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

                                ----------

                                 FORM 10-K
(Mark one)

 X  ANNUAL  REPORT  PURSUANT  TO  SECTION 13 OR 15 (d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

    For the fiscal year ended January 31, 1998  .
                              -------------------
                                     OR

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

    For the transition period from           to            .
                                  -----------   -----------
                      Commission File Number 0-2180

                    TOTAL-TEL USA COMMUNICATIONS, INC.      .
       -------------------------------------------------------------
           (Exact name of registrant as specified in its charter)

    New Jersey           .                               22-1656895 .
-------------------------                           -------------------
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                      Identification No.)

               150 Clove Road, Little Falls, NJ         07424
             --------------------------------------------------
             (Address of principal executive offices)(Zip Code)

Registrant's telephone number, including area code:  (973) 812-1100

         Securities registered pursuant to Section 12 (b) of the Act:
                                   None

         Securities registered pursuant to Section 12 (g) of the Act:
                    Common Stock, $.05 par value per share

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-K or any amendment to this Form 10-K.   [  ]

Aggregate market value (based upon a $40.25 closing price) of the voting 
stock held by nonaffiliates of the Registrant as of May 12, 1998: 
$100,481,509.

Number of shares of Common Stock outstanding on May 12, 1998:  
3,441,447.

                    DOCUMENTS INCORPORATED BY REFERENCE
                                   None



                                   PART 1
                                   ------

             Special Note Regarding Forward-Looking Statements

     Certain matters discussed in this Annual Report on Form 10-K are 
"forward-looking statements" intended to qualify for the safe harbors 
from liability established by the Private Securities Litigation Reform 
Act of 1995.  These forward-looking statements can generally be 
identified as such because the context of the statement will include 
words such as the Company "believes", "anticipates", "expects", or words 
of similar import.  Similarly, statements that describe the Company's 
future plans, objectives or goals are also forward-looking statements.  
Such forward-looking statements are subject to certain risks and 
uncertainties which are described in close proximity to such statements 
and which could cause actual results to differ materially from those 
anticipated as of the date of this report.  Shareholders, potential 
investors and other readers are urged to consider these factors in 
evaluating the forward-looking statements and are cautioned  not to 
place undue reliance on such forward-looking statements.  The forward-
looking statements included herein are only made as of the date of this 
report and the Company undertakes no obligation to publicly update such 
forward-looking statements to reflect subsequent events or 
circumstances.

ITEM 1.          BUSINESS
                 --------
     Total-Tel USA Communications, Inc. ( "TotalTel", the "Registrant" 
or the "Company" ), a New Jersey corporation, was organized on June 8, 
1959, under the name of Faradyne Electronics Corp. and adopted its 
present name on November 4, 1991.  The Registrant's principal executive 
office is located at 150 Clove Road, Little Falls, New Jersey, 07424 and 
its telephone number is (973) 812-1100.  The Registrant operates as a 
full service inter-exchange carrier as more fully described herein.

PRINCIPAL PRODUCTS AND SERVICES
-------------------------------

Telecommunications Services
---------------------------
     In September, 1982, Registrant formed Total-Tel, as a division of 
its principal operating subsidiary,  commenced  offering  interstate  
telephone  communication services in January, 1983 and provided the 
foundation for what is now the Registrant's primary business.  Total-Tel 
operates as a full service interexchange carrier providing 24 hour, 7 
day a week, telephone communication services to customers nationwide.  
The Registrant's principal market is Northern New Jersey and the New 
York  Metropolitan area for direct transmission within the contiguous 
United States, and to over 150 countries around the world.  The 
intercity circuits TotalTel utilizes to transmit its customers' 
telephone calls include, among other facilities, private lines leased 
from AT&T, World Com, Inc., Qwest and other usage sensitive services 
leased from other competing carriers.  TotalTel offers its services 
primarily through its network consisting of digital computerized 
switches in Newark, New Jersey, New York, New York and Miami, Florida, 
and intercity circuits which provide access and identification, call 
routing, transmission and billing records.  Subscribers are billed based 
on the distance and duration of each call completed.

     In July, 1987, TotalTel began offering its telecommunication 
services to commercial customers in New York City through Total-Tel USA, 
Incorporated, a wholly owned subsidiary.  On August 1, 1992, TotalTel 
extended its telecommunications services to commercial customers in the 
Southeastern United States through Total-Tel Southeast, Inc., a wholly 
owned subsidiary.  TotalTel began offering its dedicated services and  
related high usage T1.544 services in late 1985.  These services were 
designed to attract larger, more sophisticated business customers to the 
Registrant.  In April, 1995, the Registrant formed TotalTel Carrier 
Services, Inc. for the purpose of providing long distance service to 
other common carriers in the telecommunications industry, on a wholesale 
basis.  Wholesale sales were $57,981,349 and $31,429,277 for the fiscal  
years ended January 31, 1998 and 1997, respectively.

     TotalTel employs SS7 digital technology and Sonet Ring technology 
in its network.  Digital facilities utilize more sophisticated 
engineering to yield enhanced voice quality as opposed to older analog 
technology.  The capital expenditure necessary to increase transmission 
capability through digital technology is less than the comparable cost 
to expand on an analog basis.  Additionally, most of TotalTel's calling 
volume is carried over fiber optic facilities leased from other carriers 
as described above and from Bell Atlantic,  and other Regional Bell 
Operating Companies, (RBOC'S).

     During the Fiscal year ended January 31, 1998, and in Fiscal 1997, 
a majority of the traffic was carried through various equal access 
services, also known as switched access, and are priced and offered 
based on the calling volume of the particular customer.  The retail 
marketing focus is on customizing services for business customers in the 
niche market now served by Registrant.

     TotalTel currently has approximately 16,000 active accounts, of 
which approximately 95% are commercial and the balance are residential 
subscribers.  Sales are made primarily through advertising, direct 
telephone solicitation, field sales contacts, agent sales and referrals 
from present customers.

     Due to TotalTel's strategic geographic location in the New York 
Metropolitan Area, the Company continues to foresee benefits from the 
availability of a large number of suppliers of transmission facilities 
located in New York which should provide potential for improved 
operating efficiency.

Competition
-----------

     The most significant competitor in the telecommunications industry, 
AT&T, has indicated that it intends to compete vigorously with other 
common carriers (other independent telephone companies). In the past 
several years, AT&T has implemented several significant rate reductions 
for its long distance message services.  These reductions have required 
other carriers, including TotalTel, to lower their rates in order to 
remain competitive.

     In addition, TotalTel competes with carriers such as MCI 
Communications Corporation ( "MCI" ), U. S. Sprint, WorldCom, Inc., 
Frontier and other large companies engaged in providing services in 
competition with those services offered by TotalTel.  TotalTel also 
directly competes with local and regional companies which resell 
services, a number of which are substantially larger than TotalTel.

     The Telecommunications Act of 1996 ("The Act") allows local 
exchange carriers (LECs), under certain circumstances, to compete in the 
long distance telecommunications market which should substantially 
increase competition in the future.  The Act also allows long distance 
carriers to provide local service and the Registrant anticipates 
entering this market during the latter half of Fiscal 1999.

     In the opinion of Registrant's management, TotalTel's principal 
methods of competition with AT&T and others have been and are expected 
to continue to be pricing, customized service, quality and the 
development of special billing and other niche services.  TotalTel's 
long distance capability and its customer services should continue to 
make it competitive for most business users of AT&T, MCI and US Sprint 
services.

Year 2000 Matters
-----------------
     As is the case with most other companies using computers in their 
operations, the Company is in the process of addressing the Year 2000 
problem.  This matter will be addressed concurrently with another 
project to enhance the companies billing system. While the primary focus 
of the project is to install a state of the art billing system, it will 
also include a solution to the Year 2000 problem,  As such, no 
additional cost for the Year 2000 problem over and above the normal cost 
of the new billing system is anticipated.  The switching and accounting 
programs have been audited and found to be Year 2000 compliant.


Seasonal Nature of Business
---------------------------
     Registrant's business is not seasonal.

Patents, Trademarks, Licenses, etc.
----------------------------------
     Registrant does not hold any material patents, franchises or 
concessions.

Government Regulations
----------------------
     On August 1, 1982, the Federal Communications Commission ( "FCC" ) 
substantially deregulated resale common  carriers, such as the 
Registrant.  The FCC does not require certification of such carriers to 
initiate business activities nor does it exercise its authority to 
regulate their rates and services, although it has the power to do so in 
the future.  The FCC may act upon complaints against the Registrant or 
any other common carrier for failure to comply with its statutory 
obligations as a common carrier.  Registrant is duly tariffed with the 
FCC as a switch-based interexchange carrier.

     In 1995, the FCC discontinued regulating the rates and services of 
AT&T, determining that AT&T is a non-dominant carrier.  This 
determination may affect the Registrant because it competes with AT&T, 
utilizes AT&T lines to transmit some of its long distance traffic, and 
leases local access transmission facilities from RBOCS and other local 
telephone companies which are FCC regulated.  The FCC currently 
prohibits carriers such as AT&T from refusing to permit resale of their 
services.

     Services in New York City are regulated by the New York State 
Public Service Commission, which requires the filing of a tariff, among 
other requirements.  TotalTel has received approval of its tariff and 
continues to maintain its tariff in full force and effect.  TotalTel 
Southeast, Inc. is regulated by the Georgia Public Service Commission 
which requires the filing of a tariff.  TotalTel Southeast, Inc. has 
received approval of its tariff and continues to maintain its tariff in 
full force and effect.

     Since Fiscal 1996, the Registrant is registered in 49 states, in 
respect to service within those states, and is thus subject to the 
regulatory requirements of the various Public Service Commissions or 
similar agencies of these states.

     Beginning in April, 1988, TotalTel provided its domestic customers 
international phone service to numerous foreign countries.  
International services are regulated by the FCC which requires a license 
and the filing of a tariff.  TotalTel's license has been granted, and 
its tariff has been approved.

Compliance with Environmental Provisions
----------------------------------------
     Registrant believes that it complies in all material respects with 
current pertinent federal, state, and local provisions relating to the 
protection of the environment and does not believe that continued 
compliance should require any material capital expenditure.

Personnel
---------
     Registrant and its subsidiaries currently employ 231 full-time 
employees in its long distance telecommunication service,  of the full 
time employees 48 are engaged in sales activities, 11 in customer 
support, 25 in customer service, 33 in technical and field services, 16 
in data processing, and 98 in general and administrative activities.  
The Company also employs approximately 15 part time employees and 
utilizes the services of approximately 260 independent sales agents. The 
Registrant considers its relations with its employees to be excellent.

ITEM 2.          PROPERTIES
                 ----------
     On November 15, 1993, and December 28, 1993, Total-Tel  entered 
into leases to rent an aggregate of approximately 3,500 square feet of 
space at 744 Broad Street, Newark, New Jersey, for its upgraded 
switching equipment.  The leases run from January 1, 1994 through 
December 31, 1998 at an annual rental of $51,480 and also require the 
tenant to pay a proportionate share of any increase in the "Consumer 
Price Index", U. S. City Average, over the base year.

     On December 1, 1993, Total-Tel  entered into a five year lease to 
rent approximately 20,000 square feet of space from a partnership in 
which two of the partners are directors and major shareholders of the 
Company.  The lease provides for annual rentals of $58,560 for the first 
three years and $63,885 for years four and five.  This space is used  
for warehousing and office space for the technical support employees.  
The lease requires the payment of any increase in operating expenses and 
real estate taxes over the base year.

     On February 22, 1994, Total-Tel Inc. entered into a lease, 
subsequently modified on April 15, 1994, for approximately 17,700 square 
feet of space at 150 Clove Road, Little Falls, New Jersey to be used as 
sales, executive and administrative offices.  The lease provided for a 
rent holiday  until  July, 1995, after which the annual rental would be 
approximately $360,000.  The lease is for five years and ten months and 
has been amended by a second lease modification agreement dated February 
9, 1995 whereby the Registrant  leased approximately 6,700 additional  
square feet of space at the same location at an additional annual rental 
of $121,707 for the first four years and $138,154 for the next year and 
two months.  The modified agreement also extended the term of the 
existing lease for an additional two years to August 14, 2002 at a then 
annual rental of $563,063.  The lease requires the payment of the 
tenant's proportionate share of operating expenses and real estate taxes 
increased over the base year.

     On January 30, 1997, the Company entered into a third modification 
of its lease for approximately 16,640 square feet of additional office 
space at its existing facility at 150 Clove Road, Little Falls, New 
Jersey.  The annual rental on the additional space will be $357,760 per 
annum from July 1, 1997 through February 14, 1998, $366,800 per annum 
from February 15, 1998 through August 14, 2000, and  $382,720 per annum 
from August 15, 2000 through August 14, 2002.  In addition, the Company 
is liable for its proportionate share of increases in real estate taxes 
and operating expenses over the base year.

     On November 1, 1996, the Company entered into a lease for 
approximately 8,300 square feet of space at 40 Rector Street, New York 
City, New York, to be used for a second switching facility.  The term of 
the lease is for fifteen years and ten months from the date of 
commencement which was February 1, 1998.  Rental payments are $133,184 
per annum for the first five years after commencement, $166,480 per 
annum for the next five years, and $183,128 per annum for five years and 
ten months.  The lease requires the payment of the tenant's proportional 
share of increased operating expenses and real estate taxes over the 
base year.

