U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

                                   FORM 10-QSB

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


                   For the fiscal quarter ended: June 30, 1999
                        Commission file number: 0-27842


                                  COLMENA CORP.
             (Exact name of registrant as specified in its charter)


                               Delaware 54-1778587
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)

                       2500 N. Military Trail, Suite 225-D
                            Boca Raton, Florida 33431
                    (Address of principal executive offices)
                                   (Zip code)

                                 (561) 998-2031
              (Registrant's telephone number, including area code)


     Indicate  by check  mark  whether  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  No  X

                         APPLICABLE TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date:

On May 1, 2001, the issuer had  outstanding  15,872,265  shares of common stock,
$.001 par value per share.

                         COLMENA CORP. AND SUBSIDIARIES
                                   FORM 10-QSB
                      QUARTERLY PERIOD ENDED JUNE 30, 1999
                                      INDEX

<PAGE>

                                                                            Page

PART I - FINANCIAL INFORMATION

      Item 1 - Consolidated Financial Statements

      Consolidated Balance Sheet (Unaudited)
        As of June 30, 1999...................................................3
      Consolidated Statements of Operations (Unaudited)
        For the Nine and Three Months Ended June 30, 1999 and 1998............4
      Consolidated Statements of Cash Flows (Unaudited)
        For the Nine Months Ended June 30, 1999 and 1998......................5

      Condensed Notes to Consolidated Financial Statements................ 6-12

      Item 2 - Management's Discussion and Analysis of Financial  Condition  and
        Results of Operations.............................................13-16


PART II - OTHER INFORMATION

      Item 1 - Legal Proceedings.............................................16

      Item 2 - Changes in Securities and use of Proceeds.....................16

      Item 3 - Default upon Senior Securities................................16

      Item 4 - Submission of Matters to a Vote of Security Holders...........17

      Item 5 - Other Information.............................................17

      Item 6 - Exhibits and Reports on Form 8-K..............................17

      Signatures.............................................................17

<PAGE>

                         COLMENA CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  June 30, 1999
                                   (Unaudited)

                                     ASSETS

CURRENT ASSETS:
    Cash                                                           $     1,768
    Other Current Assets                                                 6,359
                                                                 --------------
        Total Current Assets                                             8,127

    Equipment to be Repossessed under security agreement,
                         net of impairment                             275,000
                                                                ----------------
        Total Assets                                               $   283,127
                                                                ===============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT


    Accounts Payable and Accrued Expenses                         $    29,158
    Notes Payable-Nonrelated Parties                                  375,000
    Net Liabilities of Discontinued Operations                        439,582
                                                                ----------------

       Total Current Liabilities                                      843,740
                                                                ----------------
STOCKHOLDERS' DEFICIT:

    Common Stock ($.01 Par Value; 20,000,000 Shares Authorized;
        11,991,692 Shares Issued and Outstanding                       119,917

    Additional Paid-in Capital                                      16,146,188
    Accumulated Deficit                                            (16,826,718)
                                                                ---------------

        Total Stockholders' Deficit                                   (560,613)
                                                                ---------------
        Total Liabilities and Stockholders' Deficit                $   283,127
                                                                   ============


<PAGE>


                         COLMENA CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<S>                                     <C>             <C>                     <C>             <C>
                                     For the Three Months                      For the Nine Months
                                        Ended June 30,                            Ended June 30,

                                       1999             1998                     1999             1998

REVENUES                        $         -        $ 4,104,009            $         -         $ 10,050,934

COST OF SALES                             -          2,576,876                      -            6,178,514
                                -----------      -------------            -----------        -------------
GROSS PROFIT                              -          1,527,133                      -            3,872,420
                                -----------      -------------            -----------        -------------
OPERATING EXPENSES:
  Consulting                         25,240                 -               1,522,978                    -
  Professional and Legal Fees         7,890                 -                  14,666                    -
  Selling, General and
   Administrative                    27,330           763,392                  29,648            1,286,886
                                -----------      ------------             -----------        -------------
                                     60,460           763,392               1,567,292            1,286,886
                                -----------      ------------             -----------        -------------

     Total Operating Expenses      (60,460)          763,741              (1,567,292)           2,585,534
                                -----------      ------------             -----------        -------------

INCOME (LOSS) FROM OPERATIONS

OTHER (EXPENSES):
  Interest Expense, net              (8,689)                -                 (26,064)                  -
                                -----------      ------------             -----------        ------------
 TOTAL OTHER EXPENSES                (8,689)                -                 (26,064)                  -
                                -----------      ------------             -----------        ------------

LOSS BEFORE INCOME TAX PROVISION    (69,149)          763,741              (1,593,356)          2,585,534

INCOME TAX PROVISION                      -           221,945                       -             845,599
                                -----------      ------------              ----------        ------------
LOSS FROM OPERATIONS                (69,149)          541,796              (1,593,356)          1,739,935
                                -----------      ------------              -----------       ------------

