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, 2002

     [   ] 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)

     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.  [  X  ]

     State  issuer's  revenues  for its most recent fiscal year.     $17,761,873

     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.)  $2,366,560

     State  the  number of shares outstanding of each of the issuer's classes of
common  equity,  as  of  the  latest  practicable  date.  20,606,622


                       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___


                                      -1-
<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.



                                      -2-
<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

GTC  Telecom  Corp.  (the "Company" or "GTC") provides various telecommunication
services,  including  long distance telephone and calling card services, 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.  The Company's common
stock  currently  trades on the NASD OTC Bulletin Board under the symbol "GTCC."

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

TELECOMMUNICATIONS  RELATED  SERVICES

GTC  is  licensed in every state (except Alaska) 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.  By  offering low rates, the Company expects to add customers at an
accelerated  pace.  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.

                                      -3-
<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. In addition, the Company has recently
obtained  licenses in the states of California, Colorado, Florida, New York, New
Jersey,  Pennsylvania,  and  Texas  to  operate  as a Competitive Local Exchange
Carrier  ("CLEC"). As a result, 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.

INTERNET  RELATED  SERVICES

The  Company  provides  a  variety of Internet related services. These services,
available  to  both  consumer  and business users, include prepaid calling cards
through  eCallingCards.com,  Inc.,  the Company's wholly owned subsidiary at its
web site located at www.ecallingcards.com; and Internet Services Provider access
through dial-up(5). 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  equal  to  or  less  than  its  competitors.

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 monthly fee of $9.95.

TELECOMMUNICATIONS  INDUSTRY  BACKGROUND
The  $100.2  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 72.0% of the aggregate revenue of all U.S. long
distance  interexchange  carriers  in 2000.  Other long distance companies, some
with  national  capabilities,  accounted  for  the  remainder  of  the  market.

Based on published FCC estimates(6), toll service revenues of U.S. long distance
interexchange  carriers  have grown from $38.8 billion in 1984 to $100.2 billion
in  2000. While industry revenues have grown at a compounded annual rate of 6.1%
since  1984,  the  revenues of carriers other than AT&T, MCI/WorldCom and Sprint
have  grown  at  a compounded rate of 30.2% 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 28.0% in 2000. During the
same  period,  the  market  share  of  AT&T  declined  from  90.1%  to  40.5%.

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

-------------------------------------

(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)  Modem  access  via  traditional  telephone  lines.
(6)  As published on the FCC's Website located at
www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/SOCC/00socc.pdf.


                                      -4-
<PAGE>

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.

The  Telecommunications  Act  of 1996 (the "Act") was 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(7) to their networks and establishing
among  other  things,  LEC  obligations  with  respect to access, resale, number
portability(8),  dialing  parity(9),  access  to  rights-of-way(10), 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.

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 every state
(except  Alaska)  and  the  District  of  Columbia.

The  Company  markets  its  products  and services using six important, but very
distinct,  strategies  as  follows:

Independent  Affiliates

The  backbone  of  GTC's  overall  market  and development strategy involves the
pursuit  and  establishment  of  strategic affiliations and alliances with major
telecommunication  and  Internet  service  companies  through  partnerships  and
co-branding.  GTC  has  already  been  quite  successful  in  establishing these
alliances  with  known  companies,  such  as  Best  Buy,  Inc.,  MasterCard
International,  Marvel  Entertainment,  and NewsMax in the telecommunication and
Internet  service  industries.

Internet  Use

The  second 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
www.gtctelecom.com  and  www.gtcinternet.com  websites.   Co-branding  is  done
through  joint  agreements such as Community Connect Inc.'s online community for
Asian  Americans,  www.AsianAvenue.com.


------------------------------------------
(7) Customer  equipment  (i.e.  customer's telephone or modem) which connects to
the service provider's equipment.
(8)  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.
(9)  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.
(10)  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.

                                      -5-
<PAGE>

Company  Sales  Force

The third method of marketing utilizes the Company's own sales force and
independent sales agents.  A sales force was developed that consists of properly
trained professionals from within the industry who are looking for an
opportunity to sell at rates that are lower than the industry standard.  The
Company is targeting both affiliates and affinity groups.

Advertising

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
advertisements.  The  Company  intends  to continue to utilize both broadcasting
and  print  media  campaigns  in  the  future  given  sufficient  funds.

GTC  has  also been very successful in obtaining new customers through important
"word-of-mouth"  free  advertising.  Many customers are extremely satisfied with
the  service provided by the Company and inform relatives or friends about GTC's
excellent  rates and this invaluable free advertising for the Company results in
new  business.

Direct  Marketing

The  fifth  method  of  marketing  the Company's products and services is direct
marketing.  The  Company  has  developed brochures for all products and services
that  can  be  used  as  a direct marketing tool and for product promotions.  In
addition,

National  Recognition

The  Company  will  continue  to  pursue  and  capitalize  on  national  media
recognition,  as  it  has  done  with  Kiplinger  and Consumer Reports, to boost
consumer  awareness  in  the  marketplace.  GTC  will capitalize on this type of
recognition  through  strategic  press  releases  and other media opportunities.

The Company believes these six 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,  including AT&T Corp., MCI/WorldCom, Sprint Corporation,
local  exchange  carriers  such  as  Verizon  and  SBC Communications, and other
national  and regional interexchange carriers.  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 (those
that  carry  long  distance  traffic  on  their  own  equipment)  and switchless
resellers  (those  that  resale  long  distance  carried  by  facilities-based
providers)  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 provisioning 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.


                                      -6-
<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 RBOCs 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, WorldNet, AOL, 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.  The  Company offers unlimited dial-up service for $9.95 per month.

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.


                                      -7-
<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  customer's  billings.  Under  the  terms of the contract first entered into
with  MCI/WorldCom  on  August 10, 1998, as subsequently amended, the Company is
currently  obligated  to  a  minimum  monthly commitment of $520,000 and a total
purchase  requirement  of  $18,000,000  over  the  term  of  the  agreement.

Pursuant  to  the  terms  of  the  contract  with  MCI/WorldCom, the Company may
terminate  the  agreement upon thirty (30) days written notice provided that the
Company  pays  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  for  convenience  or  if  MCI/WorldCom terminates the
agreement  due  to  a  material  breach  on the part of the Company prior to the
expiration  date.  The  remaining commitment to MCI/WorldCom through August 2003
is  $2,006,945  as  of  June  30,2002.

On  July  22,  2002, MCI/WorldCom filed for Chapter 11 Bankruptcy reorganization
protection.  MCI/WorldCom  has,  however, assured the Company that it intends to
continue  supplying  the  Company during its bankruptcy reorganization with long
distance  services  at  the  same  level of service and under the same terms and
conditions  as  previously  existed.  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.  There  can  be  no assurance that
accurate  information  will  be  provided by MCI/WorldCom on a timely basis, the
failure  of  which would have a material adverse effect on the Company's results
of  operations.

To  provide  redundancy  as  well  as additional capacity, on July 26, 2002, the
Company  entered  into an agreement with an additional national facilities based
provider for the transmission of phone calls by its customers and to provide the
call  detail  records upon which the Company bases its customer billings.  Under
the  terms  of  the  contract,  the  Company  is  obligated to a minimum monthly
commitment of $0 for the first four (4) months of the agreement and $25,000 each
month thereafter.  The term of this agreement is for two (2) years.  Pursuant to
the  agreement,  the  Company  may terminate the agreement upon ninety (90) days
written  notice provided that the Company pays a termination fee equal to 50% of
the aggregate minimum revenue requirement for the remaining term of the contract
if  the Company terminates for convenience or by default of the Company prior to
the  expiration date.  The provider may terminate the agreement upon thirty (30)
days  written  notice and then only in the event that the Company is in material
breach  of  the  agreement.

In  the  event  that  the  services provided by MCI/WorldCom to the Company were
discontinued,  the Company believes that its alternate supplier (as noted in the
previous  paragraph)  will  be  able  to  provide  it  with sufficient levels of
services  at  terms  similar to those of MCI/WorldCom.  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.

GTC  does  not  currently have its own Internet Network.  Currently, the Company
provides  its  Internet  Service Provider Access services pursuant to agreements
with  various  outside  companies for the provisioning of the Company's Internet
Service  Provider  Access  service.  These agreements require the Company to pay
the  greater of actual incurred usage or a minimum monthly fee.  Pursuant to one
of  these  Agreements,  the Company is subject to monthly minimum commitments of
$10,300  for  June  2002,  $23,175  for  July  2002, $38,625 for August 2002 and
$51,500  each  month  thereafter.  The initial term of this agreement is two (2)
years  with  automatic  renewals  for  additional, successive one (1) year terms
unless  previously  terminated  by  either  party  given sixty (60) days written
notice.  In addition, the Company must pay an early termination fee in an amount
equal to 75% of the aggregate minimum revenue requirement for the remaining term
of  the  contract if the Company terminates for convenience or by default of the
Company  prior  to  the  expiration date which was $857,475 as of June 30, 2002.
The  other agreements have no monthly minimum commitments.  Although the Company
believes  that its relationship with these companies is strong and should remain
so  with  continued  contract  compliance,  the  termination  of  the  Company's
contracts  with these companies, the loss of Internet services provided by these
companies,  or  a  reduction in the quality of service the Company receives from
these companies could have a material adverse effect on the Company's results of
operations.  In the event that these companies were to discontinue their service
to  the  Company,  the Company believes, based upon discussions that the Company
has  had  with  other  Internet  service  providers, that it could negotiate and
obtain  contracts  with  Internet  service  providers  at  comparable  rates.

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  publish and make available service agreements listing their rates,
terms  and conditions of service.  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.


                                      -8-
<PAGE>
The  FCC  imposes  only minimal reporting requirements on nondominant resellers,
although  the  Company  is  subject  to  certain  reporting,  accounting  and
record-keeping  obligations.

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 provides 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 and 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 every state (except Alaska) 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.

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

                                      -9-
<PAGE>
As of July 31, 2002, the Company employed approximately 79 people on a full time
basis.

ITEM  2.  DESCRIPTION  OF  PROPERTY

The  Company  leases  a  total  of  10,624  square  feet of office space for its
headquarters  and  customer  service  operations  in Costa Mesa, California at a
monthly  rental  rate  of  $22,205.