     On November 8, 1996, a subsidiary of the Company entered into a 
lease for approximately 2,300 square feet of office space in New York 
City, New York at an annual rental of approximately $75,900.  The lease 
commenced February 1, 1997 and is for sixty three months.  The lease 
requires the payment of the tenant's proportionate share of increased 
operating expenses and real estate taxes over the base year.

     On February 6, 1998, the Company entered into a lease for 
approximately 5,000 square feet of space at 28 W. Flagler Street, Miami, 
Florida.  The term of the lease is 15 years, commencing February 1, 
1998.  The annual rental fee is $106,618, with an annual adjustment 
based on the Revised Urban Wage Earners and Clerical Workers Index, 
capped at a maximum of 3% increase over the prior years rental payment.  
In addition, the Company is liable for its proportionate share of 
increases in real estate taxes and operating expenses over the base 
year.

     Certain of the leases contain options to renew for various periods 
at rentals to be determined by the then prevailing fair market rental 
rates for similar  real estate in the area.



ITEM 3.          PENDING LEGAL PROCEEDINGS
                 -------------------------
     The Registrant brought suit in Civil Court of the City of New York, 
County of New York against a customer, Community Network Services, Inc. 
d/b/a Telecommunity, for the recovery of an account receivable of 
$37,917 plus interest, attorneys fees and damages.  Defendant asserted a 
counter claim against the Registrant in the Supreme Court of the State 
of New York, County of New York alleging breach of contract and seeks 
compensatory and punitive damages of $1,300,000.  The Registrant 
believes the counter suit is without merit and is vigorously defending 
this action.

     On March 31, 1998 the Board of Directors of the Registrant adopted 
a Shareholders Rights Plan.  Subsequently Gold and Appel Transfer, SA 
commenced a proceeding, in the Chancery Court, Bergen County, State of 
New Jersey, to enjoin the adoption of the Plan as well as certain by-law 
amendments adopted by the Board.  The proceeding is currently pending.  
Registrant believes that the adoption of the Plan and by-law amendments 
will be sustained by the court.

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
             ---------------------------------------------------
     None.



               (THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK)



                                PART II
                                -------

ITEM 5.     MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
            ------------------------------------------------

            SECURITY HOLDER MATTERS
            -----------------------
            (a)     Registrant's Common Stock is traded in the 
over-the-counter market on the NASDAQ National Market System.  The 
following table sets forth, for the quarterly fiscal periods indicated, 
the high and low closing sales prices for Registrant's Common Stock in 
such market, as reported by the National Association of Securities 
Dealers, Inc.  Closing sale prices prior to July 1, 1996 have been 
adjusted to reflect the stock split, discussed in (d) below.

     FISCAL 1998                         HIGH               LOW
     -----------                         ----               ---

     February 1 thru April 30           18 1/4             11
     May 1 thru July 31                 25 1/2             13 5/8
     August 1 thru October 31           30 1/4             18 
     November 1 thru January 31,1998    33                 25 1/4

     FISCAL 1997     
     -----------
     February 1 thru April 30           12 1/4              8 3/4
     May 1 thru July 31                 18 1/8              9 1/4
     August 1 thru October 31           25 7/8             16 1/2
     November 1 thru January 31, 1997   23                 15 1/4

     (b)     As of April 20, 1998, the approximate number of 
recordholders of Registrant's Common Stock was 752, as reported by 
Registrant's transfer agent.

     (c)     Registrant has not paid or declared any cash dividends 
during the past two fiscal years and does not anticipate paying any in 
the foreseeable future.

     (d)     On July 1, 1996, the Registrant distributed 1,873,420 
shares of Common Stock in connection with a 2 for 1 stock split of all 
outstanding shares as of June 15, 1996.



<TABLE>
<CAPTION>

ITEM 6.     SELECTED FINANCIAL DATA
            -----------------------
                                  (In thousands except per share amounts)
                                          Year ended January 31,                                          .
                              -----------------------------------------------------------------------------
RESULTS OF OPERATIONS:               1998            1997            1996            1995             1994    .
                                 -----------     -----------      -----------     -----------     -----------
                                                  RESTATED
<S>                           <C>              <C>              <C>             <C>             <C>

Net sales                      $     123,286    $     89,326     $     49,873    $     29,817    $     18,999

Earnings from
    continuing operations      $       1,094    $        492     $      1,555    $      1,100           1,052

Net earnings                   $       1,094    $        492     $      1,555    $      1,100    $      1,156

Earnings Per Common and Common Equivalent Shares (b):
  Basic:
    Continuing Operations
    Before Cumulative Effect
    Of Accounting Change       $        0.35    $       0.17     $       0.53    $       0.34    $       0.34
    Accounting Change          $          --    $         --     $         --    $         --    $       0.03
    
Net earnings per share         $        0.35    $       0.17     $       0.53    $       0.34    $       0.37

  Diluted:
    Continuing Operations
    Before Cumulative Effect
    Of Accounting Change       $        0.32    $       0.15     $       0.48    $       0.34    $       0.32 
    Accounting Change          $          --    $         --     $         --    $         --    $       0.03

Net earnings per share         $        0.32    $       0.15     $       0.48    $       0.34    $       0.35

Average common shares
    outstanding (a)
  Basic                                3,107           2,941            2,909           3,258           3,158
  Diluted                              3,421           3,369            3,263           3,258           3,268

Cash dividends per
    common share                       NONE            NONE             NONE            NONE            NONE

Additions to property
    & equipment                $       3,268    $      6,397     $      3,028    $      2,268    $      1,375

Depreciation and
    amortization               $       2,028    $      1,382     $      1,026    $        663    $        492

FINANCIAL POSITION:

Working Capital                $       7,936    $      5,419     $      4,799    $      5,031    $      4,683

Property and equipment - net   $      12,406    $     11,066     $      6,011    $      3,924    $      2,236

Total assets                   $      40,245    $     31,029     $     20,520    $     15,110    $     11,071

Long-term debt                 $       2,092    $      2,940     $         --    $         --    $         --

Shareholders' Equity           $      18,598    $     14,772     $     10,700    $      9,093    $      7,917

Common shares
    outstanding (a)                    3,329           2,945            2,927           2,900           2,876

</TABLE>



(a)     All  per share amounts have been restated to reflect the 2 for 1 
stock split distributed July 1, 1996.

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

         RESULTS OF OPERATIONS
         ---------------------

Results of Operations
---------------------

         Fiscal 1998 as Compared to Fiscal 1997
         --------------------------------------
     The following discussion of the results of operations relates to 
the continuing operations of the Registrant.

     Net sales of telecommunications services and systems in Fiscal 1998 
were $123,286,028 as compared to $89,325,921 in fiscal 1997, 
representing approximately a $33,960,000 increase, or 38%.

     The continued growth in revenues in Fiscal 1998 is largely 
attributable to the rapid expansion of the Registrant's sales to other 
carriers along with aggressive internal sales and marketing efforts.  
The Registrant completed the installation of its upgraded DEX 600 switch 
at its new facility in Newark, New Jersey in the second quarter of 
Fiscal 1995, which increased transmission capabilities significantly and 
was designated to allow for substantial future expansion.

     The Registrant also completed installation of a DEX 600E MEGAHUB 
switch at its new facility in New York City which should double the 
Registrant's current revenue capacity.  This facility became operational 
in July, 1997.

     The Registrant is currently in the process of bringing on line a 
DEX 600E MEGAHUB switch at its facility in Miami, Florida.  This site 
will increase revenue capacity for the Eastern Seaboard as well as serve 
as an international  gateway to South America.  This site should be 
operational in the second quarter of Fiscal 1999.

     TotalTel had operating income of $1,547,574 in Fiscal 1998 and 
operating income, as restated, of $653,241 in Fiscal 1997.  The 
operating income represents the income before interest income, interest 
expense, other income, other expense and provision for income taxes.

     For Fiscal 1998, the Registrant billed approximately 862,479,000 
minutes of calls as compared to approximately 616,990,000 minutes of 
calls for the prior fiscal year, an increase of approximately 
245,489,000 minutes or 39.8%.

     Cost of sales includes line costs, operations costs and purchase of 
phone systems for resale.  Cost of sales for Fiscal 1998 increased 
approximately $32,257,000 or 48.3% as compared to the prior fiscal year.  
This increase was unfavorable in relation to the 38.0% increase in sales 
volume for the period and is attributable to having a higher mix of 
lower margin wholesale sales and competitive pricing pressure in the 
industry.  Line costs for Fiscal 1998 were $94,492,000, an increase of 
$30,657,000 or 48.0% over the prior year.  The increase in line cost, 
was attributable primarily to the substantially increased sales volume 
of the Company.  The balance of cost of sales was for phone system 
sales.   The operating expense components are switch and field 
technician salaries, utilities, rent and depreciation which totaled 
$4,142,000  for Fiscal 1998, an  increase of $1,148,000 or 38.3%.  This 
increase was primarily due to the additions of the New York switch and a 
new Network Operations Center.

     Selling, general and administrative expenses increased 
approximately $3,779,000 or 20.6% for Fiscal 1998 as compared to the 
prior fiscal year.  The increase was primarily due to increased salaries 
of $3,282,626 or 49.9%, increased  commissions  of $839,000 or 18.4%.  
The increase in salaries results from the buildup of infrastructure in 
Product Development, MIS, Customer Service, and Sales.  The buildup is 
to serve the anticipated growth.  The  substantial  increase  in 
commission,  is directly attributable to the sales volume growth.

     Stock compensation expense decreased approximately $2,970,000.  In 
Fiscal 1997, options to purchase 218,000 shares of common stock had 
their expiration dates extended to January 17, 2002.  This caused a non-
cash charge of approximately $3,482,000.  In 1998, stock 
options to purchase only 16,500 stock options were remeasured giving 
rise to a $433,000 expense item.

     Other income of $359,000 consists of insurance proceeds upon the 
death of a former officer and director of the Company.

     Interest income for Fiscal 1998 decreased approximately $39,000 as 
compared to Fiscal 1997 primarily due to a reduction in the funds 
available for investment.

     Fiscal 1997 as Compared to Fiscal 1996
     --------------------------------------
     The following discussion of the results of operations relates to 
the continuing operations of the Registrant.

     Net sales for Fiscal 1997 increased approximately $39,453,000 as 
compared to Fiscal 1996.  The increase in telephone sales volume of 
approximately 79.1% was primarily due to intensive sales and marketing 
by the Registrant, both internally, through expanded agency sales 
partially offset by lower prices and the substantial increase in sales 
to other carriers on a wholesale basis.

     For  Fiscal 1997, the  Registrant billed approximately  616,990,000  
minutes of calls as compared to approximately 365,878,000 minutes of 
calls for the prior fiscal year, an increase of approximately 
251,112,000 minutes or 68.6%.

     Cost of sales for Fiscal 1997 increased approximately $31,975,000 
or 91.7% as compared to the prior fiscal year.  This increase was 
unfavorable in relation to the 79.1% increase in sales volume for the 
period and is attributable to the lower gross profit in wholesale sales 
to other carriers and competitive pricing pressures in the industry. 

     Line costs for Fiscal 1997 were $63,835,000, an increase of 
$31,393,000 or 96.8% over the prior year.  The other components are 
switch and field technician salaries, utilities, rent and depreciation 
which totaled $2,994,000  for Fiscal 1997, an  increase of  $580,000 or 
24.1%.  The increase  in cost of  sales  was attributable primarily to 
the substantially increased sales of the Company.  Gross profit 
decreased in Fiscal 1997 to 25.2% from 30.1% in Fiscal 1996.  The 
decrease in gross profit was due to carrier sales having a substantial 
lower gross margin.

     Selling, general and administrative expenses increased 
approximately $5,662,000 or 44.8% for Fiscal 1997 as compared to the 
prior fiscal year.  The increase was primarily due to increased salaries 
of $2,113,000 or 47.3%, increased  commissions of $1,228,000 or 36.8%, 
increased  provision for bad debts of $130,000  or 15.9%  and an 
increase in legal and professional of $445,000 or 38.7%.  The continued 
substantial increase in commission is attributable to the aggressive  
pursuit  of  new  business in a highly  competitive  market.  The 
substantial increase in legal and professional is attributable to the 
defense of a lawsuits as disclosed in the Registrant's Financial 
Statements, which was settled during the year.

     Stock compensation expense of $3,539,653 arose from the remeasuring 
of certain stock options granted to executives of the Registrant.  As 
required by Financial Accounting Standards Board opinion number 123, 
when the expiration date of stock options is extended, the compensation 
expense related to those options is remeasured at the Fair Market Value 
on the date of the extension.

     Interest income for Fiscal 1997 decreased approximately $25,000 as 
compared to Fiscal 1996 primarily due to a reductions in the funds 
available for investment.

     Liquidity and Capital Resources
     -------------------------------
     At January 31, 1998, the Registrant had working capital of 
approximately $7,936,000 as compared to $5,419,000 at January 31, 1997, 
an increase of $2,517,000.  This increase in working capital at January 
31, 1998 was attributable primarily to an increase in accounts 
receivable of $6,413,000 (net of allowance for doubtful accounts), an 
increase in cash and cash equivalents of $828,000, an increase in 
prepaid and other current assets of $1,914,000, and a decrease in  other  
current  and  accrued  liabilities of $465,000, partially offset  by  a 
decrease in investments available for sale of $432,000, a decrease in 
deferred tax assets of $46,000, an increase in accounts payable of 
$6,134,000, and an increase in the current portion of long term debt of 
$487,000.