LOSS FROM DISCONTINUED OPERATIONS
  Loss From Operations               (3,699)        (110,962)               (108,517)            (158,951)
  Gain (Loss) on Disposal                 -                -               1,488,225                    -
                                ------------      ------------             ----------         -----------

TOTAL LOSS FROM
DISCONTINUED OPERATIONS              (3,699)        (110,962)              1,379,708             (158,951)
                                -----------        -----------            ----------          ------------

NET INCOME (LOSS)                 $ (72,848)       $ 430,834              $ (213,648)        $  1,580,984
                                ============      ============           ============         ============
BASIC AND DILUTED:

   Net Income (Loss)
   Per Common Share:

     Income (Loss)
     from Continuing Operations     $ (0.01)#         $ 0.07              $    (0.17)              $ 0.24

         Gain (Loss)
         from Discontinued Operations (0.00)           (0.02)                   0.15                (0.02)
                                    ---------      ----------            -----------            ----------

                                    $ (0.01)          $ 0.06              $    (0.02)         $      0.22
                                    ========       =========              ==========          ===========
      Weighted Common
      Shares Outstanding          11,508,176        7,280,236              9,268,249            7,280,236
                                  ===========      ==========             ==========           ==========

</TABLE>

<PAGE>


                         COLMENA CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<S>                                                                                     <C>                     <C>
                                                                                      For the Nine Months Ended June 30,
                                                                                    ---------------------------------------
                                                                                          1999                 1998
                                                                                    ------------------   ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Income (Loss) from Continuing Operations                                         $ (1,593,356)         $ 1,580,984
    Income (Loss) from Discontinued Operations                                              1,379,708             (194,025)
    Adjustments to Reconcile Net Income (Loss) to Net Cash Flows
        Provided by (Used in) Operating Activities:
           Depreciation and Amortization                                                        7,500                    -
           Stock Warrants Issued to Consultants                                             1,522,978                    -
           Common Stock Issued for Settlement                                                  25,000                    -
           Exercise of Warrants                                                                26,359                    -
           Impairment Loss on Marketable Securities                                             3,400                    -
           Organization Costs                                                                       -             (563,161)

           (Increase) Decrease in:
              Accounts Receivable                                                               9,664           (2,182,569)
              Third Party Settlement Receivable                                                     -                3,621
              Prepaid Expenses and Other                                                        4,377             (993,959)
              Inventory                                                                             -              (80,673)
              Due from Related Party                                                           (6,359)                   -
              Note Receivable                                                                       -             (351,263)
              Other Assets                                                                          -               (3,220)
              Net Assets of Discontinued Operations                                                 -               19,258
           Increase (Decrease) in:
              Cash Overdraft                                                                  (84,386)                   -
              Accounts Payable and Accrued Expenses                                          (374,539)             732,231
              Income Taxes Payable                                                                  -              845,599
              Net Liabilities of Discontined Operations                                      (549,892)                  -
                                                                                             ---------                  -

Net Cash Flows Provided by (Used in) Operating Activities                                    370,454            (1,187,177)
                                                                                             --------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of Property and Equipment                                                      (3,000)            (150,000)
    Deposits                                                                                        -             (100,000)
    Business Acquired, Net of Cash                                                                 -               (29,725)
                                                                                                   --              --------

Net Cash Flows Used in Investing Activities                                                    (3,000)            (279,725)
                                                                                               -------            ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds From Issuance of Common Stock                                                          -            1,464,444
    (Payments on) Proceeds from Issuance of Notes Payable - Related Parties                   (84,842)            (116,243)
    (Payments on) Proceeds from Issuance of Notes Payable - Non-Related Parties              (287,131)             222,083
                                                                                             ---------            ---------

Net Cash Flows Provided by (Used in) Financing Activities                                    (371,973)           1,570,284
                                                                                             ---------           ----------

Net Increase (Decrease) in Cash                                                                (4,519)             103,382

Cash - Beginning of Period                                                                      6,287                5,022
                                                                                             --------            ---------

Cash - End of Period                                                                         $  1,768            $ 108,404
                                                                                             =========           ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the year for:
   Interest                                                                                      $ -                  $ -
                                                                                                 ====                 ===
   Income Taxes                                                                                  $ -                  $ -
                                                                                                 ====                 ===
</TABLE>

<PAGE>


                                  COLMENA CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-QSB and Item 310(b)
of Regulation S-B.  Accordingly,  the financial statements do not include all of
the  information  and  footnotes  required  by  generally  accepted   accounting
principles  for  complete  financial  statements.   The  consolidated  financial
statements  include  the  accounts  of the  Company  and our  subsidiaries.  All
significant intercompany accounts and transactions have been eliminated.  In the
opinion of management,  all  adjustments  have been included and all adjustments
considered  necessary  for a fair  presentation  have  been  included  and  such
adjustments are of a normal recurring nature.

