit 3.9

10.10(1)(2)  Telecommunication  Service Agreement by and between IXE Long
             Distance, Inc. and US Voice Telemanagement, Inc., dated July
             15, 1996, as amended December 31, 1998,  previously filed as
             Exhibit 3.10

<PAGE>

Exhibit No.  Description
-----------  -----------
10.11(2)(3)  Network Resell  Services  Agreement by and between  Alliance
             Group  Services,  Inc.  and US Voice  Telemanagement,  Inc.,
             effective March 31, 1999, previously filed as Exhibit 3.11

10.12(2)(3)  Commercial  Revolving  Loan and  Security  Agreement  by and
             between Alliance Group Services, Inc. and USV Telemanagement
             Inc., effective March 31, 1999,  previously filed as Exhibit
             3.12

10.13(1)     Consulting  Services Agreement by and between J. Erik Mustad
             and  USV   Telemanagement   Inc.,  dated  January  1,  1998,
             previously filed as Exhibit 3.13

10.14(1)     Consulting   Services  Agreement  by  and  between  Interven
             Capital Corporation, Mark Smith and USV Telemanagement Inc.,
             dated January 1, 1998, previously filed as Exhibit 3.14

10.15(1)     Subscription  Agreement  by and between  USV  Telemanagement
             Inc.  and  P.E.   Development  A.S.,  dated  July  3,  1997,
             previously filed as Exhibit 3.15

10.16(1)     Nontransferable Share Purchase Warrant of USV Telemanagement
             Inc. issued to P.E.  Development  A.S., dated July 16, 1997,
             as amended  December  2, 1998,  previously  filed as Exhibit
             3.16

10.17(1)     Incentive   Stock  Option   Agreement  by  and  between  USV
             Telemanagement  Inc. and J. Erik Mustad,  dated February 17,
             1999, previously filed as Exhibit 3.17

10.18(1)     Incentive   Stock  Option   Agreement  by  and  between  USV
             Telemanagement  Inc. and Lisa Barsocchini,  previously filed
             as Exhibit 3.18

10.19(4)     USV Telemanagement Inc. Stock Option Plan (1999), previously
             filed as Exhibit 4.1

10.20(5)     USV  Telemanagement  Inc.  Amended and Restated Stock Option
             Plan (2000), previously filed as Exhibit 4.7

10.21(5)     Incentive   Stock  Option   Agreement  by  and  between  USV
             Telemanagement  Inc. and Mark Smith, dated March 10, 2000 as
             amended April 19, 2000, previously filed as Exhibit 4.1

10.22(5)     Incentive   Stock  Option   Agreement  by  and  between  USV
             Telemanagement  Inc. and Joseph  Karwat,  dated  February 8,
             2000, as amended April 19, 2000, previously filed as Exhibit
             4.2

10.23(5)     Incentive   Stock  Option   Agreement  by  and  between  USV
             Telemanagement  Inc. and West Oak Capital Group, Inc., dated
             January 25, 2000 as amended April 19, 2000, previously filed
             as Exhibit 4.3

10.24(5)     Incentive   Stock  Option   Agreement  by  and  between  USV
             Telemanagement  Inc. and Mark Smith,  dated January 25, 2000
             as amended April 19, 2000, previously filed as Exhibit 4.4

10.25(5)     Stock  Appreciation  Right  Agreement  by  and  between  USV
             Telemanagement  Inc.  and Mark Smith,  dated March 10, 2000,
             previously filed as Exhibit 4.5

10.26(5)     Incentive   Stock  Option   Agreement  by  and  between  USV
             Telemanagement  Inc. and J. Erik Mustad,  dated  January 25,
             2000 as amended April 19, 2000,  previously filed as Exhibit
             4.6

10.27(5)     Incentive  Stock  Option  Agreement  with Trevor Gibbs dated
             April 19, 2000, previously filed as Exhibit 4.8

10.28(5)     Incentive  Stock Option  Agreement with Thomas Wharton dated
             April 19, 2000, previously filed as Exhibit 4.9


<PAGE>

Exhibit No.  Description
-----------  -----------
10.29(6)     Letter of Intent with Exstream  Data,  Inc.,  dated February
             21, 2000  addressed to Joseph  Karwat,  previously  filed as
             Exhibit 3.31

10.30(6)     Letter of Intent Amendment by and between USV Telemanagement
             Inc. and Joseph Karwat dated May 1, 2000,  previously  filed
             as Exhibit 3.32

10.31(6)     Letter  of   Employment   Agreement   by  and   between  USV
             Telemanagement  Inc. and Joseph  Karwat  dated  February 21,
             2000, previously filed as Exhibit 3.33

10.32(6)     Convertible  Debenture of Exstream  Data,  Inc., in favor of
             holder  USV  Telemanagement  Inc.,  dated  March  27,  2000,
             previously filed as Exhibit 3.34