     The current ratio of 1.4 to 1, remained constant between fiscal 
1997 and 1998.  The Registrant continues to maintain a strong liquid 
position with cash and cash equivalents and investments available for 
sale of $4,000,000 representing 21.8% of current liabilities.

     The cash flow statement of the Registrant for Fiscal 1998 indicated 
an increase in cash of $828,000.  Net earnings of $1,094,001 and non 
cash adjustments of $4,427,000 reduced by net changes in assets and 
liabilities of $3,046,000 provided cash from operations of $2,475,000.  
Cash used in investing activities totaled $2,705,000.  The major 
components were purchases of property and equipment of $3,268,000 and 
additions to line installation costs of $123,000, partially offset by 
the proceeds from the sale of securities for $443,000, and collection of 
notes due from employees of $233,000.  Cash provided by financing 
activities totaled $1,057,000 and was the result of  the exercise of 
stock options, partially offset by the scheduled paydown of long term 
debt.

     Capital Expenditures
     --------------------
     Capital expenditures during Fiscal 1998 totaled approximately 
$3,268,000 and were financed from funds provided from Registrant's  
working  capital, cash derived  from operations, and bank borrowings.  
Of the $3,268,000, $1,074,000 was used for additional enhancements to 
the New York city switch,  $504,000 was for switch enhancements in 
Newark, $759,000 was spent on leasehold improvements and furniture and 
fixtures in the additional  space  leased at the Company's principal 
office in New Jersey, $310,000 was spent on the new NOC, $424,000 was 
spent on improvements to the LAN networks and MIS software and hardware 
upgrades, $40,000 for trucks for service and $100,000 initial 
expenditures on the Miami switch.

     Capital expenditures for Fiscal 1999 are estimated at approximately 
$15,000,000 and are expected to be financed from funds provided from the 
registrants bank line of credit, existing working capital, and cash 
derived from operations.

     The capital expenditures are expected to be used for the installation 
of a switch in Miami, $1,139,000, installation of a switch in London 
(4th quarter), $3,000,000, new EDS billing system, $3,000,000, LAN/WAN 
software and hardware upgrades, $1,100,000, installation of switch 
equipment to enter the local market, $2,255,000, various improvements to 
current switch operations, $1,100,000 and the purchase of an IRU to London, 
$3,000,000.

     As of January 31, 1998, the Registrant had a bank line of credit of 
$6,000,000.  In March of 1998 the Company entered into a modification of 
the agreement which increased the line of credit to $8,000,000 and 
$5,000,000 for the purchase of  machinery and equipment.  During Fiscal 
1998 Registrant had bank borrowings of $2,579,201.  For further detail 
see Note 10 to the Consolidated Financial Statements.

Inflation
---------
     Since inflation has slowed in recent years, the Registrant does not 
believe that its business has been materially affected by the relatively 
modest rate of price increases in the economy.  The Registrant continues 
to seek improvements in operations and efficiency through capital 

expenditures.  Expenditures to improve the signaling system, information 
systems and the local area network are expected to result in operating 
costs savings which could partially offset any cost increases which may 
occur in the future.

     Environmental Matters
     ---------------------
     The Registrant is not a party to any legal proceedings or the 
subject of any claim regarding environmental matters generally 
incidental to its business.  In the opinion of Management, compliance 
with the present environmental protection laws should not have a 
material adverse effect on the financial condition of the Registrant.

 ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
             -------------------------------------------
     The Financial Statements and Supplementary Data are included under 
Item 14 of this Report.

 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         ---------------------------------------------------------------

         FINANCIAL DISCLOSURE
         --------------------
     Not applicable.



                              PART III
                              --------

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
             --------------------------------------------------

     The directors and officers of the Registrant are as follows:

Name                      Age       Position
----                      ---       --------

Solomon Feldman            77       Director

Warren H. Feldman          42       Chairman, Chief Executive Officer
                                    and Director

Leon Genet                 66       Director

Thomas P. Gunning          60       Vice President, Treasurer
                                    and Secretary

Jay J. Miller              65       Director

     The Registrant's directors all serve for one year terms or until 
their successors are elected and qualify.  Officers serve at the 
pleasure of the Board of Directors.

     Mr. Solomon Feldman has served as a Director of the Registrant 
continuously since its inception in 1959, and as Treasurer from 
inception to May 2, 1997.  Mr. Feldman is currently a private investor 
and devotes approximately 25% of his time to the business of the 
Company.

     Warren H. Feldman, Esq. was elected President and Chief Executive 
Officer of the Registrant in September, 1992 and was elected Chairman of 
the Board in September, 1994.  Prior to such time, he served as Vice 
President - Regulatory Affairs of the Registrant since January, 1986, 
and had been the General Manager of Total-Tel USA Division and in-house 
General Counsel of Registrant since 1984.  He was elected a Director on 
April 1, 1987 and President of Total-Tel USA Division on October 27, 
1988.  Warren H. Feldman is the son of Solomon Feldman.

     Leon Genet is a partner in Genet Realty, a commercial and 
industrial real estate brokerage firm.  Following graduation from 
Syracuse University, he was an officer in the United States Air Force. 
Mr. Genet continues his significant involvement with Syracuse University 
as a benefactor and as a charter member of the Board of the College for 
Human Development, home of the highly popular Genet lecture series, 
which brings CEO's of leading worldwide corporations to the Syracuse  
campus.  He serves as a member of the National Commerce and Industry 
Board for the State of Israel Bonds Organization and is a shareholder, 
director and officer of LPJ Communications, Inc. which has earned 
commissions from TotalTel USA Communications, Inc. on the same basis as 
other independent representatives.

     Thomas P. Gunning was appointed Chief Financial Officer in 
September, 1994 and Secretary of the Registrant in January, 1995.  He 
has served as Controller of the Registrant since September 1992.  He is 
a Certified Public Accountant licensed by the States of New York and New 
Jersey.  From 1989 until joining the Registrant, Mr. Gunning was the 
Senior Audit Manager at Rosenberg Selsman & Company a certified public 
accounting firm.  From 1976 to 1989, he was Chief Financial Officer of 
Flyfaire, Incorporated a travel wholesale operator.  Prior to such time, 
Mr. Gunning held various positions in both public and private accounting

     Jay J. Miller, Esq. has been a practicing attorney for more than 
thirty years in the State of New York.  Mr. Miller is a Director of 
Edison Control Corporation, a manufacturer of pipe, fittings and 
accessories for concrete pumping equipment.  He is also Chairman of the 
Board of AmTrust Pacific, LTD., a New Zealand real estate company.

OTHER SIGNIFICANT EMPLOYEES

     Ben Goldberg joined TotalTel, Inc., the principal operating 
subsidiary of the Registrant, in February, 1983 as an account executive.  
In January 1992, Mr. Goldberg was promoted to Vice President of Sales.  
In June,  1994, Mr. Goldberg was promoted to Senior Vice President of 
TotalTel , Inc.

     David Hess, President and Chief Operating Officer of TotalTel, 
Inc., joined TotalTel Carrier Services, Inc., an operating subsidiary of 
the Registrant, in May 1995 as Vice President.  Mr. Hess was appointed 
Senior Vice President of TotelTel Carrier Services, Inc. in October 
1996.  On September 27, 1997 , Mr. Hess was promoted to President of 
Total Tel, Inc..  Prior to joining the Registrant, Mr. Hess served as 
Director of Eastern Regional Carrier Sales for West Coast 
Telecommunication, Inc. from 1993 to 1995.  From 1991 to 1993, Mr. Hess 
was National Account Manager for Sprint Carrier Services.  From 1989 to 
1993, Mr. Hess was Strategic Account Manager for United Telephone 
Systems.  From 1986 to 1989, Mr. Hess was employed by M C I in various 
sales management positions.

     Jeff Slater joined TotalTel, Inc., as Senior Vice President in 
September 1996.  From 1991 to 1996, Mr. Slater was founder and President 
of JTEK Systems, Ltd., a firm which provides consulting services to 
various telecommunications companies including the Registrant.  In 1990, 
Mr. Slater served as Corporate Director of Product Development for LCI 
Communications, Inc.  From 1987 to 1990, Mr. Slater served as Executive 
Vice President of Operations of Charter Network Company which was 
acquired by LCI Communications, Inc. in 1990.  Prior to such time, Mr. 
Slater held various executive positions with Companies in the 
telecommunications industry.  Mr. Slater resigned his position effective 
December 31, 1997.  Effective January 1, 1998, Mr. Slater ceased to be 
an employee, and currently serves as a consultant to the Company.



<TABLE>
<CAPTION>


ITEM 11.     EXECUTIVE COMPENSATION
             ----------------------
a)     The following table sets forth the compensation which the Registrant paid during the fiscal years ended January 31, l998,
1997, 1996 to the Chief Executive, each Executive Officer of the Registrant  whose aggregate remuneration exceeded $100,000.

                                          Summary Compensation Table
                                          --------------------------
<S>                <C>                <C>           <C>            <C>               <C>                    <C>

Name and            Fiscal Year        Annual Compensation          Other              Compensation
Principal           Ended                                           Annual             Awards                All Other
Position            January 31         Salary ($)     Bonus(s)      Compensation($)    Options (#)           Compensations(s)
--------           ------------        ----------     --------      ---------------    -----------           ---------------
Warren H.          1998                  $287,115 (1) $350,000                                                $  15,325 (4)
Feldman            1997                  $315,000 (1) $295,000                                                $   7,025 (5)
Chairman and       1996                  $195,000 (1) $274,241                                                $   4,667 (6)
Chief Executive
Officer 

Kevin Alward       1998 (2)(3)           $268,817     $270,499                                                $  12,877 (7)
President and      1997                  $315,000     $280.000                                                $   9,769 (8)
Chief Operating    1996                  $195,000     $274.241                                                $   6,010 (9)
Officer

Thomas P.          1998                  $116,000     $  4,000                                                $   8,265 (10)
Gunning            1997                  $ 95,231     $  6,000                                                $   6,560 (11)
Vice President,
Treasurer and
Secretary     

David Hess         1998                  $264,615     $176,773       $115,008 (12)                            $   8,655 (13)
President &
Chief Operating
Officer of 
Total Tel, Inc.

Jeff Slater        1998                  $235,846     $235,433                                                $   3,461 (14)
Senior Vice
President of
Total Tel, Inc.

(1)     Does not include an annual Director's fee of $15,000.

(2)     Resigned as an officer of the Company on  January 23, 1998

(3)     Does not include director's fees of $2,500.

(4)     The amounts shown represent the Registrant's contribution under its 401 (K) Deferred Compensation and Retirement 
        Savings Plan of  $4,688 and $2,357 for the use of a company vehicle for non-business purposes and $8,280 term life 
        insurance premiums.

(5)     The amount shown represents the Registrant's contribution under its 401 (K) Deferred  Compensation and Retirement 
        Savings Plan of  $4,668 and $2,357 for the use of a company vehicle for non-business purposes.

(6)     The amounts shown represents  the Registrant's contribution under its 401 (K) Deferred Compensation and Retirement 
        Savings Plan of  $2,310 and $2,357 for the use of a company vehicle for non-business purposes.

(7)     The amounts shown represent the Registrant's contribution under its 401 (K) Deferred Compensation and Retirement 
        Savings Plan of $5,931 and $4,041 for the use of a company vehicle for non-business purposes and $2,905 term life 
        insurance premiums.

(8)     The amounts shown represent the Registrant's contribution under its 401 (K) Deferred Compensation and Retirement 
        Savings Plan of $5,620 and $3,071 for the use of a company vehicle for non-business purposes and $1,078 term life 
        insurance premiums.

(9)     The amount  shown represents the Registrant's contribution under its  401 (K) Deferred Compensation and Retirement
        Savings Plan of $2,310 and $2,643 for the use of a company vehicle for non-business purposes and $1,057 term life 
        insurance premiums.

(10)    The amount shown represent the Registrant's contribution under its 401 (K) Deferred compensation and Retirement 
        Savings Plan of $3,468 and $1,393 for the use of a company vehicle for non-business purposes and $3,404 term life 
        insurance premiums.

(11)    The amount shown represent the Registrant's contribution under its 401 (K) Deferred compensation and Retirement 
        Savings Plan of $3,110 and $1,179 for the use of a company vehicle for non-business purposes and $2,271 term life 
        insurance premiums.

(12)    The amount shown represent commissions paid to Mr. Hess in his capacity as Vice President of Total-Tel Carrier 
        Services, Inc.

(13)    The amount shown represents the Registrant's contribution under its 401 (K) Deferred compensation and Retirement 
        Savings Plan of $5,795, and $2,860 term life insurance premiums.

(14)    The amount shown represents the Registrants contribution under its 401K Deferred compensation and Retirement 
        Savings Plan of $3,461.

