DRAFT
                             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, 1999.

                                   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. Identification No.)
Employer incorporation or  
organization)

                 150 Clove Road, Little Falls, New Jersey 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 $17.63 closing price) of the voting
stock held by nonaffiliates of the Registrant as of April 30, 1999:
$54,075,159.

  Number of shares of Common Stock outstanding on April 30, 1999:(7,604,904)

                   Documents Incorporated By Reference:
                                   None




PART I

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 harbor from
liability provided 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
Registrant "believes", "anticipates", "expects", or words of similar
import. Similarly, statements which describe the Registrant'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 Registrant undertakes
no obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances.

ITEM 1. Business

General

Total-Tel USA Communications, Inc. ("TotalTel", the "Registrant" or the
"Company") is a leading regional facilities-based long distance
telecommunications provider servicing both the commercial and wholesale
marketplace. The Registrant's retail segment operates principally in the
Northeast, primarily servicing small and medium-sized businesses. The
Registrant's products and services include a broad range of voice, data
and Internet solutions. The wholesale division provides domestic and
international termination services to carriers worldwide at competitive
rates. The Registrant currently owns three long distance switches, in New
York City, Newark, New Jersey and Miami, Florida, and has a Network
Operations Center ("NOC") in Northern New Jersey, to monitor and control
its New Jersey network and to coordinate its various services. As a result
of the restructuring plan initiatiated in the fourth quarter of fiscal
1999, the switch in Miami is being eliminated. (See ITEM 7 - Overview.)

Total-Tel processes approximately 95% of all its call volume through its
own facilities. The Registrant uses proven technology to provide
customized telecommunications solutions to its customers.

In the retail market, the Registrant has segmented potential customers and
tailored its service offerings, sales, marketing approach and network
development to provide service in a cost-effective manner. The Registrant
believes its customer service to be one of its principal competitive
advantages. The Registrant applies a dedicated team approach to soliciting
and servicing its clients, with substantial involvement of sales, customer
service and technical personnel in all aspects of customer relations. The
Registrant intends to continue to focus its efforts on small to
medium-sized customers with sales of $1 million to $60 million and monthly
long distance bills which typically range from $500 to $30,000. The
Registrant's focus on customer service has also enabled it to reach larger
customers.

For Fiscal 1999, Total-Tel had gross revenues of approximately $137
million, derived approximately 50% each from wholesale and commercial
services. For Fiscal 1998, the Registrant's gross revenues were
approximately $123 million. This growth has been achieved through internal
efforts and not as a result of acquisitions. The Registrant's commercial
sales activities have been concentrated in Northern New Jersey and New
York City, where, the Registrant believes, approximately half of all
United States multinational corporations have headquarters. Based on
industry sources, this area is believed to represent 40% of the total
United States telecommunications market. In addition, this market area is
an important international gateway, generating a significant amount of
international telephone traffic. This is evidenced by the Registrant's
Fiscal 1999 revenues, which were derived approximately 50% each from
international and domestic traffic. For the near term, at least, Total-Tel
intends to focus its efforts on further penetrating commercial users of
its services in the Northeast, particularly in the Metropolitan New York
area, and to augment the services offered to its customers.

The Registrant's principal executive offices are located at Overlook at
Great Notch, 150 Clove Road, Little Falls, New Jersey 07424, and its
telephone number is (973) 812-1100. The Registrant was incorporated in
1959 as Faradyne Electronics Corp. In November 1991, the Registrant
changed its name from Faradyne Electronics Corp. to Total-Tel USA
Communications, Inc.

INDUSTRY OVERVIEW

History and Industry Development

Domestic. Prior to 1984, AT&T dominated both the local exchange and long
distance marketplaces by owning the operating entities that provided both
local exchange and long distance services to most of the United States
population. Although long distance competition began to emerge in the late
1970s, the critical event triggering the growth of long distance
competition was the breakup of AT&T and the separation of its local and
long distance businesses as mandated by the Modified Final Judgment (the
"MFJ") relating to the breakup of AT&T (the "MFJ"). To foster competition
in the long distance market, the MFJ prohibited AT&T's divested local
exchange businesses, the Regional Bell Operating Companies ("RBOCs"), from
acting as single-source providers of telecommunications services.

Although the MFJ established the preconditions for competition in the
market for long distance services in 1984, the market for local exchange
services has until recently virtually been closed to competition and has
largely been dominated by regulated monopolies. Efforts to open the local
exchange market began in the late 1980s on a state-by-state basis.

The Telecommunications Act of 1996, (the "1996 Act") is considered to be
the most comprehensive reform of the nation's telecommunications laws and
affects the development of competition for local telecommunications
services. Specifically, certain provisions of the 1996 Act provide for (i)
the removal of legal barriers for entry into the local telecommunications
services market; (ii) the interconnection of the Incumbent Local Exchange
Carrier (the "ILEC") network with competitors' networks; (iii) the
establishment of procedures and requirements to be followed by the RBOCs,
including the requirement that RBOCs offer local services for resale as a
precondition to their entering into the long distance and
telecommunications equipment manufacturing markets; and (iv) the
relaxation of the regulation of certain telecommunications services
provided by Local Exchange Carriers ("LEC") and others.

The continuing deregulation of the telecommunications industry and
technological change have resulted in an increasingly
information-intensive business environment. Regulatory, technological,
marketing and competitive trends have expanded substantially the
Registrant's opportunities in the converging voice and data communications
services markets. For example, technological advances, including rapid
growth of the Internet, the increased use of packet switching technology
for voice communications, and the growth of multimedia applications, are
expected to result in substantial growth in the high-speed data services
market.

This new market opportunity should permit Competitive Access Providers
("CAPs") with operating and marketing expertise to offer a full range of
telecommunications services, including local and long distance calling,
toll-free calling, custom calling features, data services, and Internet
access and services. Telecommunications companies with an established base
of long distance customers may have an opportunity to sell additional
services to such customers.

The Registrant believes that small and medium-sized businesses have
historically been under served with respect to customer service and
support. The Registrant has observed that RBOCs and the Tier I carriers
(carriers with annual revenues of $5 billion), primarily concentrate their
sales and marketing efforts on residential and large business customers.
Thus, the Registrant also believes there is a significant market
opportunity with respect to small and medium-sized businesses to which
customer service may be a significant part of their buying decision.

International. International telecommunications involves the transmission
of voice and data information from the domestic telephone network of one
country to that of another. The Registrant believes that international
telecommunications is one of the fastest growing and most profitable
segments of the telecommunications industry. The international
telecommunications industry has been undergoing rapid change due to
deregulation, the construction of additional infrastructure, and the
introduction of new technologies, which has resulted in increased
competition and demand for telecommunications services worldwide.

Network

The Registrant's strategy has been to develop a geographic concentration
of revenue-producing customers through the sale of telecommunications
services in areas where it has installed switching platforms.

Current Network

Switches. Currently, the Registrant operates an advanced
telecommunications network which includes three DSC switches. The
Registrant's existing switches are located in New York, Newark, and Miami.
The Registrant has installed DSC DEX 600 switches in Newark and Miami and
a DEX600E switch in New York, which provides interexchange switching
capabilities and is currently being used as the Registrant's international
gateway switching platform. As a result of the restructuring plan
initiatiated in the fourth quarter of fiscal 1999, the switch in Miami is
being eliminated. (See ITEM 7 - Overview.)

During Fiscal 1999, the Registrant billed approximately 980 million
minutes, or approximately 95% of its total minutes, over its own switches.
The Registrant believes that increasing the traffic carried on its own
network would improve operating margins.

International. The Registrant is interconnected with a number of United
States and foreign wholesale international carriers through its New York
switch. The purpose of connecting to a variety of carriers is to provide
state-of-the-art, lowest-cost routing and network reliability. These
interconnected international carriers are also a source of wholesale
international traffic and revenue.

Other Features. The Registrant is interconnected by SS7 out-of-band
digital signaling throughout its network. The SS7 signaling system reduces
connect time delays, thereby enhancing overall network efficiencies.
Additionally, the SS7 technology is designed to permit the anticipated
expansion of the Registrant's Advanced Intelligent Network ("AIN")
capabilities throughout its network. The Registrant's advanced switching
platform would enable it to (i) deploy features and functions quickly
throughout its entire network, (ii) expand switch capacity in a
cost-effective manner, and (iii) lower maintenance costs through reduced
training and spare parts requirements.

Security and Reliability. The Registrant has a NOC in Northern New Jersey,
which monitors and controls the Registrant's network and coordinates its
various services from a central location, increasing the security,
reliability and efficiency of the Registrant's operations. Centralized
electronic monitoring and control of the Registrant's network allows the
Registrant to avoid duplication of this function in each region. The NOC
also helps reduce the Registrant's per-customer monitoring and customer
service costs. In addition, the Registrant's network employs an
"authorized access" architecture. Unlike many telecommunications
companies, which allow universal access to their network, the Registrant
utilizes an automatic number identification security screening
architecture which ensures only the ANIs of those users who have
subscribed to the Registrant's services and have satisfied the
Registrant's credit and provisioning criteria have access to the network.
The Registrant believes that this architecture provides the Registrant the
ability to better control bad debt and fraud in a manner which is
invisible and nonintrusive to the customer. This architecture also allows
the Registrant to better manage network capacity, as unauthorized and
unplanned users cannot access the network.

PRINCIPAL PRODUCTS AND SERVICES

Product and Service Offerings

The Registrant offers retail telecommunications services primarily to
small and medium-sized businesses. The Registrant's retail service
offerings currently include long distance and toll-free services (both
with and without an AIN), multiple access options, calling card, data,
Internet access and services, facsimile, and teleconferencing services.
The Registrant plans to add local exchange service, enhanced data and
Internet access and services, and additional AIN features. The
Registrant's wholesale services include domestic and international
termination and transport services to domestic and international
telecommunications carriers.

Current Services

Retail Services. The Registrant provides retail telecommunications
services to over 14,000 commercial customers, primarily small and
medium-sized businesses located in the Northeastern region of the United
States. The Registrant sells retail services through its direct retail
sales force and independent marketing representatives. Retail commercial
communications services accounted for approximately 53% of the
Registrant's Fiscal 1999 revenues, and produced revenues of approximately
$72,556,000 in Fiscal 1999 and $65,305,000 in Fiscal 1998. The
Registrant's retail services include the following:

* Long Distance: The Registrant offers a full range of switched and
dedicated domestic and international long distance services, including
"1+" outbound service in all 50 states along with global termination to
over 200 countries. Long distance services include intra-LATA, inter-LATA,
and worldwide international services. Long distance features include both
verified and non-verified accounting codes, station-to-station calling,
third-party calling, directory assistance, and operator-assisted calling.

* Toll-free Services: The Registrant offers a full range of switched and
dedicated domestic toll-free services, including toll-free origination in
all 50 states, international toll-free origination from over 30 countries,
and toll-free directory assistance. AIN enhanced toll-free services
include the following features: Command Routing, Dialed Number
Identification Service Area Code/Exchange Routing, Real Time Automatic
Number Identification Delivery, Day-of-Year Routing, Day-of-Week Routing,
Time-of-Day Routing, Percentage Allocation Routing, PIN protected 800
services, integrated voice response services, and store locator services.

* Access Options: The Registrant offers its long distance and toll-free
customers multiple access options including dedicated access at DS0, DS1,
and DS3 speed(s) and switched access. In Fiscal 1998, the Registrant began
offering integrated voice and data access via the same network facility.

* Calling Card and Services: The Registrant offers nationwide switched
access customized calling card and prepaid card services. Customers have
the option of calling cards which are personalized, branded or generic.

* Internet: The Registrant currently offers high-quality, dedicated
Internet access, IP registration and Domain Name Services.

* Data Services: The Registrant offers advanced data transmission
services, including private line and Frame Relay services. Data services
have multiple access options, including dedicated access at DS0, DS1, and
DS3 speed(s) and switched access.

* Customer Management Control Features: All of the Registrant's customers
have the option of customized management reporting features, including
interstate/intrastate area code summaries, international destination
matrix, daily usage summaries, state summaries, time of day summaries,
duration distribution matrix, exception reporting of long duration calls,
and incomplete and blocked call reporting.

Wholesale Services. The Registrant offers the following wholesale
services: domestic and international termination, switch ports,
collocation facilities and transport services to a broad spectrum of
domestic and international carriers. The Registrant offers international
wholesale termination and transport services primarily to domestic and
international telecommunications carriers. Once the Registrant
interconnects with a carrier customer, the carrier may utilize the
Registrant on an as-needed basis, depending upon the pricing offered by
the Registrant and its competitors, as well as capacity. The Registrant
has been tested and approved as an authorized carrier for, and included in
the routing tables of, all of its long distance and international carrier
customers.

CUSTOMER BASE

Commercial Customers

The Registrant provides retail telecommunications services to over 14,000
commercial customers, primarily in the Northeastern United States.
Approximately 53% of the Registrant's Fiscal 1999 revenues were derived
from the sale of services to the retail segment. Retail revenues were
approximately $72,556,000 and $65,305,000 in Fiscal 1999 and Fiscal 1998,
respectively.

Wholesale Customers

The Registrant provides wholesale telecommunications services to various
national and international telecommunications carriers. Approximately 47%
of the Registrant's Fiscal 1999 revenues were derived from domestic and
international wholesale services. Wholesale revenues were approximately
$64,727,000 and $57,981,000 during Fiscal 1999 and Fiscal 1998,
respectively.

Telecommunications Services Market

Overview of the United States Market. The United States market for
telecommunications services can be divided into three basic sectors: long
distance services, local exchange services and Internet access services.

Long Distance Services. A long distance telephone call can be envisioned
as consisting of three segments. Starting with the originating customer,
the call travels along a local exchange network to a long distance
carrier's point of presence ("POP"). At the POP, the call is combined with
other calls and sent along a long distance network to a POP on the long
distance carrier's network near where the call will terminate. The call is
then sent from this POP along a local network to the terminating customer.
Long distance carriers provide only the connection between the two local
networks; and, unless the long distance carrier is a local service
provider, pay access charges to LECs for originating and terminating
calls.

Local Exchange Services. A local call is one that does not require the
services of a long distance carrier. In general, the local exchange
carrier connects end-user customers within a LATA and also provides the
local portion of most long distance calls.

Internet Service. Internet services are generally provided in at least two
distinct segments. A local network connection is required from the
Internet Service Provider ("ISP") customer to the ISP's local facilities.
For large, communication-intensive users and for content providers, the
connections are typically unswitched, dedicated connections provided by
LECs, Intelligent Call Processing ("ICP"), or other providers, either as
independent service providers or, in some cases, by a carrier that is both
a CLEC and an ISP. For residential and small and medium-sized business
users, these connections are generally Public Switched Telephone Network
("PSTN") connections obtained on a dial-up access basis as a local
exchange telephone call. Once a local connection is made to the ISP's
local facilities, information can be transmitted and obtained over a
packet-switched IP data network, which may consist of segments provided by
many interconnected networks operated by a number of ISPs. The collection
of interconnected networks makes up the Internet. A key feature of
Internet architecture and packet-switching is that a single dedicated
channel between communication points is never established, which
distinguishes Internet-based services from the PSTN.

International Service. A typical international long distance call
originates on a local exchange network or private line and is carried to
the international gateway switch of a long distance carrier. The call is
then transported along a fiber optic cable or a satellite connection to an
international gateway switch in the terminating country and, finally, to
another local exchange network or private line where the call is
terminated. Generally, only a small number of carriers are licensed by a
foreign country for international long distance and, in many countries,
only the Post Telephone & Telegraph administration ("PTT") is licensed or
authorized to provide international long distance service. Any carrier
which desires to transport switched calls to or from a particular country
must, in addition to obtaining a license or other permission (if
required), enter into operating agreements or other arrangements with the
PTT or another international carrier in that country or lease capacity
from a carrier which already has such arrangements.

Market Opportunities

As a result of the 1996 Act and other federal, state, and international
initiatives, numerous telecommunications markets have been opened to
competition. In addition, the increasing globalization of the world
economy, along with increased reliance on data transmission and Internet
access, has expanded traditional telecommunications markets. The
Registrant has targeted its services principally to small and medium-sized
businesses based upon its belief that such customers are not aggressively
targeted by Tier I providers and are underserved with respect to customer
service and support.

COMPETITION

Overview

The Registrant operates in a highly competitive industry and estimates
that it has no greater than a 1% market share in any market in which it
operates. The Registrant expects that competition will continue to
intensify in the future due to regulatory changes, including the continued
implementation of the 1996 Act, and the increase in the size, resources,
and number of market participants. In each of its markets, the Registrant
will face competition from larger, better capitalized Tier I and Tier II
providers and ILECs and CLECs. While new business opportunities may be
made available to the Registrant through the 1996 Act and other federal
and state regulatory initiatives, regulators are likely to provide the
ILECs with an increased degree of flexibility with regard to pricing of
their services as competition increases.

Competition for the Registrant's products and services is based on price,
quality, reputation, name recognition, network reliability, service
features, billing services, perceived quality and responsiveness to
customers' needs. While the Registrant believes that it currently has
certain advantages relating to price, quality, customer service and
responsiveness to customer needs, there is no assurance that the
Registrant will be able to maintain these advantages or obtain additional
advantages. A continuing trend toward business combinations and alliances
in the telecommunications industry may create significant new competitors
to the Registrant. Many of the Registrant's existing and potential
competitors have financial, technical, and other resources significantly
greater than those of the Registrant. In addition, in December, 1997, the
FCC issued rules to implement the provisions of the World Trade
Organization Agreement on Basic Telecommunications, which was drafted to
liberalize restrictions on foreign ownership of domestic
telecommunications companies and to allow foreign telecommunications
companies to enter domestic markets. The new FCC rules went into effect in
February, 1998 and are expected to make it substantially easier for many
non-United States telecommunications companies to enter the United States
market, thus further increasing the number of competitors. The new rules
will also give non-United States individuals and corporations greater
ability to invest in United States telecommunications companies, thus
increasing the financial and technical resources potentially available to
existing and potential competitors as well as Registrant.

Long Distance Market

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

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

One of the Registrant's principal competitors, MCI/WorldCom, is also a
major supplier of services to the Registrant. The Registrant both links
its switching equipment with transmission facilities and services
purchased or leased from MCI/WorldCom, and resells services obtained from
MCI/WorldCom. There can be no assurance that MCI/WorldCom will continue to
offer services to the Registrant at competitive rates or on attractive
terms, if at all, and any failure to do so could have a material adverse
effect on the Registrant.

Local Exchange Market

Under the 1996 Act and related federal and state regulatory initiatives,
barriers to local exchange competition are being removed. In local
telecommunication markets, the Registrant's primary competitor would be
the ILEC serving each geographic area. ILECs are established providers of
local telephone services to all or virtually all telephone subscribers
within their respective service areas. ILECs also have long-standing
relationships with regulatory authorities at the federal and state levels.
While recent FCC administrative decisions and initiatives provide
increased business opportunities to voice, data and Internet-service
providers, they also provide the ILECs with increased pricing flexibility
for their private line, special access and switched access services. In
addition, with respect to competitive access services, the FCC recently
proposed a rule which would provide for increased ILEC pricing flexibility
and deregulation for such access services, either automatically or after
certain competitive levels are reached. If the ILECs are allowed
additional flexibility by regulators to offer discounts to large customers
through contract tariffs, decide to engage in aggressive volume and term
discount pricing practices for their customers, or seek to charge
competitors excessive fees for interconnection to their networks, the
revenue of competitors to the ILECs could be materially adversely
affected. If future regulatory decisions afford the ILECs increased access
services, pricing flexibility or other regulatory relief, such decisions
could also have a material adverse affect on competitors to the ILECs.

The Registrant also would face competition or prospective competition in
local markets from other carriers, many of which have significantly
greater financial resources than the Registrant. For example, the Tier I
providers have each begun to offer local telecommunications services in
major domestic markets using their own facilities or by resale of the
ILECs' or other providers' services. In addition to these long-distance
service providers, entities which currently offer or are potentially
capable of offering local switched services include companies which have
previously operated as Competitive Access Provider ("CAP"), cable
television companies, electric utilities, microwave carriers, wireless
telephone system operators, and large customers who build private
networks. These entities, upon entering into appropriate interconnection
agreements or resale agreements with ILECs, could offer single-source
local and long distance services, similar to those offered or proposed to
be offered by the Registrant.

In addition, a continuing trend towards business combinations and
alliances in the telecommunications industry may create significant new
competitors to the Registrant. Many of these combined entities will have
resources far greater than those of the Registrant. These combined
entities may provide a bundled package of telecommunications products,
including local and long distance telephony, that is in direct competition
with the products offered or proposed to be offered by the Registrant, and
may be capable of offering these products sooner and at more competitive
rates than the Registrant. The Registrant does not currently offer local
telephone services, but is considering entry into this market to better
serve its existing customers and provide a one-stop service for customers,
in its targeted market; namely, small to medium sized businesses.

YEAR 2000 MATTERS

As is the case with most other companies using computers in their
operations, the Registrant is in the process of addressing the year 2000
(Y2K) issues. The Registrant believes it has a solid plan in place.
Modifications, such as software and hardware upgrades have been scheduled
or are under development/deployment for all Information Technology ("IT")
and non-IT systems. Specifically, the Registrant's review of its year 2000
compliance included the Registrant's electronic data processing equipment,
including all switches, digital cross connects, and other date sensitive
processor associated with the Registrant's telecommunications network,
back office, and billing and collection systems. Any required
modifications would be addressed concurrently with another project to
enhance the Registrant's billing system and should be completed by the
third quarter of 1999. The total cost for the upgrades and management
overhead is estimated to be approximately $750,000, which has been
included in the Registrant's budget.

Despite the foregoing efforts and expenditures, there can be no assurance
that the Registrant will be able to identify all year 2000 issues in its
IT and non-IT systems in advance of their occurrence or that the
Registrant will be able to successfully remedy any such issues.
Additionally, to the extent that the Registrant's suppliers or customers
fail to address year 2000 issues in a timely and effective manner, the
Registrant's ability to provide uninterrupted, reliable service to
customers serviced through its networks may be adversely affected. In an
effort to assess the foregoing risk, the Registrant has been surveying all
of its material customers and suppliers as to their current state of year
2000 compliance. Based on the survey results, the Registrant believes they
are taking the steps necessary to ensure their readiness.

The profitability and stability of the Registrant's customers may be
adversely affected by year 2000 issues not related to their relationships
with the Registrant. The expenses or liabilities to which the Registrant
may become subject as a result of any year 2000 issues, or the impact of
year 2000 issues on the ability of existing or future customers to do
business with the Registrant cannot be precisely determined, but could
have a material adverse effect on the Registrant's business, operating
results and financial condition.

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

Overview

The Registrant's services are subject to regulation by federal, state, and
local governmental agencies. The FCC exercises jurisdiction over all
facilities and services of telecommunications common carriers to the
extent those facilities are used to provide, originate or terminate
interstate or international communications. State regulatory agencies
retain jurisdiction over carriers' facilities and services to the extent
they are used to originate or terminate intrastate communications.
Municipalities and other local government agencies may require carriers to
obtain licenses or franchises regulating use of public rights-of-way
necessary to install and operate their networks. The networks are also
subject to numerous local regulations such as building codes, franchises,
and rights of way licensing requirements. Many of the regulations issued
by these regulatory bodies may be subject to judicial review, the results
of which the Registrant is unable to predict.

The 1996 Act

Statutory Requirements. The 1996 Act requires all LECs (including ILECs
and CLECs) (i) not to prohibit or unduly restrict resale of their
services; (ii) to provide local number portability; (iii) to provide
dialing parity and nondiscriminatory access to telephone numbers, operator
services, directory assistance, and directory listings; (iv) to afford
access to poles, ducts, conduits, and rights-of-way; and (v) to establish
reciprocal compensation arrangements for the transport and termination of
local telecommunications traffic. It also requires ILECs to negotiate
local interconnection agreements in good faith and to provide
interconnection (a) for the transmission and routing of telephone exchange
service and exchange access, (b) at any technically feasible point within
the ILEC's network, (c) which is at least equal in quality to that
provided by the ILEC to itself, its affiliates, or any other party to
which the ILEC provides interconnection, and (d) at rates and terms and
conditions which are just, reasonable and nondiscriminatory. ILECs also
are required under the 1996 Act to provide nondiscriminatory access to
network elements on an unbundled basis at any technically feasible point,
to offer their local telephone services for resale at wholesale rates, and
to facilitate collocation of equipment necessary for competitors to
interconnect with or access UNEs.

In addition, the 1996 Act requires RBOCs to comply with certain safeguards
and offer interconnection which satisfies a prescribed 14-point
competitive checklist before RBOCs are permitted to provide in-region
inter-LATA services. These safeguards are designed to ensure that the
RBOC's competitors have access to local exchange and exchange access
services on nondiscriminatory terms and that the subscribers of regulated
non-competitive RBOC services do not subsidize their provision of
competitive services. The safeguards are also intended to promote
competition by preventing RBOCs from using their market power in local
exchange services to obtain an anti-competitive advantage in the provision
of other services.

The 1996 Act also granted important regulatory relief to industry segments
which compete with CLECs. ILECs were given substantial new pricing
flexibility. RBOCs have the ability to provide out-of-region long-distance
services and, if they obtain authorization and under prescribed
circumstances, may provide additional in-region long-distance services.
RBOCs also were granted new rights to provide certain cable TV services.
Inter Exchange Carriers ("IXC") were permitted to construct their own
local facilities and/or resell local services. State laws no longer may
require CATVs to obtain a franchise before offering telecommunications
services nor permit CATVs' franchise fees to be based on their
telecommunications revenue. In addition, under the 1996 Act all utility
holding companies are permitted to diversify into telecommunications
services through separate subsidiaries.

FCC Rules Implementing the Local Competition Provisions of the 1996 Act.
On August 8, 1996, the FCC released a First Report and Order, a Second
Report and Order and a Memorandum Opinion and Order in its CC Docket 96-98
(combined, the "Interconnection Orders") which established a framework of
minimum, national rules enabling state Public Utility Commissions
"("PUC"s) and Public Service Commissions ("PSCs"), and the FCC to begin
implementing many of the local competition provisions of the 1996 Act. In
its Interconnection Orders, the FCC prescribed certain minimum points of
interconnection necessary to permit competing carriers to choose the most
efficient points at which to interconnect with the ILECs' networks. The
FCC also adopted a minimum list of unbundled network elements that ILECs
must make available to competitors upon request and a methodology for
states to use in establishing rates for interconnection and the purchase
of unbundled network elements. The FCC also adopted a methodology for
States to use when applying the 1996 Act "avoided cost standard" for
setting wholesale prices with respect to retail services.

Section 706 Forbearance. Section 706 of the 1996 Act gives the FCC the
right to forebear from regulating a market if the FCC concludes that such
forbearance is necessary to encourage the rapid deployment of advanced
telecommunications capability. Section 706 has not been used to date, but
in January 1998, Bell Atlantic filed a petition under Section 706 seeking
to have the FCC deregulate entirely the provision of packet-switched
telecommunications services. Similar petitions were later filed by the
Alliance for Public Technology and US West Inc. (currently Media One Group
Inc.), and other ILECs are expected to file similar petitions in the near
future. If these petitions are granted, RBOCs would be free to provide a
bundled package of intrastate and interstate data and Internet services
similar to those the Registrant intends to offer. Such an FCC decision
could have a material adverse effect on the Registrant.

Other Federal Regulations

In general, the FCC has a policy of encouraging the entry of new
competitors in the telecommunications industry and preventing
anti-competitive practices. Therefore, the FCC has established different
levels of regulation for dominant carriers and non-dominant carriers. For
purposes of domestic common carrier telecommunications regulation, large
ILECs are currently considered dominant carriers, while CLECs are
considered non-dominant carriers.

* Tariffs. As a non-dominant carrier, the Registrant may install and
operate facilities for the transmission of domestic interstate
communications without prior FCC authorization. Services of non-dominant
carriers have been subject to relatively limited regulation by the FCC,
primarily consisting of the filing of tariffs and periodic reports.
However, non-dominant carriers like the Registrant must offer interstate
services on a nondiscriminatory basis, at just and reasonable rates, and
remain subject to FCC complaint procedures. With the exception of
informational tariffs for operator-assisted services and tariffs for
interexchange casual calling services, the FCC has ruled that IXCs must
cancel their tariffs for domestic interstate interexchange services.
Tariffs remain required for international services. Pursuant to these FCC
requirements, the Registrant has filed and maintains tariffs for its
interstate services with the FCC. All of the interstate access and retail
"basis" services (as defined by the FCC) provided by the Registrant are
described therein. "Enhanced" services (as defined by the FCC) need not be
tariffed. The Registrant believes that its proposed enhanced voice and
Internet services are "enhanced" services which need not be tariffed.
However, the FCC is reexamining the "enhanced" definition as it relates to
IP transport and the Registrant cannot predict whether the FCC will change
the classification of such services.

* International Services. Non-dominant carriers such as the Registrant are
required to obtain FCC authorization pursuant to Section 214 of the
Communications Act and file tariffs before providing international
communication services. The Registrant has obtained authority from the FCC
to provide voice and data communications services between United States
and all foreign points.

* ILEC Price Cap Regulation Reform. In 1991, the FCC replaced traditional
rate of return regulation for large ILECs with price cap regulation. Under
price caps, ILECs can raise prices for certain services by only a small
percentage each year. In addition, there are constraints on the pricing of
ILEC services which are competitive with those of CLECs. On September 14,
1995, the FCC proposed a three-stage plan which would substantially reduce
ILEC price cap regulation as local markets become increasingly competitive
and, ultimately, would result in granting ILECs nondominant status.
Adoption of the FCC's proposal to reduce significantly its regulation of
ILEC pricing would significantly enhance the ability of ILECs to compete
against the Registrant and could have a material adverse effect on the
Registrant. The FCC released an order on December 24, 1996 that adopted
certain of these proposals, including the elimination of the lower service
band index limits on price reductions within the access service category.
The FCC's December 1996 order also eased the requirements necessary for
the introduction of new services by ILECs. On May 7, 1997, the FCC took
further action in its CC Docket No. 94-1 updating and reforming its price
cap plan for the ILECs. Among other things, the changes require price cap
LECs to reduce their price cap indices by 6.5 percent annually, less an
adjustment for inflation. The FCC also eliminated rules that require ILECs
earning more than certain specified rates of return to "share" portions of
the excess with their access customers during the next year in the form of
lower access rates. These actions would have a significant impact on the
interstate access prices charged by the ILECs with which the Registrant
expects to compete.

* Access Charges. Over the past few years, the FCC has granted ILECs
significant flexibility in their pricing of interstate special and
switched access services. Under this pricing scheme, ILECs may establish
pricing zones based on access traffic density and charge different prices
for each zone. The Registrant anticipates that this pricing flexibility
should result in ILECs lowering their prices in high traffic density
areas, the probable area of competition with the Registrant. The
Registrant also anticipates that the FCC will grant ILECs increasing
pricing flexibility as the number of interconnections and competitors
increases. On May 7, 1997, the FCC took action in its CC Docket No. 96-262
to reform the current interstate access charge system. The FCC adopted an
order which makes various reforms to existing rate structures for
interstate access designed to move access charges, over time, to more
economically efficient rate levels and structures.

* Universal Service Reform. On May 8, 1997, the FCC released an order in
its CC Docket No. 96-45, which reforms the current system of interstate
universal service support and implements the universal service provisions
of the 1996 Act. The FCC established a set of policies and rules designed
to ensure that low-income consumers and consumers who live in rural,
insular and high-cost areas receive a defined set of local
telecommunications services at affordable rates. This was to be
accomplished in part through expansion of direct consumer subsidy programs
and in part by ensuring that rural, small and high-cost LECs continue to
receive universal service subsidy support. The FCC also created new
programs to subsidize connection of eligible schools, libraries and rural
health care providers to telecommunications networks. These programs were
to be funded by assessment of eligible revenue of nearly all providers of
interstate telecommunications carriers, including the Registrant.

