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

                             FORM 10-KSB

        (Mark One)

        [ X ] Annual report under Section 13 or 15(d) of the
              Securities Exchange Act of 1934

        For the fiscal year ended June 30, 1999

        [   ] Transition report under Section 13 or 15(d) of the
              Securities Exchange Act of 1934

        For the transition period from _________ to _________

        Commission File No. 0-25703

                          GTC TELECOM CORP.
          (Name of Small Business Issuer in Its Charter)

           NEVADA                                  88-0318246
(State or Other Jurisdiction of                   (IRS Employer
Incorporation or Organization)                Identification Number)

   3151 AIRWAY AVE., SUITE P-3
      COSTA MESA, CALIFORNIA                         92626
(Address of Principal Executive Offices)           (Zip Code)

                            (714) 549-7700
                     (Issuer's Telephone Number)
     SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                (None)

     SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                    Common Stock, par value $0.001
                           (Title of Class)

<PAGE>

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

    Yes __X__   No _____

    Check if there is no disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. [   ]

    State issuer's revenues for its most recent fiscal year.     $289,012

    State the aggregate market value of voting and non-voting common
equity held by non-affiliates computed by reference to the price at
which the common equity was sold, or the average bid and asked
prices of such common equity, as of a specified date within the past
60 days.  (See definition of affiliate in rule 12b-2 of the Exchange
Act.)  $33,146,120

    State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
16,039,499

                 DOCUMENTS INCORPORATED BY REFERENCE

    If the following documents are incorporated by reference,
briefly describe them and identify the part of the form 10-KSB
(e.g., Part I, Part II, etc. ) into which the document is
incorporated: (1) any annual report to security holders; (2) any
proxy or information statement; and (3) any prospectus filed
pursuant to rule 424(b) or (c) of the Securities Act of 1933
("Securities Act").  The listed documents should be clearly
described for identification purposes (e.g., annual report to
security holders for fiscal year ended December 24, 1990).

None.

    Transitional Small Business Disclosure Format (check one):

Yes ______ No___X___

<PAGE>

                          TABLE OF CONTENTS


                                PART I


Item 1   Description of Business.

Item 2   Description of Property.

Item 3   Legal Proceedings.

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

                               PART II

Item 5   Market for Common Equity and Related Stockholder Matters.

Item 6   Management's Discussion and Analysis.

Item 7   Financial Statements.

Item 8   Changes In and Disagreements With Accountants on
         Accounting and Financial Disclosure.

                               PART III

Item 9   Directors, Executive Officers, Promoters and Control
         Persons; Compliance With Section 16(a) of the
         Exchange Act.

Item 10  Executive Compensation.

Item 11  Security Ownership of Certain Beneficial Owners and
         Management.

Item 12  Certain Relationships and Related Transactions.

Item 13  Exhibits and Reports on Form 8-K.

<PAGE>

                          INTRODUCTORY NOTE

This Annual Report on Form 10-KSB may be deemed to contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934.  The Company intends that such forward-looking
statements be subject to the safe harbors created by such statutes.
The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties.
Accordingly, to the extent that this Annual Report contains
forward-looking statements regarding the financial condition,
operating results, business prospects or any other aspect of the
Company, please be advised that the Company's actual financial
condition, operating results and business performance may differ
materially from that projected or estimated by the Company in
forward-looking statements.  The differences may be caused by a
variety of factors, including but not limited to adverse economic
conditions, intense competition, including intensification of price
competition and entry of new competitors and products, adverse
federal, state and local government regulation, inadequate capital,
unexpected costs and operating deficits, increases in general and
administrative costs, lower sales and revenues than forecast, loss
of customers, customer returns of products sold to them by the
Company, disadvantageous currency exchange rates, termination of
contracts, loss of suppliers, technological obsolescence of the
Company's products, technical problems with the Company's products,
price increases for supplies and components, inability to raise
prices, failure to obtain new customers, litigation and
administrative proceedings involving the Company, the possible
acquisition of new businesses that result in operating losses or
that do not perform as anticipated, resulting in unanticipated
losses, the possible fluctuation and volatility of the Company's
operating results, financial condition and stock price, losses
incurred in litigating and settling cases, dilution in the Company's
ownership of its business, adverse publicity and news coverage,
inability to carry out marketing and sales plans, loss or retirement
of key executives, changes in interest rates, inflationary factors,
and other specific risks that may be alluded to in this Annual
Report or in other reports issued by the Company.  In addition, the
business and operations of the Company are subject to substantial
risks which increase the uncertainty inherent in the forward-looking
statements.  In light of the significant uncertainties inherent in
the forward-looking information included herein, the inclusion of
such information should not be regarded as a representation by the
Company or any other person that the objectives or plans of the
Company will be achieved.

                                PART I

ITEM 1 - DESCRIPTION OF BUSINESS

BACKGROUND OF THE COMPANY

GTC Telecom Corp. (the "Company" or "GTC") is a provider of various
telecommunication services, including long distance telephone, and
calling card services as well as various Internet related services
including Internet Service Provider access and Web Page Hosting.
GTC Telecom Corp. was organized as a Nevada Corporation on May 17,
1994 and is currently based in Costa Mesa, California.

On August 31, 1998, GTC Telecom Corp. (which at the time was
designated Bobernco, Inc., a Nevada corporation ("Bobernco"))
acquired all of the outstanding common stock of GenTel
Communications, Inc., a Colorado corporation ("GenTel") in a
business combination described as a "reverse acquisition."  For
accounting purposes, the acquisition was treated as the acquisition
of Bobernco (the Registrant) by GenTel.

GenTel Communications, was formerly known as GenX, LLC ("GenX").
GenX, a Delaware limited liability company was formed on May 29,
1997.  GenTel Communications, a Colorado corporation was formed on
December 9, 1997 and was inactive until its reorganization with
GenX.  Effective February 3, 1998, pursuant a plan of
reorganization, the members of GenX converted their members'
interest into 8,786,950 shares of the Common Stock of GenTel.
Subsequently, GenX was dissolved.  At the time of its acquisition by
Bobernco, GenTel operated as provider of long distance telephone
services.

Immediately prior to the acquisition, Bobernco had 1,800,000 shares
of Common Stock outstanding.  As part of Bobernco's reorganization
with GenTel,  Bobernco issued 8,986,950 shares of its Common Stock
to the shareholders of GenTel in exchange for 8,986,950 shares of
GenTel Common Stock.  Immediately following the merger, Bobernco
changed its name to GTC.  Bobernco had no significant operations
prior to the merger.  Subsequent to the acquisition, the former
shareholders of GenTel constituted 83.31% of the total outstanding
shares of the Common Stock of the Company and the original
shareholders of Bobernco constituted 16.69% of the total outstanding
shares of the Common Stock of the Company.  The Company's common
stock currently trades on the NASD OTC Bulletin Board under the
symbol "GTCC."

<PAGE>

BUSINESS OF THE COMPANY

GTC currently offers a variety of services designed to meet its
customers' telecommunications and Internet related needs.  The
Company's services consists of the following:

TELECOMMUNICATIONS RELATED SERVICES

GTC is currently licensed in 46 states and the District of Columbia
to provide long distance telecommunications services.  The Company
primarily services small and medium sized businesses and residential
customers throughout the United States and has positioned itself to
be a low-cost provider in the marketplace.  To date, the Company has
operated as a switchless(1), nonfacilities-based reseller of long
distance services.  By committing to purchase large usage volumes
from carriers such as MCI/WorldCom, Inc. pursuant to contract
tariffs(2), the Company has been able to procure substantial
discounts and offer low-cost, high-quality long distance services to
its customers at rates below the current standard industry levels.
____________________
     1 Switchless resellers of long distance services do not utilize
       any of their own lines, or switching equipment.
     2 Contract tariffs are services and rates based on contracts
       negotiated with individual customers, but also available
       to all customers.


<PAGE>

The Company provides long distance telephone service under a variety
of plans.  These include outbound service, inbound toll-free 800
service and dedicated private line service(3) for data.  The Company
does not currently provide local telephone service.  The Company's
long distance services are billed on a monthly basis either directly
by the Company or by the Local Exchange Carrier(4) ("LEC") through
the services of Billing Concepts, Inc., dba U.S. Billing ("USBI").
If these services are billed directly by the Company, the customer
has a choice of paying by credit card or sending payment to the
Company.  If these services are billed by the LEC, the LEC is
responsible for collecting the amount billed and remitting the
proceeds to the Company.  The Company is also in the process of
purchasing a voice-over-IP ("VoIP")(5) technology network to
complement its long distance telecommunications services.  Please
refer to the Management's Discussion and Analysis section of this
document for further details.  In addition, the Company is also
exploring the possibility of providing local telephone service.
Whether the Company will be able to provide local telephone services
is dependent on its ability to negotiate contracts with third-party
providers of local telephone service on favorable terms.  The
Company has initiated negotiations with certain local telephone
providers but has not reached any agreements.  Therefore, there can
be no assurances that the Company will be able to offer local
telephone service.
____________________
     3 Private Line uses circuits dedicated to a specific customer
     to connect that customer's equipment to both ends of the line.
     4 A company providing local telephone service.
     5 Voice calls carried over a private (packet-switched) network
     of equipment using Internet protocol (codes) to route the messages.

<PAGE>

INTERNET RELATED SERVICES

The Company also recently began providing a variety of Internet
related services.  These services, available to both consumer and
business users, include prepaid calling cards at the Company's
ecallingcards.com web site; Internet Services Provider access
through dial-up(6), Digital Subscriber Line ("DSL")(7), and Wireless
T-1 methods(8) and Internet Web Page development and hosting
services(9).   The Company's Internet related services are billed
using the same methods as those used for billing its
Telecommunication services.  The Company's Internet related
services, with the exception of its prepaid calling cards, are
provided pursuant to contracts with third-party providers, who
remain competitors with the Company.  By contracting with
third-party providers to purchase large quantities of usage volumes,
the Company is able to secure significant discounts which then
allows the Company to offer these services to its end-users at rates
at or lower than its competitors.
____________________
     6 Modem access via traditional telephone lines.
     7 Digital Subscriber Line ("DSL") utilizes advanced technology
     to transmit data over copper lines at speeds up to 1,000 faster
     than Dial-Up service.
     8 Wireless T-1 services are Internet connections using
     microwave or radio frequencies, without the use of a cable
     connection, that can transfer data at speeds up to 1.5 million
     bits-per-second.
     9 Web Page Hosting services permits customers to market
     themselves on the Internet without having to invest significantly in
     technology infrastructure and operations staff.


<PAGE>


The Company's Internet Service Provider Access service is currently
provided on a nationwide basis.  Dial-up service provides unlimited
Internet access and several related services using conventional
modems at access speeds up to 56 kbps for a $9.95 monthly fee.  DSL
service provides a faster, more efficient method for communicating
digital data over telephone lines.  DSL speeds are significantly
faster than conventional modem speeds (up to 1.1 Mbps versus 56 kbps
for Dial-up service).  The monthly DSL service charge ranges from
$100 to $260 depending on speed and service options.  A one-time
set-up fee of $500 is also charged.

Currently, the Company's Wireless T-1 services are only available in
the Southern California region.  Wireless T-1 allows businesses to
utilize connections at 1.5 Mbps without contracting for T-1 service
from local telephone companies.  Wireless T-1 Service fees range
from $299 to $899 per month with a one-time set-up fee of $2,500.
The Company plans on expanding this service to include other
regions.  Whether the Company is able to provide its Wireless T-1
services to other regions depends on whether the Company will be
able to secure contracts with third-party suppliers on favorable
terms.  There can be no assurance that the Company will be able to
obtain such contracts and therefore be able to expand its Wireless
T-1 service to other regions.

The Company's Internet Web Page Hosting services are currently
available on a nationwide basis. Internet Web Page Hosting services
provides space on the Company's Web Server computers for customers
to publish their own Web Pages.  Internet Web Page Hosting fees are
$29.95 per month, with a one-time set-up fee of $29.95.

TELECOMMUNICATIONS INDUSTRY BACKGROUND

The $88.6 billion U.S. long distance industry is dominated by the
nation's three largest long distance providers, AT&T, MCI/WorldCom
and Sprint, which together generated approximately 80.3% of the
aggregate revenue of all U.S. long distance interexchange carriers
in 1997.  Other long distance companies, some with national
capabilities, accounted for the remainder of the market.

Based on published FCC estimates(10) toll service revenues of U.S.
long distance interexchange carriers have grown from $38.8 billion
in 1984 to $88.6 billion in 1997.  While industry revenues have
grown at a compounded annual rate of 6.6% since 1984, the revenues
of carriers other than AT&T, MCI/WorldCom and Sprint have grown at a
compounded rate of 33.7% during the same period.  As a result, the
aggregate market share of all interexchange carriers other than
AT&T, MCI/WorldCom and Sprint has grown from 2.6% in 1984 to 19.8%
in 1997.  During the same period, the market share of AT&T declined
from 90.1% to 44.5%.
____________________

     10  As published on the FCC's Website located at www.fcc.gov/
     Bureaus/Common_Carrier/Reports/FCC-State_Link/SOCC/97socc.pdf.

<PAGE>

Prior to the Telecommunications Act, signed by President Clinton on
February 8, 1996, the long distance telecommunications industry had
been principally shaped by a court decree between AT&T and the
United States Department of Justice, known as the Modification of
Final Judgment (the "Consent Decree") that in 1984 required the
divestiture by AT&T of its 22 Bell operating companies and divided
the country into some 200 Local Access and Transport Areas, or
"LATAs."  The 22 operating companies, which were combined into seven
Regional Bell Operating Companies, or "RBOCs", were given the right
to provide local telephone service, local access service to long
distance carriers and intraLATA toll service (service within LATAs),
but were prohibited from providing interLATA service (service
between LATAs).  The right to provide interLATA service was
maintained by AT&T and the other carriers.

To encourage the development of competition in the long distance
market, the Consent Decree and the FCC require most LECs to provide
all carriers with access to local exchange services that is equal in
type, quality and price to that provided to AT&T and with the
opportunity to be selected by customers as their preferred long
distance carrier.  These so-called equal access and related
provisions are intended to prevent preferential treatment of AT&T.

On February 8, 1996, the President signed the Telecommunications Act
(the "Act"), which is intended to introduce more competition to U.S.
telecommunications markets.  In addition to codifying the provisions
of the Consent Decree, the Act codifies the LEC's equal access and
nondiscrimination obligations with respect to the local services
market by requiring LECs to permit interconnection(11) to their
networks and establishing among other things, LEC obligations with
respect to access, resale, number portability(12), dialing
parity(13), access to rights-of-way(14), and mutual compensation.
In essence, the Act codifies the LEC's duty to provide to
independent service providers (such as the Company) access to the
LEC's network under the same terms and restrictions which the LEC is
subject to.  The Act allows the Company to compete with previously
established long distance and local telephone providers under the
same terms and conditions as those providers are subject to.
____________________
     11 Customer equipment (i.e. customer's telephone or modem)
which connects to the service provider's equipment.
     12  Number portability is the capability of individuals,
businesses, and organizations to retain their existing telephone
number(s)   and the same quality of service   when switching to a
new local service provider.
     13  The duty to provide dialing parity to competing providers
of telephone exchange service and telephone toll service, and the
duty to permit all such providers to have nondiscriminatory access
to telephone numbers, operator services, directory assistance, and
directory listing, with no unreasonable dialing delays
     14 The duty to afford access to the poles, ducts, conduits, and
rights-of-way of a LEC to competing providers of telecommunications
services on same rates and terms afforded to the LEC.


<PAGE>

Regulatory, judicial and technological factors have helped to create
the foundation for smaller companies to emerge as competitive
alternatives to AT&T, MCI/WorldCom and Sprint for long distance
telecommunications services.  The FCC requires that AT&T not
restrict the resale of its services, and the Consent Decree and
regulatory proceedings have ensured that access to LEC networks is,
in most cases, available to all long distance carriers.

DEVELOPMENT AND STRATEGY OF THE COMPANY

The Company's telecommunication services are currently licensed in
the states of Alabama, Arizona, Arkansas, California, Colorado,
Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa,
Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New
Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio,
Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South
Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington,
Washington D.C., West Virginia, Wisconsin, and Wyoming.  The Company
is in the process of obtaining licenses to provide its services in
the remaining states, except Alaska.  However, there can be no
assurances that the Company will be successful in obtaining such
licenses.

The Company markets its products and services using four methods.
The first of those methods is to do an aggressive concentrated media
campaign that utilizes a professional advertising agency.  The
Company launched its first media campaign on March 1, 1999 utilizing
television and radio advertisement and print media targeting
Southern California as well as nationwide audiences using cable
television advertisement.   The Company intends to continue to
utilize both broadcasting and print media campaigns in the future.
The Company incurred approximately $229,000 or 57.8% of its total
marketing expenditure of approximately $396,000 on this marketing
method for the fiscal year ending June 30, 1999.  The Company's
ability to continue such media campaigns in the future is dependent
upon the Company's ability to secure financing for such media
campaigns.  Therefore, there can be no assurances that it will be
able to continue to utilize such media campaigns in the future.

The second method of marketing the Company's products and services
is through outside telemarketing agencies.  The Company presently
utilizes the services of two telemarketing firms.  These firms are
paid on a commission only basis and operate on a nationwide basis.
The Company estimates that it will cost an average of thirty-five
dollars ($35.00) to obtain each customer using this method, while
the average customer generates two hundred and forty dollars
($240.00) in revenue per year.  As of June 30, 1999, these companies
have generated 1,600 customers for the Company's telecommunications
services.  The Company incurred approximately $22,000 or 5.6% of its
total marketing expenditures of approximately $396,000 on this
marketing method for the fiscal year ending June 30, 1999.