</TABLE>



(b)     Compensation Pursuant to Plans
         ------------------------------

         1987 Stock Option Plan
         ----------------------

     In October 1987, the Registrant adopted its 1987 Stock Option Plan 
and in October 1996, adopted its 1996 Stock Option Plan (the "Plans").  
The Plans provide  that certain options granted thereunder are intended 
to qualify as "incentive stock options" within the meaning of Section 
422A of the United States Internal Revenue Code of 1954, as amended (the 
" Code " ), while non-qualified options may also be granted under the 
Plans. Incentive stock options may be granted only to employees of the 
Registrant, while non-qualified options may be granted to non-executive 
directors, consultants and others as well as to employees.

      The Plans are administered by a Committee of the Registrant's 
Board of Directors.  The Registrant has reserved 664,900 shares of 
Common Stock under the 1987 Plan and 300,000 shares of Common Stock 
under the 1996 Plan for issuance to employees, officers, directors and 
consultants of the Company. The shares for options granted prior to July 
15, 1994 have been adjusted for the 10% stock dividend.  The shares for 
options granted prior to July 1, 1996 have been adjusted to reflect the 
2 for 1 stock split.

     No option may be transferred by an optionee other than by will or 
the laws of descent and distribution, and during the lifetime of an 
optionee, an option may be exercised only by him.  In the event of 
termination of employment other than by death or disability, the 
optionee will have one month, (subject to extension not to exceed an 
additional two months), after such termination during which he may 
exercise his option.  Upon termination of employment of an optionee by 
reason of death or permanent total disability, his option remains 
exercisable for one year thereafter to the extent it was exercisable on 
the date of such termination.  No similar limitation applies to non-
qualified options.

     Options under the Plans must be granted within ten years from the 
effective date of the Plans.  Incentive stock options granted under the 
Plans cannot be exercised later than ten years from the date of grant.  
Options granted under the Plans will permit payment of the exercise 
price in cash or by delivery to the Registrant of shares of Common Stock 
already owned by the optionee having a fair market value equal to the 
exercise price of the options being exercised, or by a combination of 
such methods of payment.  Therefore, an optionee may be able to tender 
shares of Common Stock to purchase additional shares of Common Stock and 
may theoretically exercise all of his stock options with no additional 
investment other than his original shares.

     Any options that expire unexercised or that terminate upon an 
employee's ceasing to be employed by the Registrant become available 
once again for issuance under the Plans.




<TABLE>
<CAPTION>


                                              OPTIONS GRANTS IN LAST FISCAL YEAR
                                              ----------------------------------
Options /SAR Grants in last Fiscal Year                                                         Potential realizable Value
                                                                                                at Assumed Annual rates 
                                  Individual Grants                                             of stock Appreciation for
------------------------------------------------------------------------------------------      Option term 
                       Number of
                      Securities           % of Total
                       Underlying         Options/SARs
                       options /           Granted to 
                         SARs             Employees in         Exercise or Base Expiration
Name                Granted (#)(1)        Fiscal Year          Price       Date                5% ($)       10% ($) 
--------------------------------------------------------------------------------------------------------------------
<S>                    <C>                  <C>              <C>              <C>             <C>        <C>

Warren Feldman          40,000               17.24%           $ 14.50   January 15, 2001       $124,994   $269,178
Kevin Alward (2)        40,000               17.24%           $ 14.50   January 15, 2001       $124,994   $269,178
David Hess              20,000                8.62%           $ 14.50   January 15, 2001       $ 62,497   $134,589
David Hess              50,000               21.55%           $ 20.00 September 29, 2001       $215,506   $464,100
Jeffrey Slater          20,000                8.62%           $ 14.50   January 15, 2001       $ 62,497   $134,589
Jeffrey Slater          40,000               17.24%           $ 20.00    January 2, 2001       $172,405   $371,280

(1) Stock option granted under the 1996 Plan.  One fifth of the new options are exercisable on each of the first, second,
third, fourth and fifth anniversary dates of  the original grant.

(2) Kevin Alward exercised 10,000 shares on January 16, 1998.  The balance of his shares were canceled.


<CAPTION>


       Aggregated Options/SAR Exercises in Last Fiscal Year
                          and FY-End Option/SAR Values

                                                            Number of 
                                                            Securities                                     Value of
                                                            Underlying                                    Unexercised
                                                            Unexercised                                  in-the-Money
                                                           Options/SARs at                              Options/SARs at
                                                              FY-End (#)                                    FY-End (#)

                    Shares Acquired                                                         
 Name                on Exercise(#)   Value Realized ($)  Exercisable    Unexercisable     Exercisable  Unexercisable
----------------------------------------------------------------------------------------------------------------------
<S>                    <C>              <C>                  <C>           <C>              <C>           <C>
Warren Feldman          69,200           $ 155,892            139,000       30,000           $3,465,125    $442,500
Kevin Alward           260,000            $988,263                 --           --                   --          --
David Hess                  --                  --             12,500       82,500             $224,063  $1,114,063
Jeffrey Slater           4,772              11,543             35,900       59,000             $776,695    $676,290
Thomas Gunning              --                 .--             21,500        1,000             $572,513     $20,500


(c)     Other Compensation
        ------------------
        None.

(d)     Compensation of Directors
        -------------------------
        Each director of the Registrant receives $15,000 per year for services in such capacity.

(e)     Termination of Employment and Change of Control Arrangements
        ------------------------------------------------------------
        None.

</TABLE>



<TABLE>
<CAPTION>


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
             --------------------------------------------------------------
             MANAGEMENT
             ----------
     (a)     Security Ownership of Certain Beneficial Owners
             -----------------------------------------------

     Set forth below is certain information concerning persons who are known by Registrant to own beneficially more than 
5% of any class of the Registrant's voting shares on May 12, 1998.
<S>             <C>                           <C>                      <C>
                 Name and                      Amount and
Title            Address of                     Nature of               Percentage
of               Beneficial                     Beneficial                  of
Class              Owner                       Ownership (1)               Class
-----            ----------                   -------------                -----

Common           Warren H. Feldman              587,262 (2)                16.4%
Stock $.05       150 Clove Road                 shares
par value        Little Falls, NJ 07424

Common           Heartland Advisors, Inc.       200,200                     5.6%
Stock $.05       790 North Milwaukee St.        shares
par value        Milwaukee, WI 53202

Common           Solomon Feldman                443,190                    12.4%
Stock $.05       1890 South Ocean Drive         shares   
par value        Hallandale, FL 33009

Common           Gold & Appel, SA               928,817                    25.9%
Stock $.05       Morris F.DeFeo,Jr              shares
par value        Swidler & Berlin, Chartered
                 3000 K St., NW, Suite 300
                 Washington, DC 20007

Common           Michael A. Karp                219,340                     6.1%
Stock $.05       3416 Sansom Street             shares
par value        Philadelphia, PA 19104


(1)     All shares are beneficially owned and sole investment and voting power is held by the persons named to the best 
        of the Registrant's knowledge.

(2)     Includes options to purchase 139,000 shares of the Registrant's Common Stock which are currently exercisable or
        within 60 days hereof.


<CAPTION>


     (b)     Security Ownership of Management
             --------------------------------
     The following table sets forth as of May 12, 1998, information concerning the beneficial ownership of each class of 
equity securities by each director of the Registrant and all directors and officers of the Registrant as a group:
<S>             <C>                           <C>                      <C>
                 Name and                      Amount and
Title            Address of                     Nature of               Percentage
of               Beneficial                     Beneficial                  of
Class              Owner                       Ownership (1)               Class
-----            ----------                   -------------                -----

Common           Solomon H. Feldman              443,190                   12.3%
Stock $.05       1890 South Ocean Drive          shares
par value        Hallandale, FL 33009

Common           Warren H. Feldman               587,262 (2)               16.3%
Stock $.05       150 Clove Road                  shares
par value        Little Falls, NJ 07424

Common           Leon Genet                       45,560                    1.3%
Stock $.05       30 Farmstead Road
value            Short Hills, NJ 07078


Common           Jay J. Miller                       200
Stock $.05       430 E 57th St.,Suite 5D
value            New York, NY 10022

Common           All directors                 1,131,612(3)                31.4%
Stock $.05       and officers as a             shares
par value        group (6 in number)

(1)     All shares are beneficially owned and sole investment and voting power  is held  by the persons named.

(2)     Includes options  to  purchase 139,000  shares of  the  Registrant's Common Stock  which are currently exercisable
        or within 60 days hereof.

(3)     Includes options  to purchase 158,500 shares  of  the  Registrant's  Common Stock  which are currently excercisable
        or within 60 days hereof.

     c)     Changes in Control
            ------------------
     The Registrant knows of no contractual arrangement which may, at a subsequent date, result in a change in control of 
the Registrant.

</TABLE>



ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
             ----------------------------------------------

     On December 1, 1993, the Company leased warehouse space in 
Belleville, New Jersey, from a partnership in which two directors and 
major shareholders are partners and a former director and major 
shareholder is also a partner.  During the fiscal year ended January 31, 
1998, the Company paid rent of $60,450 to the partnership.  The annual 
rent for this premise is $58,560 for the first three years and $63,885 
for years four and five.  Registrant believes such premises are leased 
on terms not less favorable to Registrant than in an arm's length 
transaction.

     As set forth in Note 9 to the Financial Statements, the Registrant 
from time to time has made loans to a former executive employee and 
shareholder of the Registrant.


          (THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK)



<TABLE>
<CAPTION>


                                        TOTAL-TEL USA COMMUNICATIONS, INC.
                                        ----------------------------------
                                               AND SUBSIDIARIES
                                               ----------------
I

TEM 14.     EXHIBITS AND FINANCIAL STATEMENTS SCHEDULE
            ------------------------------------------

                 YEARS ENDED JANUARY 31, 1998, 1997, AND 1996
                 --------------------------------------------

                                                     INDEX
                                                     -----

     (a) (1)     FINANCIAL STATEMENTS:  The following consolidated financial statements of Total-Tel USA Communications, 
                 --------------------
Inc. and subsidiaries are included at the end of this Report:

<S>                                                              <C>

CONSOLIDATED FINANCIAL STATEMENTS:                                 PAGE
---------------------------------                                  ----

     Independent auditors' report                                   F-1
     Consolidated balance sheets - January 31, 1998
          and 1997                                                  F-2
     Consolidated statements of earnings - years
          ended January 31, 1998, 1997 and 1996                     F-3
     Consolidated statements of shareholder's equity -
          years ended January 31, 1998, 1997, 1996                  F-4
     Consolidated statements of cash flow - years
          ended January 31, 1998, 1997, 1996                        F-5
     Notes to consolidated financial statements                     F-7

     (a) (2) SUPPLEMENTARY DATA FURNISHED PURSUANT
                TO THE REQUIREMENTS OF FORM 10-K:

     Schedule - years ended January 31, 1998, 1997
          and 1996.

II     Valuation and Qualifying Accounts (Consolidated)             F-16

                                               ***************

Schedules other than those listed above are omitted because they are not required, not applicable or the information has
been otherwise supplied.




(THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK)

</TABLE>



                              SIGNATURES
                              ----------

Pursuant to the requirements of Section 13 or 15 (d) of the Securities 
Exchange Act of 1934, the Registrant has duly caused this Report to be 
signed on its behalf by the undersigned, thereunto duly authorized, on 
the  13th day of May, 1998

                         TOTAL-TEL USA COMMUNICATIONS, INC.
                         (Registrant)



                         By: /S/ Warren H. Feldman
                            ------------------------
                            Warren H. Feldman
                         Chairman and Chief Executive Officer


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


Signature                  Title                        Date
---------                  -----                        ----

/S/ Solomon Feldman        Director                     May 13, l998
Solomon Feldman

/S/ Warren H. Feldman      Chairman of the Board,       May 13, l998
Warren H. Feldman          Chief Executive Officer
                           and Director

/S/ Leon Genet             Director                     May 13, l998
Leon Genet

/S/ Thomas P. Gunning      Vice President, Treasurer,   May 13, l998
Thomas P. Gunning          Secretary  and  Principal
                           Accounting Officer

/S/ Jay J. Miller          Director                     May 13, l998
Jay J. Miller



Exhibit No.              Description of Document
-----------              -----------------------

(3) (a)       Certificate of Incorporation, as amended. Incorporated by
              reference to Exhibits 2-A, 2-B, 2-C and 2-D to  
              Registration Statement No. 2-15546 and  Registrant's proxy 
              statement relating to its 1987 Annual Stockholder's 
              Meeting.

(3) (b)       By-Laws  of  Registrant.  Incorporated  by  reference  to
              Exhibit A to Registrant's Annual Report on Form 10-K for 
              the year ended January 31, 1972.

(3) (c)       Amended  Certificate of Incorporation to change the name
              of the Corporation from Faradyne Electronics Corp. to 
              Total-Tel USA Communications, Inc., dated  November 4,
              l991. Incorporated  by reference to Exhibit 3 (c) to 
              Registrant's Annual Report on Form 10-K for the year ended 
              January 31, l992.

(3)(d)        By-Law  Amendments incorporated by reference to Form 8K 
              filed on April 7, 1998.

(3)(e)        Shareholder Rights plan filed by reference to Form 8K, on
              April 12, 1998.

(10)(a)       Lease  of  premises at  140 Little Street, Belleville, New
              Jersey, between Mansol Realty Company and Mansol Ceramics 
              Company, dated March 30, 1960.  Incorporated by reference 
              to Exhibit 13 (e) to Registration Statement No. 2-17546.