     These consolidated  financial statements should be read in conjunction with
the consolidated  financial statements for the year ended September 30, 1998 and
notes  thereto  contained  in the Report on Form  10-KSB of Colmena  Corp.  (our
"Company") as filed with the Securities and Exchange Commission.  The results of
operations  for the  nine  months  ended  June  30,  1999  are  not  necessarily
indicative of the results for the full fiscal year ending September 30, 1999.


NOTE 2 - PRINCIPLES OF CONSOLIDATION AND COMBINATION

     The consolidated  financial  statements include the accounts of our Company
and its subsidiaries  RCP, BTSF, Tio and TechTel.  All significant  intercompany
balances and transactions been eliminated in consolidation.


NOTE 3 - CONSULTING AGREEMENT

Consulting Agreement between Our Company and the Yankee Companies, Inc.

     On January 5, 1999 (the  "Effective  Date"),  a consulting  agreement  (the
"Agreement")  was  entered  into by and  between  our  Company  and  The  Yankee
Companies,  Inc. (the  Consultant"),  a Florida  corporation.  The Agreement was
established  for a term of 730 days from the Effective  Date and will be renewed
automatically,  on a continuing  annual basis,  unless  terminated by one of the
parties 30 days prior to the termination of the then current term.


<PAGE>

                                  COLMENA CORP.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


NOTE 3 - CONSULTING AGREEMENT (Continued)

Consulting Agreement between Our Company and the Yankee Companies, Inc.
(Continued)

     The services provided by the consultant were agreed to be the services,  on
a  reasonable,  as  required,  basis,  consistent  with the  consultant's  other
business  activities.  The  consultant's  areas  of  expertise  mainly  comprise
corporate structure, organization and reorganization,  mergers, acquisitions and
divestitures,  strategic corporate  development,  corporate financial and equity
analysis, and other corporate matters.

     Furthermore,  the consultant agreed to be responsible for administering the
expenditure of the proceeds  derived by our Company from the exercise of options
that were given to the consultant as part of our  compensation  for the services
rendered (see below) in order to implement the strategic  plans developed by the
consultant and to settle and discharge the corporate obligations of our Company.
In this role, the  consultant  agreed to establish and operate bank accounts for
our Company using such signatories as the consultant deems appropriate.

     As consideration  for the first 200 hours of services  provided (in lieu of
document license fees and required cash payments valued at $20,000), our Company
agreed to issue within the first 365 days of the agreement, (the "Initial Term")
to the consultant  8,066,326 Class A options to purchase 8,066,326 shares of our
Company's  common  stock at an  exercise  price of $0.005 per  share,  under the
assumption that 7,750,000  common shares were outstanding or reserved for future
issuance,  and therefore resulting in the consultant owning 51% of our Company's
common stock.  Any increase or decrease in the  outstanding  or reserved  shares
would result in a corresponding  adjustment of the options' quantity and prices.
The options may be exercised from the 10th day until the 365th day following the
effective date of a registration  statement  registering  the underlying  common
stock  with  the   commission.   The  consulting   agreement  with  Yankees  was
renegotiated  during  January  of  2000  at our  Company's  request,  due to our
inability  to  start  making  the  cash  payments  called  for by  the  original
agreement.  As a result of the amendment,  Yankees option was increased from the
right to purchase 51% of our Company's  common stock for $40,000 to the right to
purchase 75% of our Company's  common stock for $80,000,  in  consideration  for
Yankees'  agreement to waive its hourly and  licensing  fees for services to our
Company until  December 31, 2000. As of the date of this report,  the consultant
had exercised  options for 6,000,000 shares of common stock. Our Company applies
the fair market value method of Statement of Financial  Accounting Standards 123
in accounting for stock options issued to consultants.  Accordingly,  consulting
expense of  $1,476,138  was  recognized  during  January  1999 for the option to
acquire 8,066,326 shares of common stock.  Additionally,  in connection with the
issuance of additional  shares of common stock, the consultant was given 260,204
additional warrants to acquire common stock. Our Company applied the fair market
value method of Statement of Financial  Accounting  Standards  123 in accounting
for stock options  issued to  consultants.  Accordingly,  consulting  expense of
$25,240  was  recognized  during  April 1999 for the  option to acquire  260,204
shares of common stock.