The third method of marketing the Company's products and services
utilizes its own sales force and independent sales agents working on
its behalf.  The sales force will consist of properly trained
professionals within the industry that are currently looking for an
opportunity to sell at rates that are lower than the industry
standard.  Many of these professionals will come from companies such
as MCI/WorldCom, LCI International, TelCo and Frontier
Communications where the average calling rate is 10-12 cents per
minute.  The Company hired a V.P. of Sales from MCI/WorldCom with an
extensive sales and marketing background in the telecommunications

<PAGE>

industry.  In addition, the Company has already engaged in
discussions with many potential representatives to work for the
Company based on commission-only (8% to 10% of collected billings)
compensation packages.  However, there can be no assurances that the
Company will be successful in retaining its in-house sales force or
in acquiring independent sales agents to work on its behalf at the
commission-only compensation packages described.  The Company
incurred approximately $102,000 or 25.8% of its total marketing
expenditures of approximately $396,000 on this marketing method for
the fiscal year ending June 30, 1999.

The fourth method of marketing the Company's products and services
utilizes the Internet.  The Company currently markets and
distributes its Telecommunications and Internet related services
through the Internet utilizing its gtctelecom.com and
ecallingcards.com web pages.  The Company also plans to market
international calling plans, co-brand calling cards and advertise
domestic long distance rates on the Internet through joint
agreements such as its agreement with Community Connect Inc.'s
online community for Asian Americans, AsianAvenue.com.  There can be
no assurances that such joint agreements will continue or that the
Company will be able to develop such joint agreements in the future.
 The Company incurred approximately $43,000 or 10.8% of its total
marketing expenditures of approximately $396,000 on this marketing
method for the fiscal year ending June 30, 1999.

The Company believes these four marketing methods will be adequate
to sustain the Company now and for the foreseeable future.

COMPETITION

Telecommunication Services

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.  Competition in the long
distance business is based upon pricing, customer service, billing
services and perceived quality.  The Company competes against
various national and regional long distance carriers that are
composed of both facilities-based providers and switchless resellers
offering essentially the same services as the Company.  Several of
the Company's competitors are substantially larger and have greater
financial, technical and marketing resources.  The Company believes
that it is able to compete with these competitors by providing high
quality service at the lowest price possible.

The Company believes that the pricing strategies and cost structures
of the major long distance carriers have resulted historically in
their charging higher rates to the small-to-medium sized business
customer.  Small-to- medium-sized business customers typically are
not able to make the volume commitments necessary to negotiate
reduced rates under individualized contracts.  By committing to
large volumes of traffic, the Company is guaranteeing traffic to the
major long distance carrier while relieving the major long distance
carrier of the administrative burden of qualifying and servicing
large numbers of small to medium-sized accounts.  To be successful,
the Company believes that it must have lower overhead costs and be
able to efficiently market the long distance product, process
orders, verify credit and provide customer service to a large number
of accounts.  Although the Company believes it has human and
technical resources to pursue its strategy and compete effectively
in this competitive environment, its success will depend upon its
continued ability to profitably provide high quality, high value
services at prices generally competitive with, or lower than, those
charged by its competitors.  There can be no assurances that the
Company will be able to compete successfully in these markets.

The Company currently links its switching equipment with
transmission facilities and services purchased or leased from
MCI/WorldCom and will continue to resell services obtained from
MCI/WorldCom, which will remain a competitor of the Company for the
provision of telecommunications services.  However, there can be no
assurances that the Company will be able to continue to provide its
telecommunication services through MCI/WorldCom.

In a continual effort to lower the costs of its services, the
Company has entered into a contract with the Williams Company to
acquire its own nationwide long distance and Internet Network based
on VoIP technology.  Please refer to the Management's Discussion and
Analysis of Operations section of this document for further details.
 The Company believes that by developing its own network, the
Company will be able to substantially lower the transmission costs
of its telecommunication services.

<PAGE>

The Telecommunications Act is intended to introduce more competition
to U.S. telecommunications markets.  The legislation opens the local
services market by requiring LECs to permit interconnection to their
networks and establishing, among other things, LEC obligations with
respect to access, resale, number portability, dialing parity,
access to rights-of-way and mutual compensation.  The legislation
also codifies the LECs' equal access and nondiscrimination
obligations and preempts most inconsistent state regulation.  The
legislation also contains special provisions that eliminate
restrictions on the RBOCs providing long distance services, which
means that the Company will face competition for providing long
distance services from well capitalized, well known companies that
prior to this time could not compete in long distance service.

The RBOCs have been prohibited from providing interLATA
interexchange telecommunications services under the terms of the
AT&T decree.  The Telecommunications Act authorizes the RBOCs to
provide certain interLATA interexchange telecommunications services
immediately and others upon the satisfaction of certain conditions.
Such legislation includes certain safeguards against anticompetitive
conduct by the RBOCs in the provision of interLATA service.
Anticompetitive conduct could result from, among other things, a
RBOC's access to all subscribers on its existing network as well as
its potentially lower costs related to the termination and
origination of calls within its territory.  It is impossible to
predict whether such safeguards will be adequate to protect against
anticompetitive conduct by the RBOCs and the impact that any
anticompetitive conduct would have on the Company's business and
prospects.  Because of the name recognition that the RBOCs have in
their existing markets and the established relationships that they
have with their existing local service customers, and their ability
to take advantage of those relationships, as well as the possibility
of favorable interpretations of the Telecommunications Act by the
RBOCs, it may be more difficult for other providers of long distance
services, such as the Company, to compete to provide long distance
services to RBOC customers.  At the same time, as a result of the
Telecommunications Act, RBOCs have become potential customers for
the Company's long distance services.

Internet Related Services

The market for Internet-based online services is relatively new,
intensely competitive and rapidly changing. Since the advent of
commercial services on the Internet, the number of Internet Service
Providers and online services competing for users' attention and
spending has proliferated because of, among other reasons, the
absence of substantial barriers to entry, and the Company expects
that competition will continue to intensify.  Many of the Company's
current and potential competitors such as Earthlink, PsiNet, AOL,
UUNET, Microsoft Network, and Prodigy have longer operating
histories, larger customer bases, greater brand recognition and
significantly greater financial, marketing and other resources.
These competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements and to
devote greater resources to the development, promotion and sale of
their products and services than the Company.

The Company believes that its Internet Related Services are marketed
at competitive rates and provide quality and services comparable to
its competitors.  However, the Company's Internet Related Services
are intended to be a value-added service to attract customers to the
Company's Telecommunication Services as opposed to a
revenue-generating service.  The Company offers unlimited dial-up
service for $9.95 per month.  The Company anticipates that revenue
generated exclusively from the Company's Internet Related Services
will be immaterial to the Company's results of operations.  Rather,
the Company expects to derive sufficient revenue from its
Telecommunication Services and Internet related advertising revenue
to pay for the costs of its Internet Related Services.

In a continual effort to lower the costs of its services, the
Company has entered into an agreement with the Williams Company to
acquire its own nationwide long distance and Internet Network based
on VoIP technology.  Please refer to Management's Discussion and
Analysis of Operations section of this document for further details.
 The Company believes that by developing its own network, the
Company will be able to substantially lower the acquisition costs of
its Internet services.

CUSTOMER ATTRITION

The Company believes that a high level of customer attrition is a
characteristic of the domestic residential long distance and
Internet related industries.  Attrition is attributable to a variety
of factors, including the termination of customers by the Company
for non-payment and the initiatives of existing and new competitors
as they engage in, among other things, national advertising
campaigns, telemarketing programs and the issuance of cash or other
forms of incentives.  Such attrition could have a material adverse
effect upon the Company's future results of operations and financial
conditions.

<PAGE>

DEPENDENCE ON KEY CUSTOMERS

The Company is not dependent on any single customer for a
significant portion of its annual sales.  The Company's customer
base changes on a continuous basis as new customers are added or old
customers removed.

MAJOR SUPPLIERS

The Company does not own its own long distance network, and pursuant
to the Company's contract with MCI/WorldCom, the Company currently
depends primarily upon MCI/WorldCom to provide for the transmission
of phone calls by its customers and to provide the call detail
records upon which the Company bases its customers billings.  Under
the terms of the three-year contract entered into with MCI/WorldCom
on August 10, 1998 the Company is obligated to a minimum monthly
commitment of $10,000 which commenced March 1999.  The contract
expires on September 30, 2001.  Pursuant to the terms of the
contract with MCI/WorldCom, the Company must pay liquidated damages
in an amount equal to the aggregate minimum revenue requirement for
the remaining term of the contract if the Company terminates the
contract prior to the expiration date.  Although the Company
believes that its relations with MCI/WorldCom are strong and should
remain so with continued contract compliance, the termination of the
Company's contract with MCI/WorldCom, the loss of telecommunications
services provided by MCI/WorldCom, or a reduction in the quality of
service the Company receives from MCI/WorldCom could have a material
adverse effect on the Company's results of operations.  In addition,
the accurate and prompt billing of the Company's customers is
dependent upon the timeliness and accuracy of call detail records
provided to the Company by MCI/WorldCom.

In the event that MCI/WorldCom were to discontinue its service to
the Company, the Company believes, based upon discussions that the
Company has had with other long distance providers and based on such
providers' published contract tariffs, that it could negotiate and
obtain contracts with other long distance providers to resell long
distance services at rates at its current contract tariffs with
MCI/WorldCom.  If the Company were to enter into contracts with
another provider, however, the Company believes it would take
approximately thirty (30) days to switch end users to that provider.
Although the Company has the right to switch its current customers
to an alternate underlying carrier, the Company's customers have the
right to discontinue their service with the Company at any time.
Accordingly, the termination or non-renewal of the Company's
contract tariffs with MCI/WorldCom or the loss of telecommunications
services from MCI/WorldCom would likely have a material adverse
effect on the Company's results of operations and financial
condition.  In an effort to minimize the Company's dependence on
MCI/WorldCom, the Company has entered into a contract with the
Williams Company to acquire its own nationwide long distance and
Internet Network based on VoIP technology.  Please refer to the
Management's Discussion and Analysis of Operations section of this
document for further details.

GTC does not have its own Internet Network.  The Company currently
provides Internet Service Provider Access services pursuant to a
one-year agreement with Level 3 Communications, LLC ("Level 3") to
provide its Internet Service Provider Access.  The agreement, which
began in July 1999, provides for GTC to initially pay $36,000 per
month with an initial set-up fee of $8,000.  As Level 3 is able to
provide service throughout the nation, the Company's monthly minimum
commitment will increase from $36,000 per month to a maximum of
$60,750 per month.  In addition, GTC is committed to pay an
additional set-up fee of up to $5,500.  Although the Company
believes that its relations with Level 3 are strong and should
remain so with continued contract compliance, the termination of the
Company's contract with Level 3, the loss of Internet services
provided by Level 3, or a reduction in the quality of service the
Company receives from Level 3 could have a material adverse effect
on the Company's results of operations.

Prior to using Level 3, the Company's Internet Service Provider
Access services was provided through Epoch Networks, Inc. dba Epoch
Internet ("Epoch").  Under the terms of the three year contract with
Epoch dated February 3, 1999, GTC was obligated to an initial
monthly minimum commitment of $0.00  increasing to $25,000
per month over a seven month ramp up period beginning March 1, 1999
to September 1, 1999 and thereafter until the end of the contract
period ending on February 28, 2002.  Pursuant to the terms of the
contract with Epoch, GTC must pay liquidated damages in an amount
equal to the aggregate minimum commitment for the remaining
term of the contract if GTC terminates the contract prior to the
expiration date.  In July 1999, GTC decided to switch its Internet
Service Provider Access supplier from Epoch to Level 3.  Management
determined that the cost per customer using Level 3 is approximately
$3.00 versus $13.00 per customer using Epoch.  Additionally, the
Company believed that the services provided by Level 3 are superior
to those provided by Epoch.

<PAGE>

As a result of this decision, GTC is currently in the process of
negotiating the termination of its agreement with Epoch.  Management
of the Company does not believe that the result of these negotiations
will have a material impact on the Company's financial position or
results of operations.

The Company's Wireless T-1 services are currently provided pursuant
to a contract with Global Pacific Internet  ("Global").  Currently,
the Company's T-1 services are available only in the Southern
California region.  Under the terms of its contract with Global, the
Company is not subject to a monthly minimum commitment.
Although the Company believes that its relations with Global are
strong and should remain so with continued contract compliance, the
loss of Wireless T-1 services provided by Global, or a reduction in
the quality of service the Company receives from Global could have a
material adverse effect on the Company' s results of operations.
The Company anticipates that it would take between thirty (30) to
sixty (60) days to locate a replacement supplier in the event that
the Company's agreement with Global is terminated.  The Company
currently plans to expand its Wireless T-1 services to other
regions.  However, there can be no assurances that the Company will
or will be able to expand this service to other regions.

Previously, the Company's Internet Web Page Development service was
provided pursuant to contracts with Service One Communications, Inc.
("Service One") and OhGolly.com, Inc. ("OhGolly").  Web Pages
developed by Service One and OhGolly.com are housed within the
Company's own computer servers.  On May 21, 1999, the Company
terminated its contracts with Service One and OhGolly.com for
non-performance of Service One and OhGolly's duties under the
contract.  Under the terms of the contracts, the Company is not
obligated to pay Service One or OhGolly any additional sums beyond
the termination of the contracts.  The Company anticipates that it
will require between thirty (30) to sixty (60) days to locate a
replacement supplier.  Until the Company is able to locate a
replacement supplier, it will not be able to develop additional Web
Pages.  Current Web Page Hosting users, however, are unaffected by
the termination of the Company's agreements with Service One and
OhGolly.  As the Company considers its Web Page Development service
to be only a value- added service to attract customers to its
Telecommunication Services as opposed to a material revenue-
generating service, the Company does not anticipate that the
termination of its contracts with Service One and OhGolly will have
a material adverse effect on the Company's results of operations.

REGULATION

The Company's provision of communications services is subject to
government regulation.  Federal law regulates interstate and
international telecommunications, while states have jurisdiction
over telecommunications that originate and terminate within the same
state.  Changes in existing policies or regulations in any state or
by the FCC could materially adversely affect the Company's financial
condition or results of operations, particularly if those policies
make it more difficult for the Company to obtain service from
MCI/WorldCom or other long distance companies at competitive rates,
or otherwise increase the cost and regulatory burdens of marketing
and providing service.  There can be no assurance that the
regulatory authorities in one or more states or the FCC will not
take action having an adverse effect on the business or financial
condition or results of operations of the Company.

Federal

The Company is classified by the FCC as a nondominant carrier.
After the recent reclassification of AT&T as nondominant, only the
LECs are classified as dominant carriers among domestic carriers.
Because AT&T is no longer classified as a dominant carrier, certain
pricing restrictions that formerly applied to AT&T have been
eliminated, which could make it easier for AT&T to compete with the
Company for low volume long distance subscribers.  The FCC generally
does not exercise direct oversight over charges for service of
nondominant carriers, although it has the statutory power to do so.
Nondominant carriers are required by statute to offer interstate
services under rates, terms, and conditions that are just,
reasonable and not unreasonably discriminatory.  The FCC has the
jurisdiction to act upon complaints filed by third parties, or
brought on the FCC's own motion, against any common carrier,
including nondominant carriers, for failure to comply with its
statutory obligations.  Nondominant carriers are required to file
tariffs listing the rates, terms and conditions of service, which
are filed pursuant to streamlined tariffing procedures.  The FCC
also has the authority to impose more stringent regulatory
requirements on the Company and change its regulatory classification
from nondominant to dominant.  In the current regulatory atmosphere,
the Company believes, however, that the FCC is unlikely to do so.

<PAGE>

The FCC imposes only minimal reporting requirements on nondominant
resellers, although the Company is subject to certain reporting,
accounting and record-keeping obligations.  Both domestic and
international nondominant carriers, including the Company, must
maintain tariffs on file with the FCC.

At present, the FCC exercises its regulatory authority to set rates
primarily with respect to the rates of dominant carriers, and it has
increasingly relaxed its control in this area. Even when AT&T was
classified as a dominant carrier, the FCC most recently employed a
"price cap" system, which essentially exempted most of AT&T's
services, including virtually all of its commercial and 800
services, from traditional rate of return regulation because the FCC
believes that these services were subject to adequate competition.

State

The Company is subject to varying levels of regulation in the states
in which it currently anticipates providing intrastate
telecommunications services.  The vast majority of the states
require the Company to apply for certification to provide intrastate
telecommunications services, or at least to register or to be found
exempt from regulation, before commencing intrastate service.  The
vast majority of states also require the Company to file and
maintain detailed tariffs listing its rates for intrastate service.
Many states also impose various reporting requirements and/or
require prior approval for transfers of control of certified
carriers, corporate reorganizations, acquisitions of
telecommunications operations, assignments of carrier assets,
including subscriber bases, carrier stock offerings and incurrence
by carriers of significant debt obligations.  Certificates of
authority can generally be conditioned, modified, canceled,
terminated or revoked by state regulatory authorities for failure to
comply with state law and the rules, regulations and policies of the
state regulatory authorities.  Fines and other penalties, including
the return of all monies received for intrastate traffic from
residents of a state, may be imposed for such violations.  In
certain states, prior regulatory approval may be required for
acquisitions of telecommunications operations.

As the Company expands its efforts to resell long distance services,
the Company will have to remain attentive to relevant federal and
state regulations.  FCC rules prohibit switching (also commonly
known as "Slamming") of a consumer's long distance provider without
the consumer's consent.  However, this does not apply to the
switching of the Company's underlying carrier for its existing
customers.  The rules also specify how that consent can be obtained.
 Most states have consumer protection laws that further define the
framework within which the Company's marketing activities must be
conducted.  The Company intends to comply fully with all laws and
regulations, and the constraints of federal and state restrictions
could impact the success of direct marketing efforts.

The Company is not currently subject to any State or Federal
regulation with respect to its Internet related services.  However,
there can be no assurances that the Company will not be subject to
such regulations in the future.  Additionally, the Company is not
aware of any pending legislation that would have a material adverse
effect on the Company's operations.

PATENTS, TRADEMARKS, LICENSES

The Company does not depend upon any patents or trademarks to
conduct its business; nor does the Company hold any such patents or
trademarks.  The Company is required to hold licenses with the
Federal Communication Commission for the operation of its
telecommunication services.  The Company is also required to hold
licenses in the states in which it provides intrastate long distance
services.  Currently, the Company is licensed in 46 states and the
District of Columbia to provide intrastate services.  The Company's
federal and state telecommunication licenses are of indefinite
length and will remain effective so long as the Company complies
with all Federal and State regulations.