The Registrant, like other telecommunications carriers which provide
interstate telecommunications services, is required to contribute a
portion of its end-user telecommunications revenue to fund universal
service programs. These contributions became due beginning in 1998 for all
providers of interstate telecommunications services. Such contributions
are assessed based on intrastate, interstate and international end user
telecommunications revenue. Contribution factors vary quarterly and
carriers, including the Registrant, are billed each month. Contribution
factors for the first three quarters of 1998 have been determined by the
FCC as follows: first quarter, second quarter, and third quarter factors
are 3.19%, 3.14%, and 3.08% respectively, for the high cost and low income
funds (interstate and international end-user telecommunications revenue)
and 0.72%, 076%, and 0.75%, respectively, for the schools, libraries and
rural health funds (intrastate, interstate and international end-user
communications revenue). In addition, many state regulatory agencies have
instituted proceedings to revise state universal fund contribution
requirements, which will vary from state to state. Several parties have
appealed the FCC's May 8th order, and these appeals have been consolidated
in the U.S. Court of Appeals for the Fifth Circuit. The Registrant cannot
predict the outcome of these proceedings. In addition, a number of
telecommunications companies have filed a petition for a stay with the
FCC, which is currently pending.

Pursuant to the Universal Service Order, all carriers were required to
submit a Universal Service Fund worksheet in September, 1997. The
Registrant has filed its Universal Service Fund worksheet. The amounts
remitted to the Universal Service Fund may be billed to the Registrant's
customers. If the Registrant does not bill these amounts to its customers,
its profit margin may be less than if it had elected to do so. However, if
the Registrant elects to bill these amounts to its customers, customers
may reduce their use of the Registrant's services, or elect to use the
services provided by the Registrant's competitors, which may have a
material adverse effect upon the Registrant's business, financial
condition, or results of operations. The Registrant is eligible to qualify
as a recipient of universal service support if it elects to provide
facilities-based service to areas designated for universal service support
and if it complies with federal and state regulatory requirements to be an
eligible telecommunications carrier. The FCC's decisions in CC Docket No.
96-45 could have a significant impact on future operations of the
Registrant.

Current Registrant Certifications. The Registrant has received Section 214
authorization from the FCC allowing it to engage in business as a resale
and facilities-based international carrier.

State Regulation

The Registrant believes that most, if not all, states in which it may
operate as a local telecommunications provider, require certification or
other authorization to offer intrastate services. Many of the states in
which the Registrant may operate are in the process of addressing issues
relating to the regulation of CLECs.

In some states, existing state statutes, regulations or regulatory policy
may preclude some or all forms of local service competition. However,
Section 253 of the 1996 Act prohibits states and localities from adopting
or imposing any legal requirement which may prohibit, or have the effect
of prohibiting, the ability of any entity to provide any interstate or
intrastate telecommunications service. The FCC has the authority to
preempt any such state or local requirements to the extent necessary to
enforce the 1996 Act's open market entry requirements. States and
localities may continue to regulate the provision of interstate
communications services and require carriers to obtain certificates or
licenses before providing service, if such requirements do not constitute
prohibitive barriers to market entry.

Some states in which the Registrant operates are considering legislation
which could impede efforts by new entrants in the local services market to
compete effectively with ILECs. For example, some state PSCs and PUCs are
currently considering actions to preserve universal service and promote
the public interest. Such actions may impose conditions on the certificate
issued to an operating Registrant which would require it to offer service
on a geographically widespread basis through (i) the construction of
facilities to serve all residents and business customers in such areas,
(ii) the acquisition from other carriers of network facilities required to
provide such service, or (iii) the resale of other carriers' services. The
Registrant believes that state PSCs and PUCs have limited authority to
impose such requirements under the 1996 Act. The imposition of such
conditions by state PUCs, however, could increase the cost to operating
companies of providing local exchange services or otherwise affect an
operating company's flexibility to offer services.

The Registrant has intrastate authority for the provision of resold
interexchange services through certification or registration in every
state where it is required. The Registrant has CLEC certifications pending
in several states. There can be no assurance that the Registrant will
receive the authorizations it may seek in the future to the extent it
expands into other states or seeks to provide additional services. In most
states, the Registrant is required to file tariffs setting forth the
terms, conditions and prices for services which are classified as
intrastate.

Local Interconnection. The 1996 Act imposes a duty upon all ILECs to
negotiate in good faith with potential interconnectors to provide
interconnection to the ILEC networks, exchange local traffic, make
Unbundled Network Elements ("UNE') available and permit resale of most
local services. If negotiations do not succeed, the Registrant has a right
to seek state PUC arbitration of any unresolved issues. The Registrant has
begun the process of negotiating interconnection arrangements in several
states in its targeted region. Arbitration decisions involving
interconnection arrangements in several states have been challenged in
lawsuits filed in United States District Court by the affected ILECs.

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 would
require any material capital expenditure.

PERSONNEL

As of the date of this Report, the Registrant and its subsidiaries
employed 249 full-time and part-time employees in its long distance
telecommunication service, of whom 52 were engaged in sales activities, 27
in customer service and support, 67 in technical and field services, 30 in
data processing, and 73 in general and administrative activities. The
Registrant also utilizes the services of approximately 220 independent
sales agents. The Registrant considers its relations with its employees to
be satisfactory.

ITEM 2. Properties
On November 15, 1993, and December 28, 1993, the Registrant entered into
leases for an aggregate of approximately 3,500 square feet of space at 744
Broad Street, Newark, New Jersey, for its upgraded switching equipment.
The lease ran from January 1, 1994 through December 31, 1998, with an
option to renew the lease through August 31, 2002. This option has been
exercised. The annual rental of $54,720 also requires 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, the Registrant entered into a five-year lease, which
expired on November 30, 1998, for approximately 20,000 square feet of
space from a partnership in which two of the partners were directors and
major shareholders of the Registrant. One of the partners is no longer a
director. The lease has been renewed on a month to month basis at an
annual rate of $73,467.75. The lease has a 120 day prior written notice by
either party to terminate. 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, the Registrant 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 Registrant 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 was $357,760 per annum from July 1,
1997 through February 14, 1998, is $366,800 per annum from February 15,
1998 through August 14, 2000, and will be $382,720 per annum from August
15, 2000 through August 14, 2002. In addition, the Registrant is obligated
for its proportionate share of increases in real estate taxes and
operating expenses over the base year.

On November 1, 1996, the Registrant 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 Registrant 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 (63) 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 Registrant 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 Registrant
is liable for its proportionate share of increases in real estate taxes
and operating expenses over the base year. Due to the recent restructuring
(See ITEM 7 -Overview), the Registrant is eliminating the Miami switch,
and is seeking a sub-tenant or early termination of this lease.

On September 1, 1998 the Registrant entered into a five year lease,
commencing September 1, 1998 leasing 3,008 square feet of space at 500
Cypress Creek Road, Fort Lauderdale, Florida. Rental payments are $48,128
per annum from September 1, 1998 to August 31, 1999, $50,554 from
September 1, 1999 to August 31, 2000, $53,061 from September 1, 2000 to
August 31, 2001, $55,708 from September 1, 2001 to August 31, 2002 and
$58,506 from September 1, 2002 to August 31, 2003. The lease requires the
payment of the tenant's proportional share of increased operating expenses
and real estate taxes over the base year. Due to the recent restructuring
(See ITEM 7 -Overview), the Registrant is eliminating the Fort Lauderdale
sales office and is seeking a sub-tenant or early termination of this
lease.

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.

ITEM 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the fourth
quarter of Fiscal 1999.

(THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK)


PART II

ITEM 5. Market for Registrant's Common Stock and Related Security Holder 
Matters

Common Stock

The Registrant's authorized capital stock consists solely of 20,000,000
shares of Common Stock. Holders of the Registrant's Common Stock are
entitled to receive such dividends, if any, as may be declared from time
to time by the Board of Directors in its discretion from funds legally
available therefor, subject to any prior dividend rights of holders of
Preferred Stock. Each holder of Common Stock is entitled to one vote for
each share held. There is no right to cumulative voting. Upon liquidation,
dissolution, or winding up of the Registrant, subject to any prior
liquidation rights of holders of Preferred Stock, the holders of Common
Stock are entitled to receive a pro rata share of all remaining assets
available for distribution to stockholders. The Common Stock has no
pre-emptive or other subscription rights, and there are no conversion or
redemption rights with respect to such shares. Effective 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.
Effective on July 15, 1998, the Registrant distributed 4,207,887 shares of
Common Stock in connection with a 2-for-1 stock split of all outstanding
shares as of June 30, 1998. As of the date of this report, there were 9,122,774
shares of Common Stock issued and outstanding, held by 788 persons, as
reported by the Registrant's transfer agent.

Price Range of the Common Stock

The Registrant's Common Stock is traded in the over-the-counter market on
the NASDAQ National Market System under the Symbol TELU. The following
table sets forth, for the quarterly fiscal periods indicated, the high and
low closing sales prices for the Registrant's Common Stock in such market,
as reported by the National Association of Securities Dealers, Inc.
Closing sale prices prior to July 1, 1998 have been adjusted to reflect a
2-for-1 stock split effective July 15, 1998.

FISCAL 1999                                    HIGH             LOW
February 1 thru April 30                      21 3/4          14 5/8
May 1 thru July 31                            24 1/2          18 3/4
August 1 thru October 31                      23              14 3/4
November 1 thru January
31,1999                                       22              14 7/16
FISCAL 1998
February 1 thru April 30                      9 1/8           5 1/2
May 1 thru July 31                            12 3/4          6 13/16
August 1 thru October 31                      15 1/8          9
November 1 thru January
31,1998                                       16 1/2          12 5/8

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.


<TABLE>
<CAPTION>

ITEM 6. Selected Financial Data

                                     (In thousands except per share amounts)
                                             Year ended January 31,.

RESULTS OF OPERATIONS:         1999           1998               1997        1996            1995
                            __________      _________          ________    _________       ________
<S>                        <C>             <C>               <C>          <C>            <C>
Net sales                   $ 137,283       $ 123,286         $ 89,326     $ 49,873       $ 29,817

Net (Loss) earnings         $  (3,418)      $   1,094         $    492     $  1,555       $  1,100

Average common shares
outstanding (a) 

Basic                           6,818           6,213            5,883        5,818          6,516

Diluted                         6,818           6,842            6,739        6,526          6,516

(Loss) earnings per common 
and common equivalent 
shares

Basic (Loss) earnings per
share                       $   (0.50)       $   0.18           $ 0.08     $   0.27       $   0.17

Diluted (Loss) earnings 
per share                   $   (0.50)       $   0.16           $ 0.07     $   0.24       $   0.17

Cash dividends per
common share                     None            None             None         None           None

Additions to property
& equipment                $    4,727       $   3,268           $6,397      $ 3,028        $ 2,268

Depreciation and
amortization               $    2,785       $   2,028          $ 1,382      $ 1,026        $   663

FINANCIAL POSITION

Working Capital            $    1,261       $   7,936          $ 5,419      $ 4,799        $ 5,031

Property and equipment - 
net                        $   14,473       $  12,406          $11,066      $ 6,011        $ 3,924

Total assets               $   45,692       $  40,245          $31,029      $20,520        $15,110

Long-term debt             $    1,566       $   2,092          $ 2,940      $    --        $    --

Shareholders' Equity       $   16,442       $  18,598          $14,772      $10,700        $ 9,093

Common shares
outstanding (a)                 7,605           6,679            5,891        5,854          5,800

(a) All per share amounts have been restated to reflect the 2 for 1 stock split distributed July 1, 1996, 
    and the 2 for 1 stock split distributed on July 15, 1998.

</TABLE>

ITEM 7. Management's Discussion and Analysis of Financial Condition and 
Results of Operations.

The following discussion is presented to assist in assessing the changes 
in financial condition and performance of the Registrant for the fiscal 
year ended January 1, 1997 ("Fiscal 1997"), January 31, 1998 (Fiscal 
1998) and January 31, 1999 (Fiscal 1999). The following information 
should be read in conjunction with the financial statements and related 
notes and other detailed information regarding the Registrant included 
elsewhere in this report and should not be construed to imply management's 
belief that the results, causes, or trends presented will necessarily 
continue in the future. Certain information contained below and elsewhere 
in this, including information with respect to the Registrant's plans and 
strategy for its business, are "forward-looking statements."

Overview

The Registrant is a leading regional facilities-based ICP servicing both
the commercial and wholesale marketplace. Total-Tel is an established
company which has been in existence since 1959. The Registrant began
offering interexchange telecommunications services in January, 1983. Gross
revenues have increased from approximately $30 million in the Fiscal year
ended January 31, 1995 ("Fiscal 1995") to approximately $137 million for
Fiscal 1999. This growth has been achieved through internal efforts, and
not as a result of acquisitions.

The Registrant currently owns three long-distance switches, in New York,
Newark, and Miami. The Registrant also has a NOC that monitors and
controls its network. The Registrant sells its services through three
sales groups: a field retail sales force, independent agent sales force,
and the wholesale sales force.

With the management changes made in the fourth quarter of 1999, the focus
of the Registrant was changed from national expansion to focus on further
penetration into the Northeastern, USA market. This decision led to a
restructuring of the Registrant's business, eliminating the sales offices
in Florida, Georgia, Washington D.C. and the United Kingdom, as well as
the switch in Miami, Florida. This restructuring also led to the
elimination of the expenses related to the national expansion. The
Registrant has recorded expenses of $2,368,000 to cover the costs related
to the restructuring.

The Registrant's principal expenses consist of: direct cost of sales,
operating costs, and depreciation. Direct cost of sales consist of access
fees, line installation expenses, switch expenses, transport expenses, and
local and long-distance expenses. Operating costs are comprised of the NOC
expenses, selling and marketing costs, and general and administrative
costs.

RESULTS OF OPERATIONS

FISCAL 1999 AS COMPARED TO FISCAL 1998

Revenues

Net sales of telecommunications services and systems for the fiscal year
ended January 31, 1999 were approximately $137,283,000, an increase of
approximately $13,997,000, or 11.4% over the approximately $123,286,000 of
net sales in Fiscal 1998. These revenues were comprised of retail sales of
approximately $72,556,000 and wholesales revenues of approximately
$64,727,000. The Registrant billed approximately 978,971,000 minutes in
Fiscal 1999 as compared to approximately 862,479,000 minutes in Fiscal
1998, an increase of 116,492,000 minutes or 13.5%. Due to the competitive
nature of the long distance communications industry, the average price for
a minute of domestic retail traffic continued to decrease. In Fiscal 1999,
this decrease was approximately 4%.

Net retail sales for Fiscal 1999 were approximately $72,556,000, an
increase of approximately $7,251,000, or 11.1%, over the approximately
$65,305,000 billed in Fiscal 1998. Retail billed minutes were
approximately 628,780,000, an increase of approximately 63,866,000
minutes, or 11.3%, over the retail minutes of approximately 564,914,000
billed in Fiscal 1998.

Net wholesale (carrier) sales for Fiscal 1999 were approximately
$64,727,000, an increase of approximately $6,746,000, or 11.6%, over the
approximately $57,981,000 billed in Fiscal 1998. Billed wholesale minutes
amounted to approximately 350,191,000, an increase of approximately
52,625,000 minutes, or 17.7%, over the billed wholesale minutes of
approximately 297,566,000 billed in Fiscal 1998. There was a change in the
sales mix from the lower priced domestic traffic to higher priced
international traffic. International carrier traffic increased 86,719,000
minutes or approximately 79.9% to approximately 195,264,000 minutes.
Domestic minutes decreased approximately 34,093,000 or approximately 18.0%
to approximately 154,927,000 minutes.

Cost of Sales

Cost of sales for Fiscal 1999 were approximately $111,500,000, an increase
of approximately $12,414,000, or 12.5%, over the approximately $99,086,000
of cost of sales in Fiscal 1998. Included in cost of sales are direct line
costs, usage charges and the direct costs of the Registrant's switches and
Network Operating Center ("NOC"). The increase in cost of sales was
primarily due to sales volume increases, accounting for approximately
$10,667,000 of the total increase. Cost reductions due to access reform
and gained network efficiencies of approximately $800,000 were offset by
the higher price paid for the change in the carrier sales mix to higher
cost wholesale international traffic of approximately $800,000. The
balance of the increase in cost of sales was due to the addition of the
Miami switch, approximately $392,000; increase in salary, wages and fringe
benefits of approximately $936,000; increased depreciation expense of
$444,000; increased recruiting expense of approximately $102,000;
increased consulting expenses of approximately $127,000; and increases in
other operations expenses of approximately $50,000. These increases were
offset by the elimination of the services department which offered
telephone equipment for sale. This saved approximately $304,000 in costs.
The increases in salaries and wages, recruiting and consulting were the
result of the planned expansion into the national market. As a result of
management changes made late in Fiscal 1999, a planned expansion has been
curtailed and the expenses incurred in Fiscal 1999 have been substantially
reduced.

Selling, General and Administrative:

Selling, general and administrative expenses for Fiscal 1999 increased to
approximately $28,912,000, an increase of approximately $6,829,000, or
30.9%, over the approximately $22,083,000 in Fiscal 1998. This increase
was primarily due to expenses incurred in anticipation of the planned
expansion of Registrant into new markets and the "Revision" litigation.
These expenses were one-time charges to Registrant, and are not expected
to be continued in the next fiscal year. Among these charges, the legal
expense related to the recently settled "Revision" litigation amounted to
approximately $1,700,000. Increased expenses relating to the expansion
plans included the cost of new sales offices and recruiting costs in
Florida, Georgia, Washington D.C., Boston and the United Kingdom of
approximately $895,000; increased consulting fees incurred to rebuild the
infrastructure of the registrant of approximately $506,000; recruiting
fees of approximately $198,000 incurred in hiring additional support
staff. Increased spending in Fiscal 1999 over Fiscal 1998 included
increased salaries, wages and fringe benefits of approximately $717,000;
increased depreciation expense of approximately $156,000; increased
building rent of approximately $190,000; increased utilities, telephone
and insurance costs of approximately $122,000; an increase in annual 
accounting services of approximately $86,000; increased advertising and 
promotion of approximately $615,000; increased commission expense, related 
to the increased sales volumes, of approximately $817,000; increased 
cost of equipment rentals of approximately $111,000; increased travel and
entertainment expense of approximately $115,000; an increase in the amount
of donations to charitable causes of approximately $70,000: an increase in
the reserve for bad debts of approximately $462,000; and increases in
other expenses of approximately $69,000. Since the end of Fiscal 1999, the
Registrant has curtailed its expansion plans and taken steps to roll back
to eliminate most of the salaried positions created in Fiscal 1999.

Restructuring Expense

During the fourth quarter of fiscal 1999, the Registrant recorded a
restructuring charge of approximately $2,368,000 related to the adoption
by the Registrant of a formal action plan for restructuring its focus of
operations. The restructuring was adopted in an effort to concentrate the
efforts on the Northeastern United States market. Elements of the
Registrant's restructuring plan include eliminating the sales offices in
Florida, Atlanta, Georgia, Washington D.C. and the United Kingdom, as 
well as the Miami switch.

Asset write-down incurred in connection with the restructuring included a
charge of approximately $1,300,000 associated with the planned disposal of
the Miami switch and switch site, a charge of approximately $703,000
associated with the termination costs to reduce employee headcount and
sales offices, a charge of approximately $265,000 for the cost associated
with the balance of the Fort Lauderdale lease, and a charge of
approximately $100,000 to write off line installation costs associated
with the Florida network.

Stock Compensation Expense

Stock Compensation expenses for Fiscal 1999 decreased to approximately
$424,000, a decrease of approximately $145,000, or 25.5%, from the
approximately $569,000 charged in Fiscal 1998. This decrease is due to the
cancellation of certain shares of Common Stock granted in prior years to
employees who were terminated in the fiscal year ended January 31, 1999.

Other Income and Expense

Total other income and expense for Fiscal 1999 decreased to approximately
$62,000, a decrease of approximately $215,000, or 77.6%, from the
approximately $277,000 experienced in Fiscal 1998. Included in other
income for Fiscal 1998 was a one-time gain from insurance proceeds paid
upon the death of a former officer of Registrant. Interest income and
interest expense, which are two of the components included relatively
constant from year to year.

Net loss for the fiscal year ended January 31, 1999 of approximately
$3,418,000 represents a decrease of approximately $4,512,000 from the net
income of approximately $1,094,000 reported in Fiscal 1998. Despite an
increase of approximately $1,583,000 in gross margin to approximately
$25,783,000, the added expense of the Revision litigation, approximately
$1,700,000; and the expenses relating to the proposed national expansion
of the Registrant (including new sales offices, consulting, recruiting and
headcount additions) totaling approximately $4,500,000, were the main
factors in the reduction of earnings. The recent changes in the management
of the Registrant have brought about an elimination of a substantial
portion of these expenses. For the foregoing reasons, a loss per share of
$0.50 (basic) was realized in Fiscal 1999, a decrease of $0.68 per common
share (basic) from the earnings per share (basic) $0.18 posted in Fiscal
1998.

FISCAL 1998 AS COMPARED TO FISCAL 1997

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 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 Registrant. 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 Registrant.

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.

LIQUIDITY AND CAPITAL RESOURCES

At January 31, 1999, the Registrant had working capital of approximately
$1,261,000 as compared to approximately $7,936,000 at January 31, 1998, a
decrease of $6,675,000. The decrease in working capital in fiscal 1999 was
primarily attributable to a decrease in accounts receivable (net of
doubtful accounts) of approximately $1,615,000, a decrease in prepaid and
other current assets of approximately $696,000, a decrease of
approximately $22,000 in notes receivable, an increase in accounts
payable of approximately $4,343,000, an increase in other accrued
liabilities of $1,706,000, a restructuring reserve of approximately
$2,128,000 and an increase in the current portion of long term debt of
approximately $39,000. This decrease was partially offset by an increase
in cash and cash equivalents of approximately $2,635,000 and an increase
in deferred income taxes of approximately $1,268,000. The current ratio of
1.0 to 1, decreased from the 1.4 to 1 ratio experienced in fiscal 1998.
The Registrant continues to maintain a strong liquid position with cash
and cash equivalents and investments available for sale of approximately
$6,602,000 representing 24.1% of current liabilities.

The cash flow statement of the Registrant for Fiscal 1998 indicated an
increase in cash and cash equivalents of approximately $2,635,000.
Non-cash adjustments (depreciation, amortization, reserve for bad debt
deferred income taxes and non-cash compensation expense) of approximately
$3,469,000 and net changes in assets and liabilities of approximately
$6,965,000 added back to the net loss of approximately $3,418,000 provided
net cash from operations of approximately $7,016,000. Cash used in
investing activities amounted to approximately $4,955,000, of which
approximately $4,727,000 were used for the purchase of capital additions
and approximately $281,000 was used for the purchase of additional
circuits to build out the network. These additions were partially offset
by net repayments on notes receivable of approximately $22,000 and
proceeds from the sale of securities and fixed assets of approximately
$30,000. The cash flow from financial activities of approximately
$574,000 consisted primarily cash received from the exercise of stock
options of approximately $1,061,000 offset by the repayment of bank
borrowings of approximately $487,000.

CAPITAL EXPENDITURES

Capital expenditures for Fiscal 1999 totaled approximately $4,727,000 and
were financed from funds provided from Registrant's working capital and
cash derived from operations. The capital expenditures were used for the
installation of a switch site in Miami, approximately $2,100,000; LAN/WAN
software and hardware upgrades, $794,000; various improvements to current
switch operations, $1,766,000; with the balance of the expenditures used
for leasehold improvements in the Great Notch office.

The Registrant has an Equipment Facility and Revolving Credit Arrangement
with a major New Jersey bank. The Registrant entered into a modification
of the agreement in March, 1998 and November, 1998. The amended and
restated Equipment Facility and Revolving Credit agreement allows for an
unsecured line of credit of $5,000,000 and $10,000,000 for the purchase of
machinery and equipment. At January 31, 1999, the Registrant had bank
borrowings of $2,092,245. The $10,000,000 facility for equipment has been
terminated in exchange for a waiver from the bank releasing the 
registrant from certain covenants. For further details, see Note 11 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 7A. Quantitative and Qualitatiave Disclosures About Market Risk
Market risk represents the risk of changes in value of a financial
instrument, derivative or non-derivative, caused by fluctuations in
interest rates, foreign exchange rates and equity prices. The Registrant's
cash and investments exceed long-term debt; therefore, the exposure to
interest rate risk relates primarily to the marketable securities held by
the Registrant. The Registrant only invests in instruments with high
credit quality where a secondary market exists. The Company does not hold
any derivatives related to its interest rate exposure. The Company also
maintains long-term debt at fixed rates. Due to the nature and amounts of
the Registrant's note payable, an immediate 10% change in interest rates
would not have a material effect in the Registrant's results of operations
over the next fiscal year. The Registrant's exposure to adverse changes in
foreign exchange rates is also immaterial to the consolidated statements
as a whole.

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

Walt Anderson                 45    Director

Warren H. Feldman             43    Chairman of the Board and
                                    Chief Executive Officer

Leon Genet                    67    Director

Henry Luken                   39    Director

Jay J. Miller                 66    Director

Dennis Spina                  53    President, Chief Operating 
                                    Officer and Director

Thomas P. Gunning             61    Chief Financial Officer, Vice President
                                    Treasurer and Secretary

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. Walt Anderson was elected a Director of the Registrant in February,
1999. He has been Manager of Revision LLC from June 1998 to the present;
President and Chairman of Entree International Ltd. (Financial Consulting
Services) from July, 1997 to the present; Chairman of Teleport UK Ltd.
(Satellite Communications) from May, 1996 to the present; Chairman of
Espirit Telecom Group plc. (Telecom Services) from October, 1992 to
September, 1998 and President and Chairman, Mid Atlantic Telecom (Telecom
Services), from May, 1984 to December, 1993. Mr. Anderson is also a
director of American Technology Labs (Network Equipment), Aquarius
Holdings Ltd. (Water Transport Systems), Cis-Lunar Development (Diving
Equipment), Rotary Rocket Corp. (Space Transportation Systems), Net-Tel
Holdings (Telecom Services) and US WATS (Telecom Services).

Mr. Warren H. Feldman has served as a Director of the Registrant since
April, 1987 and Chairman of the Board since September, 1993. He has served
as President and Chief Executive Officer of the Registrant since
September, 1992. From January, 1986 until September, 1992, he served as
Vice President - Regulatory Affairs of the Registrant, and from 1984 until
January, 1986 as the General Manager of its Total-Tel USA division and
General Counsel of the Registrant. He was elected President of the
Total-Tel USA Division in October, 1988.

Mr. Leon Genet has served as a Director since October, 1996. For more than
the past five years, he has been a partner in Genet Realty, a commercial
and industrial real estate brokerage firm. 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 the Registrant on
the same basis as other independent sales representatives. See "Certain
Relationships and Related Transactions".

Mr. Henry G. Luken, III was elected a Director of the Registrant in
February, 1999. Currently he is President of Mont Lake Properties, Inc., a
real estate development firm; a director of ACNTV, a home shopping company
selling through TV; Managing Agent of Henry IV LLC, an aircraft sales
company. A co-founder of Telco-EIC, he served as Chief Executive Officer
and Treasurer from July, 1993 to April, 1996, and Chairman from July, 1993
to October, 1997. Mr. Luken has also served as Chairman of Tel-Labs, Inc.
a telecommunications billing firm ("Tel-Labs") since 1991, and as Chairman
of Telco Development Group, Inc., a computer systems firm owned by Mr.
Luken, since 1987, both of which entities he founded.

Jay J. Miller, Esq. has served as a Director since 1983. He has been a
practicing attorney for more than 35 years in New York. Mr. Miller is a
Director of Edison Control Corporation, a manufacturer of pipe, fittings,
and accessories for concrete pumping equipment. He is Chairman of the
Board of AmTrust Pacific Ltd., a New Zealand real estate company. Mr.
Miller has performed legal services on behalf of the Registrant. See
"Certain Relationships and Related Transactions."

Mr. Dennis Spina was elected a Director, President and Chief Operating
Officer of the Registrant in February, 1999. He is also a founder and
President of Simex SA, a Mexican company engaged in office cleaning
services. He had been Vice Chairman and President of Internet Services,
RCN (telecommunications) from February, 1998 to December, 1998; Chief
Executive Officer, Erols Internet, Inc. (Internet Service Provider) from
August, 1996 to February, 1998 (Erols was acquired by RCN); Independent
Consultant in the service and distribution industry from January, 1996 to
July, 1996; President and Chief Executive Officer, International Service
Systems (janitorial and energy management) from November, 1994 to
December, 1995; President and Chief Executive Officer of Suburban Propane,
Inc. (division of Hanson PLC) from August, 1990 to October, 1994.

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 firms.

Board of Directors

The Registrant's Board of Directors currently consists of six persons, two
of whom are members of management and four of whom are non-management
directors. During the fiscal year ended January 31, 1999, the Board held
six meetings which were attended by all of the directors then serving.

The Registrant's Board of Directors has Audit and Compensation Committees,
but does not have a Nominating Committee or a committee performing a
similar function. The Audit Committee currently consists of two
non-management directors, Messrs. Walt Anderson and Leon Genet. The
Committee reviews, analyzes and may make recommendations to the Board of
Directors with respect to the Registrant's financial statements and
controls. The Committee has met and intends to meet from time to time with
the Registrant's independent public accountants to monitor their
activities. The Compensation Committee consists of Messrs. Henry Luken and
Jay J. Miller and is charged with reviewing and recommending the
compensation and benefits payable to the Registrant's senior executives.
Messrs. Warren Feldman and Dennis Spina are ex-officio members of the
Compensation Committee.

ITEM 11. Executive Compensation
a) The following table sets forth the compensation which the Registrant 
paid during the fiscal years ended January 31, l999, 1998, 1997 to the 
Chief Executive, and each Executive Officer of the Registrant whose 
aggregate remuneration exceeded $100,000.


<TABLE>
<CAPTION>

                                  Summary Compensation Table

Name and         Fiscal Year       Annual Compensation             Other Compenation
Principal          Ended          Annual          Awards                        All Other
Position         January 31      Salary ($)      Bonus(s)     Options (#)     Compensation($)

<S>                <C>          <C>            <C>            <C>             <C>
Warren H.           1999        $221,154 (1)    $260,785                       $ 8,735 (2)
Feldman             1998        $287,115 (1)    $350,000                       $15,325 (3)
Chairman and        1997        $315,000 (1)    $295,000                       $ 7,025 (4)
Chief Executive 
Officer

Thomas P.           1999        $124,230         $ 2,000                       $10,161 (5)
Gunning             1998        $116,600         $ 4,000                       $ 8,265 (6)
Vice President,     1997        $ 95,231         $ 6,000                       $ 6,560 (7)
Treasurer and      
Secretary

David Hess          1999        $232,693        $229,167      $ 20,000 (9)     $19,107 (11)
President &         1998        $264,615        $176,773      $115,008 (10)    $ 8,655 (12)
Chief Operating
Officer of
Total Tel, Inc. (8)

</TABLE>

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

(2) The amounts shown represent the Registrant's contribution under its
401 (K) Deferred Compensation and Retirement Savings Plan of $5,026 and
$3,429 for the use of a Registrant vehicle for non-business purposes and
$280 term life insurance premiums.

(3) 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 Registrant vehicle for non-business purposes and
$8,280 term life insurance premiums.

(4) The amounts 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 Registrant vehicle for non-business purposes.

(5) The amount shown represent the Registrant's contribution under its 401
(K) Deferred compensation and Retirement Savings Plan of $3,837 and $1,524
for the use of a Registrant vehicle for non-business purposes and $4,800
term life insurance premiums.

(6) 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 Registrant vehicle for non-business purposes and $3,404
term life insurance premiums.

(7) 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 Registrant vehicle for non-business purposes and $2,271
term life insurance premiums.

(8) Resigned as an officer of the Registrant on January 31, 1999

(9) Settlement of amounts owed.

(10) The amount shown represents commissions paid to Mr. Hess in his
capacity as Vice President of Total-Tel Carrier Services, Inc., a
subsidiary of Registrant.

(11) The amount shown represents the Registrant's contribution under its
401 (K) Deferred compensation and Retirement Savings Plan of $5,573 and
$726 for the use of a Registrant vehicle for non-business purposes and
$12,808 term life insurance premiums.

(12) 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.

(b) Compensation Pursuant to Plans

In October, 1987, the Registrant adopted its 1987 Stock Option Plan and in
October, 1996, adopted its 1996 Stock Option Plan (the "Option Plans").
The Option 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, while
non-qualified options may also be granted under the Option 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 employees.