The  lease expires on July 31, 2004, unless previously terminated by the Company
or  by  the  lessor  given  seventy-five  (75)  days  written  notice.

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.  Other
than  as  set  forth  below,  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.

Online  Choice.com,  Inc.,  v.  GTC  Telecom  Corp. On November 30, 2001, Online
Choice.com,  Inc.  filed  a claim against the Company for breach of contract and
declaratory  relief  in  the  United  States District Court, Central District of
California.  Plaintiffs  alleged  they purchased substantially all of the assets
out  of  the  bankruptcy  estate  of  a  company  that  was an independent sales
affiliate  of  GTC.  Plaintiffs  further  alleged  that  GTC's independent sales
affiliate  agreement  with  that  previous affiliate was among those assets, and
that  GTC  has breached the agreement by failing to continue to pay commissions.
On  August  22,  2002,  the  Company  and  Online  Choice.com,  Inc.,  reached a
settlement  in which the action and all related cross-actions were dismissed. No
money  changed  hands  as  a  result  of  the  settlement.

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

On  December 13, 2001, the Company held its annual shareholder's meeting for the
fiscal  year  ended  June 30, 2001.  The results of that meeting were previously
disclosed  on  the  Company's  Quarterly  Report  on  Form 10-QSB filed with the
Securities  and Exchange Commission on February 12, 2002.  No other matters were
submitted  to  a  vote of security holders during the fiscal year ended June 30,
2002.


                                      -10-
<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, markdown or commission and may not
represent  actual  transactions.  The Company's common stock currently trades on
the  NASD  OTC  Bulletin  Board  under  the  symbol  "GTCC."

CALENDAR                                BID  PRICES
YEAR          PERIOD                  HIGH         LOW
----          ---------------         ----         ----
1999          First  Quarter          11.125       3.25
              Second  Quarter          8.625       3.56
              Third  Quarter           4.9375      2.00
              Fourth  Quarter          3.8125      1.75

2000          First  Quarter           3.75        1.71875
              Second  Quarter          2.09375     0.7188
              Third  Quarter           0.8438      0.50
              Fourth  Quarter          0.9062      0.2188

2001          First  Quarter           0.4844      0.25
              Second  Quarter          0.44        0.22
              Third  Quarter           0.31        0.18
              Fourth  Quarter          0.34        0.17

2002          First  Quarter           0.27        0.17
              Second  Quarter          0.30        0.15

On  July 31, 2002, the last sales price per share of the Company's common stock,
as  reported  by  the  NASDAQ  Bulletin  Board,  was  $0.15.

NUMBER  OF  SHAREHOLDERS

The number of beneficial holders of record of the common stock of the Company as
of  the  close  of business on July 31, 2002 was approximately 389.  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

During  the  fourth  quarter of the fiscal year ended June 30, 2002, the Company
issued  the  following  unregistered  securities:

In  April  2002,  the  Company entered into a twelve (12) month agreement with a
third  party  for  investment  banking services.  Pursuant to the agreement, the
Company,  in  addition  to monthly cash payments of $5,000 and a one-time fee of
$25,000,  agreed  to  issue to the investment banking company, 100,000 shares of
the Company's restricted common stock, valued at approximately $16,000 (based on
the  market  price  on  the  date  of  execution  of the agreement), warrants to
purchase  100,000 shares of the Company's restricted common stock with a term of
three (3) years at an exercise price of $0.50 per share, valued at approximately
$14,000  (based on the Black-Scholes option pricing model), and 25,000 shares of
the  Company's  restricted  common  stock  for each month of the agreement for a
total  of  50,000  additional  shares  of common stock pursuant to the agreement
valued at $9,750 (based on the closing market price).  Each issuance is based on
the market price on the date earned.    The issuance was an isolated transaction
not  involving a public offering pursuant to section (4) 2 of the Securities Act
of  1933.

On  April 1, 2002, the Company issued options to purchase an aggregate of 10,000
shares  of  the  Company's common stock, at an exercise price of $0.22 per share
(fair  market  value  of  the  Company's  common stock on the date of grant), to
members  of the Board pursuant to their agreement of director compensation.  The
options  vested  on  the  date  of grant and are exercisable through April 2005.

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.

The  Company provides 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,  and  Internet  web  page  hosting  services.

The  Company's  services  are  marketed  nationwide  through  sales  affiliates,
affinity  groups,  independent  sales  agents  and  its  own  sales  force.

The  Company's revenues consist of revenues from telecommunications 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 at a flat rate and are billed in
advance.  Revenues  are  recognized  in  the  period  earned.

Cost  of  sales  consists  of  telecommunications service costs and the costs of
providing Internet access.  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  acquisition  (including  costs paid for third-party verification),
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.

RESULTS  OF  OPERATIONS  OF  THE  COMPANY
FISCAL  YEAR  ENDED  JUNE  30,  2002 COMPARED TO FISCAL YEAR ENDED JUNE 30, 2001

REVENUES  -  Revenues  increased by $3,797,329 or 27.2% from $13,964,544 for the
year  ended  June 30, 2001 to $17,761,873 for the year ended June 30, 2002.  The
increase  was  due  primarily  to the increase in telecommunications revenues of
$3,169,942  and in Internet revenues of $627,387.  The backbone of GTC's overall
market  and  development  strategy  involves  the  pursuit  and establishment of
strategic  affiliations  and alliances with major telecommunication and Internet
service  companies  through partnerships and co-branding.  The Company had 2,719
and  86  affiliates as of June 30, 2002 and 2001, respectively.  In addition, as
of  June 30, 2002, the Company had approximately 155,848 long distance customers
and  8,623  internet  customers,  with  usage  of  long  distance  services  of
approximately  255,702,000  minutes for the year ended June 30, 2002 as compared
with approximately 116,824 long distance customers and 1,450 internet customers,
with  usage  of  long distance services of approximately 218,540,000 minutes for
the  year  ended  June  30,  2001.

COST  OF  SALES - Cost of sales increased by $1,718,501 or 21.6% from $7,965,782
for the year ended June 30, 2001 to $9,684,283 for the year ended June 30, 2002.
The  increase was primarily due to the increase in carrier costs associated with
increased  telecommunications  service  revenues,  partially offset by decreased
costs  associated  with  the  local  access and a 20% reduction in the Company's
transportation  cost  in  January 2002 of $1,390,479 for the year ended June 30,
2002.  In  addition,  the  costs associated with its Internet services increased
$328,022  for  the  year  ended  June  30, 2002 due primarily to the increase in
Internet  service revenues.  As a percentage of revenue, cost of sales was 54.5%
and  57.0%  resulting  in  a gross margin of 45.5% and 43.0% for the years ended
June  30,  2002  and  2001,  respectively

SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES  -  Selling,  general  and
administrative  ("S,G&A") expenses increased by $527,887 or 6.3% from $8,317,686
for the year ended June 30, 2001 to $8,845,573 for the year ended June 30, 2002.
For  the  year ended June 30, 2002 compared to the year ended June 30, 2001, the
Company  began  to  realize  increased  sales  from  its  telecommunications and
Internet customers, thereby resulting in increased S,G&A expenses primarily from
its  customer service operations and Internet support costs.  S,G&A expenses for
the  year ended June 30, 2002 were comprised primarily of $3,975,505 in salaries
and  related  taxes paid to employees; billing related costs of $1,263,020; rent
of  $315,135;  bad  debt  of $464,225 (including $100,000 for the write-off of a
note  receivable);  sales commissions of $213,280; depreciation and amortization
expense  of  $237,035;  amortization  of  previously issued options to employees
valued  at  $132,300;  warrants valued at $39,000 issued to outside consultants;
common  stock  valued at $33,000 issued for services rendered; and $2,173,073 of
other  operating  expenses,  primarily  investor  relations,  internal telephone
usage, consulting services, costs of third party verification for newly acquired
customers, internet support costs and audit and legal costs.  S,G&A expenses for
the  year ended June 30, 2001 were comprised primarily of $3,704,792 in salaries
and  related  taxes  paid to employees; a one-time settlement credit of $357,800
from  the  cancellation  of  a  consulting  agreement;  billing related costs of
$1,237,465;  advertising  expense  of  $171,108;  rent  of $314,172; bad debt of
$312,201;  sales  commissions of $350,364; depreciation and amortization expense
of $220,390; options valued at approximately $140,100 issued to employees of the
Company;  warrants  valued  at  approximately  $40,333  issued  to  an  outside
consultant;  and  $2,184,561  of  other  operating  expenses, primarily investor
relations,  internal  telephone usage, consulting services, costs of third party
verification  for newly acquired customers, internet support costs and audit and
legal  costs.

INTEREST  EXPENSE  -  Net interest expense increased by $7,638 from $504,901 for
the  year ended June 30, 2001 to $512,539 for the year ended June 30, 2002.  The
increase  was  primarily  due  to  interest  owed on outstanding balances due to
WorldCom.

LOSS ON SALE OF EQUIPMENT - Loss on sale of equipment was $14,878 and $0 for the
year  ended  June 30, 2002 and 2001, respectively, primarily due to the disposal
of  a  telephone  system.

As a result, net loss was $1,311,667, or $0.06 loss per share, and a net loss of
$2,832,258, or $0.14 loss per share, for the years ended June 30, 2002 and 2001,
respectively.

ASSETS  AND  LIABILITIES  - Assets decreased by $219,449 from $2,178,045 at June
30,  2001 to $1,958,596 at June 30, 2002.  The decrease was due to net decreases
in  accounts receivables of $190,317, decreases in related party note receivable
of  $100,000  and  other  assets  of  $19,736; net of increases in cash and cash
equivalents  of  $6,188,  deposits  of  $43,400, prepaid expenses of $9,549, and
property  and  equipment  of  $31,467.  Liabilities increased by $1,035,982 from
$7,458,312  at  June  30, 2001 to $8,494,294 at June 30, 2002.  The increase was
due  to increases in accounts payable and accrued expenses of $1,864,951 (net of
the  conversion  of  $4,861,604  of  previously recorded accounts payable into a
short-term  note  payable),  primarily  for amounts owed to WorldCom (associated
with  the  increase  in  customer  usage),  and decreases in accrued payroll and
payroll  related  liabilities of $382,533 (primarily for amounts associated with
past  due payroll taxes), notes payable of $378,230 (including the conversion of
$4,861,604  of  previously  recorded  accounts  payable  into  a short-term note
payable,  the  addition of a note payable of $70,400 and principal repayments of
$448,630),  obligations  under  capital lease of $64,733 (net of the increase in
long  term  capital lease of $15,303) primarily due to principal repayments, and
deferred  income  of  $3,473, associated with the increase in telecommunications
service  costs,  Internet  service  provider  access  fees  and customer service
operations  as  a  result  of  the  increase  in  customers.