The Company is currently in the process of securing licenses for
operation of its telecommunication services in the remainder of the
United States, except Alaska.  The Company's ability to obtain
licenses in the remaining states is dependent on the Company's
ability to meet each state's specific guidelines.  Although the
Company anticipates that it will able to secure licenses in these
states, there can be no assurances that the Company will be
successful in obtaining such licenses.

<PAGE>

COST OF COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

The Company currently has no costs associated with compliance with
environmental regulations.  However, there can be no assurances that
the Company will not incur such costs in the future.

NUMBER OF EMPLOYEES

As of September 30, 1999, the Company employed approximately 26
people on a full time basis.

ITEM 2.  DESCRIPTION OF PROPERTY

Effective June 1, 1998, the Company began leasing approximately
2,712 square feet of administrative office space in Costa Mesa,
California at a monthly rental rate of $5,017 per month.  This
facility serves as the Company's headquarters and primary place of
business.  The monthly rental rate increased to $5,560 on June 1,
1999, through the end of the lease.  The lease expires on May 31,
2001.

In addition, on February 8, 1999, the Company entered into a
month-to-month lease for approximately 1,987 square feet of office
space for its customer service operation, at a monthly rental rate
of $3,676 per month, at its headquarters building in Costa Mesa.

On September 23, 1999, the Company entered into an addendum to its
existing June 1, 1998 lease.  This addendum replaces the February 8,
1999 lease for its customer service operation.  Beginning October 1,
1999, the revised lease obligates the Company to an additional
month-to-month lease for approximately 2,973 square feet for its
customer service operation, a monthly rental rate of $ 6,095 per
month and for the Company to pay the first three months rent.  This
addendum is coterminous with the Company's June 1, 1998 lease and
will automatically expire on May 31, 2001, unless previously
terminated by the Company or by Lessor given ninety (90) days
written notice.

Due to anticipated growth, the Company is in the process of looking
for new space for its headquarters and customer service operations.
The Company believes that it will be able to locate such space at
reasonable rates and terms.

ITEM 3.  LEGAL PROCEEDINGS

The Company may from time to time be involved in various claims,
lawsuits, disputes with third parties, actions involving allegations
of discrimination, or breach of contract actions incidental to the
operation of its business.  The Company is not currently involved in
any such litigation which it believes could have a materially
adverse effect on its financial condition or results of operations.

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

There were no matters submitted to a vote of security holders during
the fourth quarter of the year ended June 30, 1999.





<PAGE>


                               PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS

MARKET INFORMATION

The following table sets forth the high and low bid prices for
shares of the Company Common Stock for the periods noted, as
reported by the National Daily Quotation Service and the NASDAQ
Bulletin Board.  Quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.  The Company's Common Stock was not listed on the
NASDAQ Bulletin Board during 1997.  On April 21, 1998, the Company's
Common Stock began listing on the NASDAQ exchange under the trading
symbol BBRI.  However, the Company's Common Stock did not begin
trading until after the Company merged with GenTel on August 31,
1998 wherein the trading symbol for the Company's Common Stock
changed to GTCC.


              CALENDAR                                    BID PRICES
                YEAR            PERIOD                   HIGH     LOW

                1998            First Quarter. . . . .   n/a      n/a
                                Second Quarter . . . .   n/a      n/a
                                Third Quarter. . . . .   4.75     4.50
                                Fourth Quarter . . . .   4.41     3.33

                1999            First Quarter. . . . .   11.125   3.25
                                Second Quarter . . . .   8.625    3.56
                                Third Quarter. . . . .   4.9375   2.00

On October 1, 1999, the last sales price per share of the Company's
common stock, as reported by the NASDAQ Stock Market, was $4 1/8.

NUMBER OF SHAREHOLDERS

The number of beneficial holders of record of the Common Stock of
the Company as of the close of business on September 30, 1999 was
approximately 190.  Many of the shares of the Company's Common Stock
are held in a "street name" and consequently reflect numerous
additional beneficial owners.

DIVIDEND POLICY

To date, the Company has declared no cash dividends on its Common
Stock, and does not expect to pay cash dividends in the next term.
The Company intends to retain future earnings, if any, to provide
funds for operation of its business.

RECENT SALES OF UNREGISTERED SECURITIES

On August 31, 1998, the Company (which at the time was designated
Bobernco, Inc., a Nevada corporation  ("Bobernco")) acquired all of
the outstanding common stock of GenTel Communications, Inc., a
Colorado corporation ("GenTel") in a business combination described
as a "reverse acquisition".  As part of the reorganization, the
Company issued 8,986,950 shares of its Common Stock to the
shareholders of GenTel in exchange for all of the outstanding shares
of Common Stock of GenTel.  Such shares include the shares owned by
officers and directors of the Company as set forth in the Section
"Security Ownership of Certain Beneficial Owners and Management"
hereunder.  This issuance was conducted under an exemption under
Section 4(2) of the Securities Act of 1933.

<PAGE>

In August 1998, the Company issued 6,000 and 5,000 shares of
"restricted" (as that term is defined under Rule 144 of the
Securities Act of 1933) Common Stock to Azad Rob and Elizabeth
Hurtado, respectively, two (2) employees of the Company, in lieu of
salary and as a retention bonus valued at $2,850 for Mr. Rob and
$2,375 for Ms. Hurtado.  This issuance was conducted under an
exemption under Section 4(2) of the Securities Act of 1933.

In September and November of 1998 and June 1999, the Company issued
1,417,008 shares of "restricted" Common Stock to the Michelson
Group, pursuant to a Corporate Development Agreement entered into
between the Company and the Michelson Group.  See Item 12 - Certain
Relationships and Related Transactions.  This issuance was conducted
under an exemption under Section 4(2) of the Securities Act of 1933.

In November 1998, the Company issued 7,300 shares of its Common
Stock valued at $32,850 to MRC Legal Services Corp., the Company's
securities counsel, under Rule 504 of Regulation D promulgated under
the Securities Act of 1933, in consideration for legal services
rendered.

In November 1998, the Company issued 50,000 shares of "restricted"
Common Stock valued at $50,000 to Dan W. Baer in consideration for
deferment of rent owed by the Company from July 1998 to November
1998 for its headquarters in Costa Mesa, CA.  The Company was
required to pay a total of $27,769 in deferred rent in three
payments beginning on November 19, 1998 through January 4, 1999 in
addition to its regular rent due each month under its lease.  All
payments of deferred rent have been made under the terms of the
agreement.  This issuance was conducted under an exemption under
Section 4(2) of the Securities Act of 1933.

In November 1998, the Company issued 40,000 shares of "restricted"
Common Stock to Benjamin Abelson pursuant to a convertible note
entered into between the Company and Mr. Abelson in the amount of
$80,000.  This issuance was conducted under an exemption under
Section 4(2) of the Securities Act of 1933.

In December 1998, the Company issued 30,000 shares of "restricted"
Common Stock valued at $30,000 to Lance Steinhart, Esq., the
Company's Federal Communication Commission regulatory counsel, an
accredited investor, in consideration for legal services rendered.
The issuance was exempt under Section 4(2) of the Securities Act of
1933.

In January 1999, the Company issued 8,750 shares of its Common Stock
valued at $43,750 to MRC Legal Services Corp., the Company's
securities counsel, under Rule 504 of Regulation D promulgated under
the Securities Act of 1933, in consideration for legal services
rendered.

In February 1999, the Company issued 7,000 shares of "restricted"
Common Stock valued at $7,000 to MRC Legal Services Corp., the
Company's securities counsel, in consideration for legal services
rendered.  The issuance was exempt under Rule 506 of Section 4(2) of
the Securities Act of 1933.

In February 1999, the Company completed a private placement offering
of 1,558,500 (including 23,500 issued as offering costs) shares of
the Company's "restricted" Common Stock under Rule 506 of Regulation
D and Section 4(2) of the Securities Act of 1933 to "accredited"
investors at a price of $1.00 per share, resulting in net proceeds
to the Company of approximately $1,215,947, net of offering costs of
$319,053.

In February 1999, the Company issued 46,000 shares of "restricted"
Common Stock valued at $46,000 to Elwood Sprenger in accordance with
a consulting Agreement entered into between the Company and Mr.
Sprenger whereby the Company agreed to grant Mr. Sprenger 150,000
options to purchase the Company's Common Stock at an exercise price
of $1.00 per share.  See Item 12 - Certain Relationships and Related
Transactions.  The issuance was exempt under Section 4(2) of the
Securities Act of 1933.

In March 1999, the Company issued 25,000 shares of "restricted"
Common Stock valued $25,000 to the Zomaya Group in exchange for
advertising services.  The issuance was exempt under Section 4(2) of
the Securities Act of 1933.

In March 1999, the Company issued 50,000 shares of "restricted"
Common Stock valued $50,000 to Transglobal Capital Corporation
("Transglobal"), pursuant to an Investment Banking Agreement entered
into between the Company and Transglobal.  The issuance was exempt
under Section 4(2) of the Securities Act of 1933.

In April 1999, Transglobal exercised their option to purchase
600,000 shares of "restricted" Common Stock at $0.01 per share
pursuant to the Company's option agreement with Transglobal.
See Item 12 - Certain Relationships and Related Transactions.
The issuance was an isolated  transaction not involving a public
offering pursuant to section 4(2) of the Securities Act of 1933.

<PAGE>

In May 1999, the Company issued 526,316 shares of "restricted"
Common Stock to Clay T. Whitehead, a director of the Company,
pursuant to an option agreement entered into between the Company and
Mr. Whitehead in April 1999. In May 1999, Mr. Whitehead exercised
all 526,316 options at an exercise price of $0.475 per share.  As a result
of the option agreement, a total of approximately $352,632 of
compensation expense was recorded at the date of grant in April
1999.  The issuance was exempt under Section 4(2) of the Securities
Act of 1933.

In late March 1999, the Company initiated a private placement
offering of 1,000,000 shares of the Company's "restricted" Common
Stock at a price of $5.00.  As of April 15, 1999, the Company had
not received any offers for subscriptions to this private offering.
The Company believes that no offers were received primarily due to
the fact that the Company's "free trading" common stock had been
trading at a price close to the $5.00 per share price of the private
offering as of late March 1999.

On April 21, 1999, the Company replaced its $5.00 per share offering
with a private placement offering of 2,000,000 shares of the
Company's "restricted" Common Stock at a price of $3.00 per share.
The Company anticipated that this Private Offering would raise
approximately $5,220,000, net of issuance costs paid for brokers and
finder's fees, should the total offering be sold.

At June 30, 1999, the Company had sold only 41,000 shares of its
Common Stock pursuant to it's $3.00 private offering.  Due to
insufficient interest, the Company decided to replace its $3.00 private
offering.  On July 20, 1999, the Company replaced its $3.00 offering
with a private placement offering (the "Private Offering") of
2,000,000 shares of the Company's "restricted" (as that term is
defined by Rule 144 of the Securities Act of 1933) Common Stock at a
price of $1.00.  Purchasers of the Company's $3.00 private offering
received additional shares of the Company's "restricted" common stock
so as to reduce their purchase price to that of the $1.00 private
offering.  The Company has accounted for 123,000 shares as of June
30, 1999.

In September 1999, the Company issued 50,000 shares of "restricted"
Common Stock valued at $50,000 to Dan Baer in consideration for
deferment of rent owed by the Company from April 1999 to September
1999 for its headquarters and customer service operations in Costa
Mesa, CA.  The Company was required to pay a total of $42,360
deferred rent in nine payments beginning January 1, 2000 through
September 1, 2000 in addition to its regular rent due each month
under its lease.  The issuance was an isolated transaction not
involving a public offering pursuant to section 4(2) of the
Securities Act of 1933.

In September 1999, the Company issued 15,000 shares of "restricted"
Common Stock valued at $15,000 to the Cutler Law Group, the
Company's securities counsel in exchange for legal services
rendered.  The issuance was an isolated transaction not involving a
public offering pursuant to section 4(2) of the Securities Act of 1933.

In September 1999, the Company issued an aggregate of 67,675 shares
to seven consultants of the Company and the Cutler Law Group, the
Company's securities counsel, in exchange for consultation and legal
services provided to the Company valued at approximately $271,000.
The transactions were isolated transactions not involving a public
offering pursuant to Section 4(2) of the Securities Act of 1933.
These shares were subsequently registered on Form S-8 filed with the
Securities and Exchange Commission on October 6, 1999.

As of September 30, 1999, the Company has sold an aggregate of
783,000 shares to 23 "accredited" investors under an ongoing Private
Offering of 2,000,000 shares of the Company's Commons Stock at a
price of $1.00 per share.  The offering was conducted without
general solicitation or advertising and offered only to "accredited"
investors pursuant to Rule 506 of Regulation D of the Securities Act
of 1933.  The sales resulted in proceeds to the Company of
approximately $688,890, net of offering costs of $94,110.

<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion contains certain forward-looking statements
that are subject to business and economic risks and uncertainties,
and the Company's actual results could differ materially from those
forward-looking statements.  The following discussion regarding the
financial statements of the Company should be read in conjunction
with the financial statements and notes thereto.

GENERAL OVERVIEW

The Company's principal line of business is to provide long distance
telephone and value-added services for small and medium-sized
businesses and residential customers throughout the United States.
The Company's strategy has been to build a subscriber base without
committing capital or management resources to construct its own
network and transmission facilities.  This strategy has allowed the
Company to add customers without being limited by capacity,
geographic coverage, or configuration of any particular network that
the Company might have developed.  In order to remain competitive,
the Company believes that it must continue to offer its services at
the lowest possible rates.  The Company believes that in order to
continue to offer lower rates, as well as reduce its dependency on
major suppliers, the Company will need to acquire its own network.
As a result, the Company has entered into a contract with Williams
Communications to design, install and maintain a voice-over-IP
network for the Company.  Please refer to Capital Expenditures-VoIP
Network in this section for further details.  Management believes
that the creation of such a network will allow it to continue to
offer its telecommunication and Internet services below the industry
average.

Recently, the Company began providing a number of Internet related
services such as: the sale of electronic calling cards on its
ecallingcards.com web site; Internet access via Dial-Up, Wireless
T-1, and DSL; and Internet Web Page Hosting services.

The Company's services are marketed nationwide through broadcasting
and print media, telemarketing, independent sales agents and its own
sales force.

The Company's revenues consist of sales from telecommunication and
Internet related services.  These revenues are generated when
customers make long distance telephone calls from their business or
residential telephones or by using the Company's telephone calling
cards.  Proceeds from prepaid telephone calling cards are recorded
as deferred revenues when the cash is received and recognized as
revenue as the telephone service is utilized.  The reserve for
deferred revenues is carried on the balance sheet as an accrued
liability.  Internet related services are typically billed in
advance at a flat rate.  Revenues are recognized in the period
earned.

Cost of Sales includes telecommunications service costs and
commissions and verification costs paid for customer acquisition.
Telecommunications service costs paid by the Company are based on
the Company's customers' long distance usage.  The Company pays its
carriers based on the type of call, time of call, duration of call,
the terminating telephone number, and terms of the Company's
contract in effect at the time of the call.  General and
administrative expenses consist of the cost of customer service,
billing, cost of information systems and personnel required to
support the Company's operations and growth.

The Company, depending on the extent of its future growth, may
experience significant strain on its management, personnel, and
information systems.  The Company will need to implement and improve
operational, financial, and management information systems.  In
addition, the Company is implementing new information systems that
will provide better record-keeping, customer service and billing.
However, there can be no assurance that the Company's management
resources or information systems will be sufficient to manage any
future growth in the Company's business, and the failure to do so
could have a material adverse effect on the Company's business,
results of operations and financial condition.

In 1998, the Company determined to change its fiscal year to June
30.  As previously discussed, the Company acquired all of the
outstanding common stock of GenTel on August 31, 1998.  Following
the acquisition, the Company adopted the business plan of GenTel and
changed its name to GTC.

<PAGE>

RESULTS OF OPERATIONS OF THE COMPANY

The following discussion assumes that the acquisition of GenTel by
the Company occurred as of June 30, 1997.

Prior to the acquisition of GenTel by the Company, the Company had
no revenues or expenses for the fiscal year ended December 31, 1996
or the six-month period ended June 30, 1997.

FISCAL YEAR ENDED JUNE 30, 1999 COMPARED TO FISCAL YEAR ENDED JUNE
30, 1998

REVENUES - Revenues totaled $289,012 and $497,312 for the years
ended June 30, 1999 and 1998, respectively.  During the year ended
June 30, 1999, the Company began selling its services pursuant to
its business plan which resulted in revenues comprised primarily of
$183,116 for web development and hosting and $105,896 from
telecommunication services.  For the year ended June 30, 1998, the
Company's revenues were derived solely from the one-time bulk sale
of long distance calling cards in February 1998.  Pursuant to the
Company's newly adopted business plan for its telecommunication
services, the Company began to acquire telecommunication customers,
primarily through the use of telemarketing.  For the year ended June
30, 1999, the Company had approximately 2,023 telecommunication
customers, with usage of long distance services of approximately
1,709,000 minutes.