The Option Plans may be administered by the Compensation Committee of the
Registrant's Board of Directors. The Registrant has reserved 1,329,800
shares of Common Stock under the 1987 Option Plan and 600,000 shares of
Common Stock under the 1996 Option Plan for issuance to employees,
officers, directors and consultants of the Registrant. The shares
underlying the options granted prior to July 15, 1994 have been adjusted
for a 10% stock dividend. The shares underlying the options granted prior
to July 1, 1996 have been adjusted to reflect a 2-for-1 stock split, and
options granted prior to July 1, 1998 have been adjusted to reflect a
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 Option Plans must be granted within 10 years from the
effective date of the respective Option Plan. Incentive stock options
granted under the Option Plans cannot be exercised later than 10 years
from the date of grant. Options granted under the Option Plans 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 option which expires unexercised or that terminates upon an employee's
ceasing to be employed by the Registrant become available once again for
issuance under the Option Plans.



<TABLE>
<CAPTION>

OPTION GRANTS IN LAST FISCAL YEAR

Options /SAR Grants in last Fiscal Year                              Potential realizable Value
                                                                        at Assumed Annual rates
                                                                                       of stock
                                                                               Appreciation for
                                                                                    Option term

                         Individual Grants
__________________________________________________________________________________________________
                     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>
Thomas P. Gunning     2,000         .27%      $ 21.50     August 6, 2003    $ 9,267    $ 19,956

(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.

</TABLE>


<TABLE>
<CAPTION>

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

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

                      Shares
                     Acquired       Value
Name               on Exercise(#)  Realized ($)     Exercisable     Unexercisable   Exercisable
Unexercisable
__________________________________________________________________________________________________
<S>                <C>           <C>               <C>                <C>           <C>
Warren Feldman       77,000       $1,435,000         261,000              --        $3,767,371 
David Hess           50,000        $ 759,375          65,000              --           630,000 
Thomas Gunning (1)       --               --          45,000           2,000          $733,137 

(1) The options to purchase 2,000 shares were at an exercise price greater
than fair market value at January 31, 1999.

</TABLE>



(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.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management
Set forth below is certain information concerning persons who were known
by the Registrant to own beneficially or of record more than 5% of the
issued and outstanding shares of Common Stock of the Registrant as of
April 29, 1999.


<TABLE>
<CAPTION>

Name and Address                    Number of Shares                     Percentage
of Beneficial Owner                      Owned (1)                        of Class

<S>                                  <C>                                   <C>
Warren H. Feldman, Esq.                  789,938 (2)(3)                     10.1%
150 Clove Road
Little Falls, NJ 07424

Walt Anderson                          3,057,634 (4)(5)                     40.1%
c/o Swidler Berlin
Shereff Friedman, LLC
3000 K Street, NW, Suite 300
Washington, D.C. 20007

Revision LLC                           3,057,434                            40.1%
c/o Swidler Berlin
Shereff Friedman, LLC
3000 K Street, NW, Suite 300
Washington, D.C. 20007

Total-Tel USA
Communications, Inc..                    600,000                             7.9%
Employee Stock Ownership Plan
150 Clove Road
Little Falls, NJ 07424

Michael A. Karp                          424,954                             5.6%
3416 Sansom Street
Philadelphia, PA 19104

Thomas Cirrito                           504,694(6)                          6.6%
6429 Georgetown Pike
McLean, VA 22101

</TABLE>

(1) Except as otherwise set forth in the footnotes to this table, 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 261,000 shares of the Registrant's Common
Stock which are exercisable currently or within 60 days of the date hereof.

(3) Does not include 4,000 shares of Common Stock owned by Mr. Feldman's
children, as to which he disclaims beneficial ownership.

(4) 3,057,434 of such shares are beneficially owned by Revision LLC. As
the sole manager and holder of 100% of the voting membership interests in
Revision LLC, Mr. Anderson has the sole power to vote and dispose of such
shares. Accordingly, Mr. Anderson may be deemed the beneficial owner of
such shares.

(5) Does not include 94,930 shares of Common Stock owned by the Foundation
for International Non-Governmental Development of Space, of which Mr.
Anderson is the President and a director. Mr. Anderson disclaims
beneficial ownership of such shares. Mr. Anderson and Revision LLC are
subject to certain restrictions on the purchase of additional shares
pursuant to a Settlement Agreement between such parties and the
Registrant.. (See "Settlement of Litigation.")

(6) Atocha LP, of which Mr. Cerrito is general partner, owns 484,694 of
these shares.

(b) Security Ownership of Management

The following table sets forth as of April 29, 1999 information concerning
the beneficial ownership of outstanding shares of Common Stock of the
Registrant by each director of the Registrant, and all directors and
officers of the Registrant as a group:

Name of Beneficial         Number of Shares    Percentage
Owner                          Owned (1)         of Class
__________________________________________________________
Walt Anderson                3,057,634 (2)(3)     40.1%

Revision LLC                 3,057,434            40.1%

Warren H. Feldman              789,938 (4)        10.0%

Leon Genet                      91,120             1.2%

Henry Luken                    164,653             2.2%

Jay J. Miller                      400                 (5)

Dennis Spina                         5                 (5)
All directors and officers
as a group (7 in number)     4,154,550 (2)(3)      52.4%

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

(2) 3,057,434 of such shares are beneficially owned by Revision LLC. As
the sole manager and holder of 100% of the voting membership interests in
Revision LLC, Mr. Anderson has the sole power to vote and dispose of such
shares. Accordingly, Mr. Anderson may be deemed the beneficial owner of
such shares.

(3) Does not include 94,930 shares of Common Stock owned by the Foundation 
for International Non-Governmental Development of Space, of which Mr. 
Anderson is the President and a Director. Mr. Anderson disclaims beneficial 
ownership of such shares. Mr. Anderson and Revision, LLC are subject to 
certain restrictions on the purchase of additional shares. See "Settlement 
of Litigation."

(4) Includes options to purchase 261,000 shares of the Registrant's Common
Stock which are exercisable currently or within 60 days hereof.

(5) Less than 1%.

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.

ITEM 13. Certain Relationships and Related Transactions
On December 1, 1993, the Registrant 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, 1999, the
Registrant paid rent of $65,482.12 to the partnership. The lease expired
on November 30, 1998 and has been renewed on a month to month basis at an
annual rate of $73,467.75, subject to 120-day prior written termination
notice requirement. Registrant believes such premises are leased on terms
not less favorable to Registrant than in an arm's length transaction.

Jay J. Miller, a Director of the Registrant, has provided various legal
services for the Registrant during Fiscal 1999. As of January 31, 1999 the
Registrant had invoices payable to Mr. Miller totaling $158,755. The
Registrant believes that Mr. Miller's fees were reasonable for the
services performed and were no less favorable to the Registrant than could
have been obtained from an unrelated third party.

Leon Genet, a Director of the Registrant, has provided agent services for
Total-Tel through his wholly-owned Registrant, LPJ, Inc. During Fiscal
1999, LPJ, Inc. was paid commissions of $117,136. The commissions paid to
LPJ, Inc. were computed on the same basis as other agents retained by the
Registrant.

Walt Anderson, a Director of the Registrant, sits on the Board of
Directors' for several of the Registrant's competitors, as described in
ITEM 10. The Registrant both purchases and sells services from US Wats and
CTS/Worldexchange. Sales to US Wats and CTS/Worldexchange in Fiscal, 1999
were approximately $722,000 and $2,128,000, respectively. Purchases from
US Wats and CTS/Worldexchange were approximately $443,000 and $1,938,000,
respectively. All transactions were based on competitive terms obtained at
an arm's length basis.

As set forth in Note 10 to the Consolidated Financial Statements, the 
Registrant from time to time has made loans to former executive employees 
and shareholders of the Registrant. Two of the executive employees are no 
longer employed by the Registrant.

(THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK)

TOTAL-TEL USA COMMUNICATIONS, INC.

AND SUBSIDIARIES

ITEM 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:

Consolidated Financial   
Statements:                                                     Page
_________________________                                      _______
Independent auditors' report                                     

Consolidated balance sheets - January 31, 1999
and 1998                                                         F-2

Consolidated statements of (loss) earnings and comprehensive 
(loss) income - years ended January 31, 1999, 1998
and 1997                                                         F-3

Consolidated statements of shareholder's equity -
years ended January 31,
1999, 1998, 1997                                                 F-4

Consolidated statements of cash flows - years
ended January 31, 1999,
1998, 1997                                                       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, 1999, 1998 and 1997

II Valuation and Qualifying Accounts (Consolidated)             F-20

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

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)

                         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
__th day of ___, 1999


                                         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/ Walter Anderson       Director                     May 3, 1999
____________________
Walter Anderson

/S/ Warren H. Feldman     Chairman of the Board,       May 3, 1999
____________________
Warren H. Feldman         Chief Executive Officer
                          and Director

/S/ Leon Genet            Director                     May 3, 1999
____________________
Leon Genet

/S/ Thomas P. Gunning     Vice President, Treasurer,   May 3, 1999
____________________
Thomas P. Gunning         Secretary and Principal
                          Accounting Officer

/S/ Henry Luken           Director                     May 3, 1999
____________________
Henry Luken

/S/ Jay J. Miller         Director                     May 3, 1999
____________________
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. Terminated on January 15, 1999 on Form 15 filed with the SEC.

(10)(a) Lease of premises at 140 Little Street, Belleville, New Jersey, 
between Mansol Realty Registrant and Mansol Ceramics Registrant, 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 Registrant 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 Registrant, 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 Registrant 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 Registrant 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 Registrant 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 Registrant 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 Registrant 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 Registrant, 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 Registrant 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 Registrant 
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 Registrant (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 Registrant 
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 Registrant. 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 Registrant (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 Registrant 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 
Registrant 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 
Registrant, L. P., successor to the Prudential Insurance Registrant 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 Registrant, L. P., successor to the Prudential Insurance 
Registrant 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 Registrant 
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.
Incorporated by reference to Form 10K for the year ended January 31, 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. Incorporated by reference to 
Form 10K for the year ended January 31, 1997.

(10)(AE) Amendment to the Amended Facility and Revolving Credit Agreement 
dated November 1, 1998 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.






INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Total-Tel USA Communications, Inc. 
150 Clove Road
Little Falls, New Jersey 07424

We have audited the accompanying consolidated balance sheets of Total-
Tel USA Communications, Inc. and subsidiaries as of January 31, 1999 and 
1998, and the related consolidated statements of (loss) earnings and 
comprehensive (loss) income, shareholders' equity, and cash flows for 
each of the three years in the period ended January 31, 1999. 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, 1999 and 1998, 
and the results of their operations and their cash flows for each of the 
three years in the period ended January 31, 1999 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.  

DELOITTE & TOUCHE LLP
New York, New York

April 30, 1999 as to Note 19



<TABLE>
<CAPTION>

TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JANUARY 31, 1999 AND 1998

<S>                                                                                   <C>               <C>
ASSETS                                                                                    1999               1998 

CURRENT ASSETS: 
  Cash and cash equivalents                                                            $6,051,892         $3,416,904 
  Investments available for sale                                                          549,612            578,293 
  Trade accounts receivable (net of allowance for doubtful accounts 
    of $1,230,483 and $866,421 in 1999 and 1998, respectively)                         18,732,480         20,346,988 
  Notes receivable - employees                                                             95,402            117,590 
  Deferred income taxes                                                                 1,419,642            151,256 
  Prepaid expenses and other current assets                                             1,801,210          2,497,707 
                                                                                     ============       ============
           Total current assets                                                        28,650,238         27,108,738 
                                                                                     ============       ============
PROPERTY AND EQUIPMENT - Net                                                           14,473,261         12,405,924 
                                                                                     ============       ============

OTHER ASSETS: 
  Deferred line installation costs (net of accumulated amortization 
    of $521,914 and $389,827 in 1999 and 1998, respectively)                              447,226            298,304 
  Other assets                                                                            488,175            432,275 
  Deferred income taxes                                                                 1,633,238                 --
                                                                                     ============       ============
           Total other assets                                                           2,568,639            730,579 
                                                                                     ============       ============
                                                                                      $45,692,138        $40,245,241 
                                                                                     ============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY 

CURRENT LIABILITIES: 
  Accounts payable                                                                    $20,699,873        $16,356,427 
  Other current and accrued liabilities                                                 3,037,255          1,757,375 
  Accrued restructuring costs                                                           2,128,000                 -- 
  Salaries and wages payable                                                              998,081            572,112 
  Current portion of long-term debt                                                       526,361            487,000 
                                                                                     ------------       ------------
           Total current liabilities                                                   27,389,570         19,172,914 
                                                                                     ------------       ------------

OTHER LONG-TERM LIABILITIES                                                               294,500            331,754 
                                                                                     ------------       ------------

LONG-TERM DEBT                                                                          1,565,884          2,092,201 
                                                                                     ------------       ------------

DEFERRED INCOME TAXES                                                                          --             50,491 
                                                                                     ------------       ------------
COMMITMENTS AND CONTINGENCIES (Note 14) 
                                                    
SHAREHOLDERS' EQUITY: 
  Common stock, par value $.05 per share; authorized 
    20,000,000 shares in 1999 and 1998, issued 
    9,114,774 shares in 1999 and, 8,282,374 in 1998, respectively.                        455,739            414,118 
  Additional paid-in capital                                                           22,809,518          9,449,429 
  Retained earnings                                                                     6,757,987         10,175,784 
                                                                                     ------------       ------------
                                                                                       30,023,244         20,039,331 
                                        
Unearned ESOP Shares                                                                  (12,225,000)                -- 
Treasury stock - at cost - 1,509,870 shares in 1999 and 1,603,020 shares in 1998       (1,456,781)        (1,547,331) 
Accumulated other comprehensive income                                                    100,721            105,881 
                                                                                     ============       ============
        Total shareholders' equity                                                     16,442,184         18,597,881 
                                                                                     ============       ============
                                                                                      $45,692,138        $40,245,241  
                                                                                     ============       ============

See notes to consolidated financial statements.          
</TABLE>



<TABLE>
<CAPTION>

TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS AND COMPREHENSIVE (LOSS) INCOME
YEARS ENDED JANUARY 31, 1999, 1998, AND 1997

<S>                                                                 <C>                <C>               <C>
                                                                         1999               1998             1997 

NET SALES                                                           $137,282,870       $123,286,028      $89,325,921 
                                                                    ============       ============     ============

COSTS AND EXPENSES:
  Cost of sales                                                      111,500,082         99,086,234       66,829,283  
  Selling, general and administrative                                 28,912,440         22,082,829       18,303,834 
  Restructuring charge                                                 2,367,910                 --               --
  Stock compensation                                                     423,588            569,391        3,539,563  
                                                                    ============       ============     ============
           Total costs and expenses                                  143,204,020        121,738,454       88,672,680 
                                                                    ============       ============     ============

OPERATING (LOSS) INCOME                                               (5,921,150)         1,547,574          653,241  

OTHER INCOME (EXPENSE):
  Interest income                                                         93,708            101,865          141,181  
  Other income                                                           154,491            358,729           50,920  
  Interest expense                                                      (186,095)          (183,623)         (68,348) 
                                                                    ============       ============     ============
        Total other income                                                62,104            276,971          123,753  

(LOSS) EARNINGS BEFORE INCOME TAXES                                   (5,859,046)         1,824,545          776,994
                                                                    ------------       ------------     ------------

INCOME TAX (BENEFIT) PROVISION                                        (2,441,249)           730,544          285,540  
                                                                    ============       ============     ============

NET (LOSS) EARNINGS                                                   (3,417,797)         1,094,001          491,454  

OTHER COMPREHENSIVE (LOSS) INCOME,
  NET OF TAX:
  Unrealized holding (loss) gain                                          (5,160)            10,253           32,671 
                                                                    ============       ============     ============

COMPREHENSIVE (LOSS) INCOME                                          $(3,422,957)        $1,104,254         $524,125  
                                                                    ============       ============     ============

BASIC (LOSS) EARNINGS PER COMMON SHARE                                    $(0.50)             $0.18            $0.08
                                                                    ============       ============     ============

DILUTED (LOSS) EARNINGS PER COMMON SHARE                                  $(0.50)             $0.16            $0.07
                                                                    ============       ============     ============

See notes to consolidated financial statements.
</TABLE>



<TABLE>
<CAPTION>

TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED JANUARY 31, 1999, 1998 AND 1997

<S>                             <C>        <C>           <C>          <C>         <C>            <C>        <C>            <C>
                                                                                                            Accumulated 
                                           Additional                            Receivable      Unearned      Other    
                                Common      Paid-in     Retained     Treasury       from           ESOP     Comprehensive 
                                Stock       Capital     Earnings      Stock      Shareholder      Shares       Income       Total
                                            
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                   --     3,482,344           --           --           --             --         --     3,482,344

Unrealized holding gain           --            --           --           --           --             --     32,671        32,671

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

July 1, 1996  stock split     93,671       (93,671)          --           --           --             --         --            --

Net earnings                      --            --      491,454           --           --             --         --       491,454
                            ========   ===========   ==========  ===========   ==========  =============   ========   ===========

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

Unrealized holding gain           --            --           --           --           --             --     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 stock 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
                                                                                     
  July 15, 1998 stock split  207,059      (207,059)          --           --           --             --         --            --
                            ========   ===========   ==========  ===========   ==========  =============   ========   ===========

ADJUSTED BALANCE AT 
JANUARY 31, 1998             414,118     9,449,429   10,175,784   (1,547,331)          --             --    105,881    18,597,881

Unrealized holding loss           --            --           --           --           --             --     (5,160)       (5,160)

Exercise of employee 
  stock options               11,621       850,130           --           --           --             --         --       861,751

Issuance of employees 
  stock grants                    --       109,136           --       90,550           --             --         --       199,686

Tax benefit due to exercise 
  of  stock options               --       205,823           --           --           --             --         --       205,823

Adoption of employee 
  stock ownership plan        30,000    12,195,000           --           --           --    (12,225,000)        --            --

Net loss                          --            --   (3,417,797)          --           --             --         --    (3,417,797)
                            --------   -----------   ----------  -----------   ----------  -------------   --------   -----------

BALANCE AT 
JANUARY 31, 1999            $455,739   $22,809,518   $6,757,987  $(1,456,781)         $--   $(12,225,000)  $100,721    $16,442,184
                            ========   ===========   ==========  ===========   ==========  =============   ========    ===========

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, 1999, 1998 and 1997

<S>                                                            <C>                 <C>               <C>
                                                                   1999               1998               1997 
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) earnings                                          $(3,417,797)        $1,094,001           $491,454  
  Adjustments to reconcile net (loss) earnings to net  
    cash provided by operating activities:
    Depreciation and amortization                                2,784,883          2,027,557          1,381,931
    Provision for doubtful accounts                                878,628            416,713            950,495  
    Tax benefit of options exercised                               205,823            769,988  
    Noncash stock compensation expense                             423,588            569,391          3,539,563  
    Deferred income taxes                                       (2,952,266)           648,544         (1,070,460) 
    Restructuring charge (net of cash paid)                      2,128,000                 --                 -- 
    Gain on disposal of property and equipment                          --             (4,852)                -- 
    Change in assets and liabilities: 
      (Increase) decrease in assets:
        Trade accounts receivable                                  735,880         (6,830,049)        (6,142,229) 
        Prepaid expenses and other current assets                  696,497         (1,914,484)          (190,249) 
        Other assets                                               (55,900)            84,360            (90,471) 
    Increase (decrease) in liabilities:
        Accounts payable                                         4,343,446          6,134,167          3,617,801  
        Other current and accrued liabilities and
           salaries and wages payable                            1,282,261           (592,746)           587,247  
        Other long-term liabilities                                (37,254)            72,534            (54,522) 
                                                              ============       ============       ============
    Net cash provided by operating activities                    7,015,789          2,475,124          3,020,560  
                                                              ============       ============       ============

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sales and maturities of short-term
    investments available for sale                                  23,521            442,554            973,141  
  Purchase of investments available for sale                            --                 --           (984,129) 
  Purchases of property and equipment                           (4,727,130)        (3,267,833)        (6,397,259) 
  Proceeds from sale of fixed assets                                 7,147             10,920             53,759  
  Payments for deferred line installation costs                   (281,008)          (122,939)          (127,488) 
  Issuance of notes                                               (406,100)                --           (136,706) 
  Collections on notes receivable                                  406,100                 --                 -- 
  Collection on notes receivable from employees                     22,188            232,499              3,898  
                                                              ============       ============       ============
           Net cash used in investing activities                (4,955,282)        (2,704,799)        (6,614,784) 
                                                              ============       ============       ============

CASH FLOWS FROM FINANCING ACTIVITIES:
  Stock options exercised                                        1,061,437          1,418,191             66,273  
  Bank borrowings                                                       --                 --          2,000,000  
  Additional borrowings                                                 --            770,000            940,000  
  Repayment on bank borrowings                                    (486,956)        (1,130,799)                -- 
                                                              ------------       ------------       ------------
           Net cash provided by financing activities               574,481          1,057,392          3,006,273 
                                                              ------------       ------------       ------------

NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                                              $2,634,988           $827,717          $(587,951) 
     
CASH AND CASH EQUIVALENTS, 
  BEGINNING OF YEAR                                              3,416,904          2,589,187          3,177,138  
                                                              ------------       ------------       ------------

CASH AND CASH EQUIVALENTS, 
  END OF YEAR                                                   $6,051,892         $3,416,904         $2,589,187  
                                                              ============       ============       ============

SUPPLEMENTAL DISCLOSURES OF
  CASH FLOW INFORMATION:
  Cash paid during the year for:     
    Interest                                                      $186,901           $187,211            $64,761  
                                                              ============       ============       ============

    Income taxes                                                   $66,603           $752,761         $1,511,149  
                                                              ============       ============       ============

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, Inc. (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 preparation of consolidated financial statements 
    in conformity with generally accepted accounting principles requires 
    management to make estimates and assumptions that affect the reported 
    amounts of assets and liabilities, the disclosure of contingent assets 
    and liabilities at the date of the financial statements and the reported 
    amounts of revenues and expenses during the reported period. 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.

    Earnings per Share - Basic earnings per share 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 15).

    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. On July 15, 1998, the Company 
    distributed 4,207,887 shares of common stock in connection with a 2 for 
    1 stock split in the form of a stock dividend of all outstanding shares 
    as of June 30, 1998 (including approximately 66,700 shares attributable 
    to stock options exercised during 1999 prior to the split). All per 
    share and number of shares data have been restated to reflect these 
    stock splits.

    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 - For cash and cash equivalents, the 
    carrying value is a reasonable estimate of its fair value. 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. The fair value of the debt was determined based on interest 
    rates that are currently available to the Company for issuance of debt 
    with similar terms and remaining maturities for debt issues that are not 
    traded on quoted market prices. 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.

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

<TABLE>
<CAPTION>

    <S>                                 <C>          <C>          <C>          <C>

                                                   1999                     1998     

                                          Carrying       Fair       Carrying       Fair
                                            Value        Value        Value        Value
                         
    Assets:                         
      Cash and cash equivalents         $6,051,892   $6,051,892   $3,416,904   $3,416,904  
      Investments available for sale       549,612      549,612      578,293      578,293  

    Liabilities: 
      Debt                               2,092,245    2,092,245     2,579,201   2,579,201  

</TABLE>

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

    Long-Lived Assets - The Company accounts for the impairment of long-
    lived assets and for long-lived assets to be disposed of by evaluating 
    the carrying value of its long-lived assets in relation to the operating 
    performance and future undiscounted cash flows of the underlying 
    businesses when indications of impairment are present. Long-lived assets 
    to be disposed of, if any, are evaluated in relation to the net 
    realizable value.

    Comprehensive Income - The Financial Accounting Standards Board issued 
    Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting 
    Comprehensive Income," in June 1997, which was effective for years 
    beginning after December 31, 1997. This statement established standards 
    for reporting and display of comprehensive income and its components in 
    financial statements. The Company adopted SFAS 130 as of February 1, 
    1998, and has restated prior years' presentations in the accompanying 
    financial statements.

    New Accounting Pronouncements - The Financial Accounting Standards Board 
    issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging 
    Activities," in June 1998, which is effective for fiscal years beginning 
    after June 1999. This statement establishes accounting and reporting 
    standards for derivative instruments, including certain instruments 
    embedded in other contracts, and hedging activities. At this time, 
    management has not determined the effect, if any, that the 
    implementation of this Statement will have on the Company's financial 
    position and results of operations.

 3. SEGMENT REPORTING

    The Company has adopted the SFAS No. 131, "Disclosures About Segments of 
    an Enterprise and Related Information" in the fiscal year ending January 
    31, 1999. This statement establishes standards for the way in which 
    public business enterprises report information about operating segments 
    in annual financial statements.

    The Company sells telecommunication services to two distinct segments: a 
    retail segment, consisting primarily of small to medium size businesses 
    within the Northeastern United States, and a wholesale segment, with 
    sales to other telecommunications carriers throughout North America and 
    Europe.

    In addition to direct costs, each segment is allocated a proportion of 
    the Company's switch and operating expenses. The accounting policies of 
    the segments are the same as those described in the summary of 
    significant accounting policies. The allocation of expenses is based 
    upon the minutes of use flowing through the Company's switching network. 
    There are no intersegment sales. Assets are held at the consolidated 
    level and are not allocable to the operating segments. The Company 
    evaluates performance on operating earnings of the two business 
    segments.

    Summarized financial information concerning the Company's reportable 
    segments is shown in the following table.

                                Retail       Wholesale         Total

    1999 
    Net Sales                $72,555,692    $64,727,178    $137,282,870  
    Gross margin              22,143,818      3,638,970      25,782,788  
    Operating loss            (4,985,480)      (935,670)     (5,921,150) 

    1998 
    Net Sales                $65,304,679    $57,981,349    $123,286,028  
    Gross margin              21,300,071      2,899,723      24,199,794  
    Operating income (loss)    1,820,306       (272,732)      1,547,574  

    1997 
    Net Sales                $57,896,644    $31,429,277     $89,325,921  
    Gross margin              20,164,462      2,332,176      22,496,638  
    Operating income (loss)     (793,640)     1,446,881         653,241  

 4. INVESTMENT SECURITIES

    Investments available for sale consist of:

<TABLE>
<CAPTION>
                                       1999                                       1998               
                    ----------------------------------------   ----------------------------------------
                                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          $25,000        $--     $--      $25,000    $50,000         $8     $--      $50,008 
    Mutual funds     286,900      2,400      --      289,300    281,991      1,104      --      283,095 
    Common  stock     70,700    164,612      --      235,312     70,700    174,490      --      245,190 

                    $382,600   $167,012     $--     $549,612   $402,691   $175,602     $--     $578,293 
                                             
</TABLE>

    The deferred tax on the unrealized gains at January 31, 1999, and 1998 
    were $66,291 and $69,721, respectively; resulting in net amounts of 
    $100,721 and $105,881in Accumulated Other Comprehensive Income.

    Maturity dates of municipal bonds as of January 31, 1999 are as follows:

    Maturing Within                    Cost        Market Value     
               
    After 1 year through 5 years       25,000          25,000       
                                      -------         -------
                                      $25,000         $25,000       
                                      =======         =======

 5. PROPERTY AND EQUIPMENT

    Property and equipment consists of:

                                                   1999          1998     
    Machinery and equipment                    $14,646,464   $12,027,693 
    Office furniture, fixtures and equipment     1,883,903     1,703,657 
    Leasehold improvements                       1,158,427       914,205 
    Vehicles                                       224,282       192,954 
    Computer equipment and software              3,870,049     3,220,808 
    Leasehold improvements in progress                  --       205,644 
    Machinery and equipment in progress          1,272,650       100,000 
                                               -----------   ----------- 
                                                23,055,775    18,364,961 
    Less accumulated depreciation 
      and amortization                           8,582,514     5,959,037 
                                               -----------   ----------- 
                                               $14,473,261   $12,405,924 
                                               ===========   ===========

    Depreciation and amortization expense related to property and equipment 
    for the years ended January 31, 1999, 1998 and 1997 was $2,652,796, 
    $1,921,530, and $1,288,816, respectively.

6.     INCOME TAXES

    The (benefit) provision for income taxes includes the following:

                            1999            1998               1997
    Federal:               
      Current              $276,691         $60,000         $1,078,000  
      Deferred           (2,190,605)        517,544           (824,160) 
    State income taxes:                                 
      Current               234,326          22,000            278,000  
      Deferred             (761,661)        131,000           (246,300) 
                        -----------        --------         ----------
                        $(2,441,249)       $730,544           $285,540  
                        ===========        ========         ==========

    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 asset (liability) are as follows:

<TABLE>
<CAPTION>
                                                   1999                          1998          
                                           Current      Long-term        Current      Long-term 
    <S>                                <C>             <C>             <C>           <C>
    Deferred tax assets:                         
      Allowance for doubtful accounts     $296,423            $--       $151,256            $--   
      Accrued compensation expense              --      1,276,044             --      1,275,096 
      Unamortized lease incentive               --        117,623             --        132,701 
      Restructuring reserve                849,924             --             --             --  
      Accrued expenses                     273,295             --             --             --  
      Net operating loss carryforward           --      1,577,970             --             --  
      Alternative minimum tax credit            --        593,944             --             --  
                                        ----------     ----------       --------     ----------
    Total deferred tax assets            1,419,642      3,565,581        151,256      1,407,797   
                                        ----------     ----------       --------     ----------
    Deferred tax liabilities:                                                           
      Property and equipment                    --     (1,865,639)            --     (1,388,568) 
      Other                                     --        (66,704)            --        (69,720) 
                                        ----------     ----------       --------     ----------
    Total deferred tax liabilities              --     (1,932,343)            --     (1,458,288) 
                                        ----------     ----------       --------     ----------
    Net deferred tax asset (liability)  $1,419,642     $1,633,238       $151,256       $(50,491) 
                                        ==========     ==========       ========     ==========
</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 
    (loss) earnings is as follows:

<TABLE>
<CAPTION>
                                                        1999              1998              1997
    <S>                                             <C>                 <C>              <C>
    Computed expense at statutory rates             $(1,992,076)        $620,345         $264,178  
    (Reductions) increase in taxes resulting from:                                 
      Tax-exempt interest income                         (4,776)         (14,300)         (16,000) 
      State taxes (benefit), net of federal                
        income tax benefit                             (350,215)         118,000           28,300  
      Insurance proceeds on officer's death                  --         (114,400)              --  
      Other                                             (94,182)         120,899            9,062  
                                 
    Actual (benefit) expense                        $(2,441,249)        $730,544         $285,540  

</TABLE>

    At January 31, 1999, for Federal income tax purposes, the Company had 
    net operating loss carryforwards of approximately $3.0 million and 
    alternative minimum tax credit carryforwards of approximately $594,000.

 7. 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.

    The Company leases warehouse space in Belleville, New Jersey from a 
    partnership in which two of the partners were directors and major 
    shareholders of the Company. One of the partners is no longer a 
    director. During the fiscal years ended January 31, 1999, 1998 and 1997, 
    the Company paid rent of $65,482, $60,450, and $59,760, respectively to 
    the partnership. The lease had an expiration date of November 30, 1998, 
    and has been renewed on a month-to-month basis with a 120-days prior 
    written notice by either party. The fixed base rent is based on an 
    annual rate of $73,468.

    Future minimum annual rentals on these leases as of January 31, 1999 are 
    as follows:

    Year Ending
    January 31,    

    2000                                       $1,293,781
    2001                                        1,320,277
    2002                                        1,322,804
    2003                                          846,236
    2004                                          312,585
    2005 and thereafter                         2,274,007
                                               ----------
                                               $7,369,690
                                               ==========

    Rental expense for the years ended January 31, 1999, 1998 and 1997 was 
    approximately $1,615,000, $1,047,000, and $626,000, respectively. 

 8. 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. The Company matches 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 $192,000, $165,000, and $111,000, for 
    the years ended January 31, 1999, 1998 and 1997, respectively.

 9. STOCK OPTION PLANS

    The Company has two stock option plans authorizing the granting of 
    either "Incentive Stock Options" or "Nonqualified Stock Options." The 
    1987 Stock Option Plan (the "1987 Plan") provides for the acquiring of 
    an aggregate of not more than 1,329,800 shares of the Company's common 
    stock reserved for issuance under the 1987 Plan. The 1996 Stock Option 
    Plan (the "1996 Plan") provides for the issuing of an aggregate of not 
    more than 600,000 shares of the Company's Common Stock.