<PAGE>

                                  COLMENA CORP.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


NOTE 3 - CONSULTING AGREEMENT (Continued)

     Consulting  Agreement  between Our Company and the Yankee  Companies,  Inc.
(Continued)

     For  additional  services  provided,  during the initial term,  our Company
agreed to pay the following  consideration:  (a) If the  consultant  arranges or
provides  funding for our Company on more beneficial  terms than those currently
reflected  in  our  Company's  current  principal  financing   agreements,   the
consultant shall be entitled, at its election, to either (i) a fee of 25% of the
savings achieved,  or (ii) if equity funding is provided through  consultants or
its  affiliates,  a discount  of 10% from the bid price for the  subject  equity
securities, if issuable as free trading securities, or a discount of 50%from the
comparable  subscription  price  paid  by  any  other  purchaser  of  restricted
securities,  if issuable as restricted securities,  or (iii) an introduction fee
of 5% of the aggregate  proceeds  obtained if funding is provided by any persons
introduced to our Company by the  consultant;  (b) If the  consultant  generates
business for our Company,  the  consultant  shall be entitled to a commission of
10% of the gross income derived by our Company there from on a continuing basis;
(c) If the consultant arranges for an acquisition by our Company, the consultant
shall be  entitled  to 10% of the  compensation  paid for such  acquisition.  In
addition,  our  Company  will be  responsible  for the  payment of all costs and
disbursements  associated  with the  consultant's  services  subject  to certain
limitations and/or approvals, as stipulated in the Agreement.

NOTE 4 - DISCONTINUED OPERATIONS

     Reorganization   Agreement   between  our  Company  and  Mr.  Peplin,   and
Resignation of Mr. Peplin.

     On March 25, 1999, a Reorganization Agreement (the "Agreement") was entered
into and  consummated  by and among the our Company and Mr. Peplin the principal
stockholder  and  former  president  of our  Company.  Under  the  terms  of the
Agreement,  our Company  conveyed  to the order of Mr.  Peplin,  and Mr.  Peplin
accepted,  all of our Company's  right,  title and interest in and to all of the
capital  stock of T2U Co.  and BTSF  (the  "Subsidiaries"),  expecting  that Mr.
Peplin will designate a newly organized  corporation to assume  ownership of the
Subsidiaries. The transaction was accounted for as a sale, at fair market value,
the  consideration  being an assumption of net  liabilities by Mr.  Peplin.  Our
Company agreed to pay all  reasonable  costs required to effect a liquidation of
the  Subsidiaries by Mr. Peplin's  designee  pursuant to Chapter 7 of the United
States  Bankruptcy  Code and to defend any  resulting  litigation  or regulatory
actions. Furthermore, our Company agreed to spin out 20% of the capital stock of
TechTel  to our  Company's  stockholders  under the  parameters  established  by
Securities  Exchange  Commission  Division  of  Corporate  Finance  Staff  Legal
Bulletin  Number 5, and to use the remaining 80% of the capital stock of TechTel
to settle  outstanding  liabilities of TechTel to Mr. Peplin,  to a principal of
Yankees and to other persons,  based on negotiations to be conducted by Yankees.
Mr. Peplin irrevocably agreed that any net assets remaining after liquidation of
the Subsidiaries will be used to pay taxes and liabilities of TechTel guaranteed
by Mr. Peplin or our Company, with the net balance returned to our Company, such
net balance  interest to be represented by a security  interest  memorialized in
one or more Forms UCC-1 to be filed in each state in which the Subsidiaries have
any assets.

<PAGE>
                                  COLMENA CORP.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 4 - DISCONTINUED OPERATIONS (Continued)

     Reorganization   Agreement   between  our  Company  and  Mr.  Peplin,   and
Resignation of Mr. Peplin.

     The 80% of TechTel common stock was transferred to Mr. Peplin and others in
a transaction accounted for as a sale, the consideration being the assumption by
the  transferors  of  liabilities  of  TechTel.  Before the  transfer of the 20%
TechTel  common stock as discussed  above,  in November 1999 the interest of all
stockholders  in TechTel,  including  our  Company,  was acquired by FON Digital
Network,  Inc. ("FON"), an OTC Bulletin Board company.  FON issued 50,000 shares
to various  parties  including  5,000 to our  Company in  exchange  for  TechTel
shares. Our Company approved such modifications of the Reorganization  Agreement
due to our inability to maintain  TechTel's  operations  pending the anticipated
spin out to our Company's stockholders.  During March 1999, pursuant to the sale
of the subsidiaries, our Company recognized a gain on sale.

     The   reorganizations   discussed   above  do  not   qualify  as   tax-free
reorganizations.  However,  no taxes will be payable, as the income generated by
our Company as a result of its reorganizations is from the relief of liabilities
which is fully excludable under the insolvency/bankruptcy  exception. Under such
exception,  the net operating  loss and other tax attributes are reduced in lieu
of reporting  income.  On May 4, 1999, Mr. Peplin  resigned from all offices and
directorships held in our Company and our remaining subsidiary.