COST OF SALES - Cost of sales totaled $163,740 and $447,312 for the
years ended June 30, 1999 and 1998, respectively.  Cost of sales for
the year ended June 30, 1999 were comprised primarily of carrier
costs of $99,913, associated with the cost of long distance service
provided by MCI/WorldCom, $22,227 for commissions paid for customer
acquisition and $41,600 for the cost of third party verification on
its newly acquired customers.  Cost of sales for the year ended June
30, 1998 was comprised of the cost of acquiring the long distance
calling cards for its one-time bulk sale in February 1998.  As a
percentage of revenue, cost of sales was 56.7% and 89.9% resulting
in a gross margin of 43.3% and 10.1% for the years ended June 30,
1999 and 1998, respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative ("S,G&A") expenses totaled $3,489,685 and $582,087,
for the years ended June 30, 1999 and 1998 respectively.  For the
year ended June 30, 1999, the Company began to realize sales from
its telecommunications customers, thereby resulting in significantly
increased S,G&A expenses.  S,G&A expenses for the year ended June
30, 1999 were comprised primarily of options valued at approximately
$352,632 granted to a director of the Company; advertising expenses
of $271,916; options valued at $595,998 issued to an investor
relations company ($522,500) and a marketing company ($73,498) in
exchange for services; shares valued at approximately $238,600
issued to vendors in exchange for services and rent; provision for
bad debts of approximately $268,200; stock and options valued at
approximately $39,875 issued to supplement compensation to certain
key employees; approximately $705,000 in salaries paid to employees;
and $1,017,464 of other operating expenses, primarily rent, legal
and audit services, and investor relations.  S,G&A expenses of
$582,087 for the year ended June 30, 1998 were comprised primarily
of salaries of approximately $200,000; shares valued at
approximately $95,000 issued to the CEO and Vice-President of GTC,
options valued at approximately $81,000 issued to an investor
relations company, options valued at approximately $71,000 issued to
certain key employees to supplement compensation, professional fees
of approximately $57,000, rent of approximately $22,000 and other
expenses of approximately $56,087.  Net loss was $3,361,676 and
$532,887 for the years ended June 30,1999 and 1998, respectively.

ASSETS AND LIABILITIES - Assets increased from $162,085 as of June
30, 1998 to $660,069 as of June 30, 1999.  The increase was
attributable to increases in accounts receivables of $16,889,
deposits of $35,500, pre-paid expenses of $23,319, long-term assets,
principally property and equipment of $349,433 and other long term
assets of $218,735 offset primarily by the collection of stock
subscription receivables of $142,500 and a decrease in cash of $3,392.
Liabilities increased from $178,075 as of June 30, 1998
to $1,087,063 as of June 30, 1999.  The increase was attributable to
increases in accounts payable and accrued expenses of $660,103,
payroll and payroll related liabilities of $97,508, and other
liabilities of $37,482 and the addition of capitalized lease
obligations of $193,895, offset primarily by the conversion of the
note payable into common stock of $80,000.

STOCKHOLDERS' DEFICIT - Stockholders' deficit increased from
$(15,990) as of June 30, 1998 to $(426,994) as of June 30,1999.  The
increase was attributable to the current year net loss of
$3,361,676, offset primarily by the fair market value of options and
warrants granted for services and compensation of $983,280, fair
market value of stock issued for services, compensation and conversion
of note payable of $323,825, amounts raised from exercise of options of
$316,170, stock issued pursuant to the acquisition of Bobernco for
$3,000 and amounts raised in the Company's recent private offerings
of its common stock of $1,324,397.

LIQUIDITY AND CAPITAL RESOURCES

GENERAL   Overall, the Company had negative cash flows of $3,392 in
fiscal year 1999 resulting from $1,787,542 of cash provided by the
Company's financing activities, offset by $1,384,411 of cash used in
operating activities, $409,523 of cash used in investing activities
and cash of $3,000 from the acquisition of Bobernco.

<PAGE>

CASH FLOWS FROM OPERATIONS - Net cash used in operating activities
of $1,384,411 in fiscal year 1999 was primarily due to a net loss of
$3,361,676 and increases in operating assets, principally accounts
receivable of $16,889 and other current assets of $58,819, offset
partially by the fair market value of options granted to a director
for compensation of $352,632, the fair market value of options
granted for services of $595,998, the fair market value of stock
issued for services of $238,600 and other items totaling $87,607,
and increases in operating liabilities, principally accounts payable
and accrued expenses of $680,628 and payroll and related taxes of
$97,508.

CASH FLOWS FROM INVESTING - Net cash used in investing activities of
$409,523 in fiscal year 1999 funded purchases of computer equipment
of $186,023, purchases of intangible assets $73,500 and deposits  of
$150,000.

CASH FLOWS FROM FINANCING - Net cash provided by financing
activities of $1,787,542 in fiscal year 1999 was primarily due to
the proceeds from sales of the Company's common stock of $1,324,397,
net of offering costs of $333,603, collection of the stock
subscription receivable of $121,975, net of offering costs of
$20,525, proceeds from the exercise of stock options of $316,170
and borrowings of short term debt of $25,000.

SHORT-TERM FINANCING  - On February 12, 1999, the Company completed
a private placement offering of 1,558,500 shares of the Company's
"restricted" (as that term is defined by Rule 144 of the Securities
Act of 1933) Common Stock (including 23,500 shares issued for
offering costs) at a price of $1.00 per share, resulting in
$1,215,997 raised, net of issuance costs paid for brokers and
finder's fees of $319,053.

In connection with the Company's private placement, the Company
entered into an Investment Banking Agreement with Transglobal
Capital Corporation ("TCC"), a licensed NASD broker on November 19,
1998.  As part of this Agreement, TCC agreed to provide the Company
with consulting services and to assist the Company in raising
capital.  In return, the Company agreed to compensate TCC with an
initial fee of 50,000 shares of the Company's "restricted" Common
Stock valued at $50,000 and charged as offering costs in additional
paid in capital plus a 13% commission on gross proceeds received in
connection with the February 12, 1999 private offering.  In
addition, the Company agreed to issue TCC options to purchase
100,000 shares of the Company's Common Stock at an exercise price of
$0.01 upon receipt of the first tranche of $100,000 in financing; an
option to purchase an additional 100,000 shares of the Company's
Common Stock at an exercise price of $0.01 upon receipt of $250,000
in financing; an option to purchase an additional 100,000 shares of
the Company's Common Stock at an exercise price of $0.01 upon
receipt of $500,000 in financing; and options to purchase an
additional 300,000 shares of the Company's Common Stock at an
exercise price of $0.01 upon the receipt of $1,000,000 in financing.
During the year ended June 30, 1999, TCC met all requirements for
the granting of 600,000 options resulting in an offering cost charge
of $594,000.  As of June 30, 1999, all 600,000 options have been
exercised at $.01 per share.

In late March 1999, the Company initiated a private placement
offering of 1,000,000 shares of the Company's "restricted" Common
Stock at a price of $5.00 per share.  As of April 15, 1999, the
Company had not received any offers for subscriptions to this
private offering.  The Company believes that no offers were received
primarily due to the fact that the Company's "free trading" common
stock had been trading at a price close to the $5.00 per share price
of the private offering as of late March 1999.

On April 21, 1999, the Company replaced its $5.00 per share offering
with a private placement offering of 2,000,000 shares of the
Company's "restricted" Common Stock at a price of $3.00 per share.
The Company anticipated that this Private Offering would raise
approximately $5,220,000, net of issuance costs paid for brokers and
finder's fees, should the total offering be sold.

At June 30, 1999, the Company had sold only 41,000 shares of its
"restricted" Common Stock for $108,450, net of offering costs of
$14,550, pursuant to its $3.00 per share  private offering.  Due to
insufficient interests which the Company believes is a result of the
fact that its "free trading" common stock has been trading at a
price close to the $3.00 per share price of the private offering as
of late July 1999, the Company decided to replace its $3.00 per
share private offering.  On July 20, 1999, the Company replaced its
$3.00 per share offering with a private placement offering (the
"Private Offering") of 2,000,000 shares of the Company's "restricted"
Common Stock at a price of $1.00 per share.  The Company anticipates
that this Private Offering will raise approximately $1,740,000, net
of issuance costs paid for brokers and finder's fees, should the
total offering be sold.  As of September 30, 1999, the Company has
raised $688,890, net of issuance costs paid for brokers and finder's
fees.  Purchasers of the Company's $3.00 per share private offering
received additional shares of the Company's "restricted" common stock
so as to reduce their purchase price to that of the $1.00 per share
private offering.

<PAGE>

In addition, the Company is currently negotiating with an
institutional investor for the purchase of up to $2,000,000 of the
Company's "restricted" (as that term is defined by Rule 144 of the
Securities Act of 1933) Common Stock at a price equal to 84% of the
market price of the stock on the day of purchase, pursuant to Rule
506 promulgated under Regulation D of the Securities Act of 1933
(the "Institutional Offering").  In conjunction with the investment,
the Company has agreed to register these shares under the Securities
Act of 1933 within 120 days of the sale.  However, there can be no
assurances that the Company will be able to complete such sale.

As of June 30, 1999, the Company had borrowed $25,000 from its
President and CEO.  Subsequent to June 30, 1999, the Company had
borrowed an additional amount of $48,500.  These borrowings
("Borrowings") were for working capital purposes.  The Company does
not expect to borrow any additional funds beyond the total amount
currently borrowed from the President and CEO.  Under the terms of
the Borrowings, the Company is required to repay the principal
balance of $73,500 within one year plus interest at 10%.  The
Borrowings are not secured.

On July 6, 1999, the Company entered into a short term note (the
"Note") with an unrelated individual for the amount of $50,000 for
use as working capital.  Under the terms of the note, the Company
will be required to repay the principal balance of $50,000 within 30
days plus interest at 10%.  The Note is secured by the Company's
receivable.  The Company is in the process of renegotiating the
repayment of the Note.

The funds from the Private Offering and the Institutional Offering
will be used principally to complete the purchase of the Company's
VoIP network (Please refer to the General Overview, Long-Term
Financing, and Capital Expenditure   VoIP Network section of this
document for further information) and fund its on-going operations.
No assurances can be given, however, that the Company will be able
to complete either the Private Offering or the Institutional
Offering.  The failure to complete either offering may have a
material adverse effect on the Company's operations.

LONG-TERM FINANCING  - On April 30, 1999, the Company entered into a
financing agreement (the "Financing Agreement") with Ascend
Communications, Inc. ("Ascend") for $26 million in equipment
financing, specifically for the purchase of the Company' s VoIP
network.  Upon delivery of the equipment, which has yet to occur,
the terms of the financing will include thirty-three (33) monthly
payments of $942,760 and a five-year warrant for Ascend to purchase
315,151 shares of the Company's "restricted" Common Stock at an
exercise price of $8.25 per share.  The warrants include provisions
for anti-dilution protection, net exercise and registration rights.
An additional amount of approximately $2.9 million, above and beyond
the Financing Agreement, will be needed to complete the purchase of
the VoIP network.  The payment terms of this additional amount are
still being negotiated.

In August 1999, the Company met with Williams to reevaluate the
configuration of the VoIP network.  This reevaluation may or may not
result in a reduction of the value of the contract and may or may
not result in a change in the scheduled launch date.  The
reevaluation is scheduled to be complete by the end of October 1999.

The Private Offering and the Institutional Offering are designed to
complete the purchase of the Company's VoIP network, meet the
Company's working capital and other cash requirements, and other
equipment purchases in connection with the expansion of its business.

The Company believes that its anticipated funds from operations,
funds from the prior sale of equity interests of GenTel's
predecessor, GenX, and funds from the sale of its recent and ongoing
Private Offering and Institutional Offering of the Company's common
stock, may be insufficient to fund its capital expenditures, working
capital, and other cash requirements for the next 12 months.
Therefore, the Company will be required to seek additional funds to
finance its long term operations ("Additional Funds").  Should the
Company fail to complete any of the Private Offering, Institutional
Offering, or the Additional Funds,  the Company will have
insufficient funds for the Company's intended operations and capital
expenditures for the next 12 months and will have a material adverse
effect on the Company's long-term results of operations.

<PAGE>

CAPITAL EXPENDITURES

VoIP Network

On April 30, 1999, the Company entered into an agreement with
Williams Communications, a unit of Williams of Tulsa, Oklahoma
("Williams"), in which Williams will design, install and maintain
the Company's previously discussed high speed, nationwide VoIP
network.  The total contract cost to the Company is approximately
$100,000,000 over a five-year term.  Under the terms of the
agreement with Williams Communications (the "Williams Agreement"),
the Company is obligated to pay Williams $28.9 million upon delivery
of the network to the Company.  The Company obtained equipment
financing for $26.0 million of the total contract price from Ascend
Communications, Inc.  The Company is responsible for the remaining
$2.9 million. Please refer to Long-Term Financing, above for further
details regarding the Company's financing for the purchase of its
VoIP Network.  In addition, the Company is obligated to pay Williams
a monthly maintenance fee of approximately $188,000 and an
additional set-up fee of $270,000 beginning on the first month
following delivery of the Network (which is currently scheduled for
January 2000) increasing to approximately $404,000 per month through
the twelfth (12th) month of the Williams Agreement.  The monthly
maintenance fee increases to approximately $639,000 per month
beginning with the thirteenth (13th) month and thereafter until the
end of the contract period (approximately through December 2004).
The remainder of the Williams Agreement is for its carrier services
in which the Company will pay approximately $520,000 per month over
the term of the contract.  In addition, the financing will include a
five- year warrant to purchase 315,151 shares of the Company 's
common stock at an exercise price of $8.25 per share.  The warrant
will include provisions for anti-dilution protections, net exercise
and registration rights.  The Williams Agreement can be terminated
by the Company with six month's written notice to Williams.

In August 1999, the Company met with Williams to reevaluate the
configuration of the VoIP network.  This reevaluation may or may not
result in a reduction of the value of the contract and may or may
not result in a change in the scheduled launch date.  The
reevaluation is scheduled to be complete by the end of October 1999.

Other Capital Expenditures

The Company also expects to purchase approximately $200,000 of
additional equipment in connection with the expansion of its
business.  Because the Company presently does not have the capital
for such expenditures, it will have to raise these funds.  (See
Long-Term Financing in this section).

GOING CONCERN

The Company's independent certified public accountants have stated
in their report included in this Form 10-KSB, that the Company has
incurred operating losses in the last two years, has a working
capital deficit and a significant stockholders deficit.  These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.

INFLATION

Management believes that inflation has not had a material effect on
the Company's results of operations.

YEAR 2000 DISCLOSURE

The Company has completed a review of its computer systems and
non-information technology ("non-IT") systems to identify all
systems that could be affected by the inability of many existing
computer and microcontroller systems to process time-sensitive data
accurately beyond the year 1999, referred to as the Year 2000 or Y2K
issue.  The Company is dependent on third-party computer systems and
applications, particularly with respect to such critical tasks as
accounting, billing and the underlying carrier (MCI/WorldCom) of its
long distance telephone service.  The Company also relies on its own
computer and non-IT systems (which consists of personal computers,
internal telephone systems, internal network server, Internet server
and associated software and operating systems).  In conducting the
Company's review of its internal systems, the Company performed
operational tests of its systems which revealed no Y2K problems.  As
a result of its review, the Company has discovered no problems with
its systems relating to the Y2K issue and believes that such systems
are Y2K compliant.  Additionally, the Company has obtained written
assurances from all of its major suppliers of third-party computer
systems and applications, including all suppliers referenced in the
Major Supplier section of this document,  indicating that they have
completed a review of their respective computer systems and that
such systems are Y2K compliant.  Costs associated with the Company's
review were not material to its results of operations.

<PAGE>

While the Company believes that its procedures have been designed to
be successful, because of the complexity of the Year 2000 issue and
the interdependence of organizations using computer systems, there
can be no assurances that the Company's efforts, or those of third
parties with whom the Company interacts, have fully resolved all
possible Year 2000 issues.  Failure to satisfactorily address the
Year 2000 issue could have a material adverse effect on the Company.
 The most likely worst case Y2K scenario which management has
identified to date is that, due to unanticipated Y2K compliance
problems, the Company may be unable to bill its customers, in full
or in part, for services used.  Should this occur, it would result
in a material loss of some or all gross revenue to the Company for
an indeterminable amount of time, which could cause the Company to
cease operations. Although the Company has received written
assurances from its major suppliers that they are, or will be, Year
2000 compliant, should any such supplier fail to adequately address
the Year 2000 problem, the Company's only recourse for any damages
suffered as a result would be through litigation. The Company has
not yet developed a contingency plan to address this worst case Y2K
scenario, and does not intend to develop such a plan in the future.

EMPLOYMENT

As of September 30, 1999, the Company had 26 full time employees.

ITEM 7.   FINANCIAL STATEMENTS

The consolidated financial statements and supplementary financial
information which are required to be filed under this item are
presented under "Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 10-KSB" in this document, and are incorporated
herein by reference.

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

There have been no disagreements between Corbin & Wertz LLP and
Management of the type required to be reported under this Item 8
since the date of their engagement.

<PAGE>


                               PART III

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

The following table sets forth the names and ages of the current
directors and executive officers of the Company, the principal
offices and positions with the Company held by each person and the
date such person became a director or executive officer of the
Company.  The executive officers of the Company are elected annually
by the Board of Directors.  The directors serve one year terms until
their successors are elected.  The executive officers serve terms of
one year or until their death, resignation or removal by the Board
of Directors.  There are no family relationships between any of the
directors and executive officers.  In addition, there was no
arrangement or understanding between any executive officer and any
other person pursuant to which any person was selected as an
executive officer.

The directors and executive officers of the Company are as follows:

Name                  Age      Positions
----                  ---      ---------
Paul Sandhu            38      Chief Executive Officer, President,
                               and Chairman of the Board

Eric Clemons           28      Director, Chief Operating Officer,
                               Secretary and Treasurer

Gerald A. DeCiccio     42      Chief Financial Officer

Mark Fleming           40      Executive Vice President

Frank Naccarelli       44      Vice President of Sales

Clay T. Whitehead      57      Director


PAUL SANDHU is currently the Company's President and Chief Executive
Officer.  Mr. Sandhu has been with GenTel since its inception.  Mr.
Sandhu has over ten (10) years experience with start-up and emerging
growth companies.  Mr. Sandhu was Co-Founder, President and Co-Owner
of Maximum Security ("Maximum"), a Security and surveillance company
he started in 1992.  While at Maximum, Mr. Sandhu actively managed a
staff of over 200 employees.  In 1997 Mr. Sandhu sold the business
to his partner.  Mr. Sandhu graduated from the University of Punjab
in India with a degree in Engineering.

ERIC CLEMONS is currently the Company's Chief Operating Officer.
Mr. Clemons has been with GTC since its inception.  Mr. Clemons has
over eight (8) years experience with sales and marketing
organizations.  Mr. Clemons most recently was Vice President of
Marketing for Intelligent Electronic Communications managing a staff
of 50 employees.  Mr. Clemons has attended The Wharton School of
Business executive management programs.