    Incentive Stock Options granted pursuant to the Plans 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% of the fair market value where the option is granted to an 
    employee who owns more than 10% of the combined voting power of all 
    classes of the Company's voting stock. Nonqualified Stock Options 
    granted pursuant to the Plans must have an exercise price equal to at 
    least 50% 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. There were no Nonqualified Stock Options issued 
    in fiscal 1999. 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 226,150 at January 31, 1999, must 
    be granted by October 10, 2006. At January 31, 1999, shares under the 
    1996 Plan had not been registered by the Company. 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, 1996 balance    $0.51  -  $4.81     1,285,800      1,246,600          $1.85
                            ---------------  -------------  -------------       --------

Granted                               $4.75        44,000           -             $4.75
Became Exercisable                -                  -            36,200            -
Exercised                   $1.00 -   $3.29       (36,456)       (36,456)         $1.64
                            ---------------  -------------  -------------       --------

January 31, 1997 balance    $0.51  -  $4.81     1,293,344      1,246,344          $1.96
                            ---------------  -------------  -------------       --------

Became Exercisable                 -              -               47,000            -
Exercised                   $0.51  -  $4.75      (722,544)      (722,544)         $1.61
Cancelled                   $2.82  -  $4.75       (12,000)       (12,000)         $3.85
                            ---------------  -------------  -------------       --------

January 31, 1998 balance    $0.51  -  $4.81       558,800        558,800          $2.36

Exercised                   $1.36  -  $4.75      (248,800)      (248,800)         $3.17
                            ---------------  -------------  -------------       --------

January 31, 1999 balance    $0.51  -  $4.81       310,000        310,000          $1.77
                            ===============  =============  =============       ========

</TABLE>

    Information regarding options under the 1996 Plan is as follows:





Insert table Here!!!!!







<TABLE>
<CAPTION>


                                   Options Outstanding             Options Exercisable
                          ------------------------------------   -------------------------
                                           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>
    $0.51 - $4.81           310,000      2.28 years    $1.77        310,000        $1.77
    $7.25 - $10.00          175,000      3.11 years    $7.88        175,000        $7.88
   $14.63 - $21.50          167,100      4.20 years   $16.38           -             -
                            --------                               -------
   $ 0.51 - $21.50          652,100      2.99 years    $5.25        485,000        $3.97
                            ========                               =======      
</TABLE>

    Compensation expense related to the nonqualified stock options was 
    $6,006, $136,265, $57,219 for the years ended January 31, 1999, 1998 and 
    1997, respectively.

    Compensation expense related to the remeasurement of nonqualified 
    and incentive stock options was $0, $433,126, and $3,482,344 for the 
    years ended January 31, 1999, 1998 and 1997, respectively.

    The Company has adopted the disclosure-only provision of SFAS 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, 1999, 1998 
    and 1997, consistent with the provisions of SFAS No. 123, the 
    incremental effect on the Company's net earnings and basic and diluted 
    earnings per share would have been $280,260, $0.04 and $0.04 for 1999; 
    $162,935, $0.03 and $0.02 for 1998 and $543,990, $0.09 and $0.08 for 
    1997.

    The fair value of the option grants 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 1999, 1998 and 
    1997: dividend yield of 0.00% for the three years; expected volatility 
    of 64.00%, 67.82% and 33.00%, respectively; risk-free interest rate of 
    5.29%, 6.53% and 6.72%, respectively; and expected lives of 5 years for 
    each of the three years.

10. 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 employee 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, with interest at 8% per 
    annum, payable in semi-monthly installments for seven-and-one-half 
    years, commencing February 7, 1996. This note was repaid with interest 
    in January, 1998.

    In 1993, the Company made a separate $100,000 unsecured loan to the 
    above mentioned employee and shareholder 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.

    In 1996, the Company made a $97,605 noninterest-bearing, secured loan to 
    an executive employee and shareholder of the Company. The note is 
    payable on demand. Between 1997 and 1999, payments have been made 
    against the note, bringing the balance as of January 31, 1999 to 
    $45,402. On January 5, 1999, the employee resigned from the Company.

    In 1998, the Company made a $50,000 secured loan to another executive 
    employee and shareholder of the Company, with interest at 8.50% per 
    annum. The loan is due and payable on August 11, 1999.

11. 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 telecommunications 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 in the fiscal 
    year ended January 31, 1997. In the fiscal year ended January 31, 1998, 
    the Company converted the balance to a term loan (the "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 
    term loan as of January 31, 1999 was $2,092,245, of which $526,361 was 
    classified as current. The interest rate on the term loan is 7.71%. The 
    term loan is secured by the assets of the Company.

    During 1999, the Company has obtained a letter of credit for a deposit 
    on a lease totaling $89,440.

    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.

    On November 1, 1998 the Company entered into an Amendment to the Amended 
    and Restated Credit Agreement (the "Second Amended Facility") with the 
    same bank. This Amendment increased the Facility for the purchase of 
    machinery and equipment to $10,000,000 and decreased the unsecured line 
    of credit to $5,000,000. The Company currently has no amounts borrowed 
    under the Second Amended Facility. The interest under the Second Amended 
    Facility is at the bank's prime rate or, at the Company's option, 225 
    basis points above the LIBOR rate.

    The Second Amended 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, debt service coverage, 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, 1999, the Company 
    was not in compliance with the covenants of the Second Amended Facility 
    concerning minimum tangible networth and debt service coverage. 

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

    Years Ending
    January 31,
     2000                $526,361
     2001                 568,653
     2002                 615,113
     2003                 382,118
                       ----------
                       $2,092,245
                       ==========

12. STOCK GRANTS

    The Company, at the discretion of the Board of Directors, awards to 
    management personnel shares of its common stock at par value. These 
    shares vest over a period of three to five years. During 1999, the 
    grants were all issued out of treasury stock. The Company awarded 
    220,850 shares, 30,000 shares, and 0 shares of its common stock and 
    recorded compensation expense of $417,582, $122,625 and $107,800 for the 
    years ended January 31, 1999, 1998 and 1997, respectively.

    Shares cancelled by the Company due to termination or resignation for 
    the years ended January 31, 1999, 1998 and 1997 totaled 111,900, 1,800 
    and 0, which amounts have been excluded from the above compensation 
    expense.

13. RESTRUCTURING

    During the fourth quarter of fiscal 1999, the Company recorded a 
    restructuring charge of approximately $2,367,910 related to the adoption 
    by the Company of a formal action plan for restructuring its focus of 
    operations. The restructuring was adopted in an effort to concentrate 
    the Company's efforts on the northeastern United States market. Elements 
    of the Company's restructuring plan include eliminating the sales 
    offices in Florida, Atlanta, Georgia, Washington D.C. and the United 
    Kingdom, as well as the Miami switch.

14. 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.

15. 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.

    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, 1999, 1998 and 1997 is as 
    follows:

<TABLE>
<CAPTION>

                              1999                                     1998      
                            Earnings       Shares        Per-Share     Earnings  
                           (Numerator)  (Denominator)     Amount     (Numerator) 
<S>                      <C>             <C>              <C>       <C>
Net (Loss) Earnings       ($3,417,797)                               $1,094,001  
                           ----------                                ----------

Basic (Loss) Earnings
  Per Share:              ($3,417,797)     6,817,701       $(0.50)    1,094,001  

Effect of Dilutive
  Securities:
  Stock Options                                                                  

Diluted (Loss)  Earnings
  Per Share               ($3,417,797)     6,817,701       $(0.50)   $1,094,001  
                           ----------      ---------       ------    ----------



                                                         1997
                              Shares      Per-Share      Earnings       Shares      Per-Share
                          (Denominator)     Amount     (Numerator)  (Denominator)     Amount

Net (Loss) Earnings                                      $491,454
                                                         --------
Basic (Loss) Earnings
  Per Share:                6,213,404        $0.18        491,454     5,882,660        $0.08

Effect of Dilutive
  Securities:
  Stock Options               628,946                                   855,862
                            ---------                                 ---------

Diluted (Loss)  Earnings
  Per Share                 6,842,350        $0.16       $491,454     6,738,522        $0.07
                            ---------        -----       --------     ---------        -----

</TABLE>

    Outstanding stock options to shares of common stock were not included 
    in the computation of diluted earnings per share for 1999 because to 
    do so would have been antidilutive. For 1998 and 1997 there were no 
    items whose effect would have been antidulitive.

16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Amounts in thousands except per share data.

<TABLE>
<CAPTION>

                                            April 30,     July 31,   October 31,     January 31, 
                                              1996           1996        1996           1997    
<S>                                         <C>          <C>          <C>            <C>
Net sales                                   $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         0.08         0.13         0.14         (0.27) 
Diluted earnings (loss) per common share       0.07         0.11         0.12         (0.27) 

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

Net sales                                   $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         0.10         0.04         0.05         (0.02)
Diluted earnings (loss) per common share       0.09         0.04         0.05         (0.02)

                                            April 30,      July 31,  October 31,     January 31,
                                              1998           1998        1998           1999     

Net sales                                   $31,882      $33,556      $41,260       $30,585  
Operating income (loss)                         411          368       (1,504)       (5,196) 
Net earnings (loss)                             263          277         (927)       (3,031) 
Basic earnings (loss) per common share         0.04         0.04        (0.12)        (0.44) 
Diluted earnings (loss) per common share       0.03         0.04        (0.12)        (0.44) 

</TABLE>

17. EMPLOYEE STOCK OWNERSHIP PLAN

    On September 1, 1998, the Company established the Total-Tel USA 
    Communications, Inc. Employee Stock Ownership Plan (the "ESOP Plan"). 
    Concurrently with the establishment of the nonleveraged ESOP Plan*, the 
    Company contributed 600,000 shares of its Common Stock to the ESOP Plan. 
    The common shares were recorded at fair value at the date contributed to 
    the ESOP Plan, totaling approximately $12.3 million, with an offset to 
    Unearned ESOP Shares in the Statement of Shareholders' Equity. The ESOP
    plan is administered through a trust by a trustee, as designated by the 
    Board of Trustees. No shares have been allocated from the ESOP Plan as of 
    January 31, 1999.

    In February 1999, the Company Board of Directors authorized the 
    termination of the ESOP Plan.

18. SHAREHOLDERS RIGHTS PLAN

    On January 15, 1999, the Company filed SEC Form 15 terminating the 
    Shareholder Rights Plan adopted by the Company on March 31, 1998.

19. SUBSEQUENT EVENT

    On April 30, 1999, the Company obtained a waiver on these covenants 
    in default from the bank and in connection therewith, the $10 million 
    facility for the purchase of machinery and equipment was terminated.

                           ******










AMENDMENT TO AMENDED AND RESTATED EQUIPMENT FACILITY
AND REVOLVING CREDIT AGREEMENT

THIS AMENDMENT dated as of ____________, 1998, by and between SUMMIT BANK,
a banking corporation organized under the laws of the State of New Jersey
(the "Bank"), and TOTAL-TEL USA COMMUNICATIONS, INC., a New Jersey
corporation ("Total-Tel Comm"), TOTAL-TEL, INC., a New Jersey corporation
and wholly owned subsidiary of Total-Tel Comm ("Total-Tel"), TOTAL-TEL
USA, INC., a New Jersey corporation and wholly owned subsidiary of
Total-Tel Comm ("Total-Tel USA"), TOTAL-TEL CARRIER SERVICES, INC., a New
Jersey corporation and wholly owned subsidiary of Total-Tel Comm
("Total-Tel Carrier"), TOTAL-TEL INTERNATIONAL, INC., a New Jersey
corporation and wholly owned subsidiary of Total-Tel Comm ("Total-Tel
International"), TOTAL-TEL SOUTHEAST, INC., a Georgia corporation and
wholly owned subsidiary of Total-Tel Comm ("Total-Tel Southeast"),
TOTAL-TEL SERVICES, INC., a New Jersey corporation and wholly owned
subsidiary of Total-Tel Comm ("Total-Tel Services"), TOTAL-TEL FLORIDA,
INC., a New Jersey corporation and wholly owned subsidiary of Total-Tel
Comm ("Total-Tel Florida"), and TOTAL-TEL U.K., LTD., a corporation
organized under the laws of the United Kingdom and a wholly owned
subsidiary of Total-Tel Comm (("Total-Tel U.K."), Total-Tel Comm,
Total-Tel, Total-Tel USA, Total-Tel Carrier Total-Tel International,
Total-Tel Southeast, Total-Tel Services, Total-Tel Florida and Total-Tel
U.K. are hereafter each referred to as a "Borrower" and collectively
referred to as the "Borrowers").

WHEREAS, the Bank and Borrowers are parties to a certain Amended and
Restated Equipment Facility and Revolving Credit Agreement dated March 16,
1998 (the "Amended and Restated Credit Agreement"), as amended and
modified by that certain Credit Modification Agreement between the Bank
and the Borrowers dated __________, 199_, and that certain Credit
Modification Agreement between the Bank and the Borrowers dated
____________, 199_ (the Amended and Restated Credit Agreement and the two
Credit Modification Agreements are herein collectively referred to as the
"Original Credit Agreement"), pursuant to which the Bank has made certain
loans, including the Equipment Loans and the Revolving Credit Loans (as
defined in the Original Credit Agreement), to Borrowers;

WHEREAS, Borrowers have requested the Bank, and the Bank has agreed to
increase the amount available to Borrowers as Equipment Loans for the
purpose of financing the purchase of four (4) new digital switching
equipment for installation at various sites (the "Domestic Switches"), to
decrease the amount available to Borrowers as Revolving Credit Loans, and
to amend the Original Credit Agreement, on the terms and conditions
contained in this Amendment.

NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:

1. Definitions.

(a) All defined terms used herein and not defined herein shall have the
meanings ascribed thereto in the Original Credit Agreement.

(b) As used herein, the term "Credit Agreement" shall mean the Original
Credit Agreement as amended by this Amendment.

2. Additional Loans. Concurrently with the execution of this Amendment,
Borrowers have executed and delivered to the Bank a Replacement Equipment
Facility/Term Note, dated the date hereof, with a stated principal amount
of Ten Million Dollars ($10,000,000.00) and a stated maturity date of
August 1, 1999 (the "Replacement Equipment Facility/Term Note"). The
Replacement Equipment Facility/Term Note supersedes that certain Equipment
Facility/Term Note dated March 16, 1998 (the "Equipment Facility Note")
made by the Borrowers in the original principal amount of $5,000,000.00.
The Restated Equipment Facility/Term Note is issued in substitution and
replacement of the Equipment Facility/Term Note and not in payment
thereof; any and all amounts due pursuant to the Equipment Facility/Term
Note, including without limitation, all accrued and unpaid interest, shall
be evidenced by the Replacement Equipment Facility/Term Note and paid in
accordance with the terms of the Replacement Equipment Facility/Term Note.

3. Replacement Revolving Credit Note. Concurrently with the execution of
this Amendment, Borrowers have executed and delivered to the Bank a
Replacement Revolving Credit Note, dated the date hereof, with a stated
principal amount of Five Million Dollars ($5,000,000.00) and a stated
maturity date of August 1, 1999 (the "Replacement Credit Note"). The
Replacement Credit Note supersedes that certain Amended and Restated
Revolving Credit Note dated March 16, 1998 (the "Amended and Restated
Note") made by the Borrowers in the original principal amount of
$8,000,000.00. The Restated Credit Note is issued in substitution and
replacement of the Amended and Restated Note and not in payment thereof;
any and all amounts due pursuant to the Amended and Restated Note,
including without limitation, all accrued and unpaid interest, shall be
evidenced by the Replacement Credit Note and paid in accordance with the
terms of the Replacement Credit Note.

4. Amendments to Credit Agreement.

(a) The definition of the term "Equipment Facility Expiration Date"
contained in the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

The term "Equipment Facility Expiration Date" means the date that is the
earlier to occur of (i) August 1, 1999 or (ii) the Conversion Date.

(b) The definition of the term "Revolving Credit Expiration Date"
contained in the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

The term "Revolving Credit Expiration Date" means August 1, 1999.

(c) The definition of the term "Financed Equipment" contained in the
Original Credit Agreement is hereby amended and restated in its entirety
to read as follows:

The term "Financed Equipment" shall mean the Domestic Switches.

(d) The Original Credit Agreement is hereby amended to include the
following definitions in Article II:

Automatic Conversion Date. The term "Automatic Conversion Date" shall have
the meaning assigned to such term in Section 1.04.

Permitted Conversion Date. The term "Permitted Conversion Date" shall have
the meaning assigned to such term in Section 1.04.

(e) Section 1.01 of the Credit Agreements hereby amended and restated in
its entirety to read as follows:

1.01 Equipment Facility. Subject to the terms and conditions herein set
forth, during the Equipment Facility Commitment Period, the Bank agrees to
make available to the Borrowers, on a joint and several basis, an
equipment finance facility (the "Equipment Facility"), under which the
Bank shall make advances (each an "Equipment Loan" and collectively the
"Equipment Loans") to the Borrowers from time to time to finance the
acquisition of the Domestic Switches. The obligations under the Equipment
Facility are separate and distinct from those obligations outstanding, if
any, under the 1996 Equipment Facility, and the Equipment Facility is not
issued in replacement or substitution of the 1996 Equipment Facility.
Amounts borrowed under the Equipment Facility and repaid may not be
reborrowed. The amounts outstanding under the Equipment Facility shall be
evidenced by the Replacement Equipment Facility/Term Note. During the
Equipment Facility Commitment Period, the Equipment Loans may be made as
Prime Rate Loans or LIBOR Loans, as requested by the relevant Borrower
pursuant to the notice of borrowing delivered with respect thereto
pursuant to Section 1.03 hereof. Upon the conversion of the Equipment
Loans into a single term loan pursuant to Section 1.04 hereof, such Loan
shall a Fixed Rate Loan.

(f) Section 1.02 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

1.02 Equipment Facility Maximum Principal Amount. The maximum aggregate
principal amount of Equipment Loans outstanding at any time, not including
the amounts outstanding pursuant to the 1996 Equipment Facility, which as
of the date hereof totals $_____________, shall not exceed TEN MILLION
00/100 DOLLARS ($10,000,000.00), such amount being hereinafter referred to
as the "Maximum Equipment Facility Principal Amount". If the aggregate
principal amount of Equipment Loans outstanding at any time under the
Equipment Facility exceeds the Maximum Equipment Facility Principal
Amount, then the Borrowers shall immediately repay to the Bank the amount
of such excess.

(g) Section 1.05 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

1.04 Conversion of Equipment Loan to a Term Loan. On the first Business
Day after six (6) months following the initial borrowing under the
Equipment Facility pursuant to Section 1.03 hereof (the "Automatic
Conversion Date"), the entire (and not less than the entire aggregate
outstanding principal balance of the Equipment Loans shall convert to a
single term loan (such Loans, as so converted, the "Term Loan"); provided,
however, that in no event shall the Automatic Conversion Date be beyond
the Equipment Facility Expiration Date. Subject to the terms and
conditions hereof (including, without limitation, the conditions set forth
in Section 6.02 hereof), by irrevocable written notice given to the Bank
by the Borrowers no later than 3 Business Days prior to the proposed
Permitted Conversion Date, the Borrowers may convert the entire (and not
less than the entire) aggregate outstanding principal balance of the
Equipment Loans to a Term Loan; provided, however, that in no event shall
the Borrowers be permitted to so convert the Equipment Loans if at the
time of such conversion the aggregate principal balance thereof is less
than $2,000,000.00. The notice delivered pursuant to the foregoing
sentence shall state the effective date of such conversion, which in no
event shall be beyond the Equipment Facility Expiration Date (the
"Permitted Conversion Date", and collectively with the Automatic
Conversion Date, the "Conversion Date"). If conversion is permitted
hereunder, then (i) the Term Loan shall mature and be due and payable on
the fifth (5th) anniversary of the Conversion Date (the "Term Loan
Maturity Date"), and (ii) effective as of the Conversion Date, all
Equipment Loans then outstanding shall be deemed consolidated into a
single Term Loan and all such Loans as so consolidated shall be deemed
refinanced as of the Conversion Date at the interest rate basis (plus any
applicable margin as set forth in Section 1.05 hereof) selected by the
Borrowers in the notice of conversion delivered pursuant to this Section
1.04. If the Borrowers select a Permitted Conversion Date which shall
cause any then outstanding Equipment Loan that is a LIBOR Loan to be
deemed consolidated into the Term Loan on any date other than the last day
of the then expiring Interest Period applicable thereto, then the
Borrowers shall indemnify the Bank for any loss or expense described in
Section 4.05 hereof that is incidental to such consolidation.

(h) Section 1.08 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

1.08 The Revolving Credit Facility. Subject to the terms and conditions
hereof, the Bank agrees to make available to the Borrowers, on a joint and
several basis, a revolving credit facility (the "Revolving Credit
Facility") under which the Bank shall make advances to the Borrowers from
time to time during the Revolving Credit Commitment Period in an aggregate
principal amount outstanding at any one time of up to FIVE MILLION 00/100
DOLLARS ($5,000,000.00) (each a "Revolving Credit Loan" and collectively
the "Revolving Credit Loans"). During the Revolving Credit Commitment
Period, the Borrowers may borrow, repay and reborrow as provided herein.
Revolving Credit Loans may be made as Prime Rate Loans or LIBOR Loans, as
requested by the relevant Borrower pursuant to Section 1.12 hereof. The
Revolving Credit Loans shall be evidenced by the Replacement Credit Note.

(i) Section 1.09 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

1.09 Revolving Credit Facility Maximum Principal Amount. The maximum
aggregate principal amount of the Revolving Credit Loans outstanding at
any time, when added to the Letter of Credit Outstanding at such time
shall not exceed FIVE MILLION 00/100 DOLLARS ($5,000,000.00), such amount
being hereinafter referred to as the "Maximum Revolving Credit Principal
Amount." If the aggregate outstanding principal amount of the Revolving
Credit Loans plus the Letters of Credit Outstanding at any time exceed the
Maximum Revolving Credit Principal Amount, the Borrowers shall immediately
repay to the Bank the amount of such excess.

(j) The Original Credit Agreement is hereby amended to include the
following:

5.03 Secondary Offering. In the event that Total-Tel Comm commences a
secondary equity offering (a "Secondary Offering"), and such Secondary
Offering is completed prior to the Equipment Facility Expiration Date, or,
if the Equipment Loan was converted to a Term Loan, the Term Loan Maturity
Date, Total-Tel Comm shall use any and all proceeds of such Secondary
Offering to pay off all amounts outstanding under the Equipment Loan, or
if the Equipment Loan was converted to a Term Loan, the Term Loan, with no
prepayment penalty.

(k) Section 8.09 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

8.09 Tangible Net Worth. Total-Tel Comm shall not permit its Tangible Net
Worth at any time to be less than $18,000,000, measured on a consolidated
basis no less frequently than quarterly. As used herein, "Tangible Net
Worth" means, at any date (i) the total assets of Total-Tel Comm which
would be shown as assets on a consolidated balance sheet of Total-Tel Comm
prepared in accordance with GAAP less (ii) the total liabilities of
Total-Tel Comm as shown on a consolidated balance sheet of Total-Tel Comm
prepared in accordance with GAAP, after subtracting therefrom the
aggregate amount of any capitalized research and development costs,
capitalized interest, debt discount and expense, goodwill, patents,
trademarks, copyrights, franchises, licenses, amounts owing from officers,
directors, shareholders, principals, partners or affiliates of any
Borrower or Guarantor and any investments in any entities owned or
controlled by any of the foregoing, and such other assets as are properly
classified as "intangible assets", in each case determined in accordance
with GAAP consistently applied.

(l) Section 8.11 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

8.11 Debt Service Coverage Ratio. Total-Tel Comm shall not permit the
ratio of its EBITDA to its CPLTD plus Interest Expense to be at any time
less than 1.50:1.00, measured on a rolling four quarter basis. As used
herein, "EBITDA" means, at any time, the earnings (excluding any
extraordinary or unusual items and non-operating earnings adjustments)
before interest expense, taxes, depreciation and amortization, determined
in accordance with GAAP consistently applied, and "CPLTD plus Interest
Expense" means, at any time, current maturities of all Indebtedness which
by its terms, or by the terms of any instrument or agreement relating
thereto, matures, or which is otherwise payable, 1 year or more after the
date of creation thereof (whether such payment is in respect of sinking
fund requirements, mandatory prepayments, or final payment upon maturity),
including, without limitation, any Capital Lease Obligations, plus all
cash and non-cash interest (including, without limitation, capitalized
interest) accrued and/or payable during the relevant fiscal period in or
in connection with any Indebtedness, in each case determined in accordance
with GAAP, consistently applied.

(m) The Original Credit Agreement is hereby amended to include the
following as Section 8.15:

8.15 Secondary Offering. Prior to the closing of the Secondary Offering
and payment in full of all amounts outstanding under the Equipment Loans,
or if the Equipment Loans were converted to a Term Loan, the Term Loan, no
Borrower shall use the proceeds of any Loan to invest in anything other
than the Domestic Switches.

5. Borrowers' Representations and Warranties. Borrower hereby represents
and warrants to the Bank as follows:

(a) All of the representations and warranties made by Borrowers in the
Original Credit Agreement and in any and all documents executed or
delivered to the Bank in connection with the Original Credit Agreement
remain true, complete and accurate as of the date hereof except to the
extent that Borrowers have advised the Bank otherwise in writing;

(b) No Event of Default and no default exist, and no event has occurred
which with notice or lapse of time or both would constitute a default or
an Event of Default under the Original Credit Agreement;

(c) As of the date hereof, there has been no material adverse change in
the financial condition of each Borrower from that reflected in the
financial statements of each Borrower dated July 31, 1998; and

(d) The execution and performance each Borrower of this Amendment, the
Replacement Equipment Facility/Term Note, the Replacement Revolving Credit
Note, and the Amendment to the Security Agreement have been duly
authorized by all necessary corporate action, will not violate any
provision of law applicable to Borrowers or any provision of the charter
or by-laws of each Borrower, will not result in a breach of or constitute
a default or require any consent under, or result in the creation of any
lien, charge or encumbrance upon any property or assets of any Borrower
pursuant to any indenture or other agreement or instrument to which any
Borrower or its property may be bound or affected. This Amendment, the
Replacement Equipment Facility/Term Note, the Replacement Credit Note, and
the Amendment to the Security Agreement constitute legal, valid and
binding agreements of each Borrower, enforceable in accordance with their
respective terms.

6. Events of Default. A breach of any covenant, representation or warranty
set forth in this Agreement by any Borrower shall constitute an Event of
Default under the Credit Agreement.

7. Effect of Amendment. Except as expressly amended and supplemented
hereby, the Original Credit Agreement and the other Credit Documents
remain in full force and effect, unmodified, and are enforceable against
each Borrower in accordance with their respective terms.

8. Further Modifications. This Amendment contains all of the modifications
to the Original Credit Agreement, and no further or other modifications to
the Original Credit Agreement or to any of the other Credit Documents
shall be effective unless in writing executed by the Bank and each
Borrower.

9. Binding Effect. This Amendment shall extend to and bind the parties
hereto and their respective successors and assigns.

10. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New Jersey.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.


TOTAL-TEL USA COMMUNICATIONS, INC.

By:_____________________________
Name:
Title:

Address: Overlook at Great Notch
         150 Clove Road
         Little Falls, NJ 07424

Telecopier: 201-812-7509


TOTAL-TEL, INC.

By:_____________________________
Name:
Title:

Address: Overlook at Great Notch
         150 Clove Road
         Little Falls, NJ 07424

Telecopier: 201-812-7509


TOTAL-TEL USA, INC.

By:_____________________________
Name:
Title:

Address: Overlook at Great Notch
         150 Clove Road
         Little Falls, NJ 07424

Telecopier: 201-812-7509


TOTAL-TEL CARRIER SERVICES, INC.

By:_____________________________
Name:
Title:

Address: Overlook at Great Notch
         150 Clove Road
         Little Falls, NJ 07424

Telecopier: 201-812-7509


TOTAL-TEL INTERNATIONAL, INC.

By:_____________________________
Name:
Title:

Address:________________________

Telecopier:_____________________


TOTAL-TEL SOUTHEAST, INC.

By:_____________________________
Name:
Title:

Address:________________________

Telecopier:_____________________


TOTAL-TEL SERVICES, INC.

By:_____________________________
Name:
Title:

Address:________________________

Telecopier:_____________________


TOTAL-TEL FLORIDA, INC.

By:_____________________________
Name:
Title:

Address:________________________

Telecopier:_____________________


TOTAL-TEL U.K., LTD.
By:_____________________________
Name:
Title:

Address:________________________

Telecopier:_____________________


SUMMIT BANK

By:_____________________________
Name:
Title:

Address:________________________

Telecopier:_____________________


















THIS REPLACEMENT EQUIPMENT FACILITY/TERM NOTE SUPERSEDES THAT CERTAIN
EQUIPMENT FACILITY/TERM NOTE DATED MARCH 16, 1998 MADE BY TOTAL-TEL USA
COMMUNICATIONS, INC., TOTAL-TEL, INC., TOTAL-TEL USA, INC., TOTAL-TEL
CARRIER SERVICES, INC., TOTAL-TEL INTERNATIONAL, INC., TOTAL-TEL
SOUTHEAST, INC., TOTAL-TEL SERVICES, INC., TOTAL-TEL FLORIDA, INC. AND
TOTAL-TEL U.K., LTD., IN THE ORIGINAL PRINCIPAL AMOUNT OF $5,000,000.00.
THIS REPLACEMENT EQUIPMENT FACILITY/TERM NOTE IS ISSUED IN SUBSTITUTION
AND REPLACEMENT OF SUCH NOTE AND NOT IN PAYMENT THEREOF, ANY AND ALL
AMOUNTS DUE PURSUANT TO SUCH NOTE INCLUDING, WITHOUT LIMITATION, ALL
ACCRUED AND UNPAID INTEREST, SHALL BE EVIDENCED HEREBY AND PAID IN
ACCORDANCE WITH THE TERMS HEREOF.

REPLACEMENT EQUIPMENT FACILITY/TERM NOTE

$10,000,000.00                                     _____________ __, 1998
                                                             , New Jersey

FOR VALUE RECEIVED, and intending to be legally bound hereby, the
undersigned, jointly, severally and unconditionally promise to pay to the
order of SUMMIT BANK (the "Bank"), the principal amount of all Equipment
Loans (as defined in the Credit Agreement referred to below) that are now
or may hereafter be made under and pursuant to the Equipment Facility
established under the Amended and Restated Equipment Facility and
Revolving Credit Agreement, dated March 16, 1998, as amended by the
Amendment to Amended and Restated Equipment Facility and Revolving Credit
Agreement dated the date hereof, and as further amended from time to time
(together, the "Credit Agreement") and that are then outstanding, together
with all accrued and unpaid interest thereon and any unpaid costs and
expenses payable thereunder and hereunder, on August 1, 1999 (the
"Expiration Date"), unless such obligations are converted to a term loan
obligation pursuant to said Credit Agreement, in which case such
obligations shall mature and be due and payable on the fifth anniversary
of the date of said conversion (the "Maturity Date").

A. Terms of Note.

1. Payment of Principal. The principal balance of each Equipment Loan
evidenced by this replacement note (together with any attachments hereto
and any amendments or modifications hereof in effect from time to time,
this "Note") shall be due and payable in full on the Expiration Date,
unless the obligations evidenced hereby are converted to a term loan
obligation pursuant to Section 1.04 of the Credit Agreement, in which case
the principal balance hereunder shall be payable in consecutive monthly
installments in the amounts and on the dates prescribed in Section 1.06 of
the Credit Agreement, with a final installment in the amount of the
remaining outstanding principal hereunder, together with any accrued and
unpaid interest thereon, due and payable on the Maturity Date.

2. Interest Payments. The undersigned agree to pay to the Bank, interest,
in arrears, on the outstanding principal balance hereunder at the rates
and on the dates set forth in the Credit Agreement, until the entire
principal balance hereunder, together with accrued and unpaid interest
thereon, is paid in full.

3. Computation of Interest. Interest hereunder shall be computed daily on
the basis of a year of 360 days for the actual number of days elapsed. If
the due date for any payment of principal is extended by operation of law,
interest shall be payable for such extended time.

4. Payment Terms. All payments made hereunder shall be made on or before
10:00 a.m. on the due date thereof, in immediately available funds and in
lawful currency of the United States of America and free and clear of, and
without deduction or withholding for, any taxes or other payments.
Payments shall be deemed made when delivered to the Bank at its offices
set forth in this Note or at such other office of the Bank as the Bank
shall notify the undersigned of in writing.

5. Incorporation by Reference. This Note is the Replacement Equipment
Facility/Term Note referred to in the Credit Agreement and is subject to
the terms and conditions thereof, which terms and conditions are
incorporated herein, including, without limitation, the terms pertaining
to payment, definitions, representations, warranties, covenants, events of
default and remedies. Any capitalized term used herein without definition
shall have the meaning set forth in the Credit Agreement.