NOTE 5 - COMMON STOCK TRANSACTIONS AND STOCK OPTIONS AND WARRANTS GRANTED

     On January 29, 1999,  directors of our Company were issued  300,000  common
stock  options  for  services  at an  exercise  price of $0.05 per  share,  such
warrants  being  exercisable  on or before January 15, 2000. On January 3, 2000,
the exercise  term was extended to January 12,  2001.  On January 11, 2001,  the
exercise  term was  extended to January 15,  2002.  The fair value of the option
grant was estimated on the date of grant using the Black-Scholes  option-pricing
model with the following assumptions:  dividend yield of 0%; expected volatility
of 200%;  risk-free  interest  rate of 4.51%,  and an  expected  live of 1 year.
Accordingly,  consulting  expense of $21,600 was recognized  during January 1999
for the 300,000 options issued.

     On June 3, 1999, in  connection  with a settlement  agreement,  our Company
issued to Mr. Sethi, a former  employee,  250,000 shares of common stock at fair
value.

     In connection  with the  consulting  Agreement  between The Company and the
Yankee  Companies,  Inc. as  discussed  in note 3 above,  the Company  issued an
additional 260,204 warrants. The fair value of the option grant was estimated on
the  date of  grant  using  the  Black-Scholes  option-pricing  model  with  the
following  assumptions:  dividend  yield  of 0%;  expected  volatility  of 158%;
risk-free  interest rate of 5.1%,  and an expected live of 1 year.  Accordingly,
consulting  expense of $25,240 was  recognized  during June 1999 for the 260,204
warrants issued.

     During  February  and  April  1999,  the  Company  issued an  aggregate  of
4,000,000 shares in connection with the exercise of warrants.

<PAGE>

                                  COLMENA CORP.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)




NOTE 6 - SUBSEQUENT EVENTS

(A)  Common Stock Transactions and Stock Options and Warrants Granted

     On January 3, 2000,  a vendor who  provided  legal  services to our Company
     converted  total  amounts due  aggregating  $50,782 at December 31, 1998 to
     677,087 restricted shares of common stock of our Company.

     On January 3,  2000,  a vendor  converted  total  amounts  due of $2,550 at
     September 30, 1998 to 34,000 shares of common stock of our Company.

     On May 11, 2000,  our Company issued 136,147 shares of common stock in full
     payment of all obligations owned to a vendor.

     On May 31, 2000,  our Company  issued  533,333  shares of common stock to a
     third party as an  accommodation  to Mr.  Peplin.  Mr.  Peplin,  personally
     guaranteed  funds loaned by the third party to RCP. The third party brought
     suit against Mr. Peplin in the Circuit Court of Cook County,  Illinois,  to
     enforce  payment on the guaranty.  Our Company was not a party to the suit.
     However,  as an accommodation to Mr. Peplin, our Company has become a party
     to a  settlement  agreement  between  the  litigants  in which our  Company
     promises to transfer 533,333 shares of our stock to the third party without
     assuming any liability for Mr.  Peplin's  obligations  under the settlement
     agreement.

     On November 8, 2000,  our Company  issued 100,000 shares of common stock in
     full satisfaction of all obligations owed to a third party.

     For all conversions of debt with unrelated parties, our Company will record
     a gain or loss on the  extinguishment  of debt based upon the quoted market
     price of the stock on the conversion dates.

     On January 3, 2000,  directors  and  officers  of our  Company  were issued
     264,000 common stock options for services at an exercise price of $0.02 per
     share, exercisable on or before December 31, 2002.  Additionally,  on March
     14, 2000, a director of our Company was issued  70,000 common stock options
     for services at an exercise  price of $.05 per share.  These options expire
     on January 15, 2002.

     On January 11, 2001,  directors of our Company were issued  400,000  common
     stock  options for services at an exercise  price of $.05 per share.  These
     options expire on January 11, 2002.


<PAGE>

                                  COLMENA CORP.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6 - SUBSEQUENT EVENTS (Continued)

(A)  Common Stock Transactions and Stock Options and Warrants Granted

     On  May  30,  2001,  the  Company  settled  all   outstanding   issues  and
     commitments,  including, without limitation, satisfaction of a certain note
     payable  amounting  to $100,000  plus any  accrued  and unpaid  interest in
     consideration  for the issuance of 1,844,444 shares of the Company's common
     stock.

(B)  Non-Qualified Stock Option & Stock Incentive Plan

     Effective   January  1,  2000,  our  Company   adopted  the  "Colmena  Corp
     Non-Qualified  Stock Option & Stock  Incentive  Plan" (the 2000 Plan).  The
     purpose of the plan was to promote the success and enhance the value of our
     Company. Subject to adjustment,  as defined in the agreement, the aggregate
     number of shares of common  stock that may be  granted  under the 2000 Plan
     shall be 1,000,000 shares. As of April 15, 2001, no shares have been issued
     under the plan and the  stockholders  had not  approved  the plan.  Because
     stockholder  approval was required as to the  incentive  stock option plan,
     within one year of its adoption, the plan has been terminated.