GERALD DECICCIO joined the Company in January 1999 as Chief
Financial Officer.  Mr. DeCiccio has over eighteen years experience
in the financial and accounting field.  Prior to joining GTC, Mr.
DeCiccio was the Vice President of Finance and Administration for
National Telephone & Communications, Inc., ("NT&C") a $150 million
inter-exchange carrier and provider of communications products and
services.  While at NT&C, Mr. DeCiccio managed NT&C's finance,
accounting, human resources and legal departments.  Between 1995 and
1997, Mr. DeCiccio was the Corporate Controller for Newport
Corporation, a $140 million multi-national manufacturer /
distributor of laser and optics products.  Prior to that, Mr.
DeCiccio was the Director of Audit and Quality Systems for Sunrise
Medical, Inc., a $750 million multi-national manufacturer /
distributor of health care products.  From 1980 to 1984, Mr.
DeCiccio was a Supervising Senior Accountant for Ernst and Young.
Mr. DeCiccio received his Bachelor of Science in Accounting from
Loma Linda University, and his Masters of Science in Finance and
Systems Technology from the University of Southern California.  Mr.
DeCiccio is a Certified Public Accountant in the State of California.

<PAGE>

MARK FLEMING joined the Company in October 1998 as Executive Vice
President.  Mr. Fleming has sixteen years of business strategy,
planning, and analysis experience within the competitive consumer
products / services industries.  For the past seven years, Mr.
Fleming worked in the telecommunications industry, holding several
finance and marketing management positions at MCI.  Some of the key
business / operational issues that Mr. Fleming managed while at MCI
included pricing strategy, market positioning, new product
development, sales channel and customer service performance reviews,
capital investment decisions and overall business planning /
analysis for Residential Markets and Local Services divisions.  Mr.
Fleming received his Bachelor of Arts degree in Business
Administration from Principia College in 1980, and attained his
Masters in Business Administration, with honors from the University
of Southern California in 1986.

FRANK NACCARELLI joined GTC in March 1999 as its Vice President of
Sales.  In this role, he will be responsible for leading the
Company's national sales efforts with large corporate accounts as
well as the Company's Commercial Sales Agent Programs.  Prior to
joining the Company, Mr. Naccarelli worked with MCI/WorldCom.
During his 20 year term with MCI/WorldCom, Mr. Naccarelli's duties
involved responsibility for P & L management, and regional and
national sales.  Mr. Naccarelli received his Associates of Arts
degree in Business Administration from the University of Pittsburgh
in 1978.

CLAY T. WHITEHEAD is currently President of Clay Whitehead
Associates, a strategic consulting and business development company
which concentrates on the telecommunications and media industries.
Clay Whitehead Associates primarily works with large companies to
develop business projects in the areas of telecommunications and
television.  Mr. Whitehead has participated in the formation,
strategy development, regulatory posture, and financing of a number
of telecommunications businesses in the United States and
internationally.  Mr. Whitehead has also served as a special
assistant to President Nixon, with policy responsibility for NASA,
the Atomic Energy Commission, and the National Science Foundation.
>From 1971 to 1974, he was director of the U.S. Office of
Telecommunications Policy.  From 1979 to 1983, Mr. Whitehead founded
and was president of Hughes Communications, Inc., a subsidiary of
Hughes Aircraft Company.  Mr. Whitehead also currently serves on the
board of directors for Prudential Funds.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more
than ten percent of a registered class of the Company's equity
securities to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock and other equity
securities of the Company.  Officers, directors and greater than ten
percent shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on the review of copies of such
reports furnished to the Company and written representations that no
other reports were required, the Company has been informed that Eric
Clemons, the Company's Chief Operating Officer failed to timely file
a required Form 4 reporting certain transfers on August 11, 1999 of
Common Stock owned by Mr. Clemons.  A Form 4 reporting these
transfers was subsequently filed by Mr. Clemons.  Additionally, the
Company is informed that Clay T. Whitehead, a director of the
Company failed to timely file a Form 3 Initial Statement of
Beneficial Ownership.  The Company has been informed that Mr.
Whitehead filed the required filing on October 1, 1999.  To the best
of the Company's knowledge, during the years ended June 30, 1999 and
1998, all Section 16(a) filing requirements applicable to the
Company's officers, directors and greater than ten percent
shareholders, except for those mentioned above, were complied with.

ITEM 10.  EXECUTIVE COMPENSATION

On December 1, 1998, the Company entered into an Employment
Agreement with Paul Sandhu, the Company's President and CEO, whereby
the Company will pay Mr. Sandhu an annual salary of $84,000.
Pursuant to the Agreement, Mr. Sandhu's salary shall increase to
$168,000 should the Company either maintain a positive cash flow for
two consecutive months, or the Company successfully completes a Form
SB-2 registered offering of its securities.  In addition to his
annual salary, the Agreement confirmed the prior issuance of options
to purchase 200,000 shares of the Company's Common Stock at an
exercise price of $0.2375 previously granted to Mr. Sandhu pursuant
to an employment agreement between Mr. Sandhu and GenTel dated
January 5, 1998.  These options vested upon execution of the
Agreement.  The Agreement may be canceled at any time by either the
Company or Mr. Sandhu.  However, if the Company terminates the
Agreement without cause, as defined in the Agreement, the Company
shall be obligated to pay Mr. Sandhu 25% of his annual salary as
severance.

<PAGE>

On December 1, 1998, the Company entered into an Employment
Agreement with Eric Clemons, the Company's Chief Operating Officer
("COO"), whereby the Company will pay Mr. Clemons an annual salary
of $76,000.  Pursuant to the Agreement, Mr. Clemons' salary shall
increase to $152,000 should the Company either maintain a positive
cash flow for two consecutive months, or the Company successfully
completes a Form SB-2 registered offering of its securities.  In
addition to his annual salary, the Agreement confirmed the prior
issuance of options to purchase 100,000 shares of the Company's
Common Stock at an exercise price of $0.2375 previously granted to
Mr. Clemons pursuant to an employment agreement between Mr. Clemons
and GenTel dated January 5, 1998.  These options vested upon
execution of the Agreement.  The Agreement may be canceled at any
time by either the Company or Mr. Clemons.  However, if the Company
terminates the Agreement without cause, as defined in the Agreement,
the Company shall be obligated to pay Mr. Clemons 25% of his annual
salary as severance.

On December 1, 1998, the Company entered into an Employment
Agreement with Gerald DeCiccio, the Company's Chief Financial
Officer, whereby the Company will pay Mr. DeCiccio an annual salary
of $105,000.  Pursuant to the Agreement, Mr. DeCiccio's salary shall
increase to $144,000 should the Company either maintain a positive
cash flow for two consecutive months, or the Company successfully
completes a Form SB-2 registered offering of its securities.  In
addition to his annual salary, the Agreement grants Mr. DeCiccio
options to purchase 150,000 shares of the Company's Common Stock.
Twenty-five thousand (25,000) of the options are set to vest six (6)
months from the execution of the Agreement at an exercise price of
$.01, expiring three years from the date of vesting if not
exercised.  The remaining 125,000 options are scheduled to vest in
1/3 increments each following year provided that Mr. DeCiccio is
employed with the Company.  The Agreement may be canceled at any
time by either the Company or Mr. DeCiccio.  However, if the Company
terminates the Agreement without cause, as defined in the Agreement,
the Company shall be obligated to pay Mr. DeCiccio 25% of his annual
salary as severance.

On October 14, 1998, the Company entered into an Employment
Agreement with Mark Fleming, the Company's Executive Vice-President,
whereby the Company will pay Mr. Fleming an annual salary of
$70,000.  Pursuant to the Agreement, Mr. Fleming's salary shall
increase to $107,000 should the Company either maintain a positive
cash flow for two consecutive months, or the Company successfully
completes a Form SB-2 registered offering of its securities.  In
addition to his annual salary, the Agreement grants Mr. Fleming
options to purchase 100,000 shares of the Company's Common Stock.
Ten thousand (10,000) of the options are set to vest six (6) months
from the execution of the Agreement at an exercise price of $.01,
expiring three years from the date of vesting if not exercised.  The
remaining 90,000 options are scheduled to vest in 1/3 increments
each following year provided that Mr. Fleming is employed with the
Company.  The Agreement may be canceled at any time by either the
Company or Mr. Fleming.  However, if the Company terminates the
Agreement without cause, as defined in the Agreement, the Company
shall be obligated to pay Mr. Fleming 25% of his annual salary as
severance.

On March 3, 1999, the Company entered into an Employment Agreement
with Frank Naccarelli, the Company's Vice-President of Sales,
whereby the Company will pay Mr. Naccarelli an annual salary of
$85,000.  In addition to his annual salary, the Agreement grants Mr.
Naccarelli options to purchase 45,000 shares of the Company's Common
Stock at $5.50 per share.  Fifteen Thousand (15,000) options are
scheduled to vest in 1/3 increments each following year provided
that Mr. Naccarelli is employed with the Company.  The Agreement may
be canceled at any time by either the Company or Mr. Naccarelli.
However, if the Company terminates the Agreement without cause, as
defined in the Agreement, the Company shall be obligated to pay Mr.
Naccarelli 25% of his annual salary as severance.

<PAGE>

SUMMARY COMPENSATION TABLE

The Summary Compensation Table shows certain compensation
information for services rendered in all capacities for the fiscal
year ended June 30, 1999, the period ended June 30, 1998, and the
fiscal year ended December 31, 1997.  Other than as set forth
herein, no executive officer's salary and bonus exceeded $100,000 in
any of the applicable years.  The following information includes the
dollar value of base salaries, bonus awards, the number of stock
options granted and certain other compensation, if any, whether paid
or deferred.

<TABLE>
                         SUMMARY COMPENSATION TABLE

                             Annual Compensation                        Long Term Compensation
                                                                 Awards                       Payouts

<S>              <C>       <C>         <C>      <C>           <C>            <C>            <C>        <C>
                                                             Restricted    Securities
Name                                        Other Annual     Stock         Underlying      LTIP     All Other
and Principal            Salary      Bonus  Compensation     Awards        Options      Payouts  Compensation
Position        Year      ($)         ($)        ($)           ($)         SARs(#)        ($)        ($)
------------    ----     ------      -----  ------------    ---------      ---------    --------  -----------
Paul Sandhu     1999      85,500      -0-        -0-           -0-            -0-         -0-        -0-
(President,    (6/30)
  CEO)

                1998      40,000      -0-        -0-          76,000        200,000       -0-        -0-
              (6/30)

                1997       n/a        -0-        -0-           -0-            -0-         -0-        -0-

Eric Clemons    1999      90,836      -0-        -0-           -0-            -0-         -0-        -0-
(COO)         (6/30)

                1998      40,500      -0-        -0-           19,000       100,000       -0-        -0-
              (6/30)

                1997       n/a        -0-        -0-           -0-            -0-         -0-        -0-
</TABLE>

COMPENSATION OF DIRECTORS

For the fiscal years ended 1996, 1997 and 1998, and the six months
ended December 31, 1998, Directors of the Company received no
compensation.  Beginning with the third quarter of fiscal year 1999,
Directors will receive $1,500 and 2,500 shares of the Company's
"restricted" Common Stock per quarter.

1999 STOCK OPTION PLAN

On September 20, 1999, the Company's Board of Directors approved the
GTC Telecom Corp. Omnibus Stock Option Plan (the "Option Plan"),
effective October 1, 1999.  Under the terms of the Option Plan, the
Board of Directors has the sole authority to determine which of the
eligible persons shall receive options, the number of shares which
may be issued upon exercise of an option, and other terms and
conditions of the options granted under the Plan to the extent they
don't conflict with the terms of the Plan.  An aggregate of 750,000
shares of common stock are reserved for issuance under the Plan
during the year October 1, 1999 to September 30, 2000.  For each
subsequent year beginning October 1, 2000, there shall be reserved
for issuance under the Plan that number of shares equal to 10% of
the outstanding shares of common stock on July 1 of that year.  The
exercise price for all statutory options granted under the Plan
shall be 100% of the fair market value of the Company's common stock
on the date of grant, unless the recipient is the holder of more
than 10% of the already outstanding securities of the Company, in
which case the exercise price shall be 110% of the fair market value
of the Company's common stock on the date of grant.  The exercise
price for all non-statutory options granted under the Plan shall be
between 25% to 100% of the fair market value on the date of grant.
All options shall vest equally over a period of five years from the
date of issuance.  Currently, the Board of Directors has not issued
any options under the terms of the Plan.

Approval and ratification of the Option Plan will require the
affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock present or represented and
voting at the Company's 1999 annual shareholder's meeting.

<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets forth, as of September 30, 1999, certain
information with respect to the Company's equity securities owned of
record or beneficially by (i) each Officer and Director of the
Company; (ii) each person who owns beneficially more than 5% of each
class of the Company's outstanding equity securities; and (iii) all
Directors and Executive Officers as a group.

 <TABLE>
<S>                           <C>                               <C>            <C>
Title                                                      Common Stock    Percent of
of Class          Name and Address of Beneficial Owner     Outstanding     Outstanding
============      ===================================      ===========     ===========
Common Stock        Paul Sandhu(1)                          4,333,608         27.02%
                    3151 Airway Avenue, Suite P-3
                    Costa Mesa, CA 92626.

Common Stock        Eric Clemons(2)                         1,444,152          9.00%
                    3151 Airway Avenue, Suite P-3
                    Costa Mesa, CA 92626.

Common Stock        Mark Fleming(3)                         40,000             0.25%
                    3151 Airway Avenue, Suite P-3
                    Costa Mesa, CA 92626.

Common Stock        Gerald A. DeCiccio(4)                   66,667             0.42%
                    3151 Airway Avenue, Suite P-3
                    Costa Mesa, CA 92626.

Common Stock        Frank Naccarelli(5)                        0               0.00%
                    3151 Airway Avenue, Suite P-3
                    Costa Mesa, CA 92626.

Common Stock        Clay T. Whitehead                       526,316            3.28%
                    3151 Airway Avenue, Suite P-3
                    Costa Mesa, CA 92626.

Common Stock        Reet Trust(6)                         2,000,000           12.47%
                    21520 Yorba Linda
                    Suite 6227
                    Yorba Linda, CA 92887

Common Stock        Michelson Group                       1,054,483            6.57%
                    5000 Birch Street
                    Suite 9600
                    Newport Beach, CA 92660

All Directors and                                         6,410,743           39.97%
Officers as a
Group (6 Persons
in total)
</TABLE>

(1)  Includes an aggregate of 200,000 options to acquire shares of
Company common stock in accordance with Mr. Sandhu's employment
agreement.
(2)  Includes an aggregate of 100,000 options to acquire shares of
Company common stock in accordance with Mr. Clemons' employment
agreement.
(3)  Includes vested options to purchase up to 40,000 shares of
Company common stock.  Does not include options to acquire 60,000
shares of Company's common stock which vest in 1/2  increments each
year beginning October 14, 2000 in accordance with Mr. Fleming's
employment agreement.
(4)  Includes vested options to purchase up to 66,667 shares of
Company common stock. Does not include options to acquire 83,333
shares of Company's common stock which vest in 1/2 increments each
year beginning December 1, 2000 in accordance with Mr. DeCiccio's
employment agreement.
(5)  Does not include an aggregate of 45,000 options to acquire
shares of Company common stock which vest in 1/2 increments each
year beginning March 15, 2000 in accordance with Mr. Naccarelli's
employment agreement.
(6)  The trustee of the Reet Trust is Teg Sandhu, father of Paul
Sandhu.  However, Paul Sandhu disclaims any beneficial ownership to
the shares held by the Reet Trust.

<PAGE>

The Company believes that the beneficial owners of securities listed
above, based on information furnished by such owners, have sole
investment and voting power with respect to such shares, subject to
community property laws where applicable.  Beneficial ownership is
determined in accordance with the rules of the Commission and
generally includes voting or investment power with respect to
securities.  Shares of stock subject to options or warrants
currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person
holding such options or warrants, but are not deemed outstanding for
purposes of computing the percentage of any other person.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On June 17, 1998, the Company entered into a Corporate Development
Agreement with the Michelson Group.  As part of the Agreement,
Michelson has agreed to provide consultation and corporate
development services on behalf of the Company.  In return, the
Company has agreed to compensate the Michelson Group in the amount
of $6,500 per month in addition to warrants to purchase up to 9.9%
of the outstanding shares of the Common Stock of the Company (as
calculated following the completion of the July 21, 1998 private
placement) at an exercise price of $0.01.  Pursuant to the
Agreement, the Michelson Group has agreed that the exercise of the
warrants adhere to the following schedule: one fourth of the
warrants can be exercised upon execution of the Agreement; an
additional one fourth when the Company breaks escrow on its initial
private placement of securities; an additional one fourth once the
Company's market capitalization reaches $40,000,000; and the
remaining one fourth upon the Company breaking escrow on a debt or
equity financing of $3,000,000 or more.  Pursuant to an amendment to
the Agreement in November 3, 1998, the Company agreed to waive the
requirements for the vesting of the fourth tranche of warrants
provided under this Agreement.  These warrants resulted in $603,920
being charged by the Company for consulting fees rendered in fiscal
1998 and 1999.  As of June 30, 1999, all 1,417,008 of the vested
warrants have been exercised.

On August 31, 1998, the Company (which at the time was designated
Bobernco, Inc., a Nevada corporation) acquired all of the
outstanding common stock of GenTel Communications, Inc., a Colorado
corporation in a business combination described as a "reverse
acquisition."  As part of the reorganization, the Company issued
8,986,950 shares of its Common Stock to the shareholders of GenTel
in exchange for all of the outstanding shares of Common Stock of
GenTel.  Such shares include the shares owned by officers and
directors of the Company as set forth in the Section "Security
Ownership of Certain Beneficial Owners and Management" hereunder.