6. Bank Records of Advance. The Bank may enter in its business records the
date and the amount of each advance and payment of Equipment Loans made
pursuant to the Credit Agreement and the date and terms of the conversion
of such loans to a term loan pursuant to the Credit Agreement. The Bank's
records thereof shall, in the absence of manifest error, be conclusively
binding upon the undersigned. In the event the Bank gives notice or
renders a statement by mailing such notice or statement to the
undersigned, concerning any such advance, conversion or payment, or the
amount of principal and interest due on this Note, the undersigned agree
that, unless the Bank receives a written notification of exceptions to
such a statement within 10 calendar days after such statement or notice is
mailed, the statement or notice shall be an account stated, correct and
acceptable and binding upon the undersigned.

7. Late Charge. In the event that any payment hereunder shall not be
received by the Bank within ten (10) days of the due date thereof, the
undersigned shall, to the extent permitted by law, pay the Bank a late
charge of five percent (5%) of the overdue payment (but in no event to be
less than $25.00 nor more than $2,500.00). Any such late charge assessed
is immediately due and payable.

8. Default Rate. At the Bank's option, interest will be assessed on any
principal which remains unpaid at the maturity of this Note, whether by
acceleration or otherwise, or upon and following an Event of Default, at a
rate which is 400 basis points (4%) higher than the rate otherwise charged
with respect thereto (the "Default Rate") provided that at no time shall
the amounts owed by the undersigned to the Bank pursuant to any judgments
entered in favor of Bank with respect to this Note, or any other Credit
Document.

B. Remedies.

1. Generally. Upon and following an Event of Default, the Bank, at its
option, may exercise any and all rights and remedies it has under this
Note, the other Credit Documents and under applicable law, including,
without limitation, the right to charge and collect interest on the
principal portion of the amounts outstanding hereunder at the Default
Rate. Upon and following an Event of Default hereunder, the Bank may
proceed to protect and enforce the Bank's rights hereunder and/or
applicable law by action at law, in equity, or other appropriate
proceeding, including, without limitation, an action for specific
performance to enforce or aid in the enforcement of any provision
contained herein or in any other Credit Document.

2. Remedies Cumulative; No Waiver. The remedies hereunder and under the
other Credit Documents are cumulative and concurrent, and are not
exclusive of any other remedies available to the Bank. No failure or delay
on the part of the Bank in the exercise of any right, power, remedy or
privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, remedy or privilege preclude any
other or further exercise thereof, or the exercise of any other right,
power, remedy or privilege.

C. Miscellaneous.

1. Governing Law. This Note shall be construed in accordance with and
governed by the substantive laws of the State of New Jersey without
reference to conflict of laws principles.

2. Amendment; Waiver. No amendment of this Note, and no waiver of any one
or more of the provisions hereof shall be effective unless set forth in
writing and signed by the Borrower and the Bank.

3. Successors and Assigns. This Note (i) shall be binding upon the
undersigned and the Bank, their respective successors and permitted
assigns, and (ii) shall inure to the benefit of the undersigned and the
Bank and, their respective successors and permitted assigns; provided,
however, that none of the undersigned may assign its rights or obligations
hereunder or any interest herein without the prior written consent of the
Bank, which shall not be unreasonably withheld, and any such assignment or
attempted assignment by any of the undersigned shall be void and of no
effect with respect to the Bank.

4. Severability. The illegality or unenforceability of any provision of
this Note or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Note or any instrument or agreement required hereunder.
In lieu of any illegal or unenforceable provision in this Note, there
shall be added automatically as part of this Note a legal and enforceable
provision as similar in terms to such illegal or unenforceable provision
as may be possible.

5. Judicial Proceeding; Waiver.

(a) THE UNDERSIGNED AGREE THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER
CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE BANK OR THE
UNDERSIGNED OR ANY SUCCESSOR OR ASSIGN OF THE BANK OR THE UNDERSIGNED, ON
OR WITH RESPECT TO THIS NOTE OR ANY OTHER CREDIT DOCUMENT OR THE DEALINGS
OF THE PARTIES WITH RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A
COURT AND NOT BY A JURY.

(b) THE BANK AND THE UNDERSIGNED EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, THE UNDERSIGNED WAIVE ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR
IN ADDITION TO, ACTUAL DAMAGES.

(c) THE UNDERSIGNED ACKNOWLEDGE AND AGREE THAT THIS SECTION IS A SPECIFIC
AND MATERIAL ASPECT OF THIS NOTE AND THAT THE BANK WOULD NOT EXTEND CREDIT
TO THE UNDERSIGNED IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A
PART OF THIS NOTE.

IN WITNESS WHEREOF, the undersigned have duly executed and delivered to
the Bank this Note as of the day and year first above written.
``
WITNESS/ATTEST:                      TOTAL-TEL USA COMMUNICATIONS, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL USA, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL CARRIER SERVICES, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL INTERNATIONAL, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________


WITNESS/ATTEST:                      TOTAL-TEL SOUTHEAST, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________


WITNESS/ATTEST:                      TOTAL-TEL SERVICES, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________


WITNESS/ATTEST:                      TOTAL-TEL FLORIDA, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________


WITNESS/ATTEST:                       TOTAL-TEL U.K., LTD. 

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________















THIS REPLACEMENT REVOLVING CREDIT NOTE SUPERSEDES THAT CERTAIN AMENDED AND
RESTATED REVOLVING CREDIT NOTE DATED MARCH 16, 1998, MADE BY TOTAL-TEL USA
COMMUNICATIONS, INC., TOTAL-TEL, INC., TOTAL-TEL USA, INC., TOTAL-TEL
CARRIER SERVICES, INC., TOTAL-TEL INTERNATIONAL, INC., TOTAL-TEL
SOUTHEAST, INC., TOTAL-TEL SERVICES, INC., TOTAL-TEL FLORIDA, INC. AND
TOTAL-TEL U.K., LTD., IN THE ORIGINAL PRINCIPAL AMOUNT OF $8,000,000.00.
THIS REPLACEMENT REVOLVING CREDIT NOTE IS ISSUED IN SUBSTITUTION AND
REPLACEMENT OF SUCH NOTE AND NOT IN PAYMENT THEREOF, ANY AND ALL AMOUNTS
DUE PURSUANT TO SUCH NOTE INCLUDING, WITHOUT LIMITATION, ALL ACCRUED AND
UNPAID INTEREST, SHALL BE EVIDENCED HEREBY AND PAID IN ACCORDANCE WITH THE
TERMS HEREOF.

REPLACEMENT REVOLVING CREDIT NOTE

$5,000,000.00                                          __________ ___, 1998
                                                               , New Jersey

FOR VALUE RECEIVED, and intending to be legally bound hereby, the
undersigned, jointly, severally and unconditionally promise to pay to the
order of SUMMIT BANK (the "Bank"), the principal amount of all advances
that are now or may hereafter be made under and pursuant to the Revolving
Credit Facility established under the Amended and Restated Equipment
Facility and Revolving Credit Agreement, dated March 16, 1998, as amended
by the Amendment to Amended and Restated Equipment Facility and Revolving
Credit Agreement dated the date hereof, and as further amended from time
to time (together, the "Credit Agreement") and that are then outstanding,
together with accrued, unpaid interest thereon and any unpaid costs and
expenses payable hereunder, on August 1, 1999.

A. Terms of Note.

1. Interest Payments. The principal amount of each Revolving Credit Loan
(as defined in the Credit Agreement) evidenced by this replacement note
(together with any attachments hereto and any amendments and modifications
hereto in effect from time to time, this "Note") shall bear interest at
the rates set forth in the Credit Agreement and accrued interest shall be
due and payable by the undersigned in accordance with the provisions
thereof.

2. Computation of Interest. Interest hereunder shall be computed daily on
the basis of a year of 360 days for the actual number of days elapsed. If
the due date for any payment of principal is extended by operation of law,
interests shall be payable for such extended time.

3. Payment Terms. All payments made hereunder shall be made on or before
10:00 a.m. on the due date thereof, in immediately available funds and in
lawful currency of the United States of America and free and clear of, and
without deduction or withholding for, any taxes or other payments.
Payments shall be deemed made when delivered to the Bank at its offices
set forth in this Note or at such other office of the Bank as the Bank
shall notify the undersigned of in writing.

4. Incorporation by Reference. This Note is the Revolving Credit Note
referred to in the Credit Agreement and is subject to the terms and
conditions thereof, which terms and conditions are incorporated herein,
including, without limitation, terms pertaining to definitions,
representations, warranties, covenants, events of default and remedies.
Any capitalized term used herein without definition shall have the
definition contained in the Credit Agreement.

5. Bank Records of Advance. The Bank may enter in its business records the
date and the amount of each advance of a Revolving Credit Loan, each
conversion from one interest rate basis to another and each payment made
pursuant to this Note and the Credit Agreement. The Bank's records of such
advance, conversion or payment shall, in the absence of manifest error, be
conclusively binding upon the undersigned. In the event the Bank gives
notice or renders a statement by mailing such notice or statement to the
undersigned, concerning any such advance, conversion or payment, or the
amount of principal and interest due on this Note, the undersigned agree
that, unless the Bank receives a written notification of exceptions to
such a statement within 10 calendar days after such statement or notice is
mailed, the statement or notice shall be an account stated, correct and
acceptable and binding upon the undersigned.

6. Late Charge. In the event that any payment hereunder shall not be
received by the Bank within ten (10) days of the due date thereof, the
undersigned shall, to the extent permitted by law, pay the Bank a late
charge of five percent (5%) of the overdue payment (but in no event to be
less that $25.00 nor more than $2,500.00). Any such late charge assessed
is immediately due and payable.

7. Default Rate. At the Bank's option, interest will be assessed on any
principal which remains unpaid at the maturity of this Note, whether by
acceleration or otherwise, or upon and following any Event of Default, at
a rate which is 400 basis points (4%) higher than the rate otherwise
charged with respect thereto (the "Default Rate"), provided that at no
time shall the Default Rate exceed the highest rate of interest allowed by
law. Such Default Rate of interest shall also be charged on the amounts
owed by the undersigned to the Bank pursuant to any judgments entered in
favor of Bank in respect of this Note or any other Credit Document.

B. Remedies.

1. Generally. Upon and following an Event of Default, the Bank, at its
option, may exercise any and all rights and remedies it has under this
Note, the other Credit Documents and under applicable law, including,
without limitation, the right to charge and collect interest on the
principal portion of the amounts outstanding hereunder at the Default
Rate. Upon and following an Event of Default, the Bank may proceed to
protect and enforce the Bank's rights under any Credit Document and/or
under applicable law by action at law, in equity, or other appropriate
proceeding, including, without limitation, an action for specific
performance to enforce or aid in the enforcement of any provision
contained herein or in any other Credit Document.

2. Remedies Cumulative; No Waiver. The remedies hereunder and under the
other Credit Documents are cumulative and concurrent, and are not
exclusive of any other remedies available to the Bank. No failure or delay
on the part of the Bank in the exercise of any right, power, remedy or
privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, remedy or privilege preclude any
other or further exercise thereof, or the exercise of any other right,
power, remedy or privilege.

C. Miscellaneous.

1. Governing Law. This Note shall be construed in accordance with and
governed by the substantive laws of the State of New Jersey without
reference to conflict of laws principles.

2. Amendment; Waiver. No amendment of this Note, and no waiver of any one
or more of the provisions hereof shall be effective unless set forth in
writing and signed by the Bank and the undersigned.

3. Successors and Assigns. This Note (i) shall be binding upon the
undersigned and the Bank, their respective successors and permitted
assigns, and (ii) shall inure to the benefit of the undersigned and the
Bank and their respective successors and permitted assigns; provided,
however, that none of the undersigned may assign its rights or obligations
hereunder or any interest herein without the prior written consent of the
Bank, which shall not be unreasonably withheld, and any such assignment or
attempted assignment by any of the undersigned shall be void and of no
effect with respect to the Bank.

4. Severability. The illegality or unenforceability of any provision of
this Note or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Note or any instrument or agreement required hereunder.
In lieu of any illegal or unenforceable provision in this Note, there
shall be added automatically as part of this Note a legal and enforceable
provision as similar in terms to such illegal or unenforceable provision
as may be possible.

5. Judicial Proceeding; Waivers.

(a) THE UNDERSIGNED AGREE THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER
CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE BANK OR THE
UNDERSIGNED OR ANY SUCCESSOR OR ASSIGN OF THE BANK OR THE UNDERSIGNED, ON
OR WITH RESPECT TO THIS NOTE OR ANY OTHER CREDIT DOCUMENT OR THE DEALINGS
OF THE PARTIES WITH RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A
COURT AND NOT BY A JURY.

(b) THE BANK AND THE UNDERSIGNED EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, THE UNDERSIGNED WAIVE ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR
IN ADDITION TO, ACTUAL DAMAGES.

(c) THE UNDERSIGNED ACKNOWLEDGE AND AGREE THAT THIS SECTION IS A SPECIFIC
AND MATERIAL ASPECT OF THIS NOTE AND THAT THE BANK WOULD NOT EXTEND CREDIT
TO THE UNDERSIGNED IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A
PART OF THIS NOTE.

IN WITNESS WHEREOF, the undersigned have duly executed and delivered to
the Bank this Note as of the date first above written.

WITNESS/ATTEST:                      TOTAL-TEL USA COMMUNICATIONS, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL USA, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL CARRIER SERVICES, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL INTERNATIONAL, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________


WITNESS/ATTEST:                      TOTAL-TEL SOUTHEAST, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________


WITNESS/ATTEST:                      TOTAL-TEL SERVICES, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________


WITNESS/ATTEST:                      TOTAL-TEL FLORIDA, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________


WITNESS/ATTEST:                       TOTAL-TEL U.K., LTD. 

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________















THIS REPLACEMENT EQUIPMENT FACILITY/TERM NOTE SUPERSEDES THAT CERTAIN
EQUIPMENT FACILITY/TERM NOTE DATED MARCH 16, 1998 MADE BY TOTAL-TEL USA
COMMUNICATIONS, INC., TOTAL-TEL, INC., TOTAL-TEL USA, INC., TOTAL-TEL
CARRIER SERVICES, INC., TOTAL-TEL INTERNATIONAL, INC., TOTAL-TEL
SOUTHEAST, INC., TOTAL-TEL SERVICES, INC., TOTAL-TEL FLORIDA, INC. AND
TOTAL-TEL U.K., LTD., IN THE ORIGINAL PRINCIPAL AMOUNT OF $5,000,000.00.
THIS REPLACEMENT EQUIPMENT FACILITY/TERM NOTE IS ISSUED IN SUBSTITUTION
AND REPLACEMENT OF SUCH NOTE AND NOT IN PAYMENT THEREOF, ANY AND ALL
AMOUNTS DUE PURSUANT TO SUCH NOTE INCLUDING, WITHOUT LIMITATION, ALL
ACCRUED AND UNPAID INTEREST, SHALL BE EVIDENCED HEREBY AND PAID IN
ACCORDANCE WITH THE TERMS HEREOF.

REPLACEMENT EQUIPMENT FACILITY/TERM NOTE

$10,000,000.00                                       _____________ __, 1998
                                                               , New Jersey

FOR VALUE RECEIVED, and intending to be legally bound hereby, the
undersigned, jointly, severally and unconditionally promise to pay to the
order of SUMMIT BANK (the "Bank"), the principal amount of all Equipment
Loans (as defined in the Credit Agreement referred to below) that are now
or may hereafter be made under and pursuant to the Equipment Facility
established under the Amended and Restated Equipment Facility and
Revolving Credit Agreement, dated March 16, 1998, as amended by the
Amendment to Amended and Restated Equipment Facility and Revolving Credit
Agreement dated the date hereof, and as further amended from time to time
(together, the "Credit Agreement") and that are then outstanding, together
with all accrued and unpaid interest thereon and any unpaid costs and
expenses payable thereunder and hereunder, on August 1, 1999 (the
"Expiration Date"), unless such obligations are converted to a term loan
obligation pursuant to said Credit Agreement, in which case such
obligations shall mature and be due and payable on the fifth anniversary
of the date of said conversion (the "Maturity Date").

A. Terms of Note.

1. Payment of Principal. The principal balance of each Equipment Loan
evidenced by this replacement note (together with any attachments hereto
and any amendments or modifications hereof in effect from time to time,
this "Note") shall be due and payable in full on the Expiration Date,
unless the obligations evidenced hereby are converted to a term loan
obligation pursuant to Section 1.04 of the Credit Agreement, in which case
the principal balance hereunder shall be payable in consecutive monthly
installments in the amounts and on the dates prescribed in Section 1.06 of
the Credit Agreement, with a final installment in the amount of the
remaining outstanding principal hereunder, together with any accrued and
unpaid interest thereon, due and payable on the Maturity Date.

2. Interest Payments. The undersigned agree to pay to the Bank, interest,
in arrears, on the outstanding principal balance hereunder at the rates
and on the dates set forth in the Credit Agreement, until the entire
principal balance hereunder, together with accrued and unpaid interest
thereon, is paid in full.

3. Computation of Interest. Interest hereunder shall be computed daily on
the basis of a year of 360 days for the actual number of days elapsed. If
the due date for any payment of principal is extended by operation of law,
interest shall be payable for such extended time.

4. Payment Terms. All payments made hereunder shall be made on or before
10:00 a.m. on the due date thereof, in immediately available funds and in
lawful currency of the United States of America and free and clear of, and
without deduction or withholding for, any taxes or other payments.
Payments shall be deemed made when delivered to the Bank at its offices
set forth in this Note or at such other office of the Bank as the Bank
shall notify the undersigned of in writing.

5. Incorporation by Reference. This Note is the Replacement Equipment
Facility/Term Note referred to in the Credit Agreement and is subject to
the terms and conditions thereof, which terms and conditions are
incorporated herein, including, without limitation, the terms pertaining
to payment, definitions, representations, warranties, covenants, events of
default and remedies. Any capitalized term used herein without definition
shall have the meaning set forth in the Credit Agreement.

6. Bank Records of Advance. The Bank may enter in its business records the
date and the amount of each advance and payment of Equipment Loans made
pursuant to the Credit Agreement and the date and terms of the conversion
of such loans to a term loan pursuant to the Credit Agreement. The Bank's
records thereof shall, in the absence of manifest error, be conclusively
binding upon the undersigned. In the event the Bank gives notice or
renders a statement by mailing such notice or statement to the
undersigned, concerning any such advance, conversion or payment, or the
amount of principal and interest due on this Note, the undersigned agree
that, unless the Bank receives a written notification of exceptions to
such a statement within 10 calendar days after such statement or notice is
mailed, the statement or notice shall be an account stated, correct and
acceptable and binding upon the undersigned.

7. Late Charge. In the event that any payment hereunder shall not be
received by the Bank within ten (10) days of the due date thereof, the
undersigned shall, to the extent permitted by law, pay the Bank a late
charge of five percent (5%) of the overdue payment (but in no event to be
less than $25.00 nor more than $2,500.00). Any such late charge assessed
is immediately due and payable.

8. Default Rate. At the Bank's option, interest will be assessed on any
principal which remains unpaid at the maturity of this Note, whether by
acceleration or otherwise, or upon and following an Event of Default, at a
rate which is 400 basis points (4%) higher than the rate otherwise charged
with respect thereto (the "Default Rate") provided that at no time shall
the amounts owed by the undersigned to the Bank pursuant to any judgments
entered in favor of Bank with respect to this Note, or any other Credit
Document.

B. Remedies.

1. Generally. Upon and following an Event of Default, the Bank, at its
option, may exercise any and all rights and remedies it has under this
Note, the other Credit Documents and under applicable law, including,
without limitation, the right to charge and collect interest on the
principal portion of the amounts outstanding hereunder at the Default
Rate. Upon and following an Event of Default hereunder, the Bank may
proceed to protect and enforce the Bank's rights hereunder and/or
applicable law by action at law, in equity, or other appropriate
proceeding, including, without limitation, an action for specific
performance to enforce or aid in the enforcement of any provision
contained herein or in any other Credit Document.

2. Remedies Cumulative; No Waiver. The remedies hereunder and under the
other Credit Documents are cumulative and concurrent, and are not
exclusive of any other remedies available to the Bank. No failure or delay
on the part of the Bank in the exercise of any right, power, remedy or
privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, remedy or privilege preclude any
other or further exercise thereof, or the exercise of any other right,
power, remedy or privilege.

C. Miscellaneous.

1. Governing Law. This Note shall be construed in accordance with and
governed by the substantive laws of the State of New Jersey without
reference to conflict of laws principles.

2. Amendment; Waiver. No amendment of this Note, and no waiver of any one
or more of the provisions hereof shall be effective unless set forth in
writing and signed by the Borrower and the Bank.

3. Successors and Assigns. This Note (i) shall be binding upon the
undersigned and the Bank, their respective successors and permitted
assigns, and (ii) shall inure to the benefit of the undersigned and the
Bank and, their respective successors and permitted assigns; provided,
however, that none of the undersigned may assign its rights or obligations
hereunder or any interest herein without the prior written consent of the
Bank, which shall not be unreasonably withheld, and any such assignment or
attempted assignment by any of the undersigned shall be void and of no
effect with respect to the Bank.

4. Severability. The illegality or unenforceability of any provision of
this Note or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Note or any instrument or agreement required hereunder.
In lieu of any illegal or unenforceable provision in this Note, there
shall be added automatically as part of this Note a legal and enforceable
provision as similar in terms to such illegal or unenforceable provision
as may be possible.

5. Judicial Proceeding; Waiver.

(a) THE UNDERSIGNED AGREE THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER
CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE BANK OR THE
UNDERSIGNED OR ANY SUCCESSOR OR ASSIGN OF THE BANK OR THE UNDERSIGNED, ON
OR WITH RESPECT TO THIS NOTE OR ANY OTHER CREDIT DOCUMENT OR THE DEALINGS
OF THE PARTIES WITH RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A
COURT AND NOT BY A JURY.

(b) THE BANK AND THE UNDERSIGNED EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, THE UNDERSIGNED WAIVE ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR
IN ADDITION TO, ACTUAL DAMAGES.

(c) THE UNDERSIGNED ACKNOWLEDGE AND AGREE THAT THIS SECTION IS A SPECIFIC
AND MATERIAL ASPECT OF THIS NOTE AND THAT THE BANK WOULD NOT EXTEND CREDIT
TO THE UNDERSIGNED IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A
PART OF THIS NOTE.

IN WITNESS WHEREOF, the undersigned have duly executed and delivered to
the Bank this Note as of the day and year first above written.

WITNESS/ATTEST:                      TOTAL-TEL USA COMMUNICATIONS, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL USA, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL CARRIER SERVICES, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509


WITNESS/ATTEST:                      TOTAL-TEL INTERNATIONAL, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________


WITNESS/ATTEST:                      TOTAL-TEL SOUTHEAST, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509

WITNESS/ATTEST:                      TOTAL-TEL SERVICES, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address: Overlook at Great Notch
                                                    150 Clove Road
                                                    Little Falls, NJ 07424

                                           Telecopier: 201-812-7509

WITNESS/ATTEST:                      TOTAL-TEL FLORIDA, INC.

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________


WITNESS/ATTEST:                       TOTAL-TEL U.K., LTD. 

By:_____________________________           By:_____________________________
   Name:                                   Name:
   Title:                                  Title:
                                           Address:________________________

                                           Telecopier:_____________________






DATED:                            JULY 28, 1998
LEASE AGREEMENT

BY AND BETWEEN

THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY,

AS LANDLORD

AND

TOTAL-TEL USA COMMUNICATIONS, INC.
a New Jersey corporation

AS TENANT

TABLE OF CONTENTS

                                                                   PAGE

FUNDAMENTAL LEASE PROVISIONS                                          1

ARTICLE 1: BASIC LEASE PROVISIONS AND TERM                            2
Section 1.01 - Leased Premises                                        2
Section 1.02 - Commencement of Rent and Term                          2

ARTICLE 2: FIXED RENT & GENERAL RENTAL PAYMENT PROVISIONS             2
Section 2.01 - Rental Payments                                        2
Section 2.02 - Fixed Rent Adjustment                                  2
Section 2.03 - Late Charge Penalty                                    3

ARTICLE 3: ADDITIONAL RENT                                            3
Section 3.01 - Def. Terms Relating to Additional Rent                 3
Section 3.02 - Additional Rent Calculation                            4
Section 3.03 - Operating Statements                                   4

ARTICLE 4: SECURITY DEPOSIT                                           5

ARTICLE 5: USE                                                        5
Section 5.01 - Use of Premises                                        5
Section 5.02 - Operation of Tenant's Business                         5

ARTICLE 6: PREPARATION OF PREMISES                                    5
Section 6.00 - Leasehold Improvements                                 5
Section 6.01 - Landlord's Work                                        6
Section 6.02 - Occupancy Date                                         7

ARTICLE 7: SUBORDINATION, NOTICE TO SUPERIOR
LANDLORDS AND MORTGAGEES                                              7
Section 7.01 - Subordination of Lease                                 8
Section 7.02 - Notice in the Event of Default                         8
Section 7.03 - Successor Landlord                                     8

ARTICLE 8: QUIET ENJOYMENT                                            8

ARTICLE 9: ASSIGNMENT, SUBLETTING AND MORTGAGING                      8
Section 9.01 - Prohibition                                            8
Section 9.02 - Rights of Landlord                                     8
Section 9.03 - Permissible Transfers                                  9
Section 9.04 - Assignment Request                                     9

ARTICLE 10: INSURANCE                                                 9
Section 10.01 - Tenant Activities                                     9
Section 10.02 - Waiver of Subrogation                                 9
Section 10.03 - Insurance to be Maintained by Tenant                  9

ARTICLE 11: ALTERATIONS                                              10
Section 11.01 - Procedural Requirements                              10
Section 11.02 - Performance of Alterations                           11
Section 11.03 - Lien Prohibition                                     11

ARTICLE 12: LANDLORD'S AND TENANT'S PROPERTY                         11
Section 12.01 - Landlord's Property                                  11
Section 12.02 - Tenant's Property                                    11
Section 12.03 - Removal of Tenant's Property                         12

ARTICLE 13: REPAIRS AND MAINTENANCE                                  12
Section 13.01 - Tenant Repairs and Maintenance                       12
Section 13.02 - Landlord Repairs and Maintenance                     12
Section 13.03 - Tenant Equipment                                     12

ARTICLE 14: HEAT, VENTILATION, AIR CONDITIONING 
AND ELECTRICAL ENERGY                                                12
Section 14.01 - Air Conditioning and Heating
Provided by Landlord                                                 12
Section 14.02 - Use of Electrical Energy by Tenant                   13

ARTICLE 15: OTHER SERVICES                                           13
Section 15.01 - Services Provided by Landlord                        13
Section 15.02 - Janitorial Standards                                 13
Section 15.03 - Involuntary Cessation of Services                    13
Section 15.04 - First Class Condition                                13

ARTICLE 16: ACCESS AND NAME                                          13
Section 16.01 - Common Areas                                         13
Section 16.02 - Landlord's Right of Access                           14
Section 16.03 - Landlord's Right to Repair and Maintain              14
Section 16.04 - Name of Building                                     14
Section 16.05 - Signs                                                14

ARTICLE 17: NON-LIABILITY AND INDEMNIFICATION                        14
Section 17.01 - Non-Liability                                        14
Section 17.02 - Tenant Indemnification                               14
Section 17.03 - Force Majeure                                        14

ARTICLE 18: DAMAGE OR DESTRUCTION                                    15
Section 18.01 - Notification                                         15
Section 18.02 - Repair Provisions                                    15

ARTICLE 19: EMINENT DOMAIN                                           16

ARTICLE 20: SURRENDER                                                16

ARTICLE 21: CONDITIONS OF LIMITATION                                 16
Section 21.01 - Bankruptcy of Tenant                                 16
Section 21.02 - Default Provisions                                   17

ARTICLE 22: DAMAGES                                                  17
Section 22.01 - Tenant Liability                                     17
Section 22.02 - Rights of Landlord                                   18
Section 22.03 - Additional Remedy of Landlord                        18

ARTICLE 23: BROKER                                                   18

ARTICLE 24: PARKING                                                  18

ARTICLE 25: ESTOPPEL CERTIFICATES                                    19

ARTICLE 26: MISCELLANEOUS                                            19
Section 26.01 - Merger                                               19
Section 26.02 - Notice                                               19
Section 26.03 - Relocation                                           19
Section 26.04 - Non-Waiver                                           19
Section 26.05 - Parties Bound                                        19
Section 26.06 - Limitations against Landlord                         19
Section 26.07 - Definition of Parties                                19
Section 26.08 - Survival of Obligations                              20
Section 26.09 - Interference by Tenant                               20

ARTICLE 26: MISCELLANEOUS                                            20
Section 26.10 - Prorations                                           20
Section 26.11 - Arbitration                                          20
Section 26.12 - Attorney Fees                                        20
Section 26.13 - Page Initials                                        20
Section 26.14 - Radon Gas                                            20

EXHIBITS:
A  Legal Description
C  Floor Plan
D  Rules and Regulations
E  Tenant Acceptance Agreement
   Receipt of Deposit
   Certificate of Secretary
   Rider

LEASE AGREEMENT - OFFICE

THIS LEASE AGREEMENT, made effective and entered into on this 28th day 
of July, 1998 is by and between THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY, of Milwaukee, Wisconsin, having an office at 500 Cypress Creek
Road, Fort Lauderdale, Florida 33309, (hereinafter referred to as
"Landlord") and TOTAL-TEL USA COMMUNICATIONS, INC. a New Jersey
corporation, having an office at 160 Clove Road, Little Falls, NJ 07424
(hereinafter referred to as "Tenant").

WITNESSETH:
FUNDAMENTAL LEASE PROVISIONS

Certain Fundamental Lease Provisions are presented in this section (the
"Fundamental Lease Provisions Section") and represent the agreement of 
the parties hereto, subject to further definition and elaboration in the
respective referenced sections and elsewhere in this Lease:

<TABLE>
<CAPTION>

<S>                          <C>                                               <C>
(a) Term of Lease:            Five (5) Years See                                               Section 1.02
(b) Lease Commencement Date:
                              The later of September 1, 1998 or completion                 See Section 1.02
                              of Tenant Improvements

(c) Occupancy Date:           The later of September 1, 1998 or completion                 See Section 6.04
                              of Tenant Improvements

(d) Rent Commencement Date:   The later of September 1, 1998 or completion                 See Section 1.02
                              of Tenant Improvements

(e) Description of Premises:  (2nd) Floor, Suite 200                                       See Section 1.01

(f) Leased Premises:          3,008 Rentable Square Feet                        See Floor Plans Exhibit "C"

(g) Initial Fixed Rent:       ANNUAL         MONTHLY                                       See Section 2.01
                              ------         -------
                      YEAR 1  $48,128.00     $4,010.67

(h) Additional Rent:                                                                          See Article 3
                              Tenant shall pay proportionate share of Tenant's
                              Building's Operating Expenses and real estate 
                              taxes - estimated to be Seven Dollars and 70/100
                              ($7.70) per rentable square foot for first year.

(i) Tenant's Proportionate
    Share:                    .0198 (1.98 percent)                                            See Article 3

(j) Prepaid Rent:                                                                           See Section 2.01
    Fixed Rent:               $4,010.67     +$240.64     = $4,251.31
                              Representing one (1) month of fixed rent and sales tax

    Additional Rent:          $1,930.13     +$115.81     = $2,045.94
                              Representing one (1) month of additional rent and sales tax

                              Total Prepaid Rent         = $6,297.25

(k) Security Deposit:         $12,594.50                                                      See Article 4

(l) Broker:                   Podolsky & Associates of Florida, Inc.                         See Article 23
                              Codina Bush Klein - Oncor International

(m) Parking:                  Fifteen (15) Spaces                                            See Article 24

(n) Escalations of Initial
    Fixed Rent:               ANNUAL         MONTHLY                                       See Section 2.02
                              ------         -------
                 YEAR 2       $50,534.00     $4,211.20
                      3       $53,061.12     $4,421.76
                      4       $55,708.16     $4,642.35
                      5       $58,505.60     $4,875.47

(o) Tenant Improvements:                                                                    See Exhibit "C".
                              Landlord, at Landlord's sole cost shall modify suite 
                              to reflect the space plan on Exhibit "C".
</TABLE>


ARTICLE 1
BASIC LEASE PROVISIONS AND TERM

1.01 Leased Premises. Landlord hereby leases to Tenant, and Tenant hereby
rents from Landlord, upon and subject to the terms, covenants, provisions
and conditions of this Lease, the Premises described in Section (e) of the
Fundamental Lease Provisions Section (the "Premises"), located at 500
Cypress Creek Road, Fort Lauderdale, Florida 33309 (the "Building"). The
legal description of the lands upon which the Building is located is more
particularly described on Exhibit "A", annexed hereto and made a part
hereof (the "Property"). The Premises are more particularly described on
the floor plans annexed hereto and made a part hereof as Exhibit "C". The
square feet of leasable area of the Premises, as set forth in Section (f)
of the Fundamental Lease Provisions Section, shall control for purposes of
rent amount. The Leased Premises is not the same as usable area. The
usable area has been increased by a multiplier for Tenant allocation of
common area and is described as the Leased Premises. The "Leased Premises"
is the same as the "Premises" for purposes of this Lease.