(C)  Employment Agreement

     On May 4, 1999, our Company's  board of directors  elected Anthony Q. Joffe
     as our president.  Mr. Joffe's term as an officer is at the pleasure of our
     Company's board of directors,  subject to his  contractual  rights under an
     employment agreement. The terms of Mr. Joffe's compensation for services to
     our Company are set forth in his  employment  agreement  with our  Company,
     summarized below. The Joffe Agreement is for a term of one year, subject to
     automatic annual renewal  thereafter unless the Party deciding not to renew
     provides the other with written  notice of intention  not to renew prior to
     the 60th day  before  termination  of the then  effective  term or  renewal
     thereof.

Compensation:

     A.   200,000  shares of our Company's  common  stock,  provided that (1) He
          remains in the employ of our Company for a period of not less than 365
          consecutive  days;  (2) He has not been  discharged by our Company for
          cause;  (3) He  fully  complies  with  the  provisions  of  the  Joffe
          Agreement,  including,  without  limitation,  the  confidentiality and
          non-competition sections hereof. The shares were issued on October 31,
          2000.


<PAGE>
                                  COLMENA CORP.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(C) Employment Agreement (Continued)


     B.   In the event that Mr.  Joffe  arranges  or  provides  funding  for our
          Company on terms more beneficial than those reflected in our Company's
          current principal financing  agreements,  copies of which are included
          among our  Company's  records  available  through  the SEC's EDGAR web
          site, Mr. Joffe shall be entitled, at our election, to either:

         (1)   A fee equal to 5% of such savings, on a continuing basis; or

         (2)   If equity funding is provided through Mr. Joffe or any affiliates
               thereof,  a  discount  of 5% from the bid  price  or the  subject
               equity   securities   if  they  are   issuable  as  free  trading
               securities,   or,  a   discount   of  25%  from  the   comparable
               subscription  price  paid by any other  purchaser  of  restricted
               shares,  if they are issuable as  restricted  securities  (as the
               term restricted is used for purposes of SEC Rule 144); and

         (3)   If equity  funding is arranged  for our Company by Mr.  Joffe and
               our Company is not obligated to pay any other source compensation
               in  conjunction  therewith,  other  than the  normal  commissions
               charged by broker  dealers in securities  in compliance  with the
               compensation  guidelines  of the  NASD,  the Mr.  Joffe  shall be
               entitled  to a bonus in a sum equal to 5% of the net  proceeds of
               such funding.

(E) Potential Reorganization Under Bankruptcy Code

     In light of the volume of litigation,  potential  litigation and regulatory
     action,  our  Company  and  our  Board  of  Directors  have  discussed  the
     possibility  of  reorganization  under  Chapter  11 of  the  United  States
     Bankruptcy Code. As of the date of this report no such  reorganization  has
     been consummated.

<PAGE>

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL   CONDITION  AND
         RESULTS OF OPERATIONS.

Overview

     The following  discussion  should be read in conjunction with our Company's
     audited financial statements and the more detailed information contained in
     Part I, Item 1 of this report.  During November of 1997, our Company became
     engaged  in  the  business  of  marketing  and  distributing  long-distance
     telephone  service calling cards and in the manufacture and distribution of
     premium   hand-rolled   cigars,   in  each  case,   through   wholly  owned
     subsidiaries.  During  March  of 1999,  our  Company's  board of  directors
     concluded   negotiations   to  divest  our  Company  of  its  wholly  owned
     subsidiaries  positioning  itself to undertake new business endeavors or to
     become a more attractive acquisition candidate.

Plan of Operations

     During  January  of  1999,  our  Company's  board  of  directors  signed  a
     consulting  agreement  with  Yankees,  calling  for  Yankees to provide our
     Company  with  working   capital  and   assistance   in   development   and
     implementation  of new strategic plans.  Yankees suggested that our Company
     first  concentrate on meeting our obligation to file periodic reports under
     the  Exchange  Act,  including   completing  the  audit  of  our  financial
     statements  for the  fiscal  year  ended  September  30,  1998,  which were
     completed in September 2000. Concurrently with activities pertaining to the
     1998 audit, Yankees assisted our Company in identifying persons with claims
     and  potential  claims  against our Company and to  negotiate  with them to
     amicably resolve such claims.

     Our Company has  completed the audit of its  financial  statements  for the
fiscal year ended  September 30, 1998 and is currently  completing the quarterly
unaudited  financial  statements  required  in  order to  complete  and file its
delinquent  reports on Commission  Form 10-QSB for the calendar  quarters  ended
December 31, 1999 and 2000, June 30, 2000, March 31, 2000 and 2001 and the audit
for its fiscal year ended  September 30, 1999 and 2000.  Our Company  expects to
have all such financial  statements and reports filed with the commission  prior
to July 1, 2001.