Between 1989 and 1994, Mr. Clemons was a licensed NASD broker.  As a
broker, Mr. Clemons was subject to three claims related to such
engagement and subsequently an administrative action by the NASD
related to his work as a licensed broker.  Mr. Clemons was found
liable for an award of $4,000 on one of the actions and subsequently
in April 1997, was fined $65,000 and barred from association with
any NASD member with the ability for re-application following a
period of two years.

On May 4, 1999, the Company issued 526,316 shares of "restricted"
(as that term is defined under Rule 144 of the Securities Act of
1933) Common Stock to Clay T. Whitehead, a director of the Company,
pursuant to an option agreement entered into between the Company and
Mr. Whitehead in April, 1999.  Pursuant to the Option Agreement, Mr.
Whitehead had the option to purchase up to 526,316 shares of the
Company's Common Stock at an exercise price of $0.475 per share.  In
May 1999, Mr. Whitehead exercised all 526,316 options.  As a result
of the option agreement, a total of approximately $352,632 of
compensation expense was recorded at the date of grant in April
1999.  The issuance was exempt under Section 4(2) of the Securities
Act of 1933.

As of June 30, 1999, the Company had borrowed $25,000 from its
President and CEO.  Subsequent to June 30, 1999, the Company had
borrowed an additional amount of $48,500.  These borrowings
("Borrowings") were for working capital purposes.  The Company does
not expect to borrow any additional funds beyond the total amount
currently borrowed from the President and CEO.  Under the terms of
the Borrowings, the Company is required to repay the principal of
$73,500 within one year plus interest at 10%.  The Borrowings are
not secured.

In August 1999, Paul Sandhu, the Company's President & CEO, and Eric
Clemons, the Company's Chief Operating Officer, agreed to a lock-up
of their shares.  As part of the agreement, Mr. Sandhu and Mr.
Clemons have agreed to register a maximum of 25,000 shares for
resale, each between now and the year 2000.

On October 6, 1999, the Company registered on Form S-8 filed with
the Securities and Exchange Commission, 67,675 shares of Common
Stock held by consultants valued at approximately $270,700; 411,000
options held by employees valued at approximately $1,184,000; and
750,000 options pursuant to its 1999 Stock Option Plan.

<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

INDEX TO FINANCIAL STATEMENTS
                                                           Page
                                                           -----
Report of Independent Auditors . . . . . . . . . . . . .    F-1

Balance sheets at June 30, 1999 and 1998 . . . . . . . .    F-2

Statements of operations for the years
ended June 30, 1999 and 1998  . . . . . . . . . . . . . .   F-3

Statements of stockholders' deficit for the
years ended June 30, 1999 and 1998  . . . . . . . . . . .   F-4

Statements of cash flows for the
years ended June 30, 1999 and 1998  . . . . . . . . . . .   F-6

Notes to financial statements . . . . . . . . . . . . . .   F-8

All other schedules are omitted as the required information is not
present or is not present in amounts sufficient to require
submission of the schedule, or because the information required is
included in the financial statements or notes thereto.

<PAGE>

INDEX TO EXHIBITS

The Company undertakes to furnish to any shareholder so requesting a
copy of any of the following exhibits upon payment to the Company of
the reasonable costs incurred by the Company in furnishing any such
exhibit.

EXHIBIT NO.     DESCRIPTION

*(2)            Agreement and Plan of Reorganization dated
                August 1998 between Bobernco, Inc. and
                GenTel Communications, Inc.

*(3.1)          Articles of Incorporation

*(3.2)          Certificate of Amendment of Articles of
                Incorporation, filed with the Nevada
                Secretary of State on March 30, 1998

*(3.3)          Certificate of Amendment of Articles of
                Incorporation filed with the Nevada Secretary of
                State on September 3, 1998

*(3.4)          Bylaws of Bobernco, Inc. (The "Corporation")

3.5             Revised Bylaws of GTC Telecom Corp.
                adopted on September 20, 1999

*(4.1)          GTC Telecom Corp. 1999 Omnibus Stock
                Incentive Plan

*(10.1)         Michelson Group Corporate Development
                Agreement, dated June 17, 1998, including
                amendment

*(10.2)         One Plus Billing and Information
                Management, Service Agreement, dated
                September 8, 1998, including addendum

*(10.3)         MCI/WorldCom Telecommunication Resale Contracts

                *(10.3.1)       Program Enrollment

                *(10.3.2)       Rate and Discount Schedule

                *(10.3.3)       Service Schedule

                *(10.3.4)       Telecommunications Service
                                Agreement

*(10.4)         Investment Banking Agreement, dated November 19, 1998

*(10.5)         Employment Agreement by and between GTC
                Telecom, Inc., a Nevada corporation and Mark
                Fleming, dated October 14, 1998

*(10.6)         Employment Agreement by and between GTC Telecom,
                Inc., a Nevada corporation and Eric Clemons, dated
                December 1, 1998

*(10.7)         Employment Agreement by and between GTC Telecom,
                Inc., a Nevada corporation and Jerry DeCiccio, dated
                December 1, 1998

*(10.8)         Employment Agreement by and between GTC Telecom,
                Inc., a Nevada corporation and Paul Sandhu, dated
                December 1, 1998

*(10.9)         Employment Agreement by and between GTC
                Telecom, Inc., a Nevada corporation and
                Frank Naccarelli, dated March 3, 1999

*(10.10)        Lease dated February 5, 1999 between Southern
                California Sunbelt Developers, Inc., and GTC
                Telecom, a Nevada corporation; Eric Clemons; and
                Paul Sandhu Jointly and Severally as Tenant
                ("Tenant") relating to premises at Suite K-104 The
                John Wayne Executive Guild Center, 3151 Airway
                Avenue, Costa Mesa, California 92626

*(10.11)        Global Pacific Internet Reseller Agreement between
                Global Pacific Internet and GTC Telecom, dated
                January 25, 1999

*(10.12)        Telecommunications Service Agreement by and between
                International Telephone and Electronics, LLC and GTC
                Telecom

*(10.13)        Sales Representative Agreement between GTC Telecom,
                Inc. and OhGolly.com, Inc., dated March 9, 1999

*(10.14)        Purchase and Services Agreement between GTC Telecom,
                Inc. and Service One Communications, Inc., dated
                March 9, 1999

*(10.15)        Branded Services Agreement between Epoch Networks,
                Inc. dba Epoch Internet and GTC Telecom, Inc., dated
                February, 1999

*(10.16)        Lease dated May 22, 1998 between Southern California
                Sunbelt Developers, Inc., and GenTel Communications,
                Inc., a Colorado Corporation; Eric Clemons; and Paul
                Sandhu Jointly and Severally as Tenant ("Tenant")
                relating to premises at Suite P-3 The John Wayne
                Executive Guild Center, 3151 Airway Avenue, Costa
                Mesa, CA 92626

*(10.17)        Agreement for Purchase and Sale of Equipment dated
                April 28, 1999 between GTC Telecom and Williams
                Communications, Inc.

*(10.18)        Ascend Financing Agreement

*(10.19)        Terms and Conditions Agreement between Level 3
                Communications and GTC Telecom

*(10.20)        Promissory Note between Jennifer Wong and GTC
                Telecom Corp. dated July 6, 1999.

10.21           Promissory Note between Paul Sandhu and GTC Telecom
                Corp. dated July 22, 1999.

10.22           Addendum to Lease dated May 21, 1998 by and between
                GTC Telecom and SunBelt Developers, Inc.

21.1            Subsidiaries of the Registrant

23.1            Consent of Independent Auditors

27.1            Financial data schedule

------------------------------
* Previously filed

REPORTS ON FORM 8-K

None.


                              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.


Dated: October 13, 1999

                          GTC TELECOM CORP.
                             (Registrant)

By:  /s/ PAUL SANDHU
     ---------------
     PAUL SANDHU
     President and
     Chief Executive Officer
     and Director

By:  /s/ ERIC CLEMONS
     ---------------
     ERIC CLEMONS
     Chief Operating Officer
     and Director

By:  /s/ GERALD DECICCIO
     ----------------
     GERALD DECICCIO
     Chief Financial Officer

Pursuant to 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                         Capacity   Date

/s/ CLAY WHITEHEAD                    Director   October 13, 1999
------------------
CLAY WHITEHEAD


<PAGE>


REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders
GTC Telecom Corp.

We have audited the balance sheets of GTC Telecom Corp. as of June
30, 1999 and 1998 and the related statements of operations,
stockholders' deficit and cash flows for the years then ended.
These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with 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, the financial statements referred to above present
fairly, in all material respects, the financial position of GTC
Telecom Corp. at June 30, 1999 and 1998 and the results of its
operations and its cash flows for the years then ended, in conformity
with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As disclosed in
the financial statements, the Company has incurred operating losses
in the last two years, has a working capital deficit and a
significant stockholders deficit.  These conditions raise
substantial doubt about the Company's ability to continue as a going
concern.  Management's plans in regard to these matters are
described in Note 1.  The financial statements do not include any
adjustments that may result from the outcome of this uncertainty.


                                            /s/  CORBIN & WERTZ


Irvine, California
October 11, 1999

<PAGE>
<TABLE>
<S>                                                     <C>            <C>
                       GTC TELECOM CORP.
                        BALANCE SHEETS
                                                               June 30,
                                                               --------
ASSETS                                                   1999          1998
Current assets:                                         ------        ------
 Cash                                               $      500   $    3,892
 Accounts receivable                                    16,889             -
 Deposits                                               35,500             -
 Stock subscription receivable                              --       142,500
 Prepaid expenses                                       23,319             -
                                                        ______        ______
   Total current assets                                 76,208       146,392

Property and equipment, net of accumulated
 depreciation of $32,186 and $1,701 at
 June 30, 1999 and 1998, respectively                  365,126        15,693

Deposits                                               150,000             -

Other assets                                            68,735             -
                                                       _______       _______
   Total assets                                      $ 660,069   $   162,085
                                                       =======       =======
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable and accrued expenses             $ 688,178   $    28,075
   Accrued payroll and related taxes                   167,508        70,000
 Current portion of obligation under capital lease      61,198             -
 Note payable to stockholder                            25,000             -
 Deferred income                                        12,482             -
                                                       _______        ______
 Total current liabilities                             954,366        98,075

Long-term liabilities:
 Obligation under capital lease,
 net of current portion                                132,697             -
Convertible note payable to stockholder                      -        80,000
                                                       -------       -------
 Total liabilities                                   1,087,063       178,075
                                                     ---------       -------
Commitments

Stockholders' deficit:
 Common stock, $0.001 par value; 50,000,000
   shares authorized; 15,286,824 shares issued
   and outstanding at June 30, 1999 and 8,986,950
   shares at June 30, 1998 (including 313,000
   shares subscribed)                                   15,287         8,987
 Additional paid-in-capital                          3,452,282       507,910
 Accumulated deficit                                (3,894,563)     (532,887)
                                                    ___________     _________
   Total stockholders' deficit                        (426,994)      (15,990)
                                                    -----------     ---------
   Total liabilities and stockholders' deficit       $ 660,069     $ 162,085
                                                    ===========     =========
</TABLE>

                         See independent auditors' report and
                     accompanying notes to financial statements

                                       F-2

<PAGE>

                                GTC TELECOM CORP.
                            STATEMENTS OF OPERATIONS
<TABLE>
<S>                                                     <C>            <C>
                                                        Years Ended June 30,
                                                        1999           1998
                                                        ----           -----
Net revenues                                      $    289,012      $ 497,312

Cost of sales                                          163,740        447,312
                                                       -------        -------
 Gross profit                                          125,272         50,000

Selling, general and administrative expenses         3,489,685        582,087
                                                     ---------       --------
Operating loss                                      (3,364,413)      (532,087)

Interest income, net of interest expense of $1,965       3,537              -
                                                      --------       --------
Loss before provision for income taxes            $ (3,360,876)      (532,087)

Provision for income taxes                                 800            800
                                                    ----------       --------
Net loss                                          $ (3,361,676)     $(532,887)
                                                    ==========       ========
Basic and diluted net loss per common share       $      (0.27)     $   (0.06)

Basic and diluted weighted average
   common shares outstanding                        12,647,347      8,511,610














                         See independent auditors' report and
                     accompanying notes to financial statements

                                       F-3

<PAGE>




                               GTC TELECOM CORP.
                    STATEMENTS OF STOCKHOLDERS' DEFICIT

</TABLE>
<TABLE>
<S>                               <C>        <C>         <C>       <C>           <C>             <C>            <C>
                                                                              Additional                        Total
                                 Members' Interest       Common Stock          Paid-in        Accumulated   Stockholder's
                                 Shares    Amount       Shares    Amount       Capital          Decifit        Deficit
__________________________________________________________________________________________________________________________
Balance at July 1, 1997           736.5    $   750           -   $     -      $      -          $      -      $    750

Members' cash
 contributions to
 February 3, 1998, net of
 offering costs of
 $49,025                           63.5    268,475           -         -             -                 -       268,475
Conversion of GenX,
 LLC to GenTel
 Communications
 (conversion rate of
 10,983.69 to 1) on
 February 3, 1998                (800.0)  (269,225)   8,786,950    8,787        260,438                -             -
Estimated fair market
 value of options granted
 to employees for
 compensation                         -          -            -        -         71,250                -        71,250
Estimated fair market
 value of warrants
 granted for services
 rendered                             -          -            -        -         81,422                -        81,422
Fair market value of
 stock issued to CEO
 and Vice President for
 compensation                         -          -      200,000      200         94,800                -        95,000

Net loss                              -          -            -        -              -         (532,887)     (532,887)
_______________________________________________________________________________________________________________________
Balance at June 30, 1998              -          -    8,986,950    8,987        507,910         (532,887)      (15,990)

</TABLE>









                         See independent auditors' report and
                     accompanying notes to financial statements

                                       F-4
<PAGE>

                               GTC TELECOM CORP.
                    STATEMENTS OF STOCKHOLDERS' DEFICIT
                                 (CONTINUED)

<TABLE>
<S>                               <C>        <C>         <C>       <C>           <C>             <C>            <C>
                                                                              Additional                        Total
                                 Members' Interest       Common Stock          Paid-in        Accumulated   Stockholder's
                                 Shares    Amount       Shares    Amount       Capital          Decifit        Deficit
_______________________________________________________________________________________________________________________
Acquisition of Bobernco                -          -   1,800,000     1,800         1,200                -         3,000
Estimated fair market
 value of options and
 warrants granted to a
 director and
 consultants for
 services rendered                     -          -           -         -       948,630                -       948,630
Estimated fair market
 value of options granted
 to employees for
 compensation                          -          -           -         -       34,650                 -        34,650
Estimated fair market
 value of restricted stock
 issued for services
 rendered                              -          -     162,000        162     161,838                 -       162,000
Estimated fair market
 value of stock issued
 for services rendered                 -          -      16,050         16      76,584                 -        76,600
 Estimated fair market
 value of restricted
 stock issued to
 employees for
 compensation                          -          -      11,000         11       5,214                 -         5,225
Issuance of common
 stock pursuant to
 private placements
 net of offering costs of
 $333,603 (including
 23,500 shares for
 placement agents)                     -          -   1,681,500      1,682   1,322,715                 -     1,324,397
Issuance of restricted
 common stock for
 conversion of note
 payable                               -          -      40,000         40      79,960                 -        80,000
Issuance of restricted
 stock for stock options
 exercised                             -          -   2,589,324      2,589     313,581                 -       316,170
Net loss                               -          -           -          -           -        (3,361,676)   (3,361,676)
_______________________________________________________________________________________________________________________
Balance at June 30, 1999               -          -  15,286,824    $15,287  $3,452,282       $(3,894,563)    $(426,994)
                                 =======    =======  ==========     ======   =========        ===========     =========
</TABLE>









              See independent auditors' report and
           accompanying notes to financial statements

                             F-5
<PAGE>

                        GTC TELECOM CORP.
                     STATEMENT OF CASH FLOWS
<TABLE>
<S>                                                                 <C>              <C>

                                                                     Years Ended June 30,
                                                                     1999           1998
                                                                     ----           -----
Cash flows from operating activities:
 Net loss                                                   $  (3,361,676)    $  (532,887)
 Adjustments to reconcile net loss to net cash
   used in operating activities:
     Estimated fair market value of options and warrants
      granted to a director and consultants for services
      rendered                                                    948,630          81,422
     Estimated fair market value of stock issued for services     238,600               -
     Estimated fair market value of options granted to
      employees for compensation                                   34,650          71,250
     Estimated fair market value of stock issued to CEO
      and Vice President for compensation                               -          95,000
     Estimated fair market value of stock issued to
      employees for compensation                                    5,225               -
     Depreciation and amortization                                 35,250           1,701
     Changes in operating assets and liabilities:
      Accounts receivable                                         (16,889)              -
      Deposits                                                    (35,500)              -
      Prepaid expenses                                            (23,319)              -
      Accounts payable and accrued expenses                       680,628           7,550
      Accrued payroll and related taxes                            97,508          70,000
      Deferred income                                              12,482               -
                                                               ----------        --------
 Net cash used in operating activities                         (1,384,411)       (205,964)
                                                               ----------        --------
Cash flows from investing activities:
 Purchases of property and equipment                             (186,023)        (17,394)
 Purchase of other assets                                         (73,500)              -
 Deposits                                                        (150,000)              -
                                                               ----------        --------
 Net cash used in investing activities                           (409,523)        (17,394)
                                                               ----------        --------
Cash flows from financing activities:
 Proceeds from sale of common stock, net of
   offering costs of $333,603                                   1,324,397               -
 Collection of stock subscription receivable,
   net of offering costs of $20,525                               121,975               -
 Proceeds from exercise of stock options                          316,170               -
 Borrowings on note payable to stockholder                         25,000               -
 Proceeds from sale of GenX units, net of
   offering costs of $28,500                                            -         146,500
 Notes payable to stockholder                                           -          80,000
                                                               ----------        --------
 Net cash provided by financing activities                      1,787,542         226,500
                                                               ----------        --------
(Decrease) Increase in cash                                        (6,392)          3,142

Cash at beginning of year                                           3,892             750

Cash from acquisition                                               3,000               -
                                                               ----------        --------
Cash at end of year                                           $       500    $      3,892
                                                               ==========        ========
Supplemental disclosure of cash flow information:
 Cash paid during the year for:
   Interest                                                   $     1,965    $          -
   Income taxes                                                     1,600               -
</TABLE>



              See independent auditors' report and
           accompanying notes to financial statements

                              F-6


                        GTC TELECOM CORP.
                     STATEMENT OF CASH FLOWS
                           (CONTINUED)



Supplemental disclosure on non-cash investing and financing activities:

During the year ended June 30, 1999, the Company incurred capital lease
 obligations in the amount of $193,895 for the acquisition of property
 and equipment.