10.33(6)     Investment  Banking  Services  Agreement  by and between USV
             Telemanagement  Inc.  and NC Capital  Markets,  Inc.,  dated
             October 13, 1999, previously filed as Exhibit 3.35

10.34(6)     Finder's  Fee  Agreement  by and between USV  Telemanagement
             Inc. and  Rosenblum  Partners  LLC dated  February 25, 2000,
             previously filed as Exhibit 3.36

10.35(6)     Subscription  Agreement  by and between  USV  Telemanagement
             Inc. and Trafalgar  Resources  LLC dated  February 25, 2000,
             previously filed as Exhibit 3.37

10.36(6)     Consulting   Services   Agreement   by   and   between   USV
             Telemanagement  Inc. and Interven  Capital  Corporation  and
             Mark Smith dated June 1, 2000,  previously  filed as Exhibit
             3.38

10.37(6)     Consulting   Services   Agreement   by   and   between   USV
             Telemanagement  Inc.  and J. Erik Mustad dated June 1, 2000,
             previously filed as Exhibit 3.39

10.38(7)     Incentive  Stock  Option  Agreement  with Mark  Smith  dated
             September 29, 2000, previously filed as Exhibit 4.10

10.39(7)     Incentive  Stock Option  Agreement with J. Erik Mustad dated
             September 29, 2000, previously filed as Exhibit 4.11

10.40(7)     E*Comnetrix  Inc.  Amended and  Restated  Stock  Option Plan
             (2000), previously filed as Exhibit 4.12

10.41(8)     Form of Amendment to Stock Option Agreement,  dated June 26,
             2000

10.42(8)     Form of Amendment to Stock Option Agreement, dated March 16,
             2001

10.43(8)     Termination of Stock  Appreciation  Rights  Agreement by and
             between  E*Comnetrix Inc. and Mark Smith,  dated November 7,
             2000

10.44(8)     Employment  Agreement  by and between  E*Comnetrix  Inc. and
             Joseph Karwat, dated August 7, 2000

10.45(8)     Form of Bonus Compensation Agreement, dated August 21, 2000

10.46(8)     Share Exchange Agreement by and between certain shareholders
             of Exstream Data Inc. and E*Comnetrix  Inc., dated August 7,
             2000

10.47(8)     Share Exchange Agreement by and between certain shareholders
             of Moving Bytes,  Inc. and E*Comnetrix Inc., dated August 7,
             2000

10.48(8)     Escrow  Agreement  by and between  certain  shareholders  of
             Exstream  Data Inc. and  E*Comnetrix  Inc.,  dated August 7,
             2000

10.49(8)     Settlement  Agreement  and  Mutual  Release  by and  between
             William  Perell,  Cheryl Harrison doing business as Harrison
             Design  Group,  Extreme  Data,  Inc.,  Joseph  Karwat,  Eric
             Karlson,  Robert Dumper and E*Comnetrix  Inc., dated January
             19, 2001

10.50(8)     Share Exchange  Agreement by and between  E*Comnetrix  Inc.,
             Exstream  Data Inc.,  Harrison  Design  Group and William S.
             Perell, dated January 19, 2001

10.51(9)     Amendment to Employment Agreement with Mark Smith dated June
             2001

10.52(9)     Employment  Agreement with Erik Mustad Employment dated June
             2001

<PAGE>

Exhibit No.  Description
-----------  -----------
10.53(9)     Lease Agreement  related  Watergate  Property dated June 28,
             2001

10.54        Non-Transferable  Share  Purchase  Warrant issued to Mark M.
             Smith by E*Comnetrix Inc. dated February 25, 2002.

10.55        Subscription  Agreement by and between  E*Comnetrix Inc. and
             Mark Smith dated effective as of February 25, 2002.

10.56        Escrow Agreement by and among  E*Comnetrix Inc., Mark Smith,
             and J. Erik Mustad made as of March 1, 2002.

21.1         List of Subsidiaries

23.1
----------------------
(1)  Previously filed on Form 20-F dated April 20, 1999.
(2)  Confidential  treatment has been requested with respect to portions of this
     exhibit  pursuant to an application for  confidential  treatment filed with
     the  Commission  under Rule  24(b)-2(b) of the  Securities  Exchange Act of
     1934, as amended.
(3)  Previously filed on Form 20-F/A dated June 4, 1999.
(4)  Previously filed on Form S-8 dated September 8, 1999.
(5)  Previously filed on Form S-8 dated May 31, 2000.
(6)  Previously filed on Form 20-F dated June 12, 2000.
(7)  Previously filed on Form S-8 dated November 16, 2000.
(8)  Previously filed on Form 10-KSB dated May 8, 2001.
(9)  Previously filed on Form 10-QSB dated August 14, 2001.