     Almost all claims and potential  claims  against our Company  identified by
Yankees  have been  amicably  resolved  through the  issuance  of  approximately
1,730,567  shares of common  stock,  with the notable  exception of the arbitral
award  in  Deutsche  Financial  Services  Corporation  vs.  Business  Technology
Systems,  Inc.,  Ila Sethi,  Madhu Sethi,  Richard C.  Peplin,  Jr., and Colmena
Corporation,  which our  Company  will  contest  (see  "Part II,  Item 1,  Legal
Proceedings").  Yankees,  on  behalf  of our  Company  is  currently  conducting
negotiations with certain remaining  claimants and has made offers of settlement
for claims of  approximately  $165,956  While  management  feels that there is a
reasonable  likelihood that such offers will be accepted,  no assurances to that
effect can be provided.

     Our  Company  currently  has no  businesses  operations  other  than  those
pertaining to correcting  deficiencies in filing  obligations under the Exchange
Act,  maintenance of our corporate  existence and potential  operations  under a
negotiated resale agreement involving the purchase of telecommunication services
for the resale to end users from BellSouth Telecommunications, Inc.

<PAGE>


ITEM 2.  MANAGEMENT'S   DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
         RESULTS OF OPERATIONS (Continued)


Plan of Operations (Continued)

     The  agreement  pertains to Sections 251 and 252 of the  Telecommunications
Act of 1996, and allows our Company to operate as an alternative  local exchange
Telecommunications Company in the States of Alabama, Florida, Georgia, Kentucky,
Louisiana,  Mississippi,  North  Carolina,  South  Carolina and  Tennessee.  The
agreement permits our Company to provide competing  telephone  exchange services
to residential and business subscribers in territories where BellSouth operates.
Our Company  currently has no customers and is not conducting any business under
our agreement with  BellSouth.  As soon as our Company has become current in its
filing  obligations  under the Exchange Act, it plans to either  obtain  capital
required to resume business operations pursuant to the BellSouth  agreement,  or
to acquire  complimentary  businesses  in exchange  for shares of our  Company's
common  stock and a  commitment  by our  Company to provide  required  expansion
capital.  However,  no assurances can be provided that such business plan can be
attained.

     The foregoing plan of operation  contains  forward-looking  statements that
are  subject to risks and  uncertainties  which could  cause  actual  results to
differ  materially  from those discussed in the  forward-looking  statements and
from historical results of operations. Among the risks and uncertainties,  which
could cause such a difference,  are those  relating to our Company's  dependence
upon  certain key  personnel,  our ability to manage our growth,  our  Company's
success  in  implementing  its  business  strategy,  our  success  in  arranging
financing where required,  and the risk of economic and market factors affecting
our Company or our  customers.  Many of such risk factors are beyond the control
of our Company and its management.

     Nine and three months ended June 30, 1999 compared to nine and three months
ended June 30, 1998

     Prior  to  the  discontinuation  of  past  operations,   substantially  all
financial  activity during fiscal 1998 was a result of business conducted in the
marketing and distributing of long-distance  telephone service calling cards. We
reported net losses from  operations  for the nine months ended June 30, 1999 of
($1,593,356)  and net income from  operations for the nine months ended June 30,
1998 of  $1,739,935.  This  translates to a per-share  (loss) of $(0.20) for the
nine  months  ended  June 30,  1998 and per  share  income of $0.24 for the nine
months  ended  June  30,  1999.  Additionally,  we  reported  a  net  gain  from
discontinued operations for the nine months ended June 30, 1999 of $1,379,708 or
$.17 per share as compared to a net loss from  discontinued  operations  for the
nine months ended June 30, 1998 of $(158,951) or $(.02) per share. The gain from
discontinued operation in 1999 was related to the sale of certain subsidiaries.


<PAGE>

ITEM 2.  MANAGEMENT'S  DISCUSSION   AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
         RESULTS OF OPERATIONS (Continued)

     Nine and three months ended June 30, 1999 compared to nine and three months
ended June 30, 1998

     The net income (loss)  figures were based on  corresponding  revenues of $0
and $10,050,934 for the nine months ended June 30, 1999 and 1998,  respectively.
The  decrease in net revenue  and  corresponding  decrease in cost of revenue in
1999  as  compared  to  1998  was   attributable  to  the   discontinuation   of
substantially  all of marketing  and  distributing  of  long-distance  telephone
service calling cards. Operating expenses rose to $1,567,292 for the nine months
ended June 30, 1999 as compared to $1,286,886 for the nine months ended June 30,
1998.  The increase was due the increased  consulting  fees  resulting  from the
issuance of common stock warrants amounting to approximately $1,523,000.

     Net cash  used in  investing  activities  in the  1999  period  was  $3,000
compared  to net cash  used in  investing  activities  of  $279,725  in the 1998
period.  This  difference  was  related to the  purchase  of  equipment  and the
acquisition of our discontinued subsidiary, BTS in fiscal 1998.

     Net cash used in financing  activities in the 1999 period was $(371,973) as
compared to net cash provided by financing  activities of $1,570,284 in the 1998
period.  The difference was  attributable  to decreased  proceeds  received from
loans and decreased capital contributions.