1.02 Commencement of Rent and Term. The Term of this Lease shall be for
the length of term set forth in Section (a) of the Fundamental Lease
Provisions Section, commencing on the Lease Commencement Date set forth
herein. The Rent shall commence on the date described in Section (d) of
the Fundamental Lease Provisions Section. "Lease Year" means each
successive twelve (12) month period from the Lease Commencement Date.

ARTICLE 2
FIXED RENT AND GENERAL RENTAL PAYMENT PROVISIONS

2.01 Rental Payments. The rents shall be and consist of (a) fixed rent,
initially at the rate set forth in Section (g) of the Fundamental Lease
Provisions Section, during the term of this Lease, payable in equal
monthly installments, in advance, on the first day of each and every
calendar month during the term of this Lease, as adjusted in accordance
with Section 2.02 (the "Fixed Rent"), and (b) additional charges (the
"Additional Rent") consisting of all sums of money as shall become due
from and payable by Tenant to Landlord in accordance with Article 3
hereof; all to be paid in lawful money of the United States to Landlord at
its office, or such other place, or to Landlord's agent and at such other
place, as Landlord shall designate by notice to Tenant. In addition to the
above, Tenant shall pay all governmental taxes including sales and rent
tax, fees or charges on account of the Fixed Rent and the Additional Rent
to Landlord each and every month on the first day of each month.

Tenant shall pay the Fixed Rent and the Additional Rent promptly when due
without notice or demand therefore and without any abatement, deduction or
setoff for any reason whatsoever. No payment by Tenant or receipt or
acceptance by Landlord of a lesser amount than the correct Fixed Rent or
Additional Rent shall be deemed to be other than the payment on account,
nor shall any endorsement or statement on any check or letter accompanying
any payment be deemed an accord or satisfaction and Landlord may accept
such payment without prejudice to its right to recover the balance or
pursue any other remedy in this Lease or at law. If the Rent Commencement
Date occurs on a day other than the first day of the calendar month, the
Fixed Rent for the partial calendar month, at the commencement of the term
of this Lease, shall be prorated for each date at the rate of
one-thirtieth (1/30) of the full monthly installment of basic rent.

Tenant has deposited with Landlord the sums set forth in Section (j) of
the Fundamental Lease Provisions Section, as prepaid Fixed Rent, the
receipt of which is acknowledged by Landlord.

2.02 Fixed Rent Adjustment. The Fixed Rent shall be a minimum base rental
for the entire term of this Lease. Commencing with the second Lease Year
and prior to the commencement of each Lease Year thereafter, the Fixed
Rent shall be increased to the amounts indicated in Section (n) of the
Fundamental Lease Provisions. Each "Lease Year" shall consist of each
period of twelve (12) months subsequent to the Lease Commencement Date.

2.03 Late Charge Penalty. The Tenant shall be given a grace period of 5
days from the first day of the month to pay Rent and Additional Rent. If
Rent and Additional Rent is received after this date, a late charge
penalty shall be due and owing to Landlord in the amount of the greater of
$100.00 or 18% per annum of the full amount of Rent and Additional Rent
due and owing beginning to accrue as of the 1st day of the month in which
payment is due extending until the late payment is received.

ARTICLE 3
ADDITIONAL RENT

3.01 Definitional Terms Relating to Additional Rent. For the purposes of
this Article and other provisions of the Lease:

(a) Operating Expenses. The term "Operating Expenses" shall mean all
expenses paid or incurred by Landlord or on Landlord's behalf with respect
to the repair, maintenance and operation of the Property and/or Building
and the curbs, sidewalks, parking garages and plazas adjoining and
contained within the same, including, without limitation, the following:

(i) salaries, payroll taxes, wages, workman's compensation, medical,
surgical, union and general welfare benefits, and other expenses for
employees (including, without limitation, group life insurance) and
pension payments of employees of Landlord engaged in the repair,
operation, maintenance and management of the Property and/or the Building;

(ii) the cost of all charges for gas, electricity, heat, ventilation, air
conditioning, water, sewer, garbage collection, and other utilities
furnished to the Building (including, without limitation, the common areas
thereof), and to the Property, together with any taxes for charges of such
utilities;

(iii) the cost of painting of the common area;

(iv) the cost of all charges for rent, casualty, liability and all other
types of insurance, provided by Landlord and relating to the Property
and/or the Building and the maintenance and/or operation thereof;

(v) the cost or rental of all supplies (including, without limitation,
cleaning supplies), tools, materials and equipment, and sales and other
taxes thereon;

(vi) the cost of all charges for window and other cleaning and janitorial
and security services.

(vii) amounts charged to Landlord by contractors for labor, services,
materials and supplies furnished in connection with the operation,
maintenance or repair of any part of the Building and/or the Property or
the heating, air conditioning, ventilating, plumbing, electrical,
elevator, and other systems of the Building;

(viii) the cost of repairs and replacements to the Building and/or the
Property or any portions thereof made by Landlord at its expense;

(ix) alterations and improvements to the Building and/or the Property 
made by reason of laws and requirements of any public authorities or 
the requirements of insurance bodies;

(x) management fees including but not limited to salaries, payroll taxes,
wages, workmen's compensation, medical, surgical, union and general
welfare benefits, and other expenses for employees (including, without
limitation, group life insurance) and pension payments of employees
engaged in the repair, operation, maintenance and management of the
Property and/or the Building;

(xi) the cost of any capital improvements to the Building and/or any
machinery or equipment installed in the Building which is made or becomes
operational, as the case may be, and which has the effect of reducing the
expenses which otherwise would be included in the Operating Expenses, to
the extent of such cost, amortized over the useful life of the
improvement, machinery and/or equipment (as reasonably estimated by
Landlord);

(xii) reasonable (excluding fees chargeable against other defaulting
Tenants) legal, accounting and other professional fees incurred in
connection with the operation, maintenance and management of the Property
and/or Building;

(xiii) refurbishing, repainting, recarpeting or redecorating any portion
of the common area of the Property and/or Building;

(xiv) Taxes, as hereinafter defined; and

(xv) all other reasonable charges properly allocable to the repair,
operation and maintenance of the Building and/or Property in accordance
with generally accepted accounting principles.

The term "Taxes" as referred to in provision (xiv) above shall mean (i)
the aggregate amount for which the Building, and all land or real and
personal property owned or Leased by Landlord underlying the Building
(i.e. the Property) or adjacent thereto and used in connection with the
operation of the building and/or the Property are assessed by Broward
County or any city or municipal body having jurisdiction for the purpose
of imposition of real estate taxes; (ii) any reasonable expenses incurred
by Landlord in the good faith contest of such taxes or assessments and/or
the assessed value of the Building and/or the Property; and (iii) any
special or other assessment or levy which is imposed upon the Building
and/or the property shall be added to the amount so determined. Any such
special tax or assessment shall be included in the operating expenses
assuming it is paid in the maximum legally permissible number of
installments. If at any time during the term of this Lease, the methods of
taxation prevailing on the date hereof shall be altered, such additional
or substitute tax, assessment, levy, imposition, or charge, shall be
deemed to be included within the term "Taxes" for the purposes hereof.

Notwithstanding the above, the following are excluded from the definition
of Operating Expenses: (1) depreciation (except as provided above); (2)
interest on and amortization of debts; (3) leasehold improvements made for
other tenants of the Building; (4) refinancing costs; (5) the costs of any
work or services performed by any tenant(s) of the Building (including
Tenant), to the extent that such work or service is separately reimbursed;
(6) the cost of any repair or replacement (other than those described in
subparagraphs (xi) and (xiii) above) which would be required to be
capitalized under generally accepted accounting principles, unless such
costs may be, under said principles, amortized over a period of not more
than ten (10) years, in which event a proportionate part of such costs may
be included each year in Operating Expenses over the useful life (as
reasonably estimated by Landlord) or; such repair and replacement; (7)
leasing commissions; (8) legal fees incurred in connection with other
tenants.

(b) Operating Year. The term "Operating Year" shall mean the calendar year
commencing January 1st of each year (including the initial year within
which the Rent Commencement Date occurs) during the term of this Lease.

3.02 Additional Rent Calculation. Tenant agrees to pay to Landlord, as
Additional Rent for each year during the term of this Lease, an amount
equal to Tenant's Proportionate Share as defined in Section (i) of the
Fundamental Lease Provision Section of the Operating Expenses for each
Operating Year hereunder. It is acknowledged and understood that the
Additional Rent commences on the Lease Commencement Date of this Lease. If
an Operating year ends after the expiration or termination of this Lease,
the Additional Rent payable hereunder shall be prorated to correspond to
that portion of the Operating Year occurring within the term of this
Lease.

3.03 Operating Statement. Landlord or its agent shall furnish to Tenant,
prior to the commencement of each Operating Year, a written statement
setting forth Landlord's estimate of Tenant's Additional Rent (the
"Estimated Operating Statement"). Landlord shall deliver to the Tenant a
budget for the first year's estimated operating expenses and the
proportion the Tenant will be required to pay beginning on the Lease
Commencement Date. Tenant shall pay to Landlord, on the first day of each
month as Additional Rent, an amount equal to one-twelfth (1/12) of the
Landlord's estimate of the same. If, however, Landlord shall furnish any
such estimate subsequent to the commencement of any year during the term
of this Lease, then until the first day of the month following the month
in which such estimate is furnished to Tenant, Tenant shall pay to
Landlord, on the first day of each month, an amount equal to the monthly
sum payable under this section in respect of the last month of the
previous Operating Year. Promptly after such estimate is furnished to
Tenant, Landlord shall give notice to Tenant stating whether the previous
installments of Additional Rent were more or less than the sums which
should have been made for such Operating Year. In the event there is a
deficiency, Tenant shall pay the amount thereof within ten (10) days after
demand therefore. In the event there shall have been an over payment,
Landlord shall permit Tenant to credit the amount thereof against
subsequent payments of Additional Rent.

If there shall be any increase or decrease in the estimated Operating
Expenses for any Lease Year, whether during or after such year, Landlord
shall furnish to Tenant a revised statement and the Additional Rent shall
be adjusted and paid or refunded, as the case may be. This revised
statement will be the basis for the Estimated Operating Statement for the
next year's Additional Rent allocation to each Tenant.

Within one hundred twenty (120) days after the end of each Operating Year,
Landlord shall furnish to Tenant a statement pertaining to the actual
expenses for said year (the "Operating Statement"). Tenant has a right to
request an audit of the records at Tenant's expense. If the Operating
Statement shows that the sums paid by Tenant, pursuant to the Estimated
Operating Statement, exceed Tenant's Proportionate Share, Landlord shall
promptly either refund to Tenant the amount of such excess Additional Rent
paid by Tenant or permit Tenant to credit the amount thereof against
subsequent payments of Additional Rent under this Article; and if such
statement shows that the sums paid by Tenant were less than Additional
Rent due hereunder, Tenant shall pay the amount of such deficiency within
ten (10) days after written demand therefore.

Each Operating Statement given by Landlord, shall be conclusive and
binding upon Tenant (a) unless within thirty (30) days after the receipt
thereof, Tenant shall notify Landlord that it disputes the accuracy of
said Operating Statement, specifying the particular respects in which the
Operating Statement is claimed to be incorrect and (b) if such dispute
shall not have been settled by agreement, either party may submit the
dispute to arbitration in accordance with Chapter 682, Florida Statutes.
The arbitration shall take place in Broward County, Florida and shall be
held in accordance with the rules of the American Arbitration Association.
A panel of three (3) arbitrators shall be selected by the parties to the
dispute from a panel selected by the American Arbitration Association and
the award of the three arbitrators shall be final and non-appealable and
judgment may be entered in any court of competent jurisdiction. In the
event the parties are unable to agree on three (3) arbitrators, each party
shall select one (1) arbitrator from the panel and the two (2) arbitrators
selected shall select the third arbitrator. The matter must be submitted
within sixty (60) days after receipt of each operating Statement, and
pending the determination of such dispute by agreement or arbitration as
aforesaid, Tenant shall within ten (10) days after receipt of such
Operating Statement, pay Additional Rent in accordance with Landlord's
statement, without prejudice to Tenant's position. If the dispute shall be
determined in Tenant's favor, Landlord shall forthwith pay to Tenant the
amount of Tenant's overpayment of Additional Rent resulting from
compliance with the Operating Statement. In no case, however, shall Tenant
delay or withhold payment of Fixed Rent and Additional rent pending
resolution of a dispute with regard to Operating Expenses.

ARTICLE 4
SECURITY DEPOSIT

Tenant has deposited with Landlord the sums set forth in Section (k) of
the Fundamental Lease Provisions Section, the receipt of which is
acknowledged by Landlord as security, for the full and faithful
performance and observance by Tenant of the covenants and obligations
hereunder (the "Security") for a period of the term of this Lease
Agreement. The Security shall be held by Landlord without bearing interest
in favor of Tenant and in the event Tenant defaults in the full and prompt
payment and performance of any of its covenants hereunder, Landlord may
use, apply or retain the whole or any part of the Security to the extent
required for the payment of any Fixed Rent and Additional Rent or any
other sums which may be due by Tenant hereunder. In the event Landlord
shall so use, apply or retain the whole or any part of the Security,
Tenant shall, upon demand, immediately deposit with Landlord a sum equal
to the amount so used. If Tenant shall fully and faithfully comply with
all the covenants hereunder, the Security, or any balance thereof, shall
be returned or paid over to Tenant after the date on which this Lease has
expired or been terminated, and after delivery to Landlord of possession
of the Premises and after all obligations of the Tenant under this Lease
have been fully satisfied. It is agreed and understood that the
obligations of Tenant to Landlord hereunder which may not have been
performed prior to the expiration date hereof shall be continuing
obligations owed by Tenant to Landlord and shall accordingly survive the
termination of this Lease. Landlord may deliver the Security to any
purchaser of Landlord's interest in the Premises and thereupon Landlord
shall be discharged of and from any further liability with respect to the
same.

ARTICLE 5
USE

5.01 Use of Premises. It is agreed and understood that Tenant shall use
the Premises for General Office only unless otherwise agreed to in writing
by Landlord. Tenant shall abide by and not violate any of the rules and
regulations set forth on Exhibit "D", annexed hereto and made a part
hereof, and such other rules and regulations as may be modified from time
to time hereafter by the Landlord provided that such rules are not
discriminatorily enforced and do not conflict with Tenant's rights under
the Lease. Landlord shall not be liable to Tenant for violation of the
rules and regulations by any other tenant or such tenant's employees,
agents, invitees or licensees.

5.02 Operation of Tenant's Business. If any governmental license or
permit, other than a certificate of occupancy, shall be required for the
proper and lawful conduct of Tenant's business in the Premises or any part
thereof, Tenant, at its expense, shall duly procure and thereafter
maintain such license or permit. Tenant shall, at all times, comply with
the terms and conditions of each such license or permit. Tenant shall not,
at any time, use or occupy, or suffer or permit anyone to use or occupy,
the Premises, or do or permit anything to be done in the Premises, in any
manner which may (a) violate the certificate of occupancy for the Premises
or for the Building; (b) cause or be liable to cause injury to the
Building or any equipment, facilities or systems therein; (c) constitute a
violation of the laws and requirements of any public authority or the
requirements of insurance bodies; (d) impair or tend to impair the
character, reputation or appearance of the Building as a first class
office building; (e) impair or tend to impair the proper and economic
maintenance, operation, and repair of the Building and/or its equipment,
facilities or systems; (f) annoy or inconvenience or tend to annoy or
inconvenience other tenants or occupants of the Building; (g) cause or
violate any provision of Landlord's fire and extended liability coverage.
Landlord shall give notice to Tenant of any non-standard insurance
provisions.

ARTICLE 6
PREPARATION OF PREMISES

6.00 Leasehold Improvements. See Section (o) of the Fundamental 
Lease Provisions and Exhibit "C."

6.01 Landlord's Work.

(a) All of the work to be done by Landlord in initially completing or
improving the Leased Premises pursuant to this Article is hereinafter
referred to as "Landlord's Work." Landlord's Work shall constitute a
single, non-recurring obligation on the part of Landlord.

Landlord's Work shall be performed in a first class workmanlike manner,
substantially in accordance with plans and specifications prepared by
Landlord's architects and engineers. Landlord's Work shall be deemed 
approved by Tenant in all respects on the Lease Commencement Date except 
for latent defects or items of Landlord's Work as to which Tenant shall 
have given notice to Landlord within thirty (30) days of occupancy by 
Tenant.

6.02 Occupancy Date.(See Section "c" of the Fundamental Lease Provisions.)

(a) On or before the Occupancy Date, Landlord and Tenant, or their
respective agents, shall inspect the Leased Premises and shall prepare and
sign an inspection form describing the condition of the Premises. At the
time Tenant surrenders the Premises at the end of the Term, or within
three (3) days thereafter, Landlord and Tenant, or their respective
agents, shall make a similar inspection of the Leased Premises and shall
prepare and sign a similar inspection form to describe the condition of
the Premises at the time of surrender.

ARTICLE 7
SUBORDINATION, NOTICE TO SUPERIOR LANDLORDS AND MORTGAGEES

7.01 Subordination of Lease. This Lease, and all rights of Tenant
hereunder, are and shall be subject and subordinate to all ground leases,
overriding leases and underlying leases of the Property and/or the
Building now or hereafter existing and to any first mortgage which may now
or hereafter affect the Property and/or the Building and/or any such
leases (whether or not such mortgages shall also cover other lands and/or
buildings and/or leases). This subordination shall likewise apply to each
and every advance made or hereafter to be made under such mortgages and to
spreaders and consolidations of such mortgages. This Section shall be
self-operative and no further instrument of subordination shall be
required. In confirmation of such subordination, Tenant shall promptly
execute, acknowledge and deliver any instrument that Landlord, the lessor
under any such lease or the holder of any such mortgage (or their
respective successors-in-interest) may reasonably request to evidence such
subordination. If Tenant fails to execute, acknowledge or deliver any such
instrument within ten (10) days after request therefore, Tenant hereby
irrevocably constitutes and appoints Landlord as Tenant's attorney-in-fact,
 coupled with an interest, to execute and deliver any such instruments for 
and on behalf of Tenant. Any lease to which this Lease is subject and 
subordinate is hereinafter referred to as a "Superior Lease" and the 
lessor of a Superior Lease is hereinafter referred to as a "Superior 
Landlord"; and any mortgage to which this Lease is subject and subordinate 
is hereinafter referred to as a "Superior Mortgage" and the holder of a 
Superior Mortgage is hereinafter referred to as a "Superior Mortgagee."

7.02 Notice in the Event of Default. If any act or omission of Landlord
would give Tenant the right, immediately or after the lapse of a period of
time, to cancel or terminate this Lease or to claim a partial or total
eviction, Tenant shall not exercise such right (a) until it has give
written notice of such act or omission to Landlord and each Superior
Mortgagee and Superior Landlord whose name and address shall previously
have been furnished to Tenant, and (b) until forty-five (45) days for
remedying such act or omission shall have elapsed following the giving of
such notice and following the time when such Superior Mortgagee or
Superior Landlord shall have become entitled under such Superior Mortgage
or Superior Lease, as the case may be, to remedy the same (which
reasonable period shall in no event be less than the period to which
Landlord would be entitled under this Lease or otherwise, after similar
notice to effect such remedy), provided such Superior Mortgagee or
Superior Landlord shall, with due diligence, give Tenant notice of
intention to, and commence and continue to, remedy such act or omission.

7.03 Successor Landlord. If any Superior Landlord or Superior Mortgagee,
or their respective successors and/or assigns, shall succeed to the rights
of Landlord hereunder, whether through possession or foreclosure action or
delivery of a new lease or deed, then, at the request of such party
(hereinafter referred to as "Successor Landlord"), Tenant shall attorn to
and recognize each Successor Landlord as Tenant's landlord under this
Lease and shall promptly execute and deliver any instrument such Successor
Landlord may reasonably request to evidence such attornment.

ARTICLE 8
QUIET ENJOYMENT

So long as Tenant pays all of the Fixed Rent and Additional Rent and
performs all of its other obligations hereunder, Tenant shall peaceably
and quietly have, hold and enjoy the Premises without hindrance, ejection
or molestation by Landlord or any other person lawfully claiming through
or under Landlord, subject, nevertheless, to the provisions of this Lease
and to Superior Leases and Superior Mortgages. This covenant shall be
construed as a covenant running with the land and is not, nor shall it be
construed as, a personal covenant of Landlord, except to the extent of
Landlord's interest in this Lease and only so long as such interest shall
continue. Thereafter, this covenant shall be binding only upon Landlord's
successors in interest, to the extent of their respective interest herein,
as and when they shall have acquired the same and for so long as they
shall retain such interest.

ARTICLE 9
ASSIGNMENT, SUBLETTING AND MORTGAGING

9.01 Prohibition. Tenant shall not, whether voluntarily, involuntarily, or
by operation of law, or otherwise (a) assign or otherwise transfer this
Lease or the term and estate hereby granted, or offer or advertise to do
so, (b) sublet the Premises or any part thereof, or offer or advertise to
do so, or allow the same to be used or occupied by anyone other than
Tenant, or (c) mortgage, pledge, encumber, or otherwise hypothecate this
Lease or the Premises or any part thereof in any manner whatsoever;
provided, however, that portions of the Leased Premises may be sublet only
upon the express prior written approval of the Landlord, which shall not
be unreasonably withheld or delayed. Any violation of the provisions
hereinabove set forth shall constitute a default in this Lease and,
thereupon, Landlord shall have the option to cancel the same and proceed
in accordance with the provisions set forth herein.

9.02 Rights of Landlord. If this Lease is assigned, whether or not in
violation of the provisions herein, Landlord may collect rent from the
assignee. If the Premises or any part thereof are sublet or used or
occupied by anyone other than Tenant, whether or not in violation of this
Lease, Landlord may collect rent from the subtenant or occupant. In either
event, Landlord may apply the net amount collected to the Fixed Rent and
Additional Rent herein reserved, but no such assignment, subletting,
occupancy or collection shall be deemed a waiver of any of the provisions
of this Section or the acceptance of the assignee, subtenant or occupancy
as a tenant, or a release of Tenant from the performance of its
obligations hereunder. In the event of the assignment, mortgaging,
subletting, or use or occupancy by others (whether or not in violation of
this Lease) the same shall not in any way be considered to relieve Tenant
from acting in accordance with the terms and prohibitions set forth in
Section 9.01. Reference in this Lease to use or occupancy by others (that
is, anyone other than Tenant) shall not be construed as limited to
subtenants and those claiming under or through subtenants but as including
also licensees and others claiming under or through Tenant, immediately or
remotely. Tenant covenants that, notwithstanding any assignment or
transfer, and notwithstanding the acceptance of Fixed Rent and/or
Additional Rent by Landlord from an assignee, transferee, or any other
party, it shall remain fully liable for the payment of the Fixed Rent and
Additional Rent and for the other obligations of this Lease to be
performed or observed by Tenant.

9.03 Permissible Transfers. The provisions of Section 9.01 (a) shall apply
to a transfer of a majority of the stock of Tenant as if such transfer
were an assignment of this Lease; but said provisions shall not apply to
transactions with a corporation into or with which Tenant is merged or
consolidated or to which substantially all of Tenant's assets are
transferred, or to any corporation which controls or which is controlled
by Tenant, or is under common control of Tenant as long as the new entity
has substantially the same or greater net worth as Tenant. Tenant and the
Guarantor shall remain liable for the obligation of this Lease during the
term of this Lease including Option Periods.

9.04 Assignment Request. In the event Tenant desires to assign or sublease
this Lease or any part thereof, Tenant shall submit to Landlord a written
request for Landlord's consent to such assignment or subletting. The
request shall be accompanied by the name and address of the proposed
assignee or subtenant and a copy of the fully executed assignment,
conditioned only upon the approval of Landlord, together with the proposed
assignee's proposed use of the Premises, current and detailed financial
information and affidavit on the proposed assignee or subtenant and such
other independent information as Landlord may reasonably request. Based
upon such information obtained by Landlord, Landlord may, in its sole
reasonable discretion, grant Tenant right to assign or sublet this Lease,
withhold from Tenant the right to assign or sublet this Lease or seek
additional information with respect to the proposed assignee or subtenant.

If Landlord grants its consent, it shall have the right to require Tenant
to pay Landlord a sum of money equal to any rent or other consideration
paid to Tenant by such assignee/subtenant in excess of any rent which is
then being paid or which, under the terms of this Lease, is to be paid by
Tenant to Landlord plus any other profit or gain realized by Tenant upon
such assignment. All sums payable by Tenant under this paragraph shall be
paid to Landlord as Additional Rent immediately upon receipt thereof by
Tenant.

ARTICLE 10
INSURANCE

10.01 Tenant Activities. Tenant shall not violate, or permit the violation
of, any condition imposed by any insurance policy issued in respect of the
Property, the Building and/or the property therein and shall not do, or
permit anything to be done, or keep or permit anything to be kept in the
Premises, which would (a) subject Landlord, any Superior Landlord, or any
Superior Mortgagee, to any liability or responsibility for personal injury
or death or property damage; (b) which would increase any insurance rate
in respect of the Property, the Building or the property therein over the
rate which would otherwise then be in effect; (c) which would result in
insurance companies of good standing refusing to insure the Property, the
Building or the property therein in amounts reasonably satisfactory to
Landlord; (d) which would result in the cancellation of or the assertion
of any defense by the insurer, in whole or in part, to claims under any
policy of insurance with respect to the Property, the Building or the
property therein.

If, by reason of any failure of Tenant to comply with any provisions of
this Lease, the premiums on Landlord's insurance on the Property, the
Building and/or property therein shall be higher than it otherwise would
be, Tenant shall reimburse Landlord, on demand, for that part of such
premiums attributable to such failure on the part of Tenant.

10.02 Waiver of Subrogation. Tenant and Landlord shall secure an
appropriate clauses in, or an endorsements upon, each insurance policy
covering or applicable to the Premises, the Building and the Property 
and the personal property, fixtures, and equipment located therein or 
thereon, pursuant to which the insurance companies waives against the 
other party. The waiver of subrogation or permission for waiver of
any claim shall extend to each party's agents and employees, and in the 
case of Landlord, each Superior Landlord and Superior Mortgagee. 
Tenant and Landlord hereby releases each other, their agents and employees 
and in the case of Landlord each Superior Landlord and Superior Mortgagee 
with respect to any claim which it might otherwise have against the other 
for loss, damage or destruction with respect to each other's property 
caused by fire or other casualty (including rental value or business 
interruption as the case may be) occurring during the term of this Lease 
and normally covered under a fire insurance policy with extended coverage 
endorsement.

10.03 Insurance to be Maintained by Tenant. (a) At all times during the
Term of this Lease, Tenant agrees to keep the trade fixtures, operating
equipment, furnishings, improvements and any other equipment furnished and
installed by Tenant insured against loss or damage by fire or other
casualty, with fire and extended coverage insurance in an amount equal to
not less than ninety percent (90%) of the full insurable value thereof,
written by one or more responsible insurance companies licensed to do
business in the State of Florida, naming Tenant as the insured and the
Landlord as the certificate holder. Each such policy shall be
noncancelable for any cause without first giving Landlord 30 day's prior
written notice. (b) Tenant, at its expense, shall maintain at all times
during the term of this Lease public liability insurance with respect to
the Premises and the conduct or operation of the business therein,
protecting Landlord and Tenant against any and all claims for injury and
damage to persons or property or for the loss of life or property
occurring in, on or about the Premises, arising out of the act or
negligence, omission, nonfeasance or malfeasance of Tenant, its employees,
agents, contractors, customers, licensees and invitees. Such insurance
shall be carried in a minimum amount of not less than One Million Dollars
($1,000,000.00) for bodily injury or death to any one person or any number
of persons in any one occurrence and not less than Five Hundred Thousand
Dollars ($500,000.00) for property damage. Landlord and its managing
agent, if any, and any Superior Landlord and Superior Mortgagee whose name
and address shall previously have been furnished to Tenant, shall be named
as additional insured. Tenant shall deliver to Landlord evidence of such
insurance and any necessary additional insurance in a form satisfactory to
Landlord, issued by the insurance company or its authorized agent, at
least ten (10) days prior to the Lease Commencement Date. Tenant shall
procure and pay for renewals of such insurance from time to time before
the expiration of the policy or certificate thereof at least thirty (30)
days prior to the expiration of any existing policy. All such policies
shall be issued by companies of recognized responsibility licensed to do
business in the State of Florida and all such policies shall contain a
provision whereby the same cannot be canceled or modified unless Landlord
is given at least twenty (20) days' prior written notice of such
cancellation or modification. Landlord may require the amount of any
public liability insurance to be maintained by Tenant increased so that
the amount adequately and reasonably protects Landlord's interest.

ARTICLE 11
ALTERATIONS

11.01 Procedural Requirements. Tenant may, from time to time, at its
expense, make such alterations, decorations, additions, or improvements
(including but not limited to initial leasehold improvements to the
Premises) (hereinafter collectively referred to as "Alterations") in and
to the Premises, excluding structural changes, as Tenant may reasonably
consider necessary for the conduct of its business in the Premises,
provided, however, that written consent of the Landlord has been first
obtained. Landlord's consent shall not be unreasonably withheld, provided,
however, that: (a) the outside of the Building shall not be affected; (b)
the Alterations are non-structural and the strength of the Building shall
not be affected; (c) the Alterations are to the interior of the Premises
and no part of the Building outside of the Premises shall be affected; (d)
the proper functioning of the structural, mechanical, electrical, sanitary
and other service systems of the Building shall not be adversely affected
and the usage of such systems by Tenant shall not be increased; (e) the
Alterations are accomplished in a workmanlike manner and equal to or
greater than the quality of materials used in the building and other
tenants; and (f) Tenant obtains all necessary governmental approvals or
permits prior to commencing the alterations.

Prior to the commencement of any alterations which exceed $5,000.00 in
total cost of work performed or any alterations which would involve
mechanical, electrical, sanitary or other service systems of the Building,
Tenant shall submit to Landlord for Landlord's approval the following:

1. List of Tenant's contractors and/or subcontractors, each of which 
   shall be approved by Landlord, which approval shall not be unreasonably 
   withheld.

2. Four complete sets of plans and specifications certified by a 
   registered architect or professional engineer. The scale on said plans 
   shall be no smaller than one eighth (_) inch equaling one foot.

3. Adequate proof that Tenant has obtained all necessary governmental 
   permits and certificates for the commencement and prosecution of 
   Tenant's Work.

4. Executed copy or copies substantiating the following insurance coverage 
   requirements which shall be provided and maintained by Tenant (and, if 
   appropriate, naming Landlord as an additional insured) at its own 
   expense, until completion of Tenant's Work.

   a. Worker's compensation insurance in accordance with the laws of the 
      State of Florida.

   b. Commercial General Liability insurance, including coverage for 
      protective and contractual liability, for not less than the following 
      limits:

      (i)   Bodily injury:   $1,000,000.00 per person
                             $1,000,000.00 per occurrence

      (ii)  Property damage: $1,000,000.00 per occurrence
                             $1,000,000.00 aggregate

   c. Commercial Automobile Liability insurance (covering all owned, 
      non-owned and/or hired motor vehicles to be used in connection with 
      Tenant's Work) for not less than the following limits:

     (i)    Bodily injury:   $1,000,000.00 per person
                             $1,000,000.00 per occurrence

     (ii)   Property damage: $1,000,000.00 per occurrence

   d. An Umbrella Liability Insurance Policy with a minimum single limit of 
      $1,000,000 in excess of the Employers' Liability, Comprehensive General 
      Liability and Comprehensive Automobile Liability insurance policies 
      required herein.

   e. Builder's Risk - All Risk, Builder's Risk insurance on the completed 
      value (non-reporting full coverage) form.

   f. Such other insurance coverage as may be reasonably requested by 
      Landlord including insurance against fire, hazard and other peril 
      against interior improvements and fixtures in the Premises, provided 
      in no event shall any such other insurance require any co-insurance 
      or waiver of subrogation provisions. 