During the year ended June 30, 1999, the Company issued 40,000 shares of
 restricted common stock pursuant to the conversion of a note payable in
 the amount of $80,000.

During the year ended June 30, 1998, the Company issued 313,010 shares of
 common stock in exchange for a $142,500 stock subscription receivable, net
 of offering costs of $20,525.  All amounts were collected and paid
 subsequent to June 30, 1998.

See accompanying notes to financial statements for other non-cash items.

















              See independent auditors' report and
           accompanying notes to financial statements

                              F-7

<PAGE>

                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________


NOTE 1   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND OPERATIONS - GTC Telecom Corp. (the "Company" or
"GTC") is a provider of various Telecommunication services,
including long distance telephone, and calling card services as well
as various Internet related services including Internet Service
Provider access and Web Page Hosting.  GTC Telecom Corp. was
organized as a Nevada Corporation on May 17, 1994 and is currently
based in Costa Mesa, California.

On August 31, 1998, GTC Telecom Corp. (which at the time was
designated Bobernco, Inc., a Nevada corporation ("Bobernco"))
acquired all of the outstanding common stock of GenTel
Communications, Inc., a Colorado corporation ("GenTel") in a
business combination described as a "reverse acquisition."  For
accounting purposes, the acquisition has been treated as the
acquisition of Bobernco by GenTel.

GenTel Communications, was formerly known as GenX, LLC ("GenX").
GenX, a Delaware limited liability company, was formed on May 29,
1997.  GenTel was formed on December 9, 1997 and was inactive until
its reorganization with GenX.  Effective February 3, 1998, pursuant
a plan of reorganization, the members of GenX converted their
members' interest into 8,786,950 shares of the Common Stock of
GenTel.  Subsequently, GenX was dissolved.  At the time of its
acquisition by Bobernco, GenTel operated as a provider of long
distance telephone services.

Immediately prior to the acquisition, Bobernco had 1,800,000 shares
of Common Stock outstanding.  As part of Bobernco's reorganization
with GenTel,  Bobernco issued 8,986,950 shares of its Common Stock
to the shareholders of GenTel in exchange for 8,986,950 shares of
GenTel Common Stock.  Immediately following the acquisition,
Bobernco changed its name to GTC.  Bobernco had no significant
operations prior to the merger.

TERMINATION OF DEVELOPMENT STAGE - As noted above, the Company was
incorporated in 1997 and had been principally engaged in raising
capital, obtaining financing, advertising and promoting the Company,
and administrative functions.   Planned operations, as discussed
above, have commenced in relation to the Company's business plan.
Accordingly, the Company is no longer to be considered a development
stage enterprise.

GOING CONCERN - The accompanying financial statements have been
prepared assuming the Company will continue as a going concern,
which contemplates, among other things, the realization of assets
and satisfaction of liabilities in the normal course of business.
The Company has negative working capital, reduced cash levels,
losses from operations through June 30, 1999 and a lack of
operational history, among other matters, raise substantial doubt
about its ability to continue as a going concern.  The Company
intends to fund operations through debt and equity financing
arrangements which management believes may be insufficient to fund
its capital expenditures, working capital, and other cash
requirements for the fiscal year ending June 30, 2000.  Therefore,
the Company will be required to seek additional funds to finance its
long term operations.  The successful outcome of future activities
cannot be determined at this time and there is no assurances that if
achieved, the Company will have sufficient funds to execute its
intended business plan or generate positive operating results.

The financial statements do not include any adjustments related to
the recoverability and classification of assets carrying amounts or
the amount and classification of liabilities that might result
should the Company be unable to continue as a going concern.

USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses
during the reporting.  Actual results could differ from those
estimates.  Significant estimates made in preparing the consolidated
financial statements include the allowance for doubtful accounts and
income tax valuation allowance.

FAIR VALUES OF FINANCIAL INSTRUMENTS - Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting
Standards No. 107 ("SFAS 107"), "Disclosures About Fair Value of
Financial Instruments." SFAS 107 requires disclosure of fair value
information about financial instruments when it is practicable to
estimate that value.  The carrying amount of the Company's cash,
receivables, trade payables, and accrued expenses approximates their
estimated fair values due to the short-term maturities of those
financial instruments.  The fair value of note payable to
stockholder is not determinable as these borrowings are with a
related party.

                               F-8
<PAGE>

                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________


CONCENTRATION OF CREDIT RISK - The Company sells its telephone and
network services to individuals and small businesses throughout the
United States and does not require collateral.  Reserves for
uncollectible amounts are provided, which management believes are
sufficient.

RISKS AND UNCERTAINTIES - The Company has limited operating history
and is subject to the substantial business risks and uncertainties
inherent to such an entity, including the potential risk of business
failure.

LONG-LIVED ASSETS - The Company has adopted issued Statement of
Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" which requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable.  In accordance with the provisions of SFAS 121, the
Company regularly reviews long-lived assets and intangible assets
for impairment whenever events or changes in circumstances indicate
that the carrying amount of the assets may not be recoverable.
Based on this analysis, the Company believes that no impairment of
the carrying value of its long-lived assets existed at June 30, 1999.

YEAR 2000 - The Year 2000 issue relates to limitations in computer
systems and applications that may prevent proper recognition of the
Year 2000.  The potential effect of the Year 2000 issue on the
Company and its business partners will not be fully determinable
until the Year 2000 and thereafter.  If Year 2000 modifications are
not properly completed either by the Company or entities with which
the Company conducts business, the Company's revenues and financial
condition could be adversely impacted.

DEPENDENT ON KEY CUSTOMERS - The Company is not dependent on any
single customer for a significant portion of its annual sales.  The
Company's customer base changes on a continuous basis as new
customers are added or removed.

MAJOR SUPPLIERS - The Company does not own its own long distance
network, and pursuant to the Company's contract with MCI/WorldCom,
the Company currently depends primarily upon MCI/WorldCom to provide
for the transmission of phone calls by its customers and to provide
the call detail records upon which the Company bases its customers
billings.  Under the terms of the three-year contract entered into
with MCI/WorldCom on August 10, 1998, the Company is obligated to a
minimum monthly commitment of $10,000 which commenced March 1999.
The contract expires on September 30, 2001.  Pursuant to the terms
of the contract with MCI/WorldCom, the Company must pay liquidated
damages in an amount equal to the aggregate minimum requirement for
the remaining term of the contract if the Company terminates the
contract prior to the expiration date.  Although the Company
believes that its relationship with MCI/WorldCom are strong and
should remain so with continued contract compliance, the termination
of the Company's contract with MCI/WorldCom, the loss of
telecommunications services provided by MCI/WorldCom, or a reduction
in the quality of service the Company receives from MCI/WorldCom
could have a material adverse effect on the Company's results of
operations.  In addition, the accurate and prompt billing of the
Company's customers is dependent upon the timeliness and accuracy of
call detail records provided to the Company by MCI/WorldCom.

PROPERTY AND EQUIPMENT - Property and equipment is stated at cost.
Depreciation is computed using the straight-line method over the
estimated useful life of 3 to 5 years.  During the year ended
June 30, 1999 and 1998, total depreciation expense was $30,485
and $1,701, respectively.

Betterments, renewals, and extraordinary repairs that extend the
lives of the assets are capitalized; other repairs and maintenance
charges are expensed as incurred.  The cost and related accumulated
depreciation applicable to assets retired are removed from the
accounts, and the gain or loss on disposition is recognized in
current operations.

STOCK-BASED COMPENSATION - The Company accounts for stock-based
compensation issued to employees using the intrinsic value based
method as prescribed by Accounting Principles Board Opinion No. 25
("APB 25"), "Accounting for Stock Issued to Employees."  Under the
intrinsic value based method, compensation is the excess, if any, of
the fair value of the stock at the grant date or other measurement
date over the amount an employee must pay to acquire the stock.
Compensation, if any, is recognized over the applicable service
period, which is usually the vesting period.

                              F-9

<PAGE>
                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________


In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation."   This standard, if fully adopted, changes the method
of accounting for employee stock-based compensation plans to the
fair value based method.  For stock options and warrants, fair value
is determined using an option pricing model that takes into account
the stock price at the grant date, the exercise price, the expected
life of the option or warrant and the annual rate of quarterly
dividends.  Compensation expense, if any, is recognized over the
applicable service period, which is usually the vesting period.

The adoption of the accounting methodology of SFAS 123 is optional
and the Company has elected to continue accounting for stock-based
compensation issued to employees using APB 25; however, pro forma
disclosures, as if the Company adopted the cost recognition
requirements under SFAS 123, are required to be presented.

REVENUE AND RELATED COST RECOGNITION - The Company recognizes
revenue during the month in which services or products are
delivered, as follows:

        TELECOMMUNICATIONS RELATED SERVICES

        The Company's long distance telecommunications service
        revenues are generated when customers make long distance
        telephone calls from their business or residential
        telephones or by using any of the Company's telephone
        calling cards.  Proceeds from prepaid telephone calling
        cards are recorded as deferred revenues when the cash is
        received, and recognized as revenue as the telephone service
        is utilized.

        Telecommunication services cost of sales include the cost of
        long distance service provided by MCI/WorldCom and other
        carriers, commissions for customer acquisition and third
        party verification costs.

        INTERNET RELATED SERVICES

        Internet service revenues consist of monthly fees charged to
        subscribers for Internet access and are recognized in the
        period service access is provided.

        Internet service cost of sales include the cost of providing
        internet access.

EARNINGS PER SHARE - The Company has adopted Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share."
Under SFAS 128, basic earnings per share is computed by dividing
income available to common shareholders by the weighted-average
number of common shares assumed to be outstanding during the period
of computation.  Diluted earnings per share is computed similar to
basic earnings per share except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if
the additional common shares were dilutive.  Pro forma per share
data has been computed using the weighted average number of common
shares outstanding during the period assuming the Company was a C
corporation since inception.  Because the Company has incurred net
losses, basic and diluted loss per share are the same as additional
potential common shares would be anti-dilutive.

INCOME TAXES - The Company accounts for income taxes under Statement
of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting
for Income Taxes."  Under SFAS 109, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or
settled.  A valuation allowance is provided for significant deferred
tax assets when it is more likely than not that such assets will not
be recovered.

                            F-10
<PAGE>

RECLASSIFICATIONS - Certain reclassifications have been made to
prior year amounts to conform to current year presentation.

COMPREHENSIVE INCOME - The Company had adopted Financial Accounting
Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income."
SFAS 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of
general-purpose financial statements.  The adoption of SFAS 130 has
not materially impacted the Company's financial position or results
of operations as the Company has no items of comprehensive income.

SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION - The Company had
adopted Financial Accounting Standards No. 131 ("SFAS 131"),
"Disclosures about Segments of an Enterprise and Related
Information."  SFAS 131 changes the way public companies report
information about segments of their business in their annual
financial statements and requires them to report selected segment
information in their quarterly reports issued to shareholders.  It
also requires entity-wide disclosures about the products and
services an entity provides, the material countries in which it
holds assets and reports revenues and its major customers.  The
adoption of SFAS 131 has not materially impacted the Company's
financial position or results of operations as the Company currently
operates in one segment.

ADVERTISING COSTS   Advertising costs are expensed as incurred.
Advertising expense was $271,915 in fiscal year 1999 and none in
fiscal year 1998 and 1997.

NEW ACCOUNTING PRONOUNCEMENTS - In June 1998, the FASB issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities."
SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities.  It
requires that an entity recognize all derivatives as either assets
or liabilities on the balance sheet at their fair value.  This
statement, as amended SFAS 137, is effective for financial
statements for all fiscal quarters of all fiscal years beginning
after June 15, 2000.  The Company does not expect the adoption of
this standard to have a material impact on its results of
operations, financial position or cash flows as it currently does
not engage in any derivative or hedging activities.

In April 1998, the American Institute of Certified Public
Accountants issued Statement of Position No. 98-5 ("SOP 98-5"),
"Reporting the Costs of Start-Up Activities."  SOP 98-5 requires
that all non-governmental entities expense the costs of start-up
activities, including organization costs as those costs are
incurred.  SOP 98-5 is effective for financial statements for fiscal
years beginning after December 15, 1998.  The Company does not
expect the adoption of this standard to have a material effect on
its results of operations, financial position or cash flows.

NOTE 2   ACQUISITION

Pursuant to an Agreement and Plan of Reorganization dated August 31,
1998, the Company completed a acquisition with and into Bobernco,
Inc. (the "Acquisition"). Under the terms of the tax-free
reorganization and acquisition, all of the Company's common stock
was converted to 8,986,950 shares of Bobernco common stock and, as a
result, the separate corporate existence of the Company ceased and
Bobernco continued as the surviving corporation.  Thus, all
additional subsequent events are disclosed in Bobernco's separate
audited financial statements. The directors and officers of the
Company immediately prior to the acquisition became the directors
and officers of Bobernco, which subsequently changed its corporate
name to GTC Telecom Corp.  ("GTC").  However, if the acquisition had
occurred at the beginning of the year, the pro forma financial
statements as of June 30, 1998 would be as follows:

     Net sales                             $ 497,312
     Cost of sales                         $ 447,312
     Net loss                              $(534,161)
     Basic and dilutive loss per share     $   (0.05)
     Basic and dilutive weighted average
     common shares outstanding            10,311,610


                               F-11
<PAGE>

                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________



NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of:

                                                           June 30,
                                                      1999        1998
                                                      ----        ----
Computer equipment                                $329,560     $17,394
Furniture and office equipment                      23,795           -
Telephone equipment                                 43,957           -
                                                    ------      ------
                                                   397,312      17,394

Less accumulated depreciation                      (32,186)     (1,701)
                                                    ------       -----
                                                  $365,126     $15,693
                                                   =======      ======
NOTE 4 - OTHER ASSETS

Other assets consist of PUC carrier certifications the Company must
obtain in order to provide interstate and intrastate telephone
service.  Other assets are recorded at cost and are being amortized
using the straight-line method over the useful life of 3 years.
Amortization expense for the years ended June 30, 1999 and 1998 is
$4,765 and none, respectively.

NOTE 5 - OBLIGATION UNDER CAPITAL LEASE

The Company is a lessee of certain property and equipment under a
capital lease that expires in April 2002.  Terms of the lease call
for monthly payments of $6,738.  The asset and liability under
capital leases are recorded at the lower of the present value of the
minimum lease payments or the fair market value of the related
assets. The asset is depreciated over its estimated useful life.

Future minimum annual commitments under lease arrangements are as
follows:

             Years Ending                          Capital
             June 30,                              Leases
              ______                               _______

                2000                            $   80,851
                2001                                80,851
                2002                                67,376
                                                   _______


Total minimum future lease payments                229,078

Less: Amounts representing interest                (35,183)
                                                   -------
Present value of net minimum lease payments        193,895

Less: Current portion of capital lease obligations (61,198)
                                                   -------
Long-term portion of capital lease obligations   $ 132,697
                                                   =======

The following is an analysis of the leased equipment under capital
eases as of June 30, 1999, which is included in property and
equipment (Note 3).

                Computer equipment               $ 205,416

                Less: Accumulated depreciation           -
                                                   -------
                                                 $ 205,416
                                                   =======

Interest paid was approximately $1,965 and none for fiscal years
1999 and 1998, respectively.  Interest resulted primarily from
interest paid on the Company's capitalized lease obligations.


                              F-12
<PAGE>

                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________


NOTE 6   NOTE PAYABLE TO STOCKHOLDER

Notes payable to stockholder represents monies borrowed from a
stockholder for working capital purposes.  The note payable accrues
interest at 10% and is due within one year.  As of June 30, 1999 and
1998, the note payable to stockholder was $25,000 and none,
respectively.  Subsequent to June 30, 1999, the Company borrowed an
additional amount of $48,500 (see Note 14).

NOTE 7   CONVERTIBLE NOTE PAYABLE TO STOCKHOLDER

Convertible note payable to stockholder represents monies borrowed
from a stockholder for working capital purposes.  The note payable
accrues interest at 12.50% and is payable in two installments of
$40,000 plus interest due on November 15, 1998 and May 15, 1999.
The note is convertible into 40,000 shares of restricted common
stock at $2.00 per share.  During fiscal 1999, the stockholder
exercised the conversion feature.

NOTE 8   STOCK BASED PLANS

>From time to time, the Company issues stock options pursuant to
various agreements and other compensatory arrangements.

During fiscal 1998, pursuant to employment agreements with its CEO
and Vice President, the Company issued options to purchase 300,000
shares of the Company's common stock at an exercise price of 50% of
the fair market value at the date the option was granted (estimated
by the Company to be $0.475 at January 5, 1998).  The options vested
100% on the date of grant and are exercisable through December 1,
2001 (remaining contractual life at June 30, 1999 is 1 1/2 years).

During fiscal 1999, the Company entered into various employment
agreements wherein the Company has agreed to supplement compensation
to certain key employees in the form of stock options.  Pursuant to
the agreements, the Company issued options to purchase 390,000
shares of restricted common stock at exercise prices ranging from
$.01 per share to $5.00 per share and vesting over a period ranging
from six months to three years from date of grant.  Subsequent to
the agreements, 29,000 options were forfeited.  A total of
approximately $85,140 of compensation expense will be recorded over
the vesting period of which, $34,650 was recognized during fiscal 1999.

During fiscal 1999, pursuant to various consulting and outside
service provider agreements, the Company issued to directors and
consultants options to purchase 1,276,316 shares of the Company's
restricted common stock at an exercise price ranging from $0.01 to
$1.00 per share (the Company estimated the fair market value per
share to be $1.00 on the date of each grant).  The options vest on
the date of grant over a pre-determined vesting schedule and are
exercisable through November 2004.  Total expense of $426,132 was
recognized at June 30, 1999.  During the years ended June 30, 1999
and 1998, the Company issued 1,172,316 shares of restricted common
stock pursuant to these option agreements for $302,000.