(10)(a) (1)   Assignment of lease from Mansol Realty Company to Mansol 
              Realty Associates.  Incorporated by reference to Exhibit 
              10 (a) (1) to Registrant's  Annual Report on Form 10-K for 
              the year ended January 31, l982.

(10)(b)       Extension Agreement re:  Lease of premises at 140 Little 
              Street dated October 31, l974.  Incorporated by reference 
              to Exhibit 10 (b) to Registrant's Annual Report on Form 
              10-K for the year ended January 31, l981.

(10)(c)       Lease of premises at 471 Cortland Street, Belleville, New
              Jersey, between Birnfeld Associates and Mansol Ceramics 
              Company, dated October 31, 1974.  Incorporated by 
              reference to Exhibit 10 (c) to Registrant's Annual Report 
              on Form 10-K for the year ended January 31, 1981.

(10)(d)       Lease Modification Agreement re: Lease of premises at 471
              Cortland Street dated July 24, 1980.  Incorporated by 
              reference to Exhibit 10 (d) to Registrant's Annual Report 
              on Form 10-K for the year ended January 31, 1981.

(10)(e) (i)   Term Loan Agreement and Term Note both dated April 22, 
              1983 between Mansol Ceramics Company and United Jersey 
              Bank in the principal amount of $1,192,320.  Incorporated 
              by reference to Exhibit 10 (e) to Registrants Annual 
              Report on Form 10-K for the year ended January 31, 1983.

(10)(e) (ii)  Installment Note and Equipment Loan and Security Agreement
              of Mansol Ceramics Company and Guaranty of Registrant, 
              dated August 1, 1988, in connection with extension of the 
              maturity date of the loan referenced to in Exhibit 10 (e) 
              (i).

(10)(f)       Lease of premises at 17-25 Academy Street, Newark, New 
              Jersey between Mansol Ceramics Company and Rachlin & Co., 
              dated April 29, 1983.  Incorporated by reference to 
              Exhibit 10 (f) to Registrant's Annual Report on Form 10-K 
              for the year ended January 31, 1984.

(10)(g)       Lease Modification Agreement re: Lease of Premises at 471
              Cortland Street dated July 24, 1985.  Incorporated by 
              reference to Exhibit 10 (g) to Registrant's Annual Report 
              on Form 10-K for the year ended January 31, l986.



Exhibit No.             Description of Document
----------              -----------------------

(10)(h)       Master Lease Agreement between Mansol Ceramics Company and
              Fidelcor Services, Inc. dated December 30, l985. 
              Incorporated by reference to Exhibit 10 (h) to 
              Registrant's Annual Report on Form 10-K for the year ended 
              January 31, l986.

(10)(i)       Deed, Mortgage and Mortgage Note between William and Fred
              Schneper as Grantees and Borrowers and Mansol Ceramics 
              Company as Grantor and Lender, dated July 26, l985 re: 
              property located in Hanover Township, New Jersey.  
              Incorporated by reference 10 (i) to Registrant's 
              Annual Report on Form 10-K for the year ended January 31, 
              l986.

(10)(j)       Lease of premises at 140 Little Street, Belleville, New
              Jersey, between Mansol Realty Association and Mansol 
              Ceramics Company, dated July 31, 1986.  Incorporated by 
              reference to Exhibit 10 (j) to Registrant's Annual Report 
              on Form 10-K for the year ended January 31, l987.

(10)(k)       1987 Stock Option Plan.  Incorporated by reference to 
              Registrant's proxy statement relating to its 1987 Annual 
              Stockholders' Meeting.

(10)(k)(1)    Amendment to the 1987 Stock Option Plan.  Incorporated by
              reference to Registrant's Form S-8 dated November 13, 
              l995.

(10)(l)       Renewal of Lease and Extension to additional space at 17-
              25 Academy Street, Newark, New Jersey (a/k/a 1212 Raymond 
              Boulevard, Newark, New Jersey) between Mansol Ceramics 
              Company and Rachlin & Co. Incorporated by reference to 
              Exhibit 10 (l) to Registrant's Annual Report on Form 10-K 
              for the year ended January 31, l988.  (See also Exhibit 10 
              (f)).

(10)(m)       Agreement, dated June 13, 1989, between Mansol Ceramics 
              Company and Bar-lo Carbon Products, Inc. providing for the 
              sale of Ceramics' Carbon fixtures division.  Incorporated 
              by reference to Exhibit 10 (m) to Registrant's Annual 
              Report on Form 10-k for the year ended January 31, 1990.

(10)(n)       Modification of Note and Mortgage from William Schneper, 
              Fred Schneper and Leon Schneper (Mortgagor) to Mansol 
              Ceramics Company (Mortgagee) dated August 1, l990, 
              extending the term of the Note and Mortgage and modifying 
              the interest provision.

(10)(o)       Asset Purchase Agreement between Registrant, Mansol 
              Ceramics Company and Mansol Industries Inc. dated May 22, 
              l990, including Subordinated Term Promissory Note and 
              Security Agreement, covering sale of assets and business 
              of Manufacturing Division of Mansol Ceramics Company.  
              Incorporated by reference to Exhibits 1, 2 and 
              3 to Registrant's Current Report on Form 8-K dated May 22, 
              l990.

(10)(p)       Modification of Loan between Mansol Industries, Inc. 
              (borrower) and Mansol Ceramics Company (Lender) dated 
              January 31, 1992, allowing for the deferral of the 
              principal for twelve months through and including the 
              period ending June 22, l992 in consideration for personal 
              guarantees from Borrower.  Incorporated by reference to 
              Exhibit 10 (p) to Registrant's Annual Report on Form 10-K 
              for the year ended January 31, 1992.

(10)(q)       Lease of premises at 470 Colfax Avenue, Clifton, New 
              Jersey, between Total-Tel USA Communications, Inc. and 
              Broadway Financial Investment Services, Inc. dated March 
              25, 1991.  Incorporated by reference to Exhibit 10 (q) to 
              Registrant's Annual Report on Form 10-K for the year ended 
              January 31, l992.

(10)(r)       Lease of premises at 744 Broad Street, Newark, New Jersey 
              between Total-Tel USA Inc. and Investment Property 
              Services, Inc. dated November 15, 1993.  Incorporated by 
              reference to Exhibit 10 (r) to the Registrant's Annual 
              Report on Form 10-K for the year ended January 31, 
              1994. 



Exhibit No.             Description of Document
----------              -----------------------

(10)(s)       Lease of premises at 744 Broad Street, Newark, New Jersey 
              between Total-Tel USA, Inc. and Investment Property 
              Services, Inc. dated December 28, 1993.  Incorporated by 
              reference to Exhibit 10 (s) to the Registrant's Annual 
              Report on Form 10-K for the year ended January 31, 1994

(10)(t)       Lease of premises at 471 Cortland Street, Belleville, New 
              Jersey, between Total-Tel USA Inc. and Birnfeld Associates -
              Belleville dated December 1, 1993.  Incorporated by 
              reference to Exhibit 10 (t) to the Registrant's Annual 
              Report on Form 10-K for the year ended January 31, 1994.

(10)(u)       Lease of premises at 150 Clove Road, Little Falls, New 
              Jersey, between Total-Tel USA Inc. and the Prudential 
              Insurance Company of America dated February 22, 1994.  
              Incorporated by reference to Exhibit 10 (u) to the 
              Registrant's Annual Report on Form 10-K for the 
              year ended January 31, 1994.

(10)(v)       Lease modification to the lease of the premises at 150 
              Clove Road, Little Falls, New Jersey between TotalTel, 
              Inc. and The Prudential Company of America dated 
              May 18, 1994. Incorporated by reference to Exhibit 10 (v) 
              to the Registrant's Annual Report on Form 10-K for the 
              year ended January 31, l995.

(10)(w)       Second lease modification to the lease of the premises at 
              150 Clove Road, Little Falls, New Jersey between TotalTel, 
              Inc. and Theta Holding Company, L. P., successor to the 
              Prudential Insurance Company of America dated 
              February 9, 1995.  Incorporated by reference to 
              Exhibit 10 (w) to the Registrant's Annual Report on Form 
              10-K for the year ended January 31, 1995.

(10)(x)       Third lease modification to the lease of the premises at 
              150 Clove Road, Little Falls, New Jersey between TotalTel, 
              Inc. and Theta Holding Company, L. P., successor to the 
              Prudential Insurance Company of America dated January 31, 
              1997.  Incorporated by reference to exhibit (10)(x) to the 
              registrants Annual Report on Form 10-K for the 
              year ended January 31, l997. 

(10)(y)       Equipment Facility and Revolving Credit Agreement dated 
              August 23, 1996 between Total-Tel USA Communications, 
              Inc., TotalTel, Inc., Total-Tel USA, Inc., and Total-Tel 
              Carrier Services, Inc. and the Summit Bank in the amount 
              of $10,000,000.  Incorporated by referral to Exhibit 
              (10)(y) to the Registrants Annual Report on Form 10K for 
              the year ended January 3, 1997.

(10)(z)       Lease of premises at 500 Fifth Avenue, New York City, New 
              York between TotalTel, Inc. and 1472 Broadway, Inc. dated 
              November 8, 1996.  Incorporated by reference to Form 10K 
              for the year ended January 31, 1997.

(10)(AA)      Lease of premises at 40 Rector Street, New York City, New 
              York between Total-Tel USA Communications, Inc. and 40 
              Rector Street Company dated November 1, 1996.  
              Incorporated by reference to Form 10K for the year ended 
              January 31, 1997.

(10)(AB)      1996 Stock Option Plan, Incorporated by reference to 
              Registrant's Proxy Statement relating to its 1996 Annual 
              Stockholder Meeting.

(10)(AC)      Lease of premises of 28 West Flagler Street, Miami, 
              Florida between TotalTel, Inc. and Mosta Corporation, Inc. 
              dated February 6, 1998.

(10)(AD)      Amended Equipment Facility and Revolving Credit Agreement 
              dated August 23, 1996 between Total-Tel USA 
              Communications, Inc., TotalTel, Inc., Total-Tel USA, Inc., 
              and Total-Tel Carrier Services, Inc. and the Summit Bank 
              in the amount of 13,000,000.

(22)          Subsidiaries of Registrant.  Incorporated by reference to 
              Exhibit 22 to Registrant's Annual Report on Form 10-K for 
              the year ended January 31, 1996.

(27)          Financial Data Schedules.



Total-Tel USA Communications, Inc.
and Subsidiaries
Consolidated Financial Statements for the
Years Ended January 31, 1998, 1997 (Restated) and 1996, and 
Independent Auditors' Report



INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Total-Tel USA Communications, Inc.
Little Falls, New Jersey

We have audited the accompanying consolidated balance sheets of 
Total-Tel USA Communications, Inc. and subsidiaries as of January 
31, 1998 and 1997, and the related consolidated statements of 
earnings, shareholders' equity, and cash flows for each of the three 
years in the period ended January 31, 1998.  Our audits also 
included the financial statement schedule listed in the index at 
item 14(a)(2).  These financial statements and financial statement 
schedule are the responsibility of the Company's management.  Our 
responsibility is to express an opinion on these financial 
statements and financial statement schedule based on our audits.

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

In our opinion, such consolidated financial statements present 
fairly, in all material respects, the financial position of Total-
Tel USA Communications, Inc. and subsidiaries as of January 31, 1998 
and 1997, and the results of their operations and their cash flows 
for each of the three years in the period ended January 31, 1998 in 
conformity with generally accepted accounting principles.  Also, in 
our opinion, such financial statement schedule, when considered in 
relation to the basic consolidated financial statements taken as a 
whole, presents fairly, in all material respects, the information 
set forth therein.

As discussed in Note 14, the accompanying 1997 financial statements 
have been restated.