     No additional meaningful  comparisons can be made for the nine months ended
June 30, 1998 as compared to the nine months  ended June 30, 1998 in that during
the nine months ended June 30, 1998, the activities of our Company's predecessor
were unrelated.

     The  effect  of the  board  of  directors'  decision  to  discontinue  past
operations  has had the effect of  allowing  our Company to be  classified  as a
development stage company prepared to conduct  profitable  business  activities.
Current  revenues  have been  reduced to zero in  contemplation  of new business
opportunities being sought by our Company.

Year 2000 Compliance

     As of the date this  report  was to have been  filed  with the  Commission,
there were serious  concerns about the effects the transition  from the 1900s to
the 2000s  would  have on  computer  programs  designed  to ignore the first two
digits  of  each  year  in  determining  operating  periods.  As a  result,  the
Commission required  Registrant's to report on their states of readiness to face
potential year 2000 problems.  The following disclosure would have been accurate
prior to January 1, 2000:

     The inability of business processes to continue to function correctly after
the beginning of the Year 2000 could have serious  adverse  effects on companies
and  entities  throughout  the world.  Our Company  does not  currently  own any
computer  equipment  and thus  would not be  subject  directly  to any  problems
associated  with such Year 2000 problems.  It currently uses computer  equipment
provided by its management and consultants, none of which would be materially


<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (Continued)

Liquidity and Capital Resources

affected by Year 2000 software and hardware problems.  However,  in the event it
makes a material  acquisition,  such problems could affect the acquired entity's
operations and, to the extent that the problem affects national  communications,
financial or utility businesses in general,  our Company,  like other businesses
could be adversely affected. In the event that our Company experiences Year 2000
related  problems,  it would be forced to expend  such  amounts  of its  working
capital as might be  necessary  to correct the  affected  software  and hardware
systems and implement contingency plans.

     As a material  subsequent event, no material year 2000 problems occurred as
a result of the  transition  from the 1900s to the  2000s on  computer  programs
designed  to ignore the first two digits of each year in  determining  operating
periods.

     At  June  30,  1999,  our  Company  had  a   stockholders'   deficiency  of
approximately  $560,613. Our Company's future operations and growth is dependent
on its ability,  with the assistance of Yankees,  to raise capital for expansion
and to implement our strategic plan. If our Company is not successful in raising
capital and in resolving the remaining  claims of certain  claimants,  or if the
arbitral  award  in  Deutsche  Financial   Services   Corporation  vs.  Business
Technology  Systems,  Inc., Ila Sethi, Madhu Sethi,  Richard C. Peplin, Jr., and
Colmena Corporation,  were successfully  reduced to a judgment,  our Company may
file for  reorganization  pursuant to Chapter 11 of the United States Bankruptcy
Code. Our Company has no other material commitments for capital expenditures.

                           PART II. OTHER INFORMATION

Item 1.   Legal Proceedings.

          As permitted by Commission  Rule 12b-23,  the response to this item is
          incorporated by reference from the corresponding item in our Company's
          report of Form 10-QSB for the fiscal period ended December 31, 1998.


Item 2.   Changes in Securities

          As permitted by Commission  Rule 12b-23,  the response to this item is
          incorporated by reference from the corresponding item in our Company's
          report of Form 10-KSB for the fiscal year ended September 30, 1998.

Item 3.   Defaults Upon Senior Securities

          As permitted by Commission  Rule 12b-23,  the response to this item is
          incorporated by reference from the corresponding item in our Company's
          report of Form 10-KSB for the fiscal year ended September 30, 1998.

<PAGE>

PART II. OTHER INFORMATION (Continued)

Item 4.   Submission of Matters to a Vote of Security Holders.

          As permitted by Commission  Rule 12b-23,  the response to this item is
          incorporated by reference from the corresponding item in our Company's
          report of Form 10-KSB for the fiscal year ended September 30, 1998.


Item 5.   Other Information

          As permitted by Commission  Rule 12b-23,  the response to this item is
          incorporated by reference from the corresponding item in our Company's
          report of Form 10-QSB for the fiscal period ended March 31, 1999.

Item 6.   Exhibits and Reports on Form 8-K.

          (a)  Exhibits and Index of Exhibits

               As permitted by Commission Rule 12b-23, the response to this item
               is incorporated by reference from the  corresponding  item in our
               Company's  report  of Form  10-KSB  for  the  fiscal  year  ended
               September 30, 1998.

          (b)  Reports on Form 8-K

               Our Company filed a current report on Form 8-K on May 18, 1999.


                                   SIGNATURES


     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                  COLMENA CORP.



Dated:  June 5, 2001                  By:  /s/ Edward C. Dmytryk
                                               Edward C. Dmytryk, President
                                               Chief Executive Officer, Director