Following is a status of the stock options outstanding at June 30,
1999 and 1998 and the changes during the years then ended:

<TABLE>
<S>                                          <C>              <C>              <C>              <C>
                                             1999                             1998

                                                            Wtd Avg                           Wtd Avg
                                           Options         Ex Price          Options         Ex Price
                                           -------         --------          -------         --------
Outstanding, beginning of year             300,000          $0.2375                -                -

       Granted                           1,666,316           0.9995          300,000          $0.2375

       Exercised                        (1,172,316)          0.2576                -                -

       Expired/Forfeited                   (29,000)          3.1052                -                -
                                            ------           ------                -                -
Outstanding, end of year                   765,000          $1.7577          300,000          $0.2375
                                           =======           ======          =======          =======
Exercisable at end of year                 439,000          $0.4000          300,000          $0.2375
                                           =======           ======          =======           ======

Wtd avg fair value of options granted                       $  1.00                           $  0.32
                                                             ======                            ======
</TABLE>

                              F-13

<PAGE>

                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________


493,500 of the options outstanding at June 30, 1999 have exercise
prices between $0.01 and $1.00, with a weighted average exercise
price of $0.36 and a weighted average remaining contractual life of
2.8 years.  439,000 of these options are exercisable at June 30,
1999.  The remaining 271,500 options have exercise prices between
$4.00 and $5.50, with a weighted average exercise price of $5.02 and
a weighted average remaining contractual life of 4.3 years.

The fair value of each option granted during 1999 and 1998 to
consultants and outside service providers is estimated using the
Black-Scholes option-pricing model on the date of grant using the
following assumptions: (i) no dividend yield, (ii) average
volatility of 127 percent and 135 percent, respectively, (iii)
weighted-average risk-free interest rate of approximately 6.5
percent and 5.2% percent, respectively, and (iv) expected life of 1
year.

Had compensation cost for the Company's 1999 and 1998 options
granted to employees been determined consistent with SFAS 123, the
Company's net loss and net loss per share for the year ended June
30, 1999 and 1998 would approximate the pro forma amounts below:

<TABLE>
<S>                                        <C>                <C>             <C>               <C>
                                                   1999                               1998

                                        As Reported       Pro Forma       As Reported        Pro Forma

Net loss                                $(3,361,676)    $(3,361,676)        $(532,887)       $(557,637)
 Basic and diluted loss per share       $     (0.27)    $     (0.27)        $   (0.06)       $   (0.07)
</TABLE>

NOTE 9   WARRANTS

>From time to time, the Company issues warrants pursuant to various
consulting agreements.

During fiscal 1998, pursuant to a contract agreement with an outside
consultant, the Company issued warrants to purchase 1,135,966 shares
of the Company's restricted common stock at an exercise price of
$0.01 per share (the Company estimated the fair market value on the
date of grant to be $0.23 per share).  During fiscal 1999, the
Company issued additional warrants to purchase 281,042 shares of the
Company's restricted common stock at an exercise price of $0.01 per
share (the Company estimated the fair market value on the date of
grant to be $1.00 per share).  The warrants vested based on a
formula and as of June 30, 1999, all warrants were vested and
exercised.  Total consulting expense of $522,498 and $81,422 was
recognized as of June 30, 1999 and 1998, respectively.

The following represents a summary of the warrants outstanding for
the years ended June 30, 1999 and 1998:

<TABLE>
<S>                                       <C>             <C>              <C>               <C>
                                                 1999                             1998

                                                        Wtd Avg                           Wtd Avg
                                       Warrants        Ex Price          Warrants         Ex Price
                                       ---------       --------          --------         --------
Outstanding, beginning of year         1,135,966          $0.01                 -                -

       Granted                           281,042           0.01         1,135,966            $0.01

       Exercised                      (1,417,008)          0.01                 -                -

       Expired/Forfeited                       -              -                 -                -
                                               -              -                 -                -

Outstanding, end of year                       -              -         1,135,966            $0.01
                                               =              =         =========             ====
Exercisable at end of year                     -              -           283,992            $0.01
                                               =              =           =======             ====

Wtd avg fair value of warrants granted                        -                                  -
                                                              =                              $0.32
                                                                                              ====
</TABLE>

The fair value of each warrant granted during 1999 and 1998 is
estimated using the Black-Scholes option-pricing model on the date
of grant using the following assumptions: (i) no dividend yield,
(ii) average volatility of 127 percent and 135 percent,
respectively, (iii) weighted-average risk-free interest rate of
approximately 6.5 percent and 5.52 percent, respectively, and (iv)
expected life of 1 year.


                              F-14
<PAGE>

                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________


NOTE 10   COMMON STOCK ISSUANCES

On August 31, 1998, the Company (which at the time was designated
Bobernco, Inc., a Nevada corporation) acquired all of the
outstanding common stock of GenTel Communications, Inc., a Colorado
corporation in a business combination described as a "reverse
acquisition."  As part of the reorganization, the Company issued
8,986,950 shares of its Common Stock to the shareholders of GenTel
in exchange for all of the outstanding shares of Common Stock of
GenTel.  Such shares include the shares owned by officers and
directors of the Company.

During the fiscal year ended June 30, 1999, the Company issued
162,000 shares of restricted common stock, valued at $162,000
(estimated by the Company to be $1.00 per share) to outside
consultants and directors for services rendered.

During the fiscal year ended June 30, 1999, the Company issued
16,050 shares of common stock, valued at $76,600  to outside
consultants for services rendered.

During the fiscal year ended June 30, 1999, the Company issued
11,000 shares of restricted common stock, valued at $5,225
(estimated by the Company to be $0.475 per share) to employees in
lieu of salary.

During the fiscal year ended June 30, 1999, the Company issued
1,558,500 (including 23,500 shares for offering costs) shares of
restricted common stock pursuant to a private placement memorandum
of $1,215,947, net of offering costs of $319,053.

On April 20, 1999, the Company issued a confidential private
placement memorandum of 2,000,000 shares of the Company's restricted
common stock at $3.00 per share.  As of June 30, 1999, the Company
had only sold and issued 41,000 shares pursuant to this offering,
resulting in cash of $108,450, net of offering costs of $14,550.
On July 20, 1999, the Company replaced this offering with a confidential
private placement offering of 2,000,000 shares of the Company's restricted
common stock at a price of $1.00.  As a result, the Company has
agreed to issue an additional 81,000 shares to these participants
which are included in the Statement of Stockholders' Deficit.

CANCELLATION OF CERTAIN SHARES OF STOCK HELD BY MANAGEMENT - On
October 4, 1999, Paul Sandhu, the Company's President and CEO, and
Eric Clemons, the Company's Chief Operating Officer, canceled
581,480 and 145,370, respectively, shares of the Company's common
stock held by each of them.  It was determined that these shares
were not cancelled in a timely matter.  As a result, these
cancellations are included in the Statement of Stockholders' Deficit.

NOTE 11   INCOME TAXES

The tax effects of temporary differences that give rise to deferred
taxes are as of:


                                                  June 30,
                                                  -------
                                             1999         1998
                                             ----         ----

Deferred tax asset:
  Net operating loss carryforward      $1,060,000     $146,000
  Expense recognized for granting
   options and warrants                   483,000       62,000
  Other, net                                6,000        6,000
                                          _______      _______

     Total gross deferred tax asset     1,549,000      214,000

  Less valuation allowance             (1,549,000)    (214,000)
                                        ---------      -------
      Net deferred tax asset           $        -     $      -
                                        =========      =======

                              F-15

<PAGE>

                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________


The valuation allowance increased by approximately $1,335,000 and
$214,000 during the year ended June 30, 1999 and 1998, respectively.
No current provision for income taxes for the periods ended June
30, 1999 and 1998 is required, except for minimum state taxes, since
the Company incurred taxable losses during such years.

The provision for income taxes for fiscal 1999 and 1998 was $800 and
differs from the amount computed by applying the U.S.  Federal
income tax rate of 34% to loss before income taxes as a result of
the following as of:

                                                  June 30,
                                                  -------
                                            1999          1998
                                            ----          ----

Computed tax benefit at federal
   statutory rate                    $(1,143,000)    $(181,000)
State income tax benefit, net
   of federal effect                   (191,200)     $ (34,000)
Increase in valuation allowance       1,335,000        214,000
Other, net                                    -          1,800
                                      _________      _________

                                     $      800      $     800
                                      =========      =========

As of June 30, 1999, the Company had net operating loss
carryforwards of approximately $2,375,000 and $1,378,000 for federal
and state income tax reporting purposes, which begin expiring in
2013 and 2003, respectively.

In the event the Company were to experience a greater than 50%
change in ownership as defined in Section 382 of the Internal
Revenue Code, the utilization of the Company's net operating loss
carryforwards could be severely restricted.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

LEASE AGREEMENTS - The Company leases its facilities for its
corporate and operations offices under a non-cancelable lease
expiring in May 2001.

Future minimum annual commitments under lease arrangements are as
follows:

          Years Ending                           Operating
          June 30,                               Leases
          ________                               ________
          2000                                   $ 66,715
          2001                                     61,156
                                                   ------
                                                 $127,871
                                                  =======

Rent expense for the fiscal years ended June 30, 1999 and 1998 was
$148,666 and $22,115, respectively.

EMPLOYMENT AGREEMENTS - On January 5, 1998, the Company entered into
five-year employment agreements with its CEO and majority
stockholder and its Vice President.  Under the terms of the
agreements, the CEO and the Vice President will receive an annual
salary and options to purchase Company common stock (see Note 8).
In addition, the Company retains an option to extend each employee's
employment and renew the agreement annually for up to ten additional
years.  During fiscal 1999, these agreements were modified to
one-year at-will employment agreements.

                             F-16

<PAGE>

                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________


In fiscal 1999, the Company entered into employment agreements with
certain officers.  Under the terms of the agreements, the officers
will receive an annual salary and options to purchase Company common
stock (see Note 8).

CONTRACTS AND AGREEMENTS - On June 17, 1998, the Company entered
into an agreement with The Michelson Group, Inc. ("Michelson"),
whereby Michelson will perform corporate development services such
as, but not limited to, selecting key employees, attracting capital
investors, providing advice on stock option plans and maintaining an
ongoing stock market support system.  Pursuant to the agreement, the
Company will pay Michelson a monthly fee of $6,500.  In addition,
the Company agrees to issue Michelson warrants to purchase that
number of shares of common stock of the Company which would, upon
exercise, result in Michelson holding 9.9% of the outstanding shares
of the Company (estimated to be a maximum of 1,417,008 shares) upon
the completion of a proposed bridge financing at an exercise price
of $0.01 per share.  As of June 30, 1999, all warrants were vested
and exercised (see note 9).

In connection with the Company's private placement, the Company
entered into an Investment Banking Agreement with Transglobal
Capital Corporation ("TCC"), a licensed NASD broker on November 19,
1998.  As part of this Agreement, TCC agreed to provide the Company
with consulting services and to assist the Company in raising
capital.  In return, the Company agreed to compensate TCC with an
initial fee of 50,000 shares of the Company's restricted Common
Stock valued at $50,000 and charged as offering costs in additional
paid in capital plus a 13% commission on gross proceeds received in
connection with the February 12, 1999 private offering totaling
$130,000.  In addition, the Company agreed to issue TCC options to
purchase 600,000 shares of the Company's Common Stock at an exercise
price of $0.01 per share pursuant to a pre-determined performance
schedule.  During the year ended June 30, 1999, TCC met all
requirements for the granting of 600,000 options resulting in an
offering cost charge of $594,000.  As of June 30, 1999, all 600,000
options have been exercised at $.01 per share.

On April 30, 1999, the Company entered into an agreement with
Williams Communications ("Williams"), in which Williams will design,
install and maintain the Company's high speed, nationwide
voice-over-IP ("VoIP") technology network.  The total contract cost
to the Company is approximately $100,000,000 over a five-year term.
On April 30, 1999, the Company entered into a financing agreement
(the "Financing Agreement") with Ascend Communications, Inc.
("Ascend") for $26 million in equipment financing, specifically for
the purchase of the Company' s VoIP network.  Upon delivery of the
equipment, which has yet to occur, the terms of the financing will
include thirty-three (33) monthly payments of $942,760 and a
five-year warrant for Ascend to purchase 315,151 shares of the
Company's restricted Common Stock at an exercise price of $8.25 per
share.  The warrants include provisions for anti-dilution
protection, net exercise and registration rights.  An additional
amount of approximately $2.9 million, above and beyond the Financing
Agreement, will be needed to complete the purchase of the VoIP
network.  The payment terms of this additional amount are still
being negotiated.  Upon delivery, the Company will capitalize the
related asset and record the liability pursuant to the agreement.
In addition, the Company is obligated to pay Williams a monthly
maintenance fee of approximately $188,000 and an additional set-up
fee of $270,000 beginning on the first month following delivery of
the Network (which is currently scheduled for January 2000)
increasing to approximately $404,000 per month through the twelfth
(12th) month of the Williams Agreement.  The monthly maintenance fee
increases to approximately $639,000 per month beginning with the
thirteenth (13th) month and thereafter until the end of the contract
period (approximately through December 2004).  The remainder of the
Williams Agreement is for its carrier services in which the Company
will pay approximately $520,000 per month over the term of the
contract.

In August 1999, the Company met with Williams to reevaluate the
configuration of the VoIP network.  This reevaluation may or may not
result in a reduction of the value of the contract and may or may
not result in a change to the scheduled launch date.  The
reevaluation is scheduled to be complete by the end of October 1999.

In conjunction with the development of its web portal site, the
Company has entered into various vendor agreements which obligate
the Company to a minimum aggregate monthly payment of approximately
$53,000 increasing to a maximum aggregate monthly payment of approximately
$83,000.  The agreements expire on various dates through June 2001.


                             F-17
<PAGE>

                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________


 In August 1998, the Company entered into a three-year carrier
contract with MCI/WorldCom whereby MCI/WorldCom is to provide for
the transmission of phone calls by its customers and to provide the
call detail records upon which the Company bases its customers
billings.  Under the terms of the contract, the Company is obligated
to a minimum monthly commitment of $10,000 which commenced March 1999.
The contract expires on September 30, 2001.

In September 1998, the Company entered into a agreement with a
billing company who will provide processing services for customer
billing and collections. In addition the billing company will
provide financing opportunities through a third-party lender for
amounts up to 70% of eligible accounts receivable, as defined.

In October 1998, the Company entered into a agreement to become a
licensed user of a telecommunications management and accounting
software program. The agreement, which expires in October 2003,
unless terminated by the Company, has a five-year renewal feature
and provides for the Company to pay $1,425 per month.

In February 1999, the Company entered into an agreement with an
Internet Access Provider ("IAP") whereby the IAP will provide
internet services for the Company.  The Agreement provides for a
minimum monthly commitment of $25,000 beginning September 1999. The
Agreement shall continue for a period of three years and is
automatically renewed for additional, successive one-year periods
unless terminated by the Company. Pursuant to the terms of the
contract with IAP, the Company must pay liquidated damages in an
amount equal to the aggregate minimum commitment for the remaining
term of the contract if the Company terminates the contract prior to
the expiration date.  In a continual effort to lower costs,
the Company has terminated this contract and has entered into a
one-year agreement with Level 3 Communications, LLC ("Level 3") to
provide its Internet Service Provider Access.  As a result of this
decision, the Company is currently in the process of negotiating the
termination of its agreement with its IAP.  Consequently, management
of the Company believes that the result of these negotiations will
have no material impact upon its financial position or results of
operations.

NOTE 13   EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominators
of the basic and diluted earnings per share computations:

<TABLE>
<S>                                                <C>         <C>
                                                 Periods Ended June 30,
                                                   1999        1998
                                                   ____        ____

 Numerator for basic and diluted
  earnings per share:
   Net loss charged to common stockholders $ (3,361,676) $  (532,887)

 Denominator for basic and diluted
  earnings per share:
   Weighted average shares                   12,647,347    8,511,610

     Basic and diluted earnings per share  $      (0.27) $     (0.06)
</TABLE>

NOTE 14 - SUBSEQUENT EVENTS:

On July 6, 1999, the Company entered into a short term note (the
"Note") with an individual for $50,000 for working capital purposes.
Under the terms of the note, the Company will be required to repay
the principal amount of $50,000 within 30 days with 10% interest.
The Note is secured by the Company's receivable.  The Company is in
the process of renegotiating the terms of the Note.

In connection with the reoffering of the confidential private
placement memorandum (see note 10), the Company has raised
approximately $688,890, net of offering costs of $94,110.

In September 1999, the Company issued an aggregate of 67,675 shares
of the Company's common stock valued at approximately $271,000 in
exchange for consultation and legal services.

In September 1999, the Company issued 65,000 shares of the Company's
restricted common stock, valued at $65,000 (estimated by the Company
to be $1.00 per share) to third parties for services rendered.

                               F-18
<PAGE>

                         GTC TELECOM CORP.
                 NOTES TO FINANCIAL STATEMENTS
                          JUNE 30, 1999
                        __________________


On September 20, 1999, the Company's Board of Directors approved the
GTC Telecom Corp.  1999 Omnibus Stock Option Plan (the "Option
Plan"), effective October 1, 1999.  An aggregate of 750,000 shares
of common stock are reserved for issuance under the Plan during the
year October 1, 1999 to September 30, 2000.  For each subsequent
year beginning October 1, 2000, there shall be reserved for issuance
under the Plan that number of shares equal to 10% of the outstanding
shares of common stock on July 1 of that year.  The exercise price
for each option shall be equal to 25% to 100% of the fair market
value of the common stock on the date of grant, as defined, and
shall vest over a five year period.

Subsequent to year end, the Company borrowed $48,500 from its
President and CEO for working capital purposes.  Pursuant to the
promissory note, the principal amount plus 10% interest is due
within one year.













                           F-19

<PAGE>