DELOITTE & TOUCHE LLP
New York, New York

May 8, 1998



<TABLE>
<CAPTION>


TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JANUARY 31, 1998 AND 1997 (RESTATED)
-----------------------------------------------------------------------------------------------------
ASSETS                                                                   1998               1997
                                                                                        (As Restated,
                                                                                         See Note 14)
<S>                                                                  <C>               <C>

CURRENT ASSETS:
  Cash and cash equivalents                                           $3,416,904         $2,589,187 
  Investments available for sale                                         578,293          1,010,594 
  Trade accounts receivable (net of allowance for doubtful accounts
     of $866,421 and $1,053,670 in 1998 and 1997, respectively)       20,346,988         13,933,652
  Notes receivable - employees                                           117,590            163,706
  Deferred income taxes                                                  151,256            196,800
  Prepaid expenses and other current assets                            2,497,707            583,223
                                                                    ------------       ------------
           Total current assets                                       27,108,738         18,477,162
                                                                    ------------       ------------
PROPERTY AND EQUIPMENT - Net                                          12,405,924         11,065,689
                                                                    ------------       ------------

OTHER ASSETS:                                              
  Notes receivable - employees                                                --             86,383
  Deferred line installation costs (net of accumulated amortization
     of $389,827 and $283,801 in 1998 and 1997, respectively)            298,304            281,392
  Deferred income taxes                                                       --            602,159
  Other assets                                                           432,275            516,635
                                                                    ------------       ------------
           Total other assets                                            730,579          1,486,569
                                                                    ------------       ------------
                                                                     $40,245,241        $31,029,420
                                                                    ============       ============
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                   $16,356,427        $10,222,260
  Other current and accrued liabilities                                1,757,375          2,222,141
  Salaries and wages payable                                             572,112            613,477
  Current portion of long-term debt                                      487,000                 --
                                                                    ------------       ------------
           Total current liabilities                                  19,172,914         13,057,878
                                                                    ------------       ------------

OTHER LONG-TERM LIABILITIES                                              331,754            259,220
                                                                    ------------       ------------
LONG-TERM DEBT                                                         2,092,201          2,940,000
                                                                    ------------       ------------
DEFERRED INCOME TAXES                                                     50,491                 --
                                                                    ------------       ------------

COMMITMENTS AND CONTINGENCIES (Note 11)

SHAREHOLDERS' EQUITY:
  Common stock, par value $.05 per share; authorized
   20,000,000 shares in 1998 and 1997, issued
    4,141,187 and 3,755,840 shares in 1998 and 1997, respectively        207,059            187,792
  Additional paid-in capital                                           9,656,488          7,054,370
  Retained earnings                                                   10,175,784          9,081,783
                                                                    ------------       ------------
                                                                      20,039,331         16,323,945

Treasury stock - at cost - 812,110 shares in 1998 and 810,510 
  shares in 1997                                                      (1,547,331)        (1,547,251)
Receivable from shareholder                                                   --           (100,000)
Unrealized gain on available for sale securities                         105,881             95,628
                                                                    ------------       ------------
           Total shareholders' equity                                 18,597,881         14,772,322
                                                                    ------------       ------------
                                                                     $40,245,241        $31,029,420
                                                                    ============       ============

See notes to consolidated financial statements.


</TABLE>



<TABLE>
<CAPTION>


TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED JANUARY 31, 1998, 1997 (RESTATED) AND 1996
------------------------------------------------------------------------------------------------------------

                                                    1998                 1997                 1996
                                                                     (As Restated,
                                                                       See Note 14)
<S>                                           <C>                  <C>                <C>

NET SALES                                      $123,286,028         $  89,325,921      $   49,873,477
                                               ------------         -------------      --------------
COSTS AND EXPENSES:
  Cost of sales                                  99,086,234            66,829,283          34,854,000
  Selling, general and administrative            22,082,829            18,303,834          12,641,680
  Stock compensation                                569,391             3,539,563              68,815
                                               ------------         -------------      --------------

           Total costs and expenses             121,738,454            88,672,680          47,564,495
                                               ------------         -------------      --------------
OPERATING INCOME                                  1,547,574               653,241           2,308,982
                                               ------------         -------------      --------------

OTHER INCOME (EXPENSE):
  Interest income                                   101,865               141,181             166,170
  Other income                                      358,729                50,920              36,091
  Interest expense                                 (183,623)              (68,348)             (3,854)
                                               ------------         -------------      --------------

        Total other income                          276,971               123,753             198,407
                                               ------------         -------------      --------------

EARNINGS BEFORE INCOME TAXES                      1,824,545               776,994           2,507,389

INCOME TAX PROVISION                                730,544               285,540             952,800
                                               ------------         -------------      --------------

NET EARNINGS                                   $  1,094,001         $     491,454      $    1,554,589
                                               ============         =============      ==============

BASIC EARNINGS PER COMMON SHARE                       $0.35                 $0.17               $0.53
                                                      =====                 =====               =====

DILUTED EARNINGS PER COMMON SHARE                     $0.32                 $0.15               $0.48
                                                      =====                 =====               =====

See notes to consolidated financial statements.

</TABLE>



<TABLE>
<CAPTION>


TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                                                                           Unrealized
                                                                                                         Gain (Loss) on
                                                  Additional                                 Receivable     Available
                                        Common     Paid-in       Retained        Treasury       from        for Sale
                                        Stock      Capital       Earnings         Stock      Shareholder    Securities     Total
<S>                                 <C>        <C>             <C>          <C>             <C>            <C>         <C>

BALANCE AT JANUARY 31, 1995          $  93,240  $  3,621,324  $  7,035,740   $ (1,584,687)   $ (100,000)    $   27,177  $ 9,092,794

  Unrealized gain on available for
  sale securities                           --            --            --             --            --         35,780       35,780

  Exercise of employee stock option        200        15,727            --             --            --             --       15,927

  Issuance of employee stock grants         --       (36,946)           --         37,436            --             --          490

  Net earnings                              --            --     1,554,589             --            --             --    1,554,589
                                    ----------  ------------  ------------   ------------  ------------   ------------ ------------
BALANCE AT JANUARY 31, 1996             93,440     3,600,105     8,590,329     (1,547,251)     (100,000)        62,957   10,699,580

  Remeasurement of employee stock 
  options (see Note 14)                     --     3,482,344            --             --            --             --    3,482,344

  Unrealized gain on available for 
  sale securities                           --            --            --             --           --          32,671       32,671

  Exercise of employee stock options       681        65,592            --             --           --              --       66,273

  Stock split                           93,671       (93,671)           --             --           --              --           --

  Net earnings (RESTATED)                   --            --       491,454             --           --              --      491,454
                                    ----------  ------------  ------------   ------------  ------------   ------------ ------------
BALANCE AT JANUARY 31, 1997 
(RESTATED)                             187,792     7,054,370     9,081,783     (1,547,251)     (100,000)        95,628   14,772,322

  Unrealized gain on available for
  sale securities                           --            --            --             --            --         10,253       10,253

  Exercise of employee stock options    19,267     1,399,004            --            (80)           --             --    1,418,191

  Remeasurement of employee stock 
  options                                   --       433,126            --             --            --             --      433,126

  Tax benefit due to exercise of 
  nonqualified options                      --       769,988            --             --            --             --      769,988

  Repayment of shareholder receivable       --            --            --             --       100,000             --      100,000

  Net earnings                              --            --     1,094,001             --            --             --    1,094,001
                                    ----------  ------------  ------------   ------------  ------------   ------------ ------------

BALANCE AT JANUARY 31, 1998          $ 207,059  $  9,656,488  $ 10,175,784   $ (1,547,331)  $        --     $  105,881  $18,597,881
                                    ==========  ============  ============   ============  ============   ============ ============

See notes to consolidated financial statements.

</TABLE>



<TABLE>
<CAPTION>


TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JANUARY 31, 1998, 1997 (RESTATED) AND 1996
------------------------------------------------------------------------------------------------------------

                                                        1998                 1997                 1996
                                                                         (As Restated,
                                                                          See Note 14)
<S>                                            <C>                   <C>                <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings                                  $     1,094,001       $     491,454       $     1,554,589
  Adjustments to reconcile net earnings
    to net cash provided by operating activities:
    Depreciation and amortization                     2,027,557           1,381,931             1,026,102
    Provision for doubtful accounts                     416,713             950,495               820,131
    Tax benefit of options exercised                    769,988                  --                    --
    Noncash compensation expense                        569,391           3,539,563                68,815
    Deferred income taxes                               648,544          (1,070,460)              139,800
    Gain on disposal of property and 
    equipment                                            (4,852)                 --                    --
    Change in assets and liabilities: 
      (Increase) decrease in assets:
        Trade accounts receivable                    (6,830,049)         (6,142,229)           (3,622,415)
        Prepaid expenses and other current
        assets                                       (1,914,484)           (190,249)               27,335
        Other assets                                     84,360             (90,471)              (53,499)
      Increase (decrease) in liabilities:
        Accounts payable                              6,134,167           3,617,801             2,483,618
        Other current and accrued 
         liabilities and salaries and wages
          payable                                      (592,746)            587,247               738,956
        Other long-term liabilities                      72,534             (54,522)              202,928
                                                 --------------      --------------        --------------
           Net cash provided by operating
           activities                                 2,475,124           3,020,560             3,386,360
                                                 --------------      --------------        --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Collections on notes receivable                            --                  --               628,792
  Proceeds from sales and maturities of
   short-term investments available for sale            442,554             973,141             1,600,963
  Purchase of investments available for sale                 --            (984,129)             (581,517)
  Purchases of property and equipment                (3,267,833)         (6,397,259)           (3,027,719)
  Proceeds from sale of fixed assets                     10,920              53,759                    --
  Payments for deferred line installation 
    costs                                              (122,939)           (127,488)             (111,283)
  Issuance of notes to employees                             --            (136,706)             (115,000)
  Collection on notes receivable from 
    employees                                           232,499               3,898                32,500
                                                 --------------      --------------        --------------

           Net cash used in investing 
           activities                                (2,704,799)         (6,614,784)           (1,573,264)
                                                 --------------      --------------        --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Stock options exercised                             1,418,191              66,273                15,927
  Bank borrowings                                            --           2,000,000                    --
  Additional borrowings                                 770,000             940,000                   490
  Repayment on bank borrowings                       (1,130,799)                 --                    --
                                                 --------------      --------------        --------------

           Net cash provided by financing 
           activities                                 1,057,392           3,006,273                16,417
                                                 --------------      --------------        --------------

<CAPTION>

TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JANUARY 31, 1998, 1997 (RESTATED) AND 1996
------------------------------------------------------------------------------------------------------------

                                                        1998                 1997                 1996
                                                                         (As Restated,
                                                                           See Note 14)
<S>                                              <C>                <C>                  <C>

NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                    $      827,717      $     (587,951)       $    1,829,513

CASH AND CASH EQUIVALENTS, 
  BEGINNING OF YEAR                                   2,589,187           3,177,138             1,347,625
                                                 --------------      --------------        --------------

CASH AND CASH EQUIVALENTS, END OF YEAR           $    3,416,904      $    2,589,187        $    3,177,138
                                                 ==============      ==============        ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION:
  Cash paid during the year for:
    Interest                                     $      187,211      $       64,761        $        3,854

    Income taxes                                 $      752,761      $    1,511,149        $      560,000


See notes to consolidated financial statements.

</TABLE>



TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1.     NATURE OF OPERATIONS

Total-Tel USA Communications, Inc. ("Total-Tel"), with its wholly-
owned subsidiaries Total-Tel, Inc., Total-Tel USA, Inc., Total-Tel 
Southeast Inc., Total-Tel Carrier Services, Inc., Total-Tel 
Sarasota, Inc., and Total-Tel Services (collectively, the "Company") 
operates as a switch based resale common carrier providing twenty-
four hour, seven day a week, domestic and international long 
distance telecommunications service to customers throughout the 
United States.  The Company's principal customers are primarily 
businesses and other common carriers.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation - The consolidated financial statements 
include the accounts of Total-Tel USA Communications, Inc. and its 
subsidiaries, all of which are wholly-owned.  All intercompany 
transactions and balances have been eliminated in the consolidated 
financial statements.

Property and Equipment - Property and equipment are stated at cost.  
Depreciation and amortization is being provided by use of the 
straight-line method over the estimated useful lives of the related 
assets.  Leasehold improvements are amortized over the shorter of 
the term of the lease or the useful lives of the asset.

The estimated useful lives of the principal classes of assets are as 
follows:

     Classification                              Years

Machinery and equipment                          5 - 10
Office furniture, fixtures and equipment         7 - 10
Vehicles                                         3 -  5
Leasehold improvements                           2 - 10
Computer equipment and software                  5 -  7

Deferred Line Installation Costs - The Company defers charges from 
other common carriers which cover the cost of installing telephone 
transmission facilities (lines).  Amortization of these costs is 
provided using the straight-line method over the estimated life 
(five years) of the lines.

Use of Estimates - The Company's financial statements include the 
use of estimates and assumptions which have been developed by 
management based on available facts and information.  Actual results 
could differ from those estimates.

Concentrations of Credit Risk - The Company sells its 
telecommunications services and products to customers operating 
primarily in the northeastern region of the United States.  The 
Company performs ongoing credit evaluations of its customers as it 
generally does not require collateral.  Allowances are maintained 
for potential credit losses and such losses have been within 
management's expectations.

Sales by Category - The Company's operations are conducted within 
one business segment, the providing of long distance 
telecommunications to business customers (retail) and other carriers 
(wholesale).  Sales by category for the fiscal years ended January 
31, 1998, 1997 and 1996 are as follows:

                    1998            1997            1996

  Retail     $   65,304,679  $   57,896,644  $   46,289,295
  Wholesale      57,981,349      31,429,277       3,584,182
             --------------  --------------  --------------
             $  123,286,028  $   89,325,921  $   49,873,477
             ==============  ==============  ==============

Earnings per Share - The Company adopted SFAS No. 128 "Earnings per 
Share," in the fourth quarter of Fiscal 1998.  The Statement 
establishes standards for computing basic earnings per share, which 
is represented by net earnings available to common shareholders 
divided by the weighted-average number of common shares outstanding 
during the period.  Diluted earnings per share reflects the 
potential dilution that could occur if securities or stock options 
were exercised or converted into common stock during the period, if 
dilutive (see Note 12).  Earnings per share amounts for prior years 
have been restated to reflect this revised standard.

Stock Split - On July 1, 1996, the Company distributed 1,873,420 
shares of common stock in connection with a 2 for 1 stock split of 
all outstanding shares as of June 15, 1996.  All per share and 
number of shares data have been restated to reflect this stock 
split.

Cash and Cash Equivalents - The Company considers all highly liquid 
investments purchased with an original maturity of three months or 
less to be cash equivalents.  Cash and cash equivalents consist of 
cash on hand, demand deposits and money market accounts.

Fair Value of Financial Instruments - The estimated fair value of 
publicly traded financial instruments is determined by the Company 
using quoted market prices, dealer quotes and prices obtained from 
independent third parties.  For financial instruments not publicly 
traded, fair values are estimated based on values obtained from 
independent third parties or quoted market prices of comparable 
instruments.  However, judgment is required to interpret market data 
to develop the estimates of fair value.  Accordingly, the estimates 
are not necessarily indicative of the amounts that could be realized 
in a current market exchange.


<TABLE>
<CAPTION>


The carrying values and fair values of financial instruments are as follows:

                                                       1998                                       1997
-----------------------------------------------------------------------------------------------------------------
                                             Carrying          Fair                    Carrying        Fair
                                              Value            Value                    Value          Value
-----------------------------------------------------------------------------------------------------------------
<S>                                     <C>               <C>                      <C>            <C>
Assets:
  Investments Available For Sale         $   578,293       $   578,293              $   1,010,594  $   1,010,594

Liabilities:
Debt                                       2,579,201         2,579,201                  2,940,000      2,940,000

Reclassifications - Certain reclassifications have been made to prior year financial statements to conform to 
classifications used in the current year.

New Accounting Pronouncements - The Financial Accounting Standards Board issued Statement of Financial Accounting 
Standards No. 130, "Reporting Comprehensive Income," Statement of Financial Accounting Standards No. 131, 
"Disclosures about Segments of an Enterprise and Related Information," in 1997.  These statements may impact the
disclosures made in future financial statements of the Company.

</TABLE>



<TABLE>
<CAPTION>


3.     INVESTMENT SECURITIES
Investments available for sale consist of:

                                           1998                                                   1997     
                       -----------------------------------------------      -----------------------------------------------
                                     Gross Unrealized                                      Gross Unrealized
                                 ------------------------        Market             ------------------------         Market
                           Cost        Gain        Loss        Value         Cost         Gain       Loss             Value
<S>                   <C>         <C>         <C>          <C>          <C>          <C>           <C>           <C>
 Municipal
  bonds and notes      $   50,000  $        8  $       --   $   50,008   $  477,227   $    1,887    $       --    $  479,114
     Mutual  funds        281,991       1,104          --      283,095      277,299       10,260            --       287,559
     Common stock          70,700     174,490          --      245,190       70,700      173,221            --       243,921
                       ----------  ----------  ----------   ----------   ----------   ----------    ----------    ----------
                       $  402,691  $  175,602  $       --   $  578,293   $  825,226   $  185,368    $       --    $1,010,594
                       ==========  ==========  ==========   ==========   ==========   ==========    ==========    ==========

<CAPTION>

Maturity dates of municipal bonds and notes as of January 31, 1998 are as follows:

     Maturing Within                                                                      Cost                  Market Value
<S>                                                                                 <C>                         <C>

     1 year                                                                          $    25,000                 $    25,008
     After 1 year through 5 years                                                         25,000                      25,000
                                                                                     -----------                 -----------
                                                                                     $    50,000                 $    50,008
                                                                                     ===========                 ===========

4.     PROPERTY AND EQUIPMENT

Property and equipment consists of:
                                                                                          1998                       1997

     Machinery and equipment                                                         $12,027,693                 $ 7,243,651
     Office furniture, fixtures and equipment                                          1,703,657                   1,257,440
     Leasehold improvements                                                              914,205                     305,812
     Vehicles                                                                            192,954                     152,583
     Computer equipment and software                                                   3,220,808                   2,420,830
     Leasehold improvements in progress                                                  205,644                     260,578
     Machinery and equipment in progress                                                 100,000                   3,585,205
                                                                                     -----------                 -----------
                                                                                      18,364,961                  15,226,099

     Less accumulated depreciation and amortization                                    5,959,037                   4,160,410
                                                                                     -----------                 -----------

                                                                                     $12,405,924                 $11,065,689
                                                                                     ===========                 ===========

Depreciation and amortization expense related to property and equipment for the years ended January 31, 1998, 1997 and 
1996 was $1,921,530, $1,288,816 and $940,853, respectively.

</TABLE>



5.     INCOME TAXES
The provision for income taxes includes the following:

                                1998           1997          1996
                                            (RESTATED)
     Federal:
       Current              $  60,000     $ 1,078,000     $ 663,000
       Deferred               517,544        (824,160)       95,400
     State income taxes:
       Current                 22,000         278,000       150,000
       Deferred               131,000        (246,300)       44,400
                            ---------     -----------     ---------
                            $ 730,544     $   285,540     $ 952,800

Deferred income taxes reflect the net tax effects of temporary 
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income 
tax purposes.  The income tax effects of significant items comprising
the Company's net deferred tax liability are as follows:

<TABLE>
<CAPTION>
                                                            1998                       1997
                                                                                    (RESTATED)
                                                   Current       Long-term     Current       Long-term
<S>                                             <C>           <C>           <C>             <C>

     Deferred tax assets:
       Allowance for doubtful accounts           $ 151,256     $        --   $ 196,800       $       --
       Accrued compensation expense                     --       1,275,096          --        1,452,460
       Unamortized lease incentive                      --         132,701          --          103,500
                                                 ---------     -----------   ---------       ----------
     Total deferred tax assets                     151,256       1,407,797     196,800        1,555,960
                                                 ---------     -----------   ---------       ----------
     Deferred tax liabilities:
       Difference between book and tax basis
         of property and equipment                      --      (1,388,568)         --         (890,181)
       Unrealized gains on securities
         available for sale                             --         (69,720)         --          (63,620) 
                                                 ---------     -----------   ---------       ----------
     Total deferred tax liabilities                     --      (1,458,288)         --         (953,801) 
                                                 ---------     -----------   ---------       ----------
     Net deferred tax asset (liability)          $ 151,256     $   (50,491)  $ 196,800       $9,602,159
                                                 ---------     -----------   ---------       ----------
</TABLE>

A reconciliation from the U.S. statutory tax rate of 34% to the 
effective tax rate for income taxes on the consolidated statements 
of earnings is as follows:

<TABLE>
<CAPTION>
                                                          1998          1997          1996
                                                                     (RESTATED)
<S>                                                    <C>           <C>           <C>

     Computed expense at statutory rates               $ 620,345     $ 264,178     $ 852,500
    (Reductions) increase in taxes resulting from:
       Tax-exempt interest income                        (14,300)      (16,000)      (23,200)
       State taxes, net of federal income tax benefit    118,000        28,300       128,300
       Insurance proceeds on officer's death            (114,400)          -             -
       Other                                             120,899         9,062        (4,800)
                                                       ---------     ---------     ---------
     Actual expense                                    $ 730,544     $ 285,540     $ 952,800
                                                       =========     =========     =========
</TABLE>

6.     LEASE COMMITMENTS
The Company rents various facilities under lease agreements classified
 as operating leases.  Several of the underlying agreements contains 
certain incentives eliminating payments at the inception of the lease.  
Lease incentives are amortized on a straight-line basis over the
entire lease term.  Under terms of these leases, the Company is 
required to pay its proportionate share of increases in real estate 
taxes, operating expenses and other related costs.

In 1993, the Company leased warehouse space in Belleville, New Jersey 
from a partnership in which two of the partners are directors and 
major shareholders of the Company.  During the fiscal years ended 
January 31, 1998, 1997 and 1996, the Company paid rent of $60,450, 
$59,760 and $59,670, respectively, to the partnership.  The annual 
rent for this premise is $58,560 for the first three years and 
$63,885 for years four and five and is included in the table of 
future minimum rentals shown below.

Future minimum annual rentals on these leases as of January 31, 
1998 are as follows:

     Year Ending
     January 31,

     1999                       $ 1,286,101
     2000                         1,195,018
     2001                         1,219,107
     2002                         1,219,107
     2003                           756,986
     2004 and thereafter          2,590,786
                                -----------
                                $ 8,267,105
                                ===========

Rental expense for the years ended January 31, 1998, 1997 and 1996 
was approximately $1,047,000, $626,600 and $517,600, respectively. 

7.     EMPLOYEE BENEFIT PLANS

The Company has established a savings incentive plan for 
substantially all employees of the Company which is qualified under 
section 401(k) of the Internal Revenue Code.  The savings plan 
provides for contributions to an independent trustee by both the 
Company and its participating employees.  Under the plan, employees 
may contribute up to 15% of their pretax base pay.  Effective 
January 1, 1996, the Company increased its matching contribution to 
50% of the first 6% of participant contributions.  Participants vest 
immediately in their own contributions and over a period of six 
years for the Company's contributions.  Company contributions were 
approximately $165,000, $111,000 and $41,000 for the years ended 
January 31, 1998, 1997 and 1996, respectively.

8.     STOCK OPTION PLAN

The Company has two stock option plans authorizing the granting of 
either Incentive Stock Options or Nonqualified Stock Options.  The 
1987 Stock Option Plan provides for the issuance of an aggregate of  
664,900 shares of the Company's Common Stock for options granted 
under the Plan.  The 1996 Stock Option Plan, which was approved by 
the shareholders and adopted by the Company on October 10, 1996, 
provides for the issuance of an aggregate of 300,000 shares of the 
Company's Common Stock for options granted under the Plan.

Incentive Stock Options granted must have an exercise price equal to
the fair market value of the Company's Common Stock at the time the 
option is granted, except that the price shall be at least 110 percent 
of the fair market value where the option is granted to an employee 
who owns more than 10 percent of the combined voting power of all 
classes of the Company's voting stock. Nonqualified Stock Options 
granted must have an exercise price equal to at least 50 percent of 
the fair market value of the Company's Common Stock at the time the 
option is granted.  Incentive Stock Options may be granted only to 
employees.  Nonqualified Stock Options may be granted to employees as 
well as directors, independent contractors and agents, as determined 
by the Board of Directors.  All options available to be granted under 
the 1987 Plan were granted prior to September 1, 1997.  All options 
available to be granted under the 1996 Plan, totaling 104,125 at 
January 31, 1998, must be granted by October 10, 2006.  The options
currently outstanding have terms that expire between five to ten
years from the date of grant and vest over a period of three to four
years from the date of grant.

Information regarding options under the 1987 Plan is as follows:


<TABLE>
<CAPTION>
                                                                                                         Weighted
                                         Option                                                           Average
                                          Price                                                          Exercise
                                        Per Share            Outstanding           Exercisable             Price
<S>                             <C>                           <C>                   <C>                <C>

     January 31, 1995 balance    $     1.03 - 9.63             634,900               378,718   $            3.57

       Granted                   $     7.99 - 8.63              33,000                    --   $            8.32
       Became Exercisable        $     1.03 - 9.63                  --               269,582                  -- 
       Exercised                 $            1.99              (8,000)               (8,000)  $            1.99
       Cancelled                 $            8.75             (17,000)              (17,000)  $            8.75
                                 -----------------   -----------------     -----------------   -----------------
     January 31, 1996 balance    $     1.03 - 9.63             642,900               623,300   $            3.70
                                 -----------------   -----------------     -----------------   -----------------

       Granted                   $            9.50              22,000                    --   $            9.50
       Became Exercisable                       --                  --                18,100                  --
       Exercised                 $     1.99 - 6.57             (18,228)              (18,228)  $            3.27
                                 -----------------   -----------------     -----------------   -----------------

     January 31, 1997            $     1.03 - 9.63             646,672               623,172   $            3.91
                                 -----------------   -----------------     -----------------   -----------------

       Became Exercisable                       --                  --                23,500                  --
       Exercised                 $     1.03 - 9.50            (361,272)             (361,272)  $            3.22
       Cancelled                 $     5.63 - 9.50              (6,000)               (6,000)  $            7.70
                                 -----------------   -----------------     -----------------   -----------------

     January 31, 1998 balance    $     1.03 - 9.63             279,400               279,400   $            4.72
                                 =================   =================     =================   =================

Information regarding options under the 1996 plan is as follows:

                                                                                                    Weighted
                                      Option                                                         Average
                                      Price                                                         Exercise
                                    Per Share           Outstanding            Exercisable            Price

       January 31, 1997 balance                 --                  --                    --                  --

        Granted                  $   14.50 - 20.00             232,000                         $           16.81
        Became Exercisable       $   14.50 - 20.00                  --                33,625                  --
        Exercised                $           14.50             (10,875)              (10,875)  $           14.50
        Cancelled                $           14.50             (36,125)                 (875)  $           14.50
                                 -----------------   -----------------     -----------------   -----------------
       January 31, 1998 balance  $     14.50-20.00             185,000                21,875   $           17.40
                                 =================   =================     =================   =================

</TABLE>



<TABLE>
<CAPTION>


     The following table summarizes information about options outstanding under the 1987 and 1996 plans:

                                                 Options Outstanding                          Options Exercisable
                                         ------------------------------------        ------------------------------------
                                                      Weighted-
                                                      Average          Weighted-                               Weighted-
               Range of            Number of          Remaining          Average           Number of            Average
               Exercise             Shares           Contractual        Exercise            Shares             Exercise
               Prices             Outstanding           Life             Price            Outstanding            Price
<S>       <C>                      <C>              <C>               <C>                   <C>               <C>

           $1.03 -  9.63            279,400         2.77 years          $  4.72            279,400             $  4.72
           $14.50 -20.00            185,000         3.17 years          $ 17.40             21,875             $ 14.50
           -------------      -------------      -------------    -------------      -------------       -------------
           $1.03 - 20.00            464,400         2.93 years          $  9.77            301,275             $  5.43
           -------------      -------------      -------------    -------------      -------------       -------------

Compensation expense related to the nonqualified stock options was $136,265, $57,219 and $68,815 for the years ended 
January 31, 1998, 1997 and 1996, respectively.

Compensation expense related to the remeasurement of nonqualified and incentive stock options was $433,126, 
$3,482,344 and $0 for the years ended January 31, 1998, 1997 and 1996, respectively.

The Company has adopted the disclosure-only provision of Statement of Financial Accounting Standards No. 123, 
"Accounting for Stock-Based Compensation."  Had compensation cost for the Company's plans been determined based on the 
fair value at the grant date for awards in the fiscal years ended January 31, 1998, 1997 and 1996, consistent with the 
provisions of SFAS No. 123, the Company's net earnings and basic and diluted earnings per share would have been 
reduced to the pro forma amounts indicated below:

</TABLE>



<TABLE>
<CAPTION>


                                                                 1998                   1997                 1996
                                                                                   (As Restated,
                                                                                    See Note 14)
<S>                                                        <C>                  <C>                    <C>

Net earnings - as reported                                  $  1,094,001         $     491,454          $    1,554,589
Net earnings (loss) - pro forma                                  931,066               (52,536)              1,544,510

Basic earnings per share - as reported                              0.35                  0.17                    0.53
Basic earnings (loss) per share - pro forma                         0.30                 (0.02)                   0.53

Diluted earnings per share - as reported                            0.32                  0.15                    0.48
Diluted earnings (loss) per share - pro forma                       0.27                 (0.02)                   0.47

The fair value of each option grant is estimated based on the date of grant using the Black-Scholes option-pricing 
model with the following weighted-average assumptions used for grants in fiscal 1998, 1997 and 1996:  dividend yield
of 0.00% for the three years; expected volatility of 67.82%, 33.00% and 33.00%, respectively; risk-free interest rate 
of 6.53%, 6.72% and 6.72%, respectively; and expected lives of 5 years for each of the three years.

</TABLE>



9.     NOTES RECEIVABLE FROM SHAREHOLDER

In 1993, the Company made a $25,000 noninterest bearing, unsecured 
loan to an executive employee and shareholder of the Company.  In 
1995, the Company made two additional unsecured loans to the same 
employees in the amounts of $55,000 and $60,000, with interest at 
the prime rate published in the Wall Street Journal, and 9% per 
annum, respectively.  In 1996, the three notes, together with unpaid 
interest, were combined into one note with a principal balance of 
$117,281.  The note bears interest at 8% per annum and is payable in 
semi-monthly installments for seven-and-one-half years, commencing 
February 7, 1996.  These three notes were repaid with interest in 
January, 1998.

In 1993, the Company made a separate $100,000 unsecured loan to the 
above mentioned employee for the purchase of the Company's common 
stock.  This note is shown as a reduction in shareholder's equity as 
of January 31, 1997.  This note was repaid in full as of January 31, 
1998.

10.     LONG-TERM DEBT

On August 23, 1996, the Company entered into an Equipment Facility 
and Revolving Credit Agreement (the "Facility") with a major New 
Jersey bank.  This Facility provides the Company with an unsecured 
line of credit of $4,000,000 and a $6,000,000 facility for the 
purchase of machinery and equipment, primarily switching equipment, 
and is secured by the Company's machinery and equipment.

The Company had drawn down $2,000,000 of the $6,000,000 Facility in 
the prior year.  In the current year, the Company converted the balance 
to a term loan payable in monthly installments of $55,923 including 
principal and interest payable over a term of 60 months.  The 
remaining balance on this note as of January 31, 1998 was $2,579,201, 
of which $487,000 was classified as current.

The Company has utilized $100,000 of the unsecured line of credit 
for the issuance of a letter of credit.

The interest rate for borrowings under the Facility is at the bank's 
prime rate or, at the Company's option, 225 basis points above the 
LIBOR rate.  The Company is currently paying 7.71% on the balance.

The Facility requires the Company to meet certain covenants.  Among 
the covenants contained in the Facility are ratios and balances as 
to minimum tangible net worth, current ratio, debt to net worth and 
fixed charge coverage (all as defined).  Other covenants include the 
level of capital expenditures, acquisitions of capital stock, the 
incurrence of new long-term indebtedness (as defined), and new liens 
on assets, as well as the maintenance of certain other ratios.  At 
January 31, 1998 and 1997, the Company was in compliance with all 
covenants of the facility.  

On March 16, 1998, the Company entered into an Amended and Restated 
Equipment Facility and Revolving Credit Agreement (the "Amended 
Facility") with the same bank.  This Amended Facility increases the 
unsecured line of credit to $8,000,000 and the Facility for the 
purchase of machinery and equipment to $5,000,000.

Scheduled maturities of notes payable during the next five years and 
thereafter are as follows:

Years Ending     
January 31,     
     
1999                 $    487,000  
2000                      526,361  
2001                      568,653  
2002                      615,113  
2003                      382,074  
2004 and thereafter            --
                     ------------
                     $  2,579,201 
                     ============

11.     COMMITMENTS AND CONTINGENCIES

The Company is a defendant in a law suit, filed by one of its 
customers for alleged breach of contract, seeks compensatory and 
punitive damages of $1,300,000.  The Company believes that the suit 
is completely without merit and intends to vigorously defend it.
However the outcome cannot be determined at this time.

12.     EARNINGS PER SHARE

Basic earnings per share was computed by dividing net earnings by 
the weighted average number of shares of common stock outstanding 
during each year.  Diluted earnings per share was computed on the 
assumption that all stock options converted or exercised during each 
year or outstanding at the end of each year were converted at the 
beginning of each year or at the date of issuance or grant, if 
dilutive.



<TABLE>
<CAPTION>


The reconciliation of the earnings and common shares included in the computation of basic earnings per common share and 
diluted earnings per common share for the years ended January 31, 1998, 1997 and 1996 is as follows:

                                 1998                                   1997                                    1996
                  Earnings      Shares     Per-Share   Earnings       Shares       Per-Share     Earnings     Shares     Per-Share
                (Numerator) (Denominator)    Amount  (Numerator)  (Denominator)     Amount     (Numerator) (Denominator)   Amount
<S>           <C>            <C>           <C>     <C>              <C>            <C>        <C>           <C>          <C>

Net Earnings   $ 1,094,001                           $   491,454                               $ 1,554,589
               -----------                           -----------                               -----------
Basic Earnings
  Per Share:     1,094,001     3,106,702    $   0.35     491,454      2,941,330      $   0.17    1,554,589    2,908,702    $   0.53

Effect of Dilutive
  Securities:
  Stock Options                  314,473                                427,931                                 354,187
               -----------   ----------- ----------- -----------    -----------   -----------  -----------  -----------  ----------
Diluted Earnings
  Per Share    $ 1,094,001     3,421,175    $   0.32 $   491,454      3,369,261      $   0.15  $ 1,554,589    3,262,889    $   0.48
               ===========   =========== =========== ===========    ===========   ===========  ===========  =========== ===========

</TABLE>



<TABLE>
<CAPTION>


13.     QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Amounts in thousands except per share data.

                                               April 30,       July 31,       October 31,       January 31,
                                                 1995            1995            1995              1996
<S>                                          <C>            <C>             <C>               <C>

Revenues                                      $  10,516      $  11,620       $  13,454         $  14,283  
Operating income                                    569            410             948               382  
Net earnings                                        366            246             594               349  
Basic earnings per common share                    0.13           0.08            0.20              0.12  
Diluted earnings per common share                  0.11           0.08            0.18              0.11  

                                               April 30,       July 31,       October 31,       January 31,
                                                 1996            1996            1996              1997
                                                                                                (restated) 

Revenues                                      $  17,370      $  23,118       $  23,948         $  24,890  
Operating income (loss)                             807          1,251           1,311            (2,716) 
Net earnings (loss)                                 503            781             810            (1,602) 

Basic earnings (loss) per common share             0.17           0.27            0.28             (0.55) 
Diluted earnings (loss) per common share           0.15           0.23            0.24             (0.55) 

                                               April 30,       July 31,       October 31,       January 31,
                                                 1997            1997            1997              1998

Revenues                                      $  26,333      $  36,152       $  29,919         $  30,882  
Operating income (loss)                           1,048            480             577              (557) 
Net earnings (loss)                                 623            258             316              (103) 
Basic earnings (loss) per common share             0.20           0.08            0.10             (0.03) 
Diluted earnings (loss) per common share           0.18           0.08            0.09             (0.03) 

</TABLE>



<TABLE>
<CAPTION>


14.     RESTATEMENT
Subsequent to the issuance of the January 31, 1997 financial statements,
the Company's management determined that an additional $3,482,344 in 
compensation expense should have been recorded in connection with the an
extension of the exercise period of certain stock options that were granted
to certain employees in 1992. These options were due to expire in 1997 and 
were extended, in January of 1997, for an additional five year period. As a
result, the financial statements were restated from amounts previously
reported to recognize the additional compensation expense and its effect
on the income tax provision and deferred taxes.


The effect of the restatement is as follows:

                                                                                  As     
                         For the year ended                                   Previously     
                          January 31, 1997                                     Reported            As restated
<S>                                                                     <C>                   <C>
Consolidated Balance Sheet:          
  Current Deferred income tax asset                                      $      263,600        $      196,800  
  Long term deferred income tax asset                                                --               602,159
  Long term deferred income tax liability                                       850,301                    --
  Additional paid in capital                                                  3,572,026             7,054,370  
  Retained earnings                                                          11,178,467             9,081,783  
Consolidated Statement of Earnings:          
  Stock compensation expense                                                     57,219             3,539,563  
  Net earnings                                                                2,588,138               491,454  

  Income tax provision                                                        1,671,200               285,540  
  Basic earnings per common share                                        $         0.88        $         0.17  
  Diluted earnings per common share                                      $         0.75        $         0.15  

</TABLE>



15.     SUBSEQUENT EVENTS

On March 31, 1998, the Board of Directors of the Company (the 
"Board") adopted a Shareholder Rights Plan and declared a dividend 
of one common share purchase right ("Right") for each share of 
common stock of the Company outstanding on April 13, 1998.  Until it 
is announced that a person or group has acquired 20% or more of the 
outstanding common stock of the Company ("Acquiring Person") or has 
commenced a tender offer that could result in such person or group 
owning 10% or more of such common stock, the Rights will initially 
be redeemeable for $0.01 each, will be evidenced solely by the 
Company's stock certificates, will automatically trade with the 
Company's common stock and will not be exercisable.  Following any 
such announcement, separate Rights certificates would be 
distributed, with each Right entitling its holder to purchase common 
stock of the Company for an exercise price of $125, subject to 
adjustment, as more fully described below.

Upon announcement that any person or group has become an Acquiring 
Person and unless the Board acts to redeem the Rights, then ten 
business days after such announcement (the "Flip-in Date"), each 
Right (other than Rights beneficially owned by an Acquiring Person 
or transferee thereof, which Rights become void) will entitle the 
holder to purchase, for the $125 exercise price, a number of shares 
of the Company's common stock having an aggregate market value of 
$250.  In addition, if, after the Acquiring Person gains control of 
the Board, the Company is involved in a merger with any person or 
sells more than 50% of its assets or earning power to any person (or 
has entered into an agreement to do either of the foregoing), and, 
in the case of a merger, an Acquiring Person would receive different 
treatment than other stockholders, each Right would entitle its 
holder to purchase, for the $125 exercise price, a number of shares 
of common stock of such other person having an aggregate market 
value of $250.  If any person or group acquires between 10% and 50% 
of the Company's common stock, the Board may, at its option, require 
the Rights to be exchanged for common stock of the Company.  The 
Rights generally may be redeemed by the Board for $0.01 per Right 
prior to the Flip-in Date.

                                ******



<TABLE>
<CAPTION>


TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(CONSOLIDATED)
--------------------------------------------------------------------------------------------------------------------
Column A                              Column B               Column C                    Column D          Column E
--------------------------------------------------------------------------------------------------------------------
                                                             Additions
                                                       --------------------
                                                                          Charged to
                                     Balance at       Charged to            Other                           Balance
                                     Beginning         Cost and            Accounts      Deductions-       at End of
Description                          of Period         Expenses            Describe      Charge Offs         Period
<S>                                 <C>               <C>               <C>             <C>               <C>

YEAR ENDED JANUARY 31,
  1998:
  Reserves and allowances
    deducted from asset accounts:
    Allowance for uncollectible     
      accounts                      $ 1,053,670        $416,713          $     --        $603,962          $866,421

YEAR ENDED JANUARY 31, 
  1997: 
  Reserves and allowances
    deducted from asset accounts: 
    Allowance for uncollectible
      accounts                      $   831,538        $950,495          $     --        $728,363        $1,053,670

YEAR ENDED JANUARY 31, 
  1996: 
  Reserves and allowances     
    deducted from asset accounts: 
    Allowance for uncollectible
      accounts                      $   492,235        $820,131          $     --        $480,828          $831,538

</TABLE>


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