Tenant shall obtain and deliver to Landlord (if so requested) either (i) a
performance bond and a labor and materials payment bond (issued by a
corporate surety licensed to do business in Florida), each in an amount
equal to one hundred twenty-five percent (125%) of estimate of the cost of
the Alterations and in form reasonably satisfactory to Landlord, or (ii)
such other security as shall be reasonably satisfactory to Landlord.

11.02 Performance of Alterations. Tenant, at its expense, shall obtain all
necessary governmental permits and certificates for the commencement and
prosecution of Alterations and for the final approval thereof upon
completion, and shall cause the Alterations to be performed in compliance
therewith and in compliance with all applicable law and requirements of
public authorities and insurance bodies. The Alterations shall be
diligently performed in a good and workmanlike manner, using new materials
and equipment at least equal in quality and class to the better of (a) the
original installations of the Building or (b) the then standards for the
Building established by Landlord. Alterations shall be performed in such
manner as to not unreasonably interfere with or delay and as not to impose
any additional expense upon Landlord in the construction, maintenance,
repair or operation of the Building; and if any such expense is incurred
by Landlord, Tenant shall pay the same upon substantiation and demand.
Tenant shall accomplish any alterations so as to not disturb other tenants
in the building even if same means that Tenant contractors must work
overtime at its expense. Landlord may establish reasonable procedures for
Tenant to follow including time permitted for construction and method of
construction.

11.03 Lien Prohibition. Tenant, at its expense, and with due diligence and
dispatch, shall procure the cancellation or discharge of all notices of
violation arising from or otherwise connected with Alterations, or any
other work, labor, services or material done for or supplied to Tenant, or
any person claiming through or under Tenant, which shall be issued by any
public authority to create any liens for labor or materials on or against
the Property, the Building and/or the Premises. Tenant shall defend,
indemnify, and save Landlord harmless from and against any and all
mechanic's and other liens and encumbrances filed in connection with
Alterations or any other work, labor, services, or materials done for or
supplied to Tenant, or any person claiming any materials, fixtures or
articles installed in and constituting a part of the Premises and against
all costs, expenses, and liabilities (including reasonable attorney's fees
to and through any appellate proceedings) incurred in connection with any
such lien or encumbrance or any action or proceeding brought thereon.
Tenant, at its expense, shall procure the satisfaction, bond or discharge
of record of all such liens and encumbrances within fifteen (15) days
after notice of the filing thereof. In the event Tenant has not so
performed, Landlord may, at its option, pay and discharge such liens and
Tenant shall be responsible to reimburse Landlord for all costs and
expenses incurred in connection therewith, which expenses shall include
reasonable attorney's fees (to and through any appellate proceedings) and
any costs in posting bond to effect discharge or release of the lien as an
encumbrance against the Premises, the Building and/or the Property.
Landlord has recorded a prohibition against the filing of mechanic liens
by Tenant's contractors, subcontractors, architects or materialmen.

ARTICLE 12
LANDLORD'S AND TENANT'S PROPERTY

12.01 Landlord's Property. All fixtures, equipment, improvements and
appurtenances attached to or built into the Premises at the commencement
of or during the term of this Lease, whether or not by or at the expense
of Tenant, are the property of the Landlord (the "Landlord's Property")
and shall not be removed by Tenant except as set forth herein. Further,
any personal property in the Premises on the Lease Commencement Date,
unless paid for by Tenant without reimbursement by Landlord, shall be and
shall remain the property of the Landlord and shall not be removed by
Tenant. All carpeting contained within the Premises during the term of
this Lease shall be and remain the property of Landlord and shall not be
removed or replaced without the prior written consent and approval by
Landlord.

12.02 Tenant's Property. All movable partitions, business and trade
fixtures, machinery and equipment, communications equipment and office
equipment, whether or not attached to or built into the Premises, which
are installed in the Premises by or for the account of Tenant without
expense to Landlord and which can be removed without structural damage to
the Building or expenses to Landlord, and all furniture, furnishings and
other articles of movable personal property owned by Tenant and located in
the Premises shall be and shall remain the property of the Tenant (the
"Tenant's Property") and may be removed by Tenant at any time during the
term of this Lease. In the event Tenant's Property is so removed, Tenant
shall repair or pay the cost of repairing any damage to the Premises or to
the Building, including common areas, resulting directly or indirectly
from the installation and/or removal thereof. Any equipment or other
property for which Landlord shall have granted any allowance or credit to
Tenant shall not be deemed to have been installed by or for the account of
Tenant without expense to Landlord and shall not be considered Tenant's
Property, but shall be deemed the property of Landlord. Tenant shall pay
Landlord the reasonable cost of Landlord to supervise the removal of the
property from the Premises. Tenant shall give Landlord ten (10) days
notice of date and time of any proposed removal of more than one third of
the existing personal property or fixtures from the Premises.

12.03 Removal of Tenant's Property. At or before the expiration date of
this Lease, or the date of any earlier termination hereof, or within
fifteen (15) days after such an earlier termination date, Tenant, at its
expense, shall remove from the Premises all of Tenant's Property (except
such items thereof as Tenant desires to leave and Landlord shall have
expressly permitted to remain, which property shall become the property of
Landlord), and Tenant shall repair any damage to the Premises or the
Building resulting from any installation and/or removal of Tenant's
Property. Any other items of Tenant's Property which shall remain in the
Premises after the expiration date of this Lease, or after a period of
Fifteen (15) days following an earlier termination date, may, at the
option of Landlord, be deemed to have been abandoned, and in such case,
such items may be retained by Landlord as its property or disposed of by
Landlord, without accountability, in such manner as Landlord shall
determine, at Tenant's expense.

ARTICLE 13
REPAIRS AND MAINTENANCE

13.01 Tenant Repairs and Maintenance. Tenant shall, at its expense,
throughout the term of this Lease, take good care of the Premises, the
fixtures and appurtenances therein and Tenant's Property. Tenant shall be
responsible for all repairs, interior and exterior, structural and
non-structural, ordinary and extraordinary, in and to the Premises and the
Building and the facilities and systems thereof, the need for which arises
out of (a) the performance or existence of Tenant's Work or Alterations,
(b) Tenant's installation, use or operation of Tenant's Property in the
Premises, (c) the moving of Tenant's Property in or out of the Building,
or (d) the act, omission, misuse, or neglect of Tenant or any of its
subtenants or its or their employees, agents, contractors, or invitees.
Then Tenant, at its expense, shall promptly replace all scratched,
damaged, or broken doors and glass in and about the Premises and shall be
responsible for all repairs, maintenance and replacement of wall and floor
coverings in the Premises and for the repair and maintenance of all
sanitary and electrical fixtures therein which exclusively serve the
Premises. Tenant shall promptly make, at Tenant's expense, all repairs in
or to the Premises for which Tenant is responsible, and any repairs
required to be made by Tenant to the mechanical, electrical, sanitary,
heating, ventilating, air conditioning, or other systems of the Building
shall be performed only by contractor(s) designated by Landlord. All such
repairs shall be performed at such times and in such manner as shall cause
the least interference with the operation of the central systems of the
Building and the use of the Building by other occupants. All such repairs
shall be subject to the supervision and control of Landlord for which
Landlord may charge Tenant a reasonable fee.

Any other repairs in or to the Building and the facilities and systems
thereof for which Tenant is responsible shall be performed by Landlord at
Tenant's expense. Landlord shall have the right, but not the duty to make
any repairs required to be made by Tenant as described above and charge
the Tenant for the cost of said repairs which shall be considered
Additional Rent and shall be due and payable within thirty (30) days of
receipt of the charges described herein.

13.02 Landlord Repairs and Maintenance. Landlord, at its expense, shall
keep and maintain the public portions of the building and its systems and
facilities serving the Premises in good and working order, condition and
repair, and shall make all repairs, structural and otherwise, interior and
exterior, as and when needed in or about the Premises, except for those
repairs for which Tenant is responsible pursuant to any of the provisions
of this Lease. Landlord shall have no liability to Tenant, nor shall
Tenant's covenants and obligations hereunder be reduced or abated in any
manner whatsoever, by reason of any inconvenience, annoyance, interruption
or injury to business arising from Landlord's making any repairs or
changes which Landlord is required or permitted by this Lease, or required
by law, to make in or to any portion of the Building or the Premises, or
in or to the fixtures, equipment or appurtenances of the Building or the
Premises.

Additionally, Tenant waives any and all claims of any kind, nature or
description against Landlord arising out of the failure of the Landlord
from time to time to furnish any of the services requested to be furnished
hereunder including, without limitation, air conditioning, heat,
electricity, elevator service, and toilet facilities. Not withstanding the
foregoing, no such waiver, limitation of liability, or restriction of
right of set-off or abatement shall apply to relieve Landlord of
responsibility for damage relating to the gross negligence or willful act
or omission of Landlord, its agents, employees, invitees, etc.

13.03 Tenant Equipment. Tenant shall not place a load upon any floor of
the Premises which exceeds the load per square foot which such floor was
designed to carry or which is allowed by law. Business machines and
mechanical equipment belonging to Tenant which cause noise or vibrations
that may be transmitted to the structure of the Building or to the
Premises to such a degree as to be objectionable to Landlord shall, at the
Tenant's expense, be placed and maintained by Tenant in settings of cork,
rubber or spring-type vibration eliminators sufficient to eliminate such
noise or vibration.

ARTICLE 14
HEAT, VENTILATION, AIR CONDITIONING, AND ELECTRICAL ENERGY

14.01 Air Conditioning and Heating Provided by Landlord. Except as
otherwise provided herein, Landlord, at its expense, shall maintain and
operate the heating, ventilating and air conditioning systems serving the
Premises as may be reasonably required for reasonably comfortable
occupancy of the Premises during Business Hours of Business Days.
"Business Hours" shall mean 8:00 a.m. through 6:00 p.m. during Business
Days. "Business Days" shall mean all days except Saturdays (after 1:00
p.m.), Sundays and days observed by the Federal or state government as
legal holidays, and such other days as shall be designated as holidays. If
Tenant shall require such services any other time, Landlord may at its
option furnish the same upon not less than twenty four (24) hours written
notice and Tenant shall pay to Landlord, upon demand, Landlord's then
established charges therefore which at the date of execution of this
Agreement is $17.50 per air conditioning/handling unit per hour or any
portion thereof.

14.02 Use of Electrical Energy by Tenant. Tenant's use of electrical
energy in the Premises shall not, at any time, exceed the capacity of any
of the electrical conductors and equipment in or otherwise serving the
Premises. In order to insure that such capacity is not exceeded and to
avert possible adverse effects upon the Building's electric service,
Tenant shall not, without Landlord's prior written consent in each
instance, connect appliances or equipment to the Building electric
distribution system, or make any alteration or addition to the electric
system of the Premises existing on the Lease Commencement Date. Tenant's
electrical usage under this Lease contemplates only the use of normal and
customary office equipment including office computers. In the event Tenant
installs any office equipment which uses substantial additional amounts of
electricity, then Tenant agrees that Landlord's prior written consent is
required before the installation of such additional office equipment and
Landlord shall have the right to charge the Tenant an additional cost for
said usage.

ARTICLE 15
OTHER SERVICES

15.01 Services Provided by Landlord. Landlord, at its expense, shall
provide elevator service to the Premises during Business Hours of Business
Days, and Landlord shall have at least one elevator subject to call at all
other times. The use of the elevators shall be subject to the rules and
regulations promulgated by the Landlord. Landlord shall furnish adequate
water for drinking, lavatory and cleaning purposes. Landlord shall also
furnish all electric power reasonably required for lighting and the
operation of ordinary office copying equipment and ordinary desk-top
office equipment. Landlord shall maintain standard listings on the
Building directory of the names of Tenant, and the names of any of
Tenant's officers and employees, provided that the names so listed shall
not use more than Tenant's Proportionate Share of the space on the
Building directory based upon the square feet of Leased space in the
Building. Tenant shall pay the cost of any changes or modifications
requested by Tenant.

15.02 Janitorial Standards. Provided that Landlord, its cleaning
contractor and their employees shall have access to the Premises at all
reasonable times and shall have the right to use, without charge
therefore, all light, power, and water in the Premises reasonably required
to clean the same, Landlord shall cause the Premises, including the
exterior and interior of the windows thereof, to be cleaned in a manner
standard to the Building. Landlord shall not be required to clean any
portions of the Premises used for the preparation, serving or consumption
of food or beverages, training rooms, data processing or reproducing
operations, private lavatories or toilets. Tenant shall pay to Landlord on
demand the cost incurred by Landlord for (a) extra cleaning work in the
Premises required because of (i) misuse or neglect on the part of Tenant
or subtenants or its or their employees or visitors, (ii) the use of
portions of Premises for special purposes requiring greater or more
difficult cleaning work than office areas, (iii) interior glass partitions
or unusual quantity of interior glass surfaces and (iv) non-building
standard materials or finishes installed by Tenant or at its request and
(b) removal from the Premises and the Building of any refuse and rubbish
of Tenant in excess of that ordinarily accumulated in business office
occupancy or times other than Landlord's standard cleaning times, and (c)
the use of the Premises by Tenant other than during Business Hours on
Business Days.

15.03 Involuntary Cessation of Services. Landlord reserves the right,
without any liability to Tenant and without affecting Tenant's covenants
and obligation hereunder, to stop service of the heating, air
conditioning, electric, sanitary, elevator, or other Building systems
serving the Premises, or to stop any other services required by Landlord
under this Lease, whenever and for so long as may be necessary, by reason
of accidents, emergencies, strikes, or the making of repairs or changes
which Landlord is required by this Lease or by law to make or in good
faith deems necessary, by reason of inability or delay in securing proper
supplies of fuel, steam, water, electricity, labor, or supplies, or by
reason of any other cause beyond Landlord's reasonable control.
Involuntary cessation of services as described herein shall not be
considered constructive eviction nor shall there be any abatement of rent.

15.04 First Class Condition. Subject to the terms of this Lease, Landlord
represents and agrees with Tenant that it will provide the services
described in this Agreement to Tenant and will maintain the Building in a
first class quality appearance and condition throughout the term of this
Lease.

ARTICLE 16
ACCESS AND NAME

16.01 Common Areas. Except for the space within the inside surfaces of all
walls, hung ceilings, floors, windows and doors bounding the Premises, all
of the Building, including, without limitation, exterior Building walls,
core corridor walls and doors and any core corridor entrance, any terraces
or roofs adjacent to the Premises, and any space in or adjacent to the
Premises used for shafts, stacks, pipes, conduits, fan rooms, ducts,
electric or other utilities, sinks or other Building facilities, and the
use thereof, as well as access thereto through the Premises for the
purposes of operation, maintenance, decoration and repair, are reserved to
Landlord. Landlord reserves the right, and Tenant shall permit Landlord,
to install, erect, use and maintain pipes, ducts and conduits in and
through the Premises provided that none interferes unreasonably with
Tenant's business.

16.02 Landlord's Right of Access. Landlord and its agents shall have the
right to enter and/or pass through the Premises upon reasonable notice
during normal hours (a) to examine the Premises and to show them to actual
and prospective Superior Landlords, Superior Mortgagees, or prospective
purchasers, mortgagees or lessees of the Building and (b) to make such
repairs, alterations, additions and improvements in or to the Premises
and/or the Building or its facilities and equipment as Landlord is
required or desires to make. Landlord shall be allowed, in the exercise of
reasonable care on its part, to take all materials into and upon the
Premises that may be required in connection therewith, without any
liability to Tenant and without any reduction of Tenant's covenants and
obligations hereunder. During the period of six (6) months prior to the
expiration date of this Lease, Landlord and its agents may exhibit the
Premises to prospective tenants unless the Term of Tenant's Lease has been
extended.

16.03 Landlord's Right to Repair and Maintain. If at any time any windows
of the Premises are temporarily darkened or obstructed by reasons of any
repairs, improvements, maintenance and/or cleaning in or about the
Building, or if any part of the Building, other than the Premises, is
temporarily or permanently closed or inoperable, the same shall be without
liability to Landlord and without any reduction or diminution of Tenant's
obligations under this Lease. Landlord reserves the right, at any time,
without incurring any liability to Tenant therefore, and without affecting
or reducing any of Tenant's covenants and obligations hereunder, to make
such changes, alterations, additions and improvements in or to the
Building as Landlord shall deem necessary or desirable.

16.04 Name of Building. Landlord may adopt any name for the Building and
reserves the right to change the name and/or address of the Building at
any time.

16.05 Signs. Tenant is not permitted to erect any signs in the Building
without written approval of Landlord. Landlord shall install a sign in the
common area with the name of Tenant and suite number in building standard
graphics. After initial signage, any changes to signage shall be at
Tenant's expense.

ARTICLE 17
NON-LIABILITY AND INDEMNIFICATION

17.01 Non-Liability. Neither Landlord nor any partner, director, officer,
agent, servant, or employee of Landlord, any Superior Landlord or any
Superior Mortgagee, shall be liable to Tenant for any loss, injury, or
damage to Tenant or to any other person, or to its or their property,
irrespective of the cause of such injury, damage or loss, relating to the
operation or maintenance of the Premises or the Building except for gross
negligence or willful misconduct of Landlord. Further, neither Landlord,
any Superior Landlord or any Superior Mortgagee, nor any partner,
director, officer, agent, servant, or employee of Landlord shall be liable
(a) for any such damage caused by other tenants or persons in, upon or
about the Building, or caused by operations in construction of any
private, public or quasi-public work; or (b) for consequential damages
arising out of any loss of use of the Premises or any equipment or
facilities therein by Tenant or any person claiming through or under
Tenant as a result of the damage referred to in 17.01 (a).

17.02 Tenant Indemnification. Tenant shall indemnify and hold Landlord and
all Superior Landlords and Superior Mortgagees and its and their
respective partners, directors, officers, agents and employees harmless
from and against any and all claims arising from or in connection with (a)
the conduct or management of the Premises or any business at or upon the
Premises during the term of this Lease or during the period of time, if
any, prior to the Lease Commencement Date that Tenant may have been given
access to the Premises; (b) any act, omission or negligence of Tenant or
any of its subtenants or licensees or its or their partners, directors,
officers, agents, visitors, employees or contractors; (c) any accident,
injury or damage whatsoever (unless caused by the negligent act or
omission or willful misconduct of Landlord, its agents, officers,
servants, Superior Landlord, Superior Mortgagee) occurring in, at or upon
the Premises; and (d) any breach or default by Tenant in the full and
prompt payment and performance of Tenant's obligations under this Lease;
together with all costs, expenses and liabilities incurred in or in
connection with each such claim or action or proceeding brought thereon,
including without limitation, all reasonable attorneys' fees (to and
through appellate proceedings) and expenses. In case any action or
proceeding be brought against Landlord and/or any Superior Landlord or
Superior Mortgagee and/or its or their partners, directors, officers,
agents and/or employees by reason of any such claim, Tenant, upon notice
from Landlord or such Superior Landlord or Superior Mortgagee, shall
resist and defend such action or proceeding (by counsel reasonably
satisfactory to Landlord and/or such Superior Landlord or Superior
Mortgagee).

17.03 Force Majeure. The obligations of Tenant hereunder shall not be
affected, impaired or excused, nor shall Landlord have any liability
whatsoever to Tenant, because (a) Landlord is unable to fulfill, or is
delayed in fulfilling any of its obligations under this Lease by Reasons
of act of God, war, strike, other labor trouble, governmental pre-emption
of priorities or other controls in connection with a national or other
public emergency or labor or materials, or any other cause, whether
similar or dissimilar, beyond Landlord's reasonable control; or (b) of any
failure or defect in the supply, quantity or character of electricity or
water furnished to the Premises, by reasons of any requirement, act or
omission of any public utility or others serving the Building beyond
Landlord's reasonable control. Tenant shall not hold Landlord liable,
excluding gross negligence of Landlord, for any latent defect in the
Premises or the Building.

ARTICLE 18
DAMAGE OR DESTRUCTION

18.01 Notification. Tenant shall give prompt notice to Landlord of (a) any
occurrence in or about the Premises for which Landlord might be liable,
(b) any fire or other casualty in the Premises, (c) any damage to or
defect in the Premises, including the fixtures, equipment and
appurtenances thereof, for the repair of which Landlord might be
responsible, and (d) any damage to or defect in any part or appurtenance
of the Building's sanitary, electrical, heating, ventilating, air
conditioning, elevator or other systems located in or passing through the
Premises or any part thereof.

18.02 Repair Provisions. In the event of loss of, or damage to, the
Premises or the Building by fire or other casualty, the rights and
obligations of the parties hereto shall be as follows:

a. If the Premises or any part thereof shall be damaged by fire or 
other casualty, Tenant shall give prompt notice thereof to Landlord, 
and Landlord, upon receiving such notice, shall proceed promptly and 
with reasonable diligence, subject to Force Majeure and a reasonable 
time for adjustment of insurance losses, to repair, or cause to be 
repaired, such damage in a manner designed to minimize interference 
with Tenant's occupancy (but with no obligation to employ labor at 
overtime or other premium pay rates). If the Premises or any part 
thereof shall be rendered untenantable by reason of such damage, 
whether to the Premises or the Building, the Fixed Rent and 
Additional Rent Charges shall proportionately abate for the period 
from the date of such damage to the date when such damage shall have 
been repaired for the portion of the Premises rendered tenantable. 
If, however, prior to the date when all of such damage shall have 
been repaired, any part of the Premises so damaged shall be rendered 
tenantable and shall be used or occupied by Tenant or any Person or 
Persons claiming through or under Tenant, then the amount by which 
the Fixed Rent and Additional Rent and Charges shall abate shall be 
equitably apportioned for the period from the date of any such use.

b. If, as a result of fire or other casualty more that one-half (_) 
of the Building Rentable Area is rendered untenantable, Landlord 
within 60 days from the date of such fire or casualty may terminate 
this Lease by notice to Tenant, specifying a date, not less than 20 
nor more than 40 days after the giving of such notice, on which the 
Term shall expire as fully and completely as if such date were the 
date herein originally fixed for the expiration of the Term. If the 
Premises are damaged as a result of fire or other casualty and if the 
damage to the Premises (but not including Tenant's Installations or 
Alterations) is so extensive that such damage cannot be substantially 
repaired within 180 days from the date of the fire or other casualty 
(except for Force Majeure), either Landlord or Tenant within 30 days 
from the date of such fire or other casualty may terminate this Lease 
by notice to the other, specifying a date, not less than 20 nor more 
than 40 days after the giving of such notice, on which the Term shall 
expire as fully and completely as if such date were the date 
originally fixed for the expiration of the Term. If either Landlord 
or Tenant terminates this Lease, the Fixed Rent and Additional Rent 
and Charges shall be apportioned as of the date of such fire or other 
casualty. If neither Landlord nor Tenant so elects to terminate this 
Lease, then Landlord shall proceed to repair the damage to the 
Building and the damage to the Leased Premises (but not Tenant's 
Installations or Alterations), if any shall have occurred, and the 
Fixed Rent and Additional Rent and Charges shall meanwhile be 
apportioned and abated all as provided in subsection (a). If, 
however, such damage is not repaired and the Premises and the 
Building restored to reasonably the same condition as they were prior 
to such damage within 270 days from the date of such damage (such 270 
day period to be extended by the period of any Force Majeure plus a 
reasonable time for adjustment of insurance losses), Tenant, within 
30 days from the expiration of such 270 day period (as the same may 
be extended), may terminate this Lease by notice to Landlord, 
specifying a date not more than 60 days after the giving of such 
notice on which the Term shall expire as fully and completely as if 
such date were the date herein originally fixed for the expiration of 
the Term.

c. If the Premises shall be rendered untenantable to the extent of 
fifty (50%) percent or more by fire or other casualty during the last 
six months of the Term, Landlord or Tenant may terminate this Lease 
upon notice to the other party given within 90 days after such fire 
or other casualty specifying a date, not less than 20 days nor more 
than 40 days after the giving of such notice, on which the Term shall 
expire as fully and completely as if such date were the date 
originally fixed for the expiration of the Term. If either Landlord 
or Tenant terminates this Lease pursuant to this subsection, the 
Fixed Rent and Additional Rent and Charges shall be apportioned as of 
the date of such fire or casualty.

d. Landlord shall not be required to repair or replace any of 
Tenant's Installations or Alterations or any other personal property 
of Tenant and no damages, compensation or claim shall be payable by 
Landlord for inconvenience, loss of business or annoyance arising 
from any repair or restoration of any portion of the Premises or of 
the Building, but the foregoing shall not be deemed to relieve 
Landlord of liability for the gross act or omission or willful 
misconduct of Landlord its agents, etc., or its breach of any 
covenant of this Lease.

e. The provisions of this Section shall be considered an express 
agreement governing any instance of damage or destruction of the 
Building or the Premises by fire or other casualty, and any law now 
or hereafter in force providing for such a contingency in the absence 
of express agreement shall have not application.

f. Notwithstanding any other provision of this Lease, Landlord shall 
not be liable or responsible for, and Tenant hereby releases Landlord 
and its partners, officers, directors, agents and employees from, any 
and all liability or responsibility to Tenant or any Person claiming 
by, through or under Tenant, by way of subrogation or otherwise, for 
any injury, loss or damage to Tenant's property covered by a valid 
and collectible fire insurance policy with extended coverage 
endorsement. Tenant shall require its insurer(s) to include in all of 
Tenant's insurance policies which could give rise to a right of 
subrogation against Landlord a clause or endorsement whereby the 
insurer(s) shall waive any rights of subrogation against Landlord, 
and Tenant shall pay any additional premium required therefore.

g. Notwithstanding any other provision of this Lease, Tenant shall 
not be liable or responsible for, and Landlord hereby releases Tenant 
and its partners, officers, directors, agents and employees from, any 
and all liability or responsibility to Landlord or any Person 
claiming by, through or under Landlord, by way of subrogation or 
otherwise, for any injury, loss or damage to Landlord's property 
covered by a valid and collectible fire insurance policy with 
extended coverage endorsement. Landlord shall require its insurer(s) 
to include in all of Landlord's insurance policies which could give 
rise to a right of subrogation against Tenant a clause or endorsement 
whereby the insurer(s) shall waive any rights of subrogation against 
Tenant, and Landlord shall pay any additional premium required 
therefore.

h. The proceeds payable under all fire and other hazard insurance 
policies maintained by Landlord on the Building shall belong to and 
be the property of Landlord and Tenant shall not have any interest in 
such proceeds. Tenant agrees to look to its own fire and hazard 
insurance policies in the event of damage to Tenant's Installations 
or Alterations or its personal property.

ARTICLE 19
EMINENT DOMAIN

If the whole or a substantial part of the Premises or the Building shall
be taken or condemned or is under threat of being taken by any
governmental authority for any public or quasi-public use or purpose, then
the term of this Lease shall cease and terminate as of the date when title
vests in such governmental authority, and Tenant shall have no claim
against Landlord or the condemning authority for any portion of the amount
that may be awarded as damages as a result of such taking or condemnation
or for the value of any unexpired term of the Lease. Tenant may make a
separate claim against the condemning authority for a separate award for
the value of any unexpired term of the Lease, Tenant's tangible personal
property and trade fixtures and for consequential damages as may be
allowed by law, provided the same shall be abated on the date when such
title vests in such governmental authority. If less than a substantial
part of the Premises is taken, or condemned or is under threat of being
taken by any governmental authority for any public or quasi-public use or
purpose, monthly rent shall be equitably adjusted on the date when title
vests in such governmental authority, and the Lease shall otherwise
continue in full force and effect. For purposes of this Article, a
substantial part of the Premises shall be considered to have been taken if
more than twenty-five percent (25%) of the Premises are unusable by
Tenant. Landlord may elect to terminate this Lease (whether or not the
Premises shall have been condemned), if Landlord elects to demolish the
remainder of the Building.

ARTICLE 20
SURRENDER

On the last day of the term of this Lease, or upon any earlier termination
of this Lease, or upon any re-entry by Landlord upon the Premises, Tenant
shall quit and surrender the Premises to Landlord "broom-clean" and in
good order, condition and repair, except for ordinary wear and tear and
such damage or destruction as Landlord is required to repair or restore
under this Lease, and Tenant shall remove all of the Tenant's Property
therefrom except as otherwise expressly provided in this Lease. Except as
permitted by the terms of this Lease or by law, no termination of this
Lease prior to the expiration date shall affect Landlord's right to
collect Fixed Rent and Additional Rent for any period prior to the
effective date of termination. If Tenant remains in possession after the
expiration date hereof (a) Tenant shall be deemed a tenant at sufferance,
(b) Tenant shall pay two hundred percent (200%) of the Fixed Rent and
Additional Rent last prevailing hereunder, (c) there shall be no renewal
or extension of this Lease by operation of law, and (d) the tenancy at
sufferance may be terminated upon fifteen (15) days' notice from Landlord.

ARTICLE 21
CONDITIONS OF LIMITATION

21.01 Bankruptcy of Tenant. In the event that Tenant shall make an
assignment for the benefit of creditors, or shall file a voluntary
petition under any bankruptcy or insolvency law, or an involuntary
petition alleging an act of bankruptcy or insolvency shall be filed
against Tenant under any bankruptcy or insolvency law, or whenever a
petition shall be filed by or against Tenant under the reorganization
provisions of the United States Bankruptcy Act or under the provision of
any law of like import, or whenever a petition shall be filed by Tenant
under the arrangement provisions of the United States Bankruptcy Act or
under the provisions of any law of like import, or whenever a permanent
receiver of Tenant, or of or for the property of Tenant shall be
appointed, then Landlord if such event occurs without the acquiescence of
Tenant at any time after the event continues for sixty (60) days, may give
Tenant a notice of intention to end the term of this Lease at the
expiration of five (5) days from the date of service of such notice
whereupon this Lease, and the term and estate hereby granted, whether or
not the term shall theretofore have commenced, shall thereupon terminate
with the same effect as if the day were the expiration date of the Lease;
however, Tenant shall remain liable for all damages set forth in this
Lease.

21.02 Default Provisions.

a. Each of the following events shall be deemed to be, and is referred 
   to in this Lease as, an "Event of default":

   1. A default by Tenant in the due and punctual payment of any Fixed 
      Rent or Additional Rent or Charges which continues for more than 
      ten (10) days; Landlord shall notify Tenant in writing of such 
      deficiency; or

   2. The neglect or failure of Tenant to perform or observe any of the
      terms, covenants or conditions contained in this Lease on Tenant's 
      part to be performed or observed other than those referred to in 
      paragraph 21.02 a.1. above which is not remedied by Tenant within 
      30 days after Landlord shall have given to Tenant written notice 
      specifying such neglect or failure, provided that such thirty (30) 
      day period shall be extended for the time period reasonably necessary 
      to diligently cure such neglect or failure if such cure cannot 
      reasonably be accomplished during such thirty (30) day period and 
      Tenant has commenced to cure the default; or

   3. The assignment, transfer, mortgaging or encumbering of this Lease 
      or the subletting of the Premises in a matter not permitted by 
      Article 9; or

b. Upon the occurrence of an Event of Default, pursuant to subsection (a), 
   Landlord shall have the right, at its election, then or at any time 
   thereafter, either:

   1. To give Tenant written notice that this Lease will terminate on a 
      date to be specified in such notice, which date shall not be less 
      than three (3) days after such notice, and on the date specified 
      in such notice Tenant's right to possession of the Premises shall 
      cease and this Lease shall thereupon be terminated, but Tenant shall 
      remain liable as provided in paragraph 22.01; or

   2. Without demand or notice, to re-enter and take possession of the
      Premises, or any part thereof, and repossess the same as of Landlord's
      former estate and expel Tenant and those claiming through or under 
      Tenant and remove the effects of both or either, by summary 
      proceedings, or by action at law or in equity or by force (if 
      necessary) or otherwise, without being deemed guilty of any manner 
      of trespass and without prejudice to any remedies for arrears of rent 
      or preceding breach of covenant.

If Landlord elects to re-enter under paragraph 21.02 b.2., Landlord may
terminate this Lease, or, from time to time, without terminating this
Lease, may relet the Premises, or any part thereof, as agent for Tenant
for such term or terms and at such rental or rentals and upon such other
terms and conditions as Landlord may deem advisable, with the right to
make alterations and repairs to the Premises.