STOCKHOLDERS'  DEFICIT  -  Stockholders'  deficit increased by $(1,255,431) from
$(5,280,267)  at  June  30, 2001 to $(6,535,698) at June 30, 2002.  The increase
was  attributable  to  the current year net loss of $1,311,667, expenses made on
the  Company's  registration  statement  of  $148,164,  offset  primarily by the
amortization  of  compensation  expense  related to previously issued options to
employees  in  the amount of $132,300, the fair market value of warrants granted
under a third party agreements of $39,000, the fair market value of stock issued
for  services of $33,000, and the exercise of stock options by an officer of the
Company  of  $100.

LIQUIDITY  AND  CAPITAL  RESOURCES
GENERAL - Overall, the Company had an increase in cash flows of $6,188 in fiscal
year  2002  resulting  from $860,859 of cash provided by the Company's operating
activities,  offset  partially  by cash used in investing activities of $165,146
and  cash  used  in  financing  activities  of  $689,525.


                                      -11-
<PAGE>
CASH  FLOWS  FROM  OPERATIONS  ACTIVITIES  -  Net  cash  provided  by  operating
activities  of  $860,859 in fiscal year 2002 was primarily due to the changes in
operating  assets  and  liabilities,  principally  accounts  payable and accrued
expenses of $1,864,951, offset partially by accrued payroll and related taxes of
$382,533;  accounts receivable and other current assets of $226,857 and deferred
income  of  $3,473; a net loss of $1,311,667; the loss on the disposal of assets
of  $14,878;  the fair market value of options vesting to employees of $132,300;
the  fair  market value of warrants granted to consultants for services rendered
of  $39,000;  depreciation and amortization expense of $237,035; the fair market
value  of  stock  issued  for  services of $33,000; and the increase in bad debt
expense  related  to accounts receivable of $464,225 (including $100,000 for the
write-off  of  a  note  receivable).

CASH  FLOWS FROM INVESTING ACTIVITIES - Net cash used in investing activities of
$165,146  in  fiscal  year  2002  funded  purchases of property and equipment of
$171,771; offset partially by the proceeds from the sale of equipment of $6,625.

CASH  FLOWS FROM FINANCING ACTIVITIES - Net cash used in financing activities of
$689,525  in fiscal year 2002 was primarily due to principal repayments on notes
payable  of  $448,630;  principal  repayments under capital lease obligations of
$92,831;  and  payments  of  registration  statement  fees  of  $148,164  offset
partially by the exercise of stock options by an officer of the Company of $100.

NOTE  RECEIVABLE  -  During  fiscal  year  2001,  the  Company  recorded  a note
receivable  for  $100,000  advanced  to a company related to a shareholder.  The
Company  has not received payment for the related party note receivable advance,
which  was due March 25, 2001.  Therefore, the Company has determined that there
is  a significant risk that the Company's related party note receivable will not
be  repaid.  The Company established an allowance and charged the carrying value
of  the  note  receivable  to  bad  debt  during  the  year ended June 30, 2002.

FINANCING - The Company's funds from operations are currently sufficient to fund
daily  operations.  In  addition, repayment of the Company's monthly obligations
on  its WorldCom Note (see below) and its past due payroll taxes (see below) are
currently  being  met  by  the  Company's  funds  from operations.  However, the
Company's  funds  from  operations  are currently insufficient to fund immediate
repayment  of  its  short  and  long-term  debts and contingent liabilities (see
below).  Therefore,  the Company may be required to seek additional funds either
through  debt  or  equity  financing  to  finance these debts and contingencies.
Failure  to  raise  additional  funds, may have a material adverse effect on the
Company's  long-term  operational  viability.

EQUITY  FINANCING  -  Effective  September  19, 2001, the Company entered into a
common  stock  purchase  agreement  ("Agreement")  with  Bluefire  Capital, Inc.
("Bluefire").  The Agreement entitles the Company to issue and sell common stock
to  Bluefire  in  the  form  of  draws for up to an aggregate of $20,000,000, as
defined in the Agreement, from time to time during a three year period beginning
on  the  date of the filing of an effective registration statement.  On November
20,  2001,  the  Company filed a registration statement under the Securities Act
with  the  Securities  and  Exchange  Commission  ("SEC")  for 15,000,000 shares
available to be issued to Bluefire under the Agreement should the Company choose
to draw down on these shares and on January 23, 2002, the registration statement
was  declared  effective.  As  of  June  30, 2002, the Company has recorded fees
incurred  to  date  in  the  amount  of  $148,164  related  to  the registration
statement,  under  additional  paid-in-capital  in the accompanying consolidated
balance  sheet.

Under the Agreement, each draw must be for a minimum of $100,000 up to a maximum
draw  amount equal to 10% of the weighted average price for the Company's common
stock  for  the  60  calendar  days  immediately  prior to the draw down pricing
period,  as defined, multiplied by the total aggregate trading volume in respect
of  the  common stock for such period.  In the event the minimum draw is greater
than  the  maximum  draw, the minimum draw shall equal the maximum draw, but the
minimum  draw  shall  not  be less than $25,000.  Pursuant to the Agreement, the
Company  must  draw a minimum of $500,000 over the term of the Agreement, or the
Company  shall  pay  liquidated  damages  within  five  days from the end of the
Agreement,  as  defined  in  the  Agreement.

The  number  of shares of common stock to be issued in connection with each draw
shall  be equal to the draw amount divided by either 88% of the lowest bid price
during  the  short  pricing  period  or 88% of the volume weighted average price
during  the long pricing period, dependent on whether the Company elects a short
pricing period or a long pricing period at the time the draw notice is delivered
to  Bluefire,  as  defined  in  the  Agreement.

In addition, the Company issued a warrant to Bluefire to purchase 150,000 shares
of  common stock at an exercise price of $0.3471 per share.  The warrants vested
on  the date of grant and are exercisable through March 19, 2005.  No consulting
expense  is  to  be  recognized  due  to  the  fact  the warrants were issued in
connection  with  equity  fund  raising  activities.

As  of  the date of this filing, the Company has not drawn down any shares under
this  Agreement.

SHORT-TERM  DEBT  -  On  February  15,  2002, the Company placed a new telephone
system  into  service at a cost of $120,686.  The telephone system was purchased
using  a  cash  downpayment  of  $23,786,  and  entering  into a note payable of
$70,400,  and  a  capital  lease of $21,000 less a trade-in allowance of $5,500.
The  note of $70,400 commenced February 1, 2002, has monthly payments of $5,500,
is  payable over 14 months, and bears interest at 14.6%.  As of the date of this
report,  the Company has made all payments as required in the Note.  The capital
lease  of  $21,000  commenced  on November 30, 2001, and has monthly payments of
$744  for  36  months.  As  of the date of this report, the Company has made all
payments  as  required  in  the  capital  lease.

On October 19, 2001, the Company converted $4,861,604 of a total payable balance
of  $6,173,612  to  a  third party into a short-term note payable ("Note").  The
Note  bears  interest  at  12%, unless the Company is unable to make the monthly
payments  as  required,  at  which time the interest rate increases to 18%.  The
Note originally provided for interest only payments of approximately $48,000 for
the  first three months, commencing October 15, 2001, with monthly principal and
interest  payments  of  $100,000  commencing  January  15,  2002, with a balloon
payment  of  $4,480,475  due  on  September  15,  2002.  On January 9, 2002, the
Company  renegotiated the monthly payments due in the Note in exchange for a 20%
reduction in the Company's transportation cost due to MCI/WorldCom.  The revised
Note  provided  for  monthly  principal  and  interest  payments of $100,000 due
January  15,  2002  and  February  15, 2002, with monthly principal and interest
payments  of  $125,000  commencing  March  15,  2002,  with a balloon payment of
$4,027,646  due  on December 15, 2002.  The Note is secured by substantially all
of  the  assets  of  the  Company  (as defined in the agreement).  The Note also
provides  that if the Company makes all scheduled payments pursuant to the Note,
the noteholder will renegotiate the Note in good faith with the then outstanding
balance being due under a promissory note with terms similar to the Note.  There
can be no assurances that the Company will be able to repay the Note.  As of the
date  of  this report, the Company has made all payments as required in the Note
and  the  balance  is  $4,441,691  as  of  June  30,  2002.

CONTINGENT  LIABILITIES  -  On  April  30,  1999,  the  Company  entered into an
agreement  with  Williams  Communications, a unit of Williams of Tulsa, Oklahoma
("Williams"),  in  which  Williams  was  to  design, install and maintain a high
speed, nationwide VoIP network for the Company.  Subsequently, due to Williams's
inability  to  deliver  the  VoIP  network  as  contracted and as a result of an
amendment  to  the  MCI/WorldCom contract, the Company determined to discontinue
its  agreement  with  Williams.  As a result of the Company's discontinuation of
its  contract  with  Williams,  the  Company  may be subject to accrued costs of
$600,110.  The  Company  is in negotiations with Williams to modify or eliminate
these  charges.  However,  no assurances can be made that such negotiations will
result  in  a  favorable  outcome.  No amounts have been recorded related to the
discontinuation  of  the  contract  through  June  30,  2002.

The  Company  has  recorded an accrual for past due payroll taxes as of June 30,
2002  due  to  the under-reporting of the Company's payroll tax liability.  As a
result,  the  Company  has  accrued  approximately  $1,011,000,  including
approximately  $422,000  of  penalties  and  interest, under accrued payroll and
related  taxes  and  accounts  payable  and accrued expenses in the accompanying
consolidated  balance  sheet  at  June 30, 2002.  The Company anticipates having
this  matter  settled  by  December  31,  2002.

CAPITAL  EXPENDITURES

On  February 15, 2002, the Company placed a new telephone system into service at
a cost of $120,686.  The telephone system was purchased using a cash downpayment
of  $23,786, and entering into a note payable of $70,400, and a capital lease of
$21,000  less  a  trade-in  allowance  of  $5,500.

On  January  23,  2002,  the  Company  placed  software  used  in  the Company's
operations  into  service.  The  software  was  financed with a capital lease of
$7,098.

The  Company  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).

SUBSIDIARIES

The  Company  has  formed  four  wholly  owned subsidiaries that offer different
products  and  services.  They  are  managed  separately  because  each business
requires  different  technology  and/or  marketing  strategies.

The  four  subsidiaries  are:  CallingPlanet.com, Inc., ecallingcards.com, Inc.,
U.S.  Main  Corporation,  and  GTC  Wireless,  Inc.

CallingPlanet.com,  Inc. was set up to offer international calling using a PC to
phone  connection.  It  is  currently  inactive.  ecallingcards.com, Inc. offers
prepaid  calling cards purchased over the internet, U.S. Main Corporation offers
private  label  telecommunications  and Internet related needs and GTC Wireless,
Inc.  plans  to  offer  wireless  telecommunication  services.

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.

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 13.
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

Effective  March 1, 2002, the Board of Directors of the Company dismissed Corbin
&  Wertz  ("Corbin  &  Wertz")  as  its  independent  auditors  and approved the
engagement  of Squar, Milner, Reehl & Williamson, LLP Public Accountants ("Squar
Milner")  as its independent auditors for the fiscal year ended June 30, 2002 to
replace  Corbin  &  Wertz.  The  decision to change auditors was approved by the
Company's  audit  committee  as well as the full Board of Directors. The Company
did  not  consult  with  Squar  Milner  on any matters prior to their retention.

The  reports  of  Corbin  &  Wertz on the Company's financial statements for the
fiscal  years  ended  June  30,  2001  and  2000,  and the related statements of
operations, stockholder's equity and cash flows for the two years then ended did
not  contain an adverse opinion or a disclaimer of opinion and was not qualified
or  modified as to uncertainty, audit scope, or accounting principles, except as
relating  to  the  Registrant's  ability  to  continue  as  a  going  concern.

Since  the  date  of  Corbin & Wertz's engagement and during the two most recent
fiscal years and any subsequent interim period, there were no disagreements with
Corbin  &  Wertz on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures which, if not resolved to
the  satisfaction  of  Corbin  &  Wertz would have caused Corbin & Wertz to make
reference  to  the  matter  in  their  report.

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


                                      -12-
<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   Position(s)
----                ---   -----------
Paul  Sandhu        41    Chief  Executive  Officer and Chairman of the Board

Eric  Clemons       31    Director,  President, Secretary and Treasurer

Gerald  DeCiccio    44    Director  and  Chief  Financial  Officer

Mark  Fleming       44    Chief  Operating  Officer

John  M.  Eger      62    Director

Clay  T.  Whitehead 63    Director

PAUL  SANDHU is currently the Company's Chief Executive Officer.  Mr. Sandhu has
been  with  the  Company  since  its inception.  Mr. Sandhu has over twelve (12)
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 President.  Mr. Clemons has been with
GTC  since  its  inception.  Mr. Clemons has over ten (10) 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.

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.

GERALD  DECICCIO  joined the Company in January 1999 as Chief Financial Officer.
Mr.  DeCiccio  has  over twenty 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.


                                      -13-
<PAGE>
MARK  FLEMING  joined the Company in October 1998 and is currently the Company's
Chief  Operating  Officer.  Mr.  Fleming  has  twenty  (20)  years  of  business
strategy,  planning,  and  analysis  experience  within the competitive consumer
products  /  services  industries.  For  seven  years, prior to joining GTC, 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.

JOHN  M.  EGER  is  a  telecommunications  lawyer  and  former  counsel  to  the
international  law firm Morrison and Forester and is currently the holder of the
prestigious Lionel Van Deerlin Endowed Chair of Communications and Public Policy
at  San  Diego  State University.  He is also the President and CEO of the World
Foundation  for  Smart  Communities,  a non-profit, non-governmental educational
program  dedicated  to  helping  communities  understand  the  importance  of
information  technology as a catalyst for transforming life and work in the 21st
Century.  Mr.  Eger  formerly  headed  CBS  Broadcast  International,  which  he
established,  and  was  Senior  Vice President of the CBS Broadcast Group.  From
1971  through  1973, Mr. Eger was legal assistant to the chairman of the Federal
Communications  Commission,  and  from  1974  through  1976  served  as
Telecommunications Advisor to Presidents Nixon and Ford and was also the Head of
the  White  House  Office  of  Telecommunications  Policy (OTP).  Earlier in his
career,  Mr. Eger served as a data communications specialist and design director
of  information  systems  for the Bell System.  From 1976 through 1981, he was a
Washington,  DC based telecommunications attorney.  Other positions Mr. Eger has
held  include  serving  as  Chairman  of  the  Board of the San Diego Processing
Corporation,  Chairman  of  San  Diego  Mayor Susan Golding's City of the Future
Advisory  Committee and Chairman of Governor Pete Wilson's California Commission
on  Information  Technology.

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 and to the best
of  its knowledge, during the year ended June 30, 2002, all Section 16(a) filing
requirements  applicable  to  the Company's officers, directors and greater than
ten  percent  shareholders  were  complied  with.

ITEM  10.  EXECUTIVE  COMPENSATION

On  December 1, 1998, the Company entered into an Employment Agreement with Paul
Sandhu, the Company's Chief Executive Officer, whereby the Company agreed to pay
Mr.  Sandhu  an  annual  salary  of  $84,000.  On  January  15, 1999 the Company
voluntarily  agreed  to  increase his salary to $168,000.  On September 6, 2001,
the  Compensation  Committee of the Board agreed to increase his salary to $184,
800.  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.


                                      -14-
<PAGE>
On  December 1, 1998, the Company entered into an Employment Agreement with Eric
Clemons,  the Company's President, whereby the Company agreed to pay Mr. Clemons
an  annual  salary  of  $76,000.  On  January  15,  1999 the Company voluntarily
increased  his  salary  to  $152,000.  On  September  6,  2001, the Compensation
Committee of the Board agreed to increase his salary to $167,200.  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
agreed  to  pay Mr. DeCiccio an annual salary of $105,000.  On December 23, 1999
the Company voluntarily increased his salary to $144,000.  On September 6, 2001,
the  Compensation  Committee  of  the  Board  agreed  to  increase his salary to
$158,400.  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 vested 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  Chief Operating Officer, whereby the Company agreed to
pay  Mr.  Fleming  an annual salary of $70,000.  On January 23, 2000 the Company
voluntarily  increased  his  salary  to  $130,000.  On  September  6,  2001, the
Compensation  Committee  of the Board agreed to increase his salary to $143,000.
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  vested  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.

SUMMARY  COMPENSATION  TABLE
The  Summary  Compensation  Table  shows  certain  compensation  information for
services  rendered  in  all capacities for the fiscal years ended June 30, 2002,
2001,  and  2000.  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.

                                      -15-
<PAGE>

<TABLE>
<CAPTION>


                                                             SUMMARY COMPENSATION TABLE

                                          ANNUAL  COMPENSATION                          LONG  TERM  COMPENSATION
                                         ----------------------                         AWARDS           PAYOUTS
                                                                                    -------------------------------
                                                                OTHER        RESTRICTED  SECURITIES                 ALL
NAME AND                                                        ANNUAL         STOCK     UNDERLYING    LTIP        OTHER
PRINCIPAL                          SALARY        BONUS       COMPENSATION      AWARDS     OPTIONS     PAYOUTS   COMPESATION
POSITION               YEAR         ($)           ($)            ($)            ($)       SARS (#)      ($)         ($)
---------------------------------------------------------------------------------------------------------------------------
<S>                   <C>       <C>             <C>          <C>               <C>       <C>          <C>       <C>
Paul Sandhu           2002
(CEO)                (6/30)     $  186,450        -0-           12,000(1)       -0-        280,000      -0-       27,139(4)

                      2001
                     (6/30)        105,000        -0-           10,000(1)       -0-        132,500      -0-       13,000(2)

                      2000
                     (6/30)        126,000        -0-             -0-           -0-        217,500      -0-         -0-

---------------------------------------------------------------------------------------------------------------------------
Eric Clemons          2002
(President)          (6/30)        198,550(5)     1,520         12,000(1)       -0-        270,000      -0-       24,554(4)

                      2001
                     (6/30)        145,667       13,680         10,000(1)       -0-        132,500      -0-      100,000(2)

                      2000
                     (6/30)        133,000        -0-             -0-           -0-        167,500      -0-         -0-
---------------------------------------------------------------------------------------------------------------------------

Gerald DeCiccio       2002
(CFO)                (6/30)        155,100       14,400          12,000(1)      -0-        260,000      -0-       17,169(4)

                      2001
                     (6/30)        138,000        -0-              -0-          -0-        177,500      -0-         -0-

                      2000
                     (6/30)        139,708        -0-              -0-          -0-         75,000      -0-         -0-
---------------------------------------------------------------------------------------------------------------------------

Mark Fleming          2002
(COO)                (6/30)        141,483       13,000            -0-          -0-        240,000      -0-       15,500(4)

                      2001
                     (6/30)        124,583        -0-              -0-          -0-         50,000      -0-         -0-

                      2000
                     (6/30)        121,042        -0-              -0-          -0-         75,000      -0-         -0-
---------------------------------------------------------------------------------------------------------------------------

Frank Naccarelli(3)   2002
(COO)                (6/30)        147,500        -0-              -0-          -0-           -0-       -0-         -0-

                      2001
                     (6/30)        111,686        -0-              -0-          -0-         35,000      -0-         -0-

                      2000
                     (6/30)         90,208        -0-              -0-          -0-         35,000      -0-         -0-
---------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1)     Amounts paid for director's fees earned in fiscal year 2001 and paid in
        fiscal year 2002
(2)     Non-business  expenses  paid  on  behalf  of  the  officers
(3)     Mr.  Naccarelli's  employment  was  terminated  on  May  10,  2002
(4)     Amounts paid for vacation
(5)     Includes  $24,383  of  salary  advances


                                      -16-
<PAGE>

<TABLE>
<CAPTION>


                                   OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                            (INDIVIDUAL GRANTS)


                  NUMBER OF SECURITIES      PERCENT OF TOTAL
                       UNDERLYING         OPTIONS/SAR'S GRANTED
                 OPTIONS/SAR'S GRANTED   TO EMPLOYEES IN FISCAL    EXERCISE OF BASE PRICE
NAME                      (#)                     YEAR                     ($/SH)           EXPIRATION DATE
                 ----------------------  -----------------------  ------------------------  ---------------
<S>              <C>                     <C>                      <C>                       <C>
Paul Sandhu                  180,000(1)                     9.9%  $                   0.19          4/23/12
                             100,000(1)                     5.5%  $                   0.19          4/23/07
                 ----------------------  -----------------------  ------------------------  ---------------
Eric Clemons                 170,000(1)                     9.4%  $                   0.19          4/23/12
                             100,000(1)                     5.5%  $                   0.19          4/23/07
                 ----------------------  -----------------------  ------------------------  ---------------
Gerald DeCiccio              160,000(1)                     8.8%  $                   0.19          4/23/12
                             100,000(1)                     5.5%  $                   0.19          4/23/07
                 ----------------------  -----------------------  ------------------------  ---------------
Mark Fleming                 140,000(1)                     7.7%  $                   0.19          4/23/12
                             100,000(1)                     5.5%  $                   0.19          4/23/07
                 ----------------------  -----------------------  ------------------------  ---------------

</TABLE>
(1)  Represents  options  issued  on  4/23/02  in accordance with the 2001 Stock
Incentive  Plan.

<TABLE>
<CAPTION>



                                   AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                               AND FY-END OPTION/SAR VALUES


                                                                   NUMBER OF UNEXERCISED      VALUE OF UNEXERCISED IN
                                                                   SECURITIES UNDERLYING       THE-MONEY OPTION/SARS
                   SHARES ACQUIRED ON             VALUE            OPTIONS/SARS AT FY-END (#)        AT FY-END ($)
NAME                  EXERCISE (#)             REALIZED ($)        EXERCISABLE/UNEXERCISABLE   EXERCISABLE/UNEXERCISABLE
                 ----------------------  ------------------------  --------------------------  --------------------------
<S>              <C>                     <C>                       <C>                         <C>

Paul Sandhu                           0                       n/a           230,000 / 400,000                   4,500 / 0
Eric Clemons                          0                       n/a           210,000 / 360,000                   4,550 / 0
Gerald DeCiccio                       0                       n/a           392,500 / 245,000                     450 / 0
Mark Fleming                     10,000                     1,463           230,000 / 225,000                       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 through December 31, 2000, Directors
received  $1,500  and  2,500  options to purchase the Company's common stock per
quarter.  Beginning  January  1, 2001, the outside directors each receive $4,000
per  quarter,  $1,000  per  major  committee  meeting  as  contemplated  in  the
respective  committee  charter,  $1,000  each  for the Chairman of the Audit and
Compensation committees per year of service, 2,500 options per quarter priced at
fair  market  value  on  the  date  of grant, and 2,500 options each per quarter
priced  at  fair market value on the date of grant for the Chairman of the Audit
and Compensation committees.  Beginning January 1, 2001, the inside directors no
longer  receive  compensation  related  to  their  duties  as  directors.

1999  STOCK  OPTION  PLAN

On  September  20, 1999, the Company's Board of Directors ("Board") approved the
GTC  Telecom  Corp.  Omnibus  Stock  Option  Plan (the "Option Plan"), effective
October  1, 1999.  The Option Plan was approved and ratified by the shareholders
on  December 13, 1999 at the Company's 1999 annual shareholder's meeting.  Under
the  terms  of  the  Option  Plan, the Board 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 or 2,037,162 shares for the year
beginning October 1, 2001.  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.  The shares underlying the options issued pursuant to the plan
have  been  registered  with  the  Securities and Exchange Commission.  Upon the
approval  and  ratification  of  the  Company's  2001  Stock Incentive Plan (see
below),  the  Company  elected  to  terminate  the  1999  Stock  Option  Plan.

On  October  5,  2000, the Company's Board granted, pursuant to the Option Plan,
Incentive  Stock  Options  (as  defined by the Option Plan), to purchase 203,650
shares  of  the Company's common stock at an exercise price of $0.6875 per share
(the  fair  market  value  of the Company's common stock on the day of grant) to
certain  employees of the Company and Non-statutory Stock Options (as defined by
the Option Plan), to purchase 300,000 shares of the Company's common stock at an
exercise  price  of  $0.6875  per  share (the fair market value of the Company's
common  stock on the day of grant) to the directors of the Company.  The options
vest  equally  over  a  period  of  five  years  from  the date of grant and are
exercisable through October 2010.  During fiscal year 2001, additional Incentive
Stock  Options (as defined by the Option Plan) were granted, to purchase 109,900
shares  of  the Company's common stock at an exercise price of $0.3937 per share
(each  issuance priced at the fair market value of the Company's common stock on
the day of grant) to certain employees of the Company.  The options vest equally
over  a  period of five years from the date of grant and are exercisable through
April  2011.

During  fiscal  year 2002, additional Incentive Stock Options (as defined by the
Option  Plan)  were  granted,  to purchase 43,000 shares of the Company's common
stock at an average exercise price of $0.2814 per share (each issuance priced at
the  fair  market  value  of  the Company's common stock on the day of grant) to
certain  employees  of  the  Company.  The options vest equally over a period of
five  years  from  the  date  of grant and are exercisable through October 2011.

2001  STOCK  INCENTIVE  PLAN

On  October  17,  2001,  the Company's Board approved the GTC Telecom Corp. 2001
Stock  Incentive Plan (the "SIP Plan"), effective January 1, 2002.  The SIP Plan
was  approved  and  ratified  by  the  shareholders  on December 13, 2001 at the
Company's  2001  annual  shareholder's  meeting.  The  SIP Plan provides for the
grant  of various types of equity-based incentives. The following description of
the  primary  features of the SIP Plan is qualified in all respects by reference
to  the  full  text  of  the  SIP  Plan.

Types  of  Incentives.  The  SIP  Plan  provides for the grant of stock options,
stock  appreciation  rights  ("SARs"),  restricted  stock,  and  cash  and stock
bonuses, on a current or deferred basis, collectively "Awards."  The Company may
settle  Awards  in  cash  or  shares  of  the Company's Common Stock ("Shares").

-  Options

Description.  Options  represent  rights to purchase shares at a specified price
(the  exercise  price)  during  a  specified  term not to exceed 10 years.  Both
nonqualified stock options ("NQSOs") and incentive stock options (those intended
to be qualified under Section 422 of the Code) ("ISOs") may be granted under the
SIP  Plan.  NQSOs  and  ISOs  trigger  different  tax  consequences.

Exercise  Price.  Options  typically are issued without consideration other than
for  services  rendered  or  (by  virtue of the vesting schedule) services to be
rendered.  The  exercise  price  of  options  will  be  determined  by  the
administrator,  but  in  the case of ISOs may not be less than 100% of the grant
date  fair  market  value  ("FMV")  of  the  Common  Stock.

Vesting  and  Exercise.  The  administrator  determines the vesting schedule and
exercise  provisions  applicable  to  each  Award.

Effect  of  Termination  of  Employment.  Unless  the  administrator  otherwise
provides,  options  terminate  when a participant terminates employment with the
Company,  except  for  options  which  are  then vested and exercisable.  Vested
options  typically  continue to be exercisable for limited periods following the
date  of termination (except if the employee is terminated "for cause," in which
case  even  the  vested  options  will  immediately  terminate).  The  following
post-service  exercise  periods  are  included:

     -12  months  if termination results from death, disability or retirement (3
months  in  the  case  of  retirement  and  an  incentive  stock  option);  or

     -3  months  if  termination  occurs  for  any  reason  other  than  death,
disability,  retirement,  or  "for  cause."

Change  in Control.  A Change in Control Event generally would trigger immediate
acceleration  of  vesting  of  all  options, unless the Board otherwise provides
prior  to  the  Change in Control Event.  Awards which are fully accelerated and
which  are  not  exercised  or  settled at or prior to a Change in Control Event
which  the  Company  does  not  survive  generally would or could be terminated.
A  Change in Control Event is generally defined to include (i) an acquisition by
any  person  (other  than  an  Excluded Person) of more than [50%] of the voting
securities of the Company, (ii) certain mergers, dispositions, or consolidations
of  the  Company, or certain sales of substantially all of the Company's assets,
and  (iii)  a  dissolution  or  liquidation  of the Company.  The term "Excluded
Person"  means  the  Company,  certain  entities related to the Company, and any
Company  employee  benefit  SIP  Plan  (or  their  related  successors).

-Stock  Appreciation  Rights.

Description.  SARs  constitute  rights  to  receive  payment  equal  to  the
appreciation  in the price of the Common Stock between the date of grant and the
date  of exercise.  SARs are usually granted in conjunction with an equal number
of  options and would vest and become exercisable on the same schedule, although
stand-alone  SARs  may  be  issued  under the SIP Plan.  If the SAR is issued in
conjunction  with  an  option,  exercise  of  the SAR generally cancels an equal
number  of  Shares subject to the option.  Exercise of an SAR triggers a payment
obligation  to  the holder.  The Company has the discretion to make such payment
in  either  cash  or  Shares.

Other  Provisions.  The general terms of Awards summarized under "Options" above
also  apply  to  SARs.

-Restricted  Stock

Description.  A  restricted  stock Award is an award of a fixed number of Shares
subject  to  vesting  requirements  and  other  restrictions.  The administrator
specifies  the  price,  if  any, the Participant must pay for the Shares and the
restrictions  imposed  on the Shares.  Generally, if a recipient of a restricted
stock  Award  terminates  employment  prior  to  the  time  that  any applicable
restrictions have lapsed, or if a restricted stock Award otherwise expires prior
to the lapse of any applicable restrictions, the recipient is required to return
the  unvested  restricted  Shares  to  the  Company.

-Bonuses  and  Other  Awards

Description.  The  SIP  Plan leaves considerable discretion to the administrator
to  grant  bonuses  in  the  form of Common Stock and to structure the terms and
conditions  of  performance-based  awards.

A  performance-based  award  is generally an award that becomes payable upon the
attainment  of one or more performance criteria established at the time of grant
and  set  forth in the related Award Agreement.  The amount of cash or shares or
other  property  that may be deliverable pursuant to such an Award is based upon
the  degree  of  attainment  over  a  specified  period  of  such  measure(s) of
performance  of  the  Company (or any part thereof) or the Participant as may be
established  by  the  administrator.

Number  of  Shares  Available.  The  maximum number of Shares that may be issued
under  the  SIP  Plan  is  5,000,000  shares of the Company's Common Stock.  The
Internal Revenue Code requires a fixed limit on the number of Shares that may be
covered  by  options  and SARs granted to any one individual in any one calendar
year and a fixed limit on the number of Shares that may be covered by all Awards
granted  to  any one individual in any one calendar year.  These limits are each
1,000,000  shares.

Plan  Administration.  The  SIP  Plan  may  be administered by the Board or by a
committee  appointed  by  the Board (the "Committee").  Currently, the Board has
appointed  the  Compensation  Committee  of  the  Board  as  the  "Committee" or
administrator under the SIP Plan.  Subject to the express terms of the SIP Plan,
the  SIP  Plan  administrator will have broad power to administer, construe, and
interpret  the  SIP  Plan,  including  the  power  to:

-     determine  who  receives  Awards and the type of Awards they will receive,

-     grant  Awards,  price  them  and determine the size and other terms of the
grants,  and  determine  appropriate  adjustments  in  connection  with  a
reorganization,  change  in  control,  or  certain  other  events,  and

-     accelerate  the  exercisability or vesting of Awards or make other changes
in  Awards.

Consideration for Awards and Shares.  Awards may be issued for services rendered
or  to  be  rendered.  Shares  also  may be issued for any lawful consideration,
including  cash,  other  securities  or rights.  The administrator may authorize
loans  from the Company to participants in the amount necessary for participants
to  pay  the withholding taxes due in connection with the exercise or vesting of
Awards.

Eligibility.  All directors, officers, consultants, and employees of the Company
and  its  subsidiaries  are  eligible  for  Award grants.  Only persons actually
selected  by  the  administrator  will  be  granted  Awards.

Restrictions  on  Transfer.  Awards  are  generally  nontransferable  (except on
death), subject to exceptions for donative purposes on a case-by-case basis to a
limited  number of related persons (e.g., spouse or children), in furtherance of
tax  and  estate  SIP  Planning  objectives.

Term.  No  Awards  may be granted under the SIP Plan more than 10 years after it
is  adopted  by  the Board.  The Board, in its discretion, may terminate the SIP
Plan earlier.  Outstanding Awards generally will be unaffected by the SIP Plan's
termination.

SIP Plan Amendment & Approval.  The Board may amend or terminate the SIP Plan at
any  time.  SIP  Plan  amendments  need  not  be subject to stockholder approval
unless  required by law.   Materially adverse changes to an Award generally (but
not  always)  require  the  holder's  consent.  The  Committee  may  terminate
outstanding  Awards  in certain extraordinary corporate circumstances, but would
generally  be  required to provide for an alternative settlement of at least the
vested  portions  of  the  Awards.  It  is important to note that if an Award is
amended  after the date it is granted (to change the vesting schedule, to change
the  termination  of employment provisions, to reprice the option or otherwise),
the  amendment  may  have  adverse  accounting  consequences.

On  April  23,  2002,  the  Company's  Board  granted, pursuant to the SIP Plan,
Incentive  Stock  Options (as defined by the SIP Plan), to purchase an aggregate
of  1,330,000 shares of the Company's common stock at an exercise price of $0.19
per  share  (the  fair  market value of the Company's common stock on the day of
grant), vesting equally over a period of five years from the date of issuance to
certain  employees of the Company and Non-qualified Stock Options (as defined by
the  SIP  Plan),  to  purchase  an  aggregate of 600,000 shares of the Company's
common  stock  at an exercise price of $0.19 per share (the fair market value of
the  Company's  common  stock  on the day of grant), and vest immediately to the
officers and directors of the Company.  During fiscal year 2002, Incentive Stock
Options  (as  defined by the SIP Plan) were granted, to purchase an aggregate of
28,000  shares  of  the  Company's  common stock (net of 13,000 granted and then
cancelled) at an average exercise price of $0.21 per share (each issuance priced
at  the  fair market value of the Company's common stock on the day of grant) to
certain  employees  of  the  Company.  The options vest equally over a period of
five  years  from  the  date  of  grant  and  are exercisable through June 2012.

NON-PLAN  ISSUANCES

During  fiscal year 2002, the Company issued options to purchase an aggregate of
40,000  shares  of  the Company's common stock, at exercise prices between $0.20
and  $0.30,  valued  at  $9,400  to  the  members of the Board pursuant to their
agreement of director compensation.  The options vested on the date of grant and
are  exercisable  through  April  2005.

During  fiscal year 2001, the Company issued options to purchase an aggregate of
52,500  shares  of  the Company's common stock, at exercise prices between $0.01
and  $0.2969,  valued  at  $7,800  to the members of the Board pursuant to their
agreement of director compensation.  The options vested on the date of grant and
are  exercisable  through  April  2004.

On  November  3, 2000, the Company granted options to purchase 125,000 shares of
restricted  common stock, at an exercise price of $0.50 per share, to a director
of  the Company (the fair market value of the Company's common stock on the date
of  grant).  The options vested on the date of grant and are exercisable through
November  2003.

<TABLE>
<CAPTION>


                                               EQUITY COMPENSATION PLANS

                                        (A)                       (B)                             (C)
-----------------------------------------------------------------------------------------------------------------------
                               NUMBER OF SECURITIES
                               NUMBER OF SECURITIES         WEIGHTED-AVERAGE         REMAINING AVAILABLE FOR FUTURE
                            TO BE ISSUED UPON EXERCISE     EXERCISE PRICE OF       ISSUANCE UNDER EQUITY COMPENSATION
                              OF OUTSTANDING OPTIONS,     OUTSTANDING OPTIONS,   PLANS (EXCLUDING SECURITIES REFLECTED
                                WARRANTS AND RIGHTS       WARRANTS AND RIGHTS                IN COLUMN (A))
PLAN CATEGORY                           (#)                       ($)                             (#)
-----------------------------------------------------------------------------------------------------------------------
<S>                         <C>                          <C>                     <C>

Equity Aompensation
plans approved by security
holders                                       3,028,200  $                 0.46                               3,042,000
-----------------------------------------------------------------------------------------------------------------------
Equity compensation plans
not approved by security
holders                                       2,054,400  $                 1.10                                       0
-----------------------------------------------------------------------------------------------------------------------
Total                                         5,082,600  $                 0.72                               3,042,000
</TABLE>

(1)  does  not include any ungranted options under the 1999 Omnibus Stock Option
Plan  as  this  plan  was  terminated.

                                      -17-
<PAGE>

ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT

The  following table sets forth, as of August 15, 2002, 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>
<CAPTION>
                                                            COMMON STOCK  PERCENT OF
TITLE OF CLASS         NAME AND ADDRESS OF BENEFICIAL OWNER  OUTSTANDING  OUTSTANDING
----------------------- -----------------------------        ----------   ------------
<S>                     <C>                                  <C>             <C>
                        Paul Sandhu(1)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                4,162,215      20.20%
----------------------- -----------------------------        ----------   ------------

                        Eric Clemons(2)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  665,522       3.23%
----------------------- -----------------------------        ----------   ------------
                        Mark Fleming(3)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  260,000       1.26%
----------------------- -----------------------------        ----------   ------------
                        Gerald A. DeCiccio(4)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  432,500       2.10%
----------------------- -----------------------------        ----------   ------------
                        John M. Eger(5)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  688,500       3.34%
----------------------- -----------------------------        ----------   ------------
                        Clay T. Whitehead(6)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  686,816       3.33%
----------------------- -----------------------------        ----------   ------------
                        Reet Trust(7)
                        21520 Yorba Linda,Suite 6227
Common Stock            Yorba Linda, CA 92887                2,000,000       9.71%
----------------------- -----------------------------        ----------   -------------

All Directors and
Officers as a
Group (6
Persons in total)                                            6,895,553       33.46%
----------------------- -----------------------------        ----------   -------------

</TABLE>


(1)     Includes 285,000 options to acquire shares of Company common stock in
accordance with Mr. Sandhu's director compensation agreement and the Company's
employee benefit plan.  Does not include an aggregate of 345,000 unvested
options to acquire shares of Company common stock granted in accordance with the
Company's employee benefit plan.
(2)     Includes 255,000 options to acquire shares of Company common stock in
accordance with Mr. Clemons' director compensation agreement and the Company's
employee benefit plan.  Does not include an aggregate of 315,000 unvested
options to acquire shares of Company common stock in accordance with the
Company's employee benefit plan.
(3)     Includes an aggregate of 250,000 options to acquire shares of Company
common stock in accordance with Mr. Fleming's employment agreement and the
Company's employee benefit plan.  Does not include an aggregate of 205,000
unvested options to acquire shares of Company common stock in accordance with
the Company's employee benefit plan.
(4)     Includes an aggregate of 412,500 options to acquire shares of Company
common stock in accordance with Mr. DeCiccio's employment and director
compensation agreements and the Company's employee benefit plan.  Does not
include an aggregate of 225,000 unvested options to acquire shares of Company
common stock in accordance with the Company's employee benefit plan.
(5)     Includes an aggregate of 688,500 options to acquire shares of Company
common stock in accordance with Mr. Eger's director compensation agreement and
the Company's employee benefit plan.  Does not include an aggregate of 30,000
unvested options to acquire shares of Company common stock in accordance with
the Company's benefit plan.
(6)     Includes an aggregate of 175,000 options to acquire shares of Company
common stock in accordance with Mr. Whitehead's director compensation agreement
and the Company's employee benefit plan.  Does not include an aggregate of
30,000 unvested options to acquire shares of Company common stock in accordance
with the Company's benefit plan.
(7)     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.

                                      -18-
<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  November  3, 2000, the Company granted options to purchase 125,000 shares of
restricted  common  stock, at an exercise price of $0.50 per share, to Gerald A.
DeCiccio,  a  director  of  the  Company (the fair market value of the Company's
common  stock  on  the  date  of  grant).  The  options  are exercisable through
November  2003.  The issuance was an isolated transaction not involving a public
offering  pursuant  to  section  4(2)  of  the  Securities  Act  of  1933.

As  of June 30, 2002, the Company has net advances to Eric Clemons, President of
the  Company,  of  $60,306.  The  advances  accrue  interest at 10% (no interest
income  has  been  recorded  as  of  June  30, 2002) and are due on demand.  The
Company  has  reclassified  the  note receivable as an increase to stockholders'
deficit  in  the  accompanying  consolidated  balance  sheet  at  June 30, 2002.

See  Item  10.  Executive Compensation for transactions relating to issuances of
options  to  Officers  and  Directors  from  the  Company's  stock option plans.

                                      -19-
<PAGE>
ITEM  13.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

INDEX  TO  FINANCIAL  STATEMENTS                                     Page
                                                                     ----
Reports  of  Independent  Auditors                                   F-1

Consolidated  balance  sheet  at  June  30,  2002                    F-3

Consolidated statements of operations for the years ended
 June 30, 2002 and 2001                                              F-4

Consolidated statements of stockholders' deficit for
the years ended June 30, 2002 and 2001                               F-5

Consolidated statements of cash flows for the years ended
June 30, 2002 and 2001                                               F-7

Notes to consolidated financial statements                           F-9

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.

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
------  -----------

*(3.1)  Restated  Articles  of  Incorporation filed with the Nevada Secretary of
State  on  January  4,  2001  (incorporated  by  reference to Exhibit 3.1 in the
Company's  2000  Proxy  Statement).

*(3.2)  Restated  Bylaws  of  GTC  Telecom  Corp.  adopted on September 20, 1999
(incorporated by reference to Exhibit 3.5 in the Company's Annual Report on Form
10-KSB  for  the  year  ended  June  30,  1999).

*(4.1)  GTC  Telecom  Corp.  1999  Omnibus Stock Incentive Plan (incorporated by
reference  to  Exhibit  in  the  Company's  1999  Proxy  Statement).

*(4.2) GTC Telecom Corp. 2001 Stock Incentive Plan (incorporated by reference to
Exhibit  in  the  Company's  2001  Proxy  Statement).

*(10.1)  One  Plus  Billing and Information Management, Service Agreement, dated
September 8, 1998, including addendum (incorporated by reference to Exhibit 10.2
in  the  Company's  Form  10  SB/A  filed  April  2,  1999).

*(10.2)  MCI/WorldCom  Telecommunication  Resale  Contracts  (incorporated  by
reference  to  Exhibit  10.2  in the Company's Form 10 QSB for the quarter ended
September  30,  1999).

         *(10.2.1)     Program  Enrollment

         *(10.2.2)     Rate  and  Discount  Schedule

         *(10.2.3)     Service  Schedule

         *(10.2.4)     Telecommunications  Service  Agreement

         *(10.2.5)     Amendment  dated  September  14,  2000

*(10.3)  Employment  Agreement  by  and  between  GTC  Telecom  Corp.,  a Nevada
corporation  and Mark Fleming, dated October 14, 1998 (incorporated by reference
to  Exhibit  10.5  in  the  Company's  Form  10  SB/A  filed  April  2,  1999).

*(10.4)  Employment  Agreement  by  and  between  GTC  Telecom  Corp.,  a Nevada
corporation  and Eric Clemons, dated December 1, 1998 (incorporated by reference
to  Exhibit  10.6  in  the  Company's  Form  10  SB/A  filed  April  2,  1999).

*(10.5)  Employment  Agreement  by  and  between  GTC  Telecom  Corp.,  a Nevada
corporation  and  Jerry  DeCiccio,  dated  December  1,  1998  (incorporated  by
reference  to  Exhibit  10.7 in the Company's Form 10 SB/A filed April 2, 1999).

*(10.6)  Employment  Agreement  by  and  between  GTC  Telecom  Corp.,  a Nevada
corporation  and  Paul Sandhu, dated December 1, 1998 (incorporated by reference
to  Exhibit  10.8  in  the  Company's  Form  10  SB/A  filed  April  2,  1999).

*(10.7) Addendum to Lease dated May 21, 1998 between Southern California Sunbelt
Developers, Inc., and GTC Telecom Corp., a Nevada corporation; Eric Clemons; and
Paul  Sandhu  Jointly and Severally as Tenant ("Tenant") relating to premises at
Suites  K-103,  K-104,  and  K-108  The  John Wayne Executive Guild Center, 3151
Airway  Avenue,  Costa  Mesa,  California  92626  (incorporated  by reference to
Exhibit  10.7  in  the Company's Annual Report on Form 10-KSB for the year ended
June  30,  2001).

*(10.8) Addendum to Lease dated May 21, 1998 between Southern California Sunbelt
Developers, Inc., and GTC Telecom Corp., a Nevada corporation; Eric Clemons; and
Paul  Sandhu  Jointly and Severally as Tenant ("Tenant") relating to premises at
Suites  P-1,  P-3  and  L-2  The  John Wayne Executive Guild Center, 3151 Airway
Avenue,  Costa  Mesa, CA 92626 (incorporated by reference to Exhibit 10.7 in the
Company's  Annual  Report  on  Form  10-KSB  for  the year ended June 30, 2001).

(10.9)  Internet  Services  Agreement  dated  May  15,  2002

21.1  Subsidiaries  of  the  Registrant

23.1  Consent  of  Squar,  Milner,  Reehl  &  Williamson,  LLP

23.2  Consent  of  Corbin  &  Wertz

99.1  Certification  of  Chief  Executive  Officer  to  Section  906  of  the
Sarbanes-Oxley  Act  of  2002

99.2  Certification  of  Chief  Financial  Officer  to  Section  906  of  the
Sarbanes-Oxley  Act  of  2002

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

REPORTS  ON  FORM  8-K

The  Company  did  not  file  any  Current Reports on Form 8-K during the fourth
quarter.



                                      -20-
<PAGE>

                                   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:  August 28, 2002

                                GTC TELECOM CORP.
                                  (Registrant)

By:  /s/  PAUL SANDHU
          PAUL SANDHU
Chief Exeutive Officer and Director

By:  /s/  ERIC CLEMONS
          ERIC CLEMONS
President and Director

By:  /s/  GERALD DECICCIO
          GERALD DECICCIO
Chief Financial Officer and Director

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         August 28, 2002
     CLAY  WHITEHEAD

/s/  JOHN  EGER          Director         August 28, 2002
     JOHN  EGER


                                      -21-
<PAGE>


INDEPENDENT  AUDITORS'  REPORT

To  the  Board  of  Directors  and  Shareholders  of
GTC  Telecom  Corp.

We have audited the accompanying consolidated balance sheet of GTC Telecom Corp.
(the  "Company")  and  subsidiaries  as  of  June  30,  2002  and  the  related
consolidated  statements of operations, stockholders' deficit and cash flows for
the  year  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  audit.

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

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects, the consolidated financial position of GTC
Telecom  Corp. at June 30, 2002 and the consolidated results of their operations
and  their  cash  flows  for  the year then ended, in conformity with accounting
principles  generally  accepted  in  the  United  States  of  America.

The  accompanying  consolidated financial statements have been prepared assuming
that  the Company will continue as a going concern.  As disclosed in Note 1, the
Company  has  incurred operating losses in the last two years, and has a working
capital  deficit  of  $6,774,446,  liabilities  from the underpayment of payroll
taxes  and  contingent liabilities from cancelled contracts, and a stockholders'
deficit  of  $6,535,698  at  June  30, 2002.  These factors, among others, 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
consolidated financial statements do not include any adjustments that may result
from  the  outcome  of  this  uncertainty.


/s/ SQUAR, MILNER, REEHL & WIILIAMSON LLP



Newport  Beach,  California
August  9,  2002

                                      F-1
<PAGE>
INDEPENDENT  AUDITORS'  REPORT

To  the  Board  of  Directors  and  Shareholders  of
GTC  Telecom  Corp.

We  have  audited  the  accompanying  consolidated  statements  of  operations,
stockholders'  deficit  and  cash flows of GTC Telecom Corp. (the "Company") for
the year ended June 30, 2001.  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  audit.

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

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects, the consolidated results of operations and
cash  flows of GTC Telecom Corp. for the year ended June 30, 2001, in conformity
with  accounting  principles generally accepted in the United States of America.


     /s/  CORBIN  &  WERTZ



Irvine,  California
July 27, 2001

                                      F-2
<PAGE>
<TABLE>
<CAPTION>



                             GTC TELECOM CORP. AND SUBSIDIARIES
                                 CONSOLIDATED BALANCE SHEET



<S>                                                                 <C>
                                                                        June 30,
                                                                          2002


ASSETS
  Cash and cash equivalents. . . . . . . . . . . . . . . . . . . .  $    226,066
  Accounts receivable, net of allowance for doubtful accounts of
   105,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1,324,655
  Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . .       120,826
  Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . .        32,998
                                                                    -------------
    Total current assets . . . . . . . . . . . . . . . . . . . . .     1,704,545

Property and equipment, net. . . . . . . . . . . . . . . . . . . .       254,051
                                                                    -------------
    Total assets . . . . . . . . . . . . . . . . . . . . . . . . .  $  1,958,596
                                                                    =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable and accrued expenses. . . . . . . . . . . . . .  $  2,678,420
  Accrued payroll and related taxes. . . . . . . . . . . . . . . .     1,261,695
  Obligation under capital lease . . . . . . . . . . . . . . . . .         8,088
  Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . .     4,483,374
  Deferred income. . . . . . . . . . . . . . . . . . . . . . . . .        47,414
                                                                    -------------
    Total current liabilities. . . . . . . . . . . . . . . . . . .     8,478,991
                                                                    -------------

Long-term liabilities:
  Obligation under capital lease, net of current portion . . . . .        15,303
                                                                    -------------

    Total Liabilities. . . . . . . . . . . . . . . . . . . . . . .     8,494,294
                                                                    -------------

Commitments and contingencies

Stockholders' deficit:
  Preferred stock, $0.001 par value; 10,000,000 shares authorized;
    none issued and outstanding. . . . . . . . . . . . . . . . . .            --
  Common stock, $0.001 par value; 50,000,000 shares authorized;
    20,556,622 shares issued and outstanding . . . . . . . . . . .        20,557
  Additional paid-in-capital . . . . . . . . . . . . . . . . . . .     8,723,530
  Note receivable officer. . . . . . . . . . . . . . . . . . . . .       (60,306)
  Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . .   (15,219,479)
                                                                    -------------
    Total stockholders' deficit. . . . . . . . . . . . . . . . . .    (6,535,698)
                                                                    -------------

    Total liabilities and stockholders' deficit. . . . . . . . . .  $  1,958,596
                                                                    =============

</TABLE>
                      See independent auditors' reports and
             accompanying notes to consolidated financial statements


                                      F-3
<PAGE>

<TABLE>
<CAPTION>



                    GTC TELECOM CORP. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS

                                                     Year Ended June 30,
                                                  ------------------------
                                                     2002          2001
                                                  ------------------------
<S>                                               <C>           <C>
Revenues:
  Telecommunications . . . . . . . . . . . . . .  $17,037,105   $13,867,163
  Internet services. . . . . . . . . . . . . . .      724,768        97,381
                                                  ------------  ------------
    Total revenues . . . . . . . . . . . . . . .   17,761,873    13,964,544
                                                  ------------  ------------

Cost of sales:
  Telecommunications . . . . . . . . . . . . . .    9,279,127     7,888,648
  Internet services. . . . . . . . . . . . . . .      405,156        77,134
                                                  ------------  ------------
    Total cost of sales. . . . . . . . . . . . .    9,684,283     7,965,782
                                                  ------------  ------------

Gross profit . . . . . . . . . . . . . . . . . .    8,077,590     5,998,762

Selling, general, and administrative expenses. .    8,845,573     8,317,686
                                                  ------------  ------------

Operating loss . . . . . . . . . . . . . . . . .     (767,983)   (2,318,924)

Interest expense, net. . . . . . . . . . . . . .     (512,539)     (504,901)
Loss on sale of equipment. . . . . . . . . . . .      (14,878)           --
                                                  ------------  ------------

Loss before provision for income taxes . . . . .   (1,295,400)   (2,823,825)

Provision for income taxes . . . . . . . . . . .       16,267         8,433
                                                  ------------  ------------

Net loss . . . . . . . . . . . . . . . . . . . .  $(1,311,667)  $(2,832,258)
                                                  ============  ============

Basic and diluted net loss available to common
  shareholders per common share. . . . . . . . .  $     (0.06)  $     (0.14)
                                                  ============  ============
Basic and diluted weighted average common shares
  outstanding. . . . . . . . . . . . . . . . . .   20,412,375    20,031,313
                                                  ============  ============

</TABLE>


                      See independent auditors' reports and
             accompanying notes to consolidated financial statements


                                      F-4
<PAGE>

<TABLE>
<CAPTION>


                                     GTC TELECOM CORP. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                FOR THE TWO-YEAR PERIOD ENDED JUNE 30, 2002



                                                        Additional    Note                        Total
                                      Common Stock       Paid-in    Receivable  Accumulated   Stockholders'
                                  Shares      Amount     Capital     Officer      Deficit       Deficit
                                -----------  --------  -----------  ---------  -------------  ------------
<S>                             <C>          <C>       <C>          <C>        <C>            <C>
BALANCE AT JUNE 30, 2000 . . .  19,967,544   $19,968   $8,652,020   $(71,351)  $(11,075,554)  $(2,474,917)

Estimated fair market value of
 stock issued for services
 rendered. . . . . . . . . . .     150,000       150       54,580         --             --        54,730
Estimated fair market value of
 warrants granted to
 consultants for services
 rendered. . . . . . . . . . .          --        --       53,833         --             --        53,833
Estimated fair market value of
 options granted to directors
 and employees for
 compensation. . . . . . . . .          --        --      140,100         --             --       140,100
Cancellation of previously
 issued stock and options. . .     (56,637)      (57)    (357,743)        --             --      (357,800)
Issuance of restricted
 common stock for
 conversion of notes payable .     310,715       311      124,689         --             --       125,000
Advances to officer, net . . .          --        --           --     11,045             --        11,045
Net loss . . . . . . . . . . .          --        --           --         --     (2,832,258)   (2,832,258)
                                -----------  --------  -----------  ---------  -------------  ------------
BALANCE AT JUNE 30, 2001 . . .  20,371,622    20,372    8,667,479    (60,306)   (13,907,812)   (5,280,267)
                                -----------  --------  -----------  ---------  -------------  ------------
</TABLE>


                      See independent auditors' reports and
             accompanying notes to consolidated financial statements


                                      F-5
<PAGE>
<TABLE>
<CAPTION>


                                     GTC TELECOM CORP. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                FOR THE TWO-YEAR PERIOD ENDED JUNE 30, 2002
                                               (continued)



                                                        Additional    Note                        Total
                                      Common Stock       Paid-in    Receivable  Accumulated   Stockholders'
                                  Shares      Amount     Capital     Officer      Deficit       Deficit
                                -----------  --------  -----------  ---------  -------------  ------------
<S>                             <C>          <C>       <C>          <C>        <C>            <C>
Estimated fair market value of
 stock issued for services
 rendered. . . . . . . . . . .     175,000        175       32,825         --             --        33,000
Estimated fair market value of
 warrants granted to
 consultants for services
 rendered. . . . . . . . . . .          --         --       39,000         --             --        39,000
Estimated fair market value of
 options granted to directors
 and employees for
 compensation. . . . . . . . .          --         --      132,300         --             --       132,300
Registration statement fees. .          --         --     (148,164)        --             --      (148,164)
Exercise of stock options by
 officer . . . . . . . . . . .      10,000         10           90         --             --           100
Net loss . . . . . . . . . . .          --         --           --         --     (1,311,667)   (1,311,667)
                                -----------  --------  -----------  ---------  -------------  ------------
BALANCE AT JUNE 30, 2002 . . .  20,556,622   $20,557   $ 8,723,530  $ (60,306) $ (15,219,479) $ (6,535,698)
                                ===========  ========  ===========  =========  =============  ============
</TABLE>


                      See independent auditors' reports and
             accompanying notes to consolidated financial statements


                                      F-6
<PAGE>

<TABLE>
<CAPTION>

                     GTC TELECOM CORP. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                Year Ended June 30,
                                                            -------------------------
                                                               2002            2001
                                                            -------------------------
<S>                                                         <C>           <C>
Cash Flows From Operating Activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . .  $(1,311,667)  $(2,832,258)
Adjustments to reconcile net loss to net cash provided by
operating activities:
  Estimated fair market value of options granted
    to directors and employees for compensation. . . . . .      132,300       140,100
  Estimated fair market value of options and warrants
    granted to consultants for services rendered . . . . .       39,000        40,333
  Estimated fair market value of stock issued for services       33,000        54,730
  Estimated fair market value of warrants granted in
    connection with notes payable. . . . . . . . . . . . .           --        13,500
  Cancellation of previously issued stock and options. . .           --      (357,800)
  Allowance for related party note receivable. . . . . . .      100,000            --
  Bad debt expense . . . . . . . . . . . . . . . . . . . .      364,225       312,201
  Depreciation and amortization. . . . . . . . . . . . . .      237,035       220,390
  Loss on sale of equipment. . . . . . . . . . . . . . . .       14,878            --
  Changes in operating assets and liabilities:
    Accounts receivable and other current assets . . . . .     (226,857)   (1,164,896)
    Accounts payable and accrued expenses. . . . . . . . .    1,864,951     3,062,738
    Accrued payroll and related taxes. . . . . . . . . . .     (382,533)      770,015
    Deferred income. . . . . . . . . . . . . . . . . . . .       (3,473)      (60,582)
                                                            -------------------------
Net cash provided by operating activities. . . . . . . . .      860,859       198,471
                                                            -------------------------
Cash Flows From Investing Activities:
Purchases of property and equipment. . . . . . . . . . . .     (171,771)      (46,109)
Proceeds from sale of equipment. . . . . . . . . . . . . .        6,625            --
Loan to related party under note receivable. . . . . . . .           --      (100,000)
Advances to officer, net . . . . . . . . . . . . . . . . .           --        11,045
Deposits . . . . . . . . . . . . . . . . . . . . . . . . .           --       101,564
                                                            -------------------------
Net cash used in investing activities. . . . . . . . . . .     (165,146)      (33,500)
                                                            -------------------------
Cash Flows From Financing Activities:
Principal repayments on notes payable. . . . . . . . . . .     (448,630)      (36,790)
Principal repayments under capital lease obligations . . .      (92,831)      (91,139)
Payment of registration statement costs. . . . . . . . . .     (148,164)           --
Proceeds from exercise of stock options. . . . . . . . . .          100            --
Principal borrowings on notes payable to stockholders. . .           --       225,000
Principal repayments on notes payable to stockholders. . .           --      (273,500)
                                                            -------------------------
Net cash used in financing activities. . . . . . . . . . .     (689,525)     (176,429)

Net increase/(decrease) in cash. . . . . . . . . . . . . .        6,188       (11,458)

Cash at beginning of period. . . . . . . . . . . . . . . .      219,878       231,336
                                                            -------------------------
Cash at end of period. . . . . . . . . . . . . . . . . . .  $   226,066   $   219,878
                                                            =========================
</TABLE>

                      See independent auditors' reports and
             accompanying notes to consolidated financial statements


                                      F-7
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)



Supplemental disclosure of cash flow information:

                                                      Year Ended June 30,
                                                      -------------------
                                                      2002          2001
                                                      ----          ----
     Cash  paid  during  the  year  for:
       Interest                                     $439,068      $69,772
       Income taxes                                 $ 16,267      $ 8,433

Supplemental  disclosure  of  non-cash  investing  and  financing  activities:


On  January  23,  2002,  the  Company  placed  software  used  in  the Company's
operations  into  service.  The  software  was  financed with a capital lease of
$7,098  (see  Note  3).

On  February 15, 2002, the Company placed a new telephone system into service at
a cost of $120,686.  The telephone system was purchased using a cash downpayment
of  $23,786, and entering into a note payable of $70,400, and a capital lease of
$21,000  less  a  trade-in  allowance  of  $5,500  (See  Notes  3  and  5).

During  the  year  ended  June  30,  2001,  the Company issued 285,715 shares of
restricted  common  stock  pursuant  to  the conversion of a note payable with a
principal  amount  of  $100,000.

During  the  year  ended  June  30,  2001,  the  Company issued 25,000 shares of
restricted  common  stock  pursuant  to  the conversion of a note payable with a
principal  amount  of  $25,000.

See  accompanying  notes  to  consolidated  financial  statements  for  noncash
investing  and  financing  activities.












                      See independent auditors' reports and
             accompanying notes to consolidated financial statements