No such re-entry or taking of possession of the Premises by Landlord shall
be construed as an election on Landlord's part to terminate this Lease
unless a written notice of such intention is given to Tenant under
paragraph 21.02 b.1. above or unless the termination thereof be decreed by
a court of competent jurisdiction.

ARTICLE 22
DAMAGES

22.01 Tenant Liability. If Landlord terminates this Lease pursuant to
Article 21, Tenant shall remain liable (in addition to accrued
liabilities) to the extent legally permissible for:

(i) the sum of:

    (A) all Fixed Rent and Additional Rent provided for in this Lease 
        until the date this Lease would have expired had such termination 
        not occurred, and;

    (B) any and all reasonable expenses incurred by Landlord in re-entering
        the Premises not including any Excess Rent charged by Landlord to 
        new tenant, repossessing the same, making good any default of Tenant,
        painting, altering or dividing the Premises, combining the same with 
        any adjacent space for any new tenants, putting the same in proper 
        repair, reletting the same (including any and all reasonable 
        attorney's fees and disbursements and reasonable brokerage fees 
        incurred in so doing), and any and all expenses which Landlord may 
        incur during the occupancy of any new tenant (other than expenses 
        of a type that are Landlord's responsibility under the terms of 
        this Lease), less;

    (C) all Fixed Rent and Additional Rent for the period from the Lease
        Commencement Date to the Rent Commencement Date based upon the 
        rate of both Fixed Rent and Additional Rent described in paragraphs 
        (g) and (h) of the Fundamental Lease Provisions Section, less;

(ii) the net proceeds of any reletting, to the extent that the proceeds
      are less than or equal to the amount due under (i) above.

Tenant agrees to pay to Landlord the difference between items (i) and (ii)
above with respect to each month during the Term, at the end of such
month. Any suit brought by Landlord to enforce collection of such
difference for any one month shall not prejudice Landlord's right to
enforce the collection of any difference for any subsequent month. In
addition to the foregoing, Tenant shall pay to Landlord such sums as the
court which has jurisdiction thereover may adjudge reasonable as
attorney's fees with respect to any successful law suit or action
instituted by Landlord to enforce the provisions of this Lease. Landlord
shall have the right, at its sole option, to relet the whole or any part
of the Leased Premises for the whole of the unexpired Term, or longer, or
from time to time for shorter periods, for any rental then obtainable,
giving such concessions of rent and making such special repairs,
alterations, decorations and paintings for any new tenant as Landlord, in
its sole and absolute discretion, may deem advisable. Tenant's liability
as aforesaid shall survive the institution of summary proceedings and the
issuance of any warrant thereunder. Landlord shall be under no obligation
to relet the Leased Premises, but agrees to use its best efforts to do so.

22.02 Rights of Landlord. Suit or suits for the recovery of such damages,
or any installments thereof, or acceleration of all Fixed Rent and
Additional Rent due during the remaining Lease Term, may be brought by
Landlord from time to time at its election, and nothing contained herein
shall be deemed to require Landlord to postpone suit until the date when
the term of this Lease would have expired nor limit or preclude recovery
by Landlord against Tenant of any sums or damages which, in addition to
the damages particularly provided above, Landlord may lawfully be entitled
by reason of any default hereunder on the part of Tenant. The various
rights, remedies and elections of Landlord reserved, expressed or
contained herein are cumulative and no one of them shall be deemed to be
exclusive of the others or of such other rights, remedies, options or
elections as are now or may hereafter be conferred upon Landlord by law.
Landlord is hereby granted a valid security interest to secure payment of
all Fixed Rent and Additional Rent becoming due hereunder and to secure
payment of any loss or damage due to any default by Tenant hereunder and
to secure payment of any loss or damage due to any default by Tenant
hereunder upon all of Tenant's Property and any other personal property of
Tenant which may now or hereafter be installed or placed in the Premises.

22.03 Additional Remedy of Landlord. In the event of a default by Tenant
hereunder during the Free Rent Period, in the event Free Rent is
applicable, Tenant shall pay to Landlord, as Additional Rent, an amount
equal to the Free Rent Subsidy. In the event of a default by Tenant
hereunder following the Free Rent Period, Tenant shall pay to Landlord, as
Additional Rent, the Free Rent Subsidy multiplied by a fraction, the
numerator of which is the number of months of the Term minus the number of
months which have elapsed from the Commencement Date through the date of
default, and the denominator of which is the number of months in the Term.

The foregoing is an additional remedy of Landlord and not in lieu of or in
substitution for any other remedy provided in this Lease Agreement or by
law.

ARTICLE 23
BROKER

Landlord and Tenant covenant, warrant and represent that the broker set
forth in Section (l) of the Fundamental Provisions Section (the "Brokers")
was instrumental in bringing about or consummating this Lease. Further,
neither Landlord nor Tenant have had any conversation or negotiations with
any broker except the Broker or Co-broker, if any, concerning the leasing
of the Premises which could give rise to a commission or fee. Both parties
agree to indemnify the other against and from any claims for any brokerage
commissions (except those payable to Broker) and all costs, expenses and
liabilities in connection therewith, including, without limitation,
reasonable attorneys' fees and expenses, for any breach of the foregoing.
Landlord shall pay all brokerage commissions due Brokers in accordance
with a separate agreement between Landlord and Brokers.

ARTICLE 24
PARKING

Landlord grants to Tenant the right to use that number of parking spaces
set forth in Section (m) of the Fundamental Provision s Section (the
"Parking Spaces") based upon a first come first serve basis with no
separated tenant designation of parking spaces. During the initial term of
the Lease and any renewal thereof, Tenant shall not be obligated to pay to
Landlord any cost for the use of parking spaces. Landlord reserves control
of the parking lot and spaces and may designate reserved spaces. In
addition, Landlord reserves the right to control the parking areas of the
building by installing control devices and security to limit the use of
the parking lot by non-building Tenants and their invitees and employees.

ARTICLE 25
ESTOPPEL CERTIFICATES

Each party agrees, at any time and from time to time, as requested by the
other party to execute and deliver to the other a statement certifying
that this Lease is unmodified and in full force and effect (or if there
have been modifications, that the same is in full force and effect as
modified and stating the modifications), certifying the dates to which the
Fixed Rent and Additional Rent have been paid, stating whether or not, the
other party is in default in performance of any of its obligations under
this Lease, and, if so, specifying each such default and stating whether
or not, any event has occurred which with the giving of notice or passage
of time, or both, would constitute such a default, and, if so, specifying
each such event. Any such statement delivered pursuant hereto shall be
deemed a representation and warranty to be relied upon by the party
requesting the certificate and by others with whom such party may be
dealing, regardless of independent investigation. Tenant also shall
include in any such statements such other information concerning this
Lease as Landlord may reasonably request. If either party fails to
execute, acknowledge or deliver any such statement within fifteen (15)
days after request therefore, the other party hereby irrevocably
constitutes and appoints the requesting party as its attorney-in-fact,
coupled with an interest, to execute and deliver any such statements for
and on behalf of Tenant.

ARTICLE 26
MISCELLANEOUS

26.01 Merger. Tenant expressly acknowledges and agrees that Landlord has
not made and is not making, and Tenant, in executing and delivering this
Lease, is not relying upon, any warranties, representations, promises, or
statements, except to the extent that the same are expressly set forth in
this Lease. All prior understandings and agreements between the parties
are merged in this Lease which alone fully and completely expresses the
agreement of the parties. No agreement shall be effective to change,
modify, waive, release, discharge, terminate or effect an abandonment of
this Lease, in whole or in part, unless such agreement is in writing, and
is signed by the party against whom enforcement of said change or
modification is sought.

26.02 Notice. Any notice required to be given by either party pursuant to
this Lease, shall be in writing and shall be deemed to have been properly
given, rendered or made only if sent by registered or certified mail,
return receipt requested, posted in a United States post office station or
an established national courier service addressed to the other party at
the address hereinbelow set forth (unless either party shall give written
notice to the contrary), and shall be deemed to have been given, rendered
or made on the day so mailed.

Notice to Landlord                    Notice to Tenant
CLW REALTY ASSET GROUP, INC.          TOTAL -TEL USA COMMUNICATIONS, INC.
as Agent for The Northwestern         500 W. Cypress Creek Road, Suite 200
Mutual Life Insurance Company         Fort Lauderdale, FL 33309
500 W. Cypress Creek Road, Ste. 440
Fort Lauderdale, FL 33309
                                      TOTAL -TEL USA
                                      150 Clove Road - 8th Floor
                                      Little Falls, NJ 07424

26.03 Relocation. Tenant agrees that Landlord may relocate Tenant to other
space within the Building containing at least the same amount of rentable
space as contained within the Premises, provided that the cost of
relocating Tenant and the cost of altering the new space to make it
substantially comparable to the Premises is borne by Landlord.

26.04 Non-Waiver. The failure of either party to insist in any one or more
instances upon the strict performance of any one or more of the
obligations of this Lease, or to exercise any election herein contained,
shall not be construed as a waiver or relinquishment for the future of the
performance of such one or more obligations of this Lease, which shall
continue and remain in full force and effect with respect to any
subsequent breach, act or omission. The receipt by Landlord of Fixed Rent
or Additional Rent with knowledge of breach by Tenant of any obligation of
this Lease shall not be deemed a waiver of such breach.

26.05 Parties Bound. The provisions of this Lease shall be binding upon
and shall inure to the benefit of the parties hereto, and each of their
respective representatives, successors and assigns. Landlord may freely
and fully assign its interest hereunder subject to the rights of Tenant
herein contained.

26.06 Limitations against Landlord. Tenant shall look only to Landlord's
estate in the Property, or the proceeds thereof, for the satisfaction of
Tenant's remedies for the collection of a judgment (of other judicial
process) requiring the payment of money by Landlord in the event of any
default by Landlord hereunder, and no other property or assets of Landlord
or its partners or principals, disclosed or undisclosed, shall be subject
to levy, execution, or other enforcement procedure for the satisfaction of
Tenant's remedies under or with respect to this Lease, the relationship of
Landlord and Tenant hereunder or Tenant's use or occupancy of the
Premises.

26.07 Definition of Parties. The term "Tenant" shall mean the Tenant
herein named or any assignee or other successor in interest (immediate or
remote) of the Tenant herein named, which at the time in question is the
owner of the Tenant's estate and interest granted by this Lease. The term
"Landlord" shall mean only the owner at the time in question of the
Building or a lease of the Building, so that in the event of any transfer
or transfers of title to the Building or of Landlord's interest in a lease
of the Building, the transferor shall be and hereby is relieved and freed
of all obligations of Landlord under this Lease accruing after such
transfer, and it shall be deemed, without further agreement that such
transferee has assumed and agreed to perform and observe all obligations
of Landlord herein during the period it is the holder of Landlord's
interest in this Lease.

26.08 Survival of Obligations. Upon the expiration or other termination of
this Lease, neither party shall have any further obligation or liability
to the other except as otherwise expressly provided in this Lease and
except for such obligations as by their nature or under the circumstances
can only be, or by the provisions of this Lease, may be, performed after
such expiration or other termination; and, in any event, unless otherwise
expressly provided in this Lease, any liability for any payment hereunder
which shall have accrued to or with respect to any period ending at the
time of expiration or other termination of this Lease shall survive the
expiration or other termination of this lease.

26.09 Interference by Tenant. Tenant agrees that the exercise of its
rights pursuant to this Lease or the Exhibits hereto shall not be done in
the manner which would violate Landlord's union contracts affecting the
Building and/or the Property nor create any work stoppage, picketing,
labor disruption or dispute or any interference with the business of
Landlord or any tenant or occupant of the Building.

26.10 Prorations. This Lease shall be governed by and construed in
accordance with the laws of the State of Florida. If any provision of this
Lease or the application thereof to any person or circumstance shall, for
any reason and to any extent be invalid or unenforceable, the remainder of
this Lease and the application of that provision to other persons or
circumstances shall not be affected but rather shall be enforced to the
extent permitted by law. The table of contents, captions, headings and
titles in this Lease are solely for convenience of reference and shall not
affect its interpretation. This Lease shall be construed without regard to
any presumption or other rule requiring construction against the party
causing this Lease to be drafted. Each covenant, agreement, obligation, or
other provision of this Lease on Tenant's part to be performed, shall be
deemed and construed as a separate and independent covenant, agreement,
obligation or other provision of this Lease not dependent on any other
provision of this Lease. All terms and words used in this Lease,
regardless of the number or gender in which they are used, shall be deemed
to include any other number and any other gender as the context may
require.

26.11 Arbitration. In any case in which it is provided by the terms of
this Lease that any matter shall be determined by arbitration, then such
arbitration shall be in accordance with the Commercial Arbitration Rules
then in effect of the American Arbitration Association by one arbitrator
in Fort Lauderdale, Florida, and judgment upon the award rendered by the
arbitrator may be entered in any Court having jurisdiction thereof. All
direct and reasonable costs of the arbitrator, witnesses and attorney fees
are to be paid in accordance with Section 26.12 below.

26.12 Attorney's Fees. In the case of either arbitration or litigation,
the prevailing party shall be reimbursed the full and reasonable costs of
arbitration or litigation, including attorney's fees through the Appellate
Level. If, however, the prevailing party does not receive a Judgment for
the entire amount of damages requested in the original pleading or
petition, then attorney's fees shall only be awarded in accordance with a
decision of the arbitrator or judge as the case may be.

26.13 Page Initials. Each page of this document has been initialed by a
representative or attorney for Tenant and Landlord signifying that the
page is part of this final executed Lease Agreement.

26.14 Radon Gas. Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of Radon
that exceed Federal and State guidelines have been found in buildings in
Florida. Additional information regarding Radon and Radon testing may be
obtained from your county public health unit.

THIS AGREEMENT shall not be effective until it is executed by both
parties.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease.

Signed, sealed and delivered
in the presence of:                  CLW REALTY ASSET GROUP, INC. as Agent 
                                     for The Northwestern Mutual Life 
                                     Insurance Company


------------------------------       By: ------------------------------
                                         F. BRUCE LAUER, PRESIDENT


------------------------------       Date: ----------------------------

                                     TOTAL-TEL USA COMMUNICATIONS, INC. 
                                     a New Jersey corporation


------------------------------       By: ------------------------------


------------------------------       Date: ----------------------------

                                           (CORPORATE SEAL)

EXHIBIT A

LEGAL DESCRIPTION

Parcel A of SIXTEEN SIX PROPERTIES, according to the plat thereof recorded
in Plat Book 114, page 3, of the Public Records of Broward County, Florida

PARCEL II
TOGETHER WITH

The South 25 feet of the North 50 feet except the West 35 feet of the
South one-half (S._) of the Northwest one-quarter (N.W._) of the Northwest
one-quarter (N.W._) of the Southwest one-quarter (S.W._) of Section 10,
Township 49 South, Range 42 East; the South 25 feet of the North 50 feet
of the West 300 feet of the South one-half (S. _) of the Northeast
one-quarter (N.E._) of the Northwest one-quarter (N.W._) of the Southwest
one-quarter (S.W._) of said Section 10; the East 187.50 feet of the West
487.50 feet except the North 25 feet of the South one-half (S._) of the
Northeast one-quarter (N.E._) of the Northwest one-quarter (N.W._) of the
Southwest one-quarter (S.W._) of said Section 10, that part of the East
187.50 feet of the West 487.50 feet of the North one-half (N._) of the
Southeast one-quarter (S.E._) of the Northwest one-quarter of the
Southwest one-quarter (S.W._) of Said Section 10, lying North of the
sidetrack right-of-way of the Seaboard Airline Railroad, the centerline of
the said sidetrack right-of-way being described as follows: Beginning at a
point 141 feet North and 300 feet East of the Southwest corner of the
North one-half (N._) of the Southeast one-quarter (S.E._) of the Northwest
one-quarter (N.W._) of the Southwest one-quarter (S.W._) of said Section
10; thence East 375.23 feet to the East line of the Northwest one-quarter
(N.W._) of the Southwest one-quarter (S.W._) of said Section 10, said
right-of-way being a uniform width of 16 feet.

PARCEL III
TOGETHER WITH

The North 25 feet of the North 50 feet except the West 35 feet of the
South one-half (S._) of the Northwest one-quarter (N.W. _) of the
Northwest one-quarter (N.W. _) of the Southwest one-quarter (S.W. _) of
Section 10, Township 49 South, Range 42 East; the North 25 feet of the
West 487.50 feet of the South one-half (S._) of the Northeast one-quarter
(N.E. _) of the Northwest one-quarter (N.W. _) of the Southwest
one-quarter (S.W. _) of the said Section 10; and the South one-half (S._)
of the Northeast one-quarter (N.E. _) of the Northwest one-quarter 
(N.W. _) of the Southwest one-quarter (S.W. _) of said Section 10, Township 
49 South, Range 42 East, less the West 487.50 feet; and that part of the 
North one-half (N._) of the Southeast one-quarter (S.E. _) of the
Northwest one-quarter (N.W. _) of the Southwest one-quarter (S.W. _) of
said Section 10, Township 49 South, Range 42 East, less the West 487.50
feet, and lying North of the sidetrack right-of-way of the Seaboard
Airline Railroad, the center line of said sidetrack right-of way being
described as follows: Beginning at a point 141 feet North and 300 feet
East of the Southwest corner of the North one-half (N._) of the Southeast
one-quarter (S.E. _) of the Northwest one-quarter (N.W. _) of the feet to
the East line of the Northwest one-quarter (N.W. _) of the Southwest
one-quarter (S.W. _) of said Section 10, lying West of the Seaboard
Airline Railroad and lying North of the spur track deed recorded in O.R.
Book 1136, page 607, Broward County, Records. Said lands situate, lying
and being in Broward County, Florida.

EXHIBIT C
FLOOR PLAN

EXHIBIT D
RULES AND REGULATIONS

1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls or other parts of the Building not occupied
by any Tenant shall not be obstructed or encumbered by any Tenant or used
for any purpose other than ingress and egress to and from the Leased
Premises. Landlord shall have the right to control and operate the public
portions of the Building, and the facilities furnished for the common use
of all Tenants, in such manner as Landlord deems best for the benefit of
the Tenants generally. No Tenant shall permit the visit to the Leased
Premises of persons in such numbers or under such conditions as to
interfere with the use and enjoyment by other Tenants of the entrances,
corridors, elevators and other public portions or facilities of the
Building.

2. No awnings or other projections shall be attached to the outside walls
of the Building without the prior written consent of the Landlord. No
drapes, blinds, shades, or screens shall be attached to or hung in, or
used in connection with any window or door of the Leased Premises, without
the prior written consent of the Landlord. Such awnings, projections,
curtains, blinds, shades, screens or other fixtures must be of a quality,
type, design and color, and attached in the manner approved by Landlord.

3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside or
inside of the Leased Premises in such a way that may be seen from the
outside of the Premises or Building without the prior written consent of
the Landlord. In the event of the violation of the foregoing by any
Tenant, Landlord may remove same without any liability, and may charge the
expense incurred by such removal to the Tenant or Tenants violating this
rule. Interior signs on doors and the directory tablet shall be inscribed,
painted or affixed for each Tenant by the Landlord at the expense of such
Tenant, and shall be of a size, color and style acceptable to the
Landlord.

4. No showcases or other articles shall be put in front of or affixed to
any part of the exterior of the Building, nor placed in the halls,
corridors or vestibules without the prior written consent of the Landlord.

5. The water and wash closets and other plumbing fixtures shall not be
used for any other purposes other than those for which they were
constructed, and no sweepings, rubbish, rags, or other substances shall be
thrown therein. All damages resulting from any misuse of the fixtures
shall be borne by Tenant who, or whose employees, agents, visitors or
licensees, shall have caused the same.

6. There shall be no marking, painting, drilling into or in any way
defacing any part of the Leased Premises or the Building. No boring,
cutting or stringing or wires shall be permitted. Tenant shall not
construct, maintain, use or operate within the Leased Premises or
elsewhere within or on the outside of the Building, any electrical device,
wiring or apparatus in connection with a loud speaker system or other
sound amplification system.

7. No bicycles, vehicles or animals, birds or pets of any kind shall be
brought into or kept in or about the Leased Premises, and no cooking shall
be done or permitted by any Tenant on the Leased Premises except in any
kitchen actually contained therein. No Tenant shall cause or permit any
unusual or objectionable odors to be produced upon or permeate from the
Leased Premises.

8. No space in the Building shall be used for manufacturing, for the
storage of merchandise, or for the sale of merchandise, goods or property
of any kind at auction.

9. No Tenant shall make, or permit to be made, any unseemingly or
disturbing noises or disturb or interfere with occupants of this or
neighboring buildings or Premises. No Tenant shall throw anything out of
the doors or windows or down the corridors or stairs.

10. No inflammable, combustible or explosive fluid, chemical or similar
substance shall be brought or kept upon the Leased Premises.

11. No additional locks or bolts of any kind shall be placed upon any 
of the doors or windows by any Tenant nor shall changes be made in 
existing locks or the mechanism thereof without consent of the 
Landlord. The doors leading to the corridors or main halls shall be 
kept closed during business hours except as they may be used for 
ingress or egress. Each Tenant shall, upon the termination of its 
tenancy, return to Landlord all keys of building, stores, offices, 
storage, and toilet rooms either furnished to, or otherwise procured 
by such Tenant, and in the event of the loss of any keys, so 
furnished, such Tenant shall pay to the Landlord the replacement cost 
thereof.

12. All removals or the carrying in or out of any safes, freight, 
furniture or bulky matter of any description must take place during 
the hours which the Landlord or its Agent may reasonably determine 
from time-to-time. The Landlord reserves the right to inspect all 
freight to be brought into the Building and to exclude from the 
Building all freight which violates any of these Rules and 
Regulations or the Lease of which these Rules and Regulations are a 
part.

13. Any Person employed by any Tenant to do janitorial work within 
the Leased Premises must obtain Landlord's consent and such Person 
shall; while in the Building and outside of said Leased Premises, 
comply with all instructions issued by the Landlord or the Landlord's 
Building Manager. No Tenant shall engage or pay any employee of the 
Owner, Owner's agent or contractor, without the Owner's expressed 
written consent.

14. No Tenant shall purchase spring water, ice, coffee, soft drinks, 
towels, or other like service, from any company or persons not 
approved by the Landlord. Landlord's permission will not be 
unreasonably withheld. Vending machines are not permitted in the 
Leased Premises.

15. Landlord shall have the right to prohibit any advertising by any 
Tenant which, in Landlord's opinion, tends to impair the reputation 
of the Building or its desirability as a building for offices, and 
upon written notice from Landlord, Tenant shall refrain from or 
discontinue such advertising.

16. The Landlord reserves the right to exclude from the Building, at 
all times, any person who is not known or does not properly identify 
himself to the Building Management or security personnel.

17. The Leased Premises shall not be used for lodging or sleeping or 
for any immoral or illegal purpose.

18. Each Tenant, before closing and leaving the Leased Premises at 
any time, shall see that all lights are turned off and the entry door 
is locked.

19. The requirements of Tenants will be attended to only upon 
application to the Landlord's Building Manager. Employees of the 
Building shall not perform any work or do anything outside of the 
regular duties, unless under special instruction from the Landlord's 
Building Manager.

20. Canvassing, soliciting and peddling in the Building is prohibited 
and each Tenant shall cooperate to prevent the same.

21. No water cooler or plumbing shall be installed by any Tenant 
without Landlord's consent.

22. There shall not be used in space, or in the public halls of the 
building, either by any Tenant or by jobbers or others, in the 
delivery or receipt of merchandise, any handtrucks, except those 
equipped with rubber tires and side guards.

23. Mats, trash or other objects shall not be placed in public 
corridors.

24. Drapes installed by the Tenant for its use which are visible from 
the exterior of the Building must be approved by Landlord in writing 
and be cleaned by the Tenant.

25. No vehicles may be parked overnight on the building grounds. Any 
vehicle experiencing problems must be reported to the Management 
Office.

26. The Landlord may, upon request by any Tenant, waive the 
compliance by such Tenant with any of the foregoing Rules and 
Regulations, provided that (i) no waiver shall be effective unless 
signed by Landlord or Landlord's authorized agent, (ii) any such 
waiver shall not relieve such Tenant from the obligation to comply 
with such rule or regulation in the future unless expressly consented 
to by Landlord, and (iii) no waiver granted to any Tenant shall 
relieve any other Tenant from the obligation of complying with the 
foregoing Rules and Regulations unless such other Tenant has received 
a similar waiver in writing from Landlord.

EXHIBIT "E"

TENANT ACCEPTANCE AGREEMENT
500 CYPRESS CREEK ROAD WEST
FORT LAUDERDALE, FLORIDA 33309

This Agreement made this ____ day of JULY 1998, between THE NORTHWESTERN
MUTUAL LIFE INSURANCE COMPANY, a Wisconsin corporation, having an office
at 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, hereinafter
referred to as "Landlord" and TOTAL-TEL USA COMMUNICATIONS, INC., a New
Jersey corporation hereafter referred to as "Tenant":

WITNESSETH

WHEREAS, Landlord and Tenant entered into a Lease, dated JULY 28 1998,
(hereinafter referred to as the "Lease" for 3,008 Square Feet, Suite 200
in the building known as 500 Cypress Creek Road West (hereinafter referred
to as the "Premises"):

NOW, THEREFORE, pursuant to the provision of the Lease, Landlord and
Tenant mutually agree as follows:

1. The Commencement Date of the Lease Term is September 1, 1998;

   the Rent Commencement Date is September 1, 1998;

   and the Expiration Date of the Lease Term is August 31, 2003.

2. Tenant is in possession of, and has accepted, the Premises demised by
the Lease, and acknowledges that all the work to be performed by the
Landlord in the Premises as required by the terms of the Lease has been
satisfactorily completed, punch list items excluded. Punch list items will
be completed within 30 days. Tenant further certifies that all conditions
of the Lease required of Landlord as of this date have been fulfilled and
there are no defenses or setoffs against the enforcement of the Lease by
Landlord.

3. The Lease has not been modified, changed, altered or amended in any
respect and is the only Lease or agreement between the Landlord and Tenant
affecting said Premises.

IN WITNESS WHEREOF, the parties have duly executed and sealed this
Agreement, as of the date and year first above stated.

                                     LANDLORD:

                                     CLW REALTY ASSET GROUP, INC. as 
                                     agent for THE NORTHWESTERN MUTUAL 
                                     LIFE INSURANCE COMPANY


                                     By: ------------------------------
                                         F. BRUCE LAUER, PRESIDENT

                                     TENANT 

                                     TOTAL-TEL USA COMMUNICATIONS, INC. 
                                     a New Jersey corporation


                                     By: ------------------------------


RECEIPT OF DEPOSIT

The Landlord named in the foregoing Lease hereby acknowledges receipt from
TOTAL-TEL USA COMMUNICATIONS, INC. a New Jersey corporation of a check in
the amount of $18,891.75 representing payment of the Prepaid Rent and
Security Deposit called for by the Lease. The Tenant acknowledges that the
Lease shall neither become effective nor be binding on the Landlord until
the deposit check is cleared and paid by the institution upon which it is
drawn.

                                     CLW REALTY ASSET GROUP, INC. as 
                                     agent for THE NORTHWESTERN MUTUAL 
                                     LIFE INSURANCE COMPANY


                                     By: ------------------------------
                                         F. BRUCE LAUER, PRESIDENT

                                     TENANT 

                                     TOTAL-TEL USA COMMUNICATIONS, INC. 
                                     a New Jersey corporation


                                     By: ------------------------------



CERTIFICATE OF SECRETARY

I, ____________________ Secretary of TOTAL-TEL USA COMMUNICATIONS, INC., 
a New Jersey corporation, (the "Corporation") hereby certify that on, 
199 8, the foregoing resolutions were adopted by the Board of Directors 
of the Corporation at a special meeting duly called and held for such 
purpose, a quorum of the directors of the Corporation having been 
present and having acted throughout said meeting, and that said 
resolutions are still in full force and effect; and I further certify 
that no consent, approval, vote, authorization or other action of the 
stockholders of the Corporation is required for or in connection with 
the consummation of the matters authorized in said resolutions; that 
neither the execution and delivery by an officer of the Corporation of 
the instruments authorized in the foregoing resolutions nor the 
consummation of the transactions therein contemplated, nor compliance 
with the terms and provisions thereof, will conflict with or result in a 
breach of any of the terms, conditions or provisions of the Articles of 
Incorporation or the By-Laws of the Corporation, or of any law or any 
regulation, order, writ, injunction or decree of any court or 
governmental instrumentality, or of any agreement or instrument, known 
to me to which the Corporation is a party or by which it is bound or to 
which it is subject, or constitute a default thereunder or result in the 
creation or imposition of any lien, charge or encumbrance of any nature 
whatsoever upon any property of the Corporation pursuant to the terms of 
any such agreement or instrument.

AND I DO FURTHER CERTIFY that the name(s) of the person(s) holding the
office(s) of the Corporation set forth below and a specimen of his, her or
their signature(s) are as follows:

Office                            Name                       Signature
RIDER

Rider to that certain Lease by and between The Northwestern Mutual Life
Insurance Company, as Landlord and TOTAL-TEL USA COMMUNICATIONS, INC., as
Tenant, dated July 28, 1998.

RIGHT OF FIRST OFFER

Landlord grants Tenant the right of first offer on contiguous space which
may come available during the term of Tenant's lease. The rate and terms
shall be fair market value. Tenant agrees that the minimum term on the
expansion space must be three (3) years or more and must be coterminous
with existing space. Landlord agrees to negotiate a lease extension on the
existing space to accommodate the three (3) year minimum term. In order to
exercise this option, Tenant shall notify Landlord of their interest in
expanding or Landlord shall give Tenant written notice of a prospective
tenant's interest in such space. Tenant shall have up to five (5) business
days to reply and up to five (5) additional business days to execute a
Lease Addendum mutually agreeable to both parties. If Tenant does not
reply within five (5) business days, it shall be assumed that Tenant
declines the space. If a Lease Addendum mutually agreeable to both parties
is not executed and delivered in the permitted time period, Landlord shall
be free to negotiate with other prospective tenant(s).

RENEWAL OPTION

Provided that Tenant is not in default under any terms and conditions of
this Lease, beyond the applicable notice and cure period, Landlord hereby
grants Tenant the option and right to extend the term of this Lease for
the Premises for one (1) additional period of five (5) years on the same
terms and conditions set forth in this Lease except as relates to the
Fixed Rental which shall be adjusted to 100% of market at the time this
option is exercised. In order to exercise this option, Tenant must give
Landlord written notice not less than 180 days prior to the end of the
Lease term. The Landlord shall furnish Tenant with its determination of
rental rate at least 120 days prior to the date upon which the Tenant must
exercise its option to renew.

INDEMNIFICATION

Notwithstanding anything to the contrary in this Lease or Rider:

Landlord shall indemnify and save harmless Tenant and its parent,
subsidiaries and affiliates and their respective officers, directors,
employees and agents (herein collectively referred to as the
"Indemnities") from and against any and all suits, liabilities,
obligations, damages, penalties, claims, costs, charges and expenses,
including reasonable attorney's fees, which may be imposed upon or
incurred by or asserted against Indemnities as a result of or arising out
of Landlord's failure to perform any covenant or agreement required to be
performed by Landlord under this Lease Agreement or caused by the
negligence or willful misconduct of Landlord, its agents and employees.
When the claim is caused by the joint negligence or willful misconduct of
Landlord and Indemnities or Landlord and a third party unrelated to
Landlord, except Landlord's agents or employees, Landlord's duty to
indemnify and save harmless Indemnities shall be in proportion to
Landlord's allocable share of the joint negligence or willful misconduct.

Tenant shall Indemnify and save harmless Landlord and its parent,
subsidiaries and affiliates and their respective officers, directors,
employees and agents (herein collectively referred to as the
"Indemnities") from and against any and all suits, liabilities,
obligations, damages, penalties, claims, costs, charges and expenses,
including reasonable attorneys' fees which may be imposed upon or incurred
by or asserted against Indemnities as a result of or arising out of
Tenant's failure to perform any covenant or agreement required to be
performed by Tenant under this Lease Agreement or caused by the negligence
of willful misconduct of Tenant or its agents or employees. When the claim
is caused by the joint negligence or willful misconduct of Tenant and
Landlord or Tenant and a third party unrelated to Tenant, except Tenant's
agents or employees, Tenant's duty to indemnify and save harmless Landlord
shall be in proportion to Tenant's allocable share of the joint negligence
or willful misconduct.

The provisions of this Section (Indemnification) will survive the
termination of this Lease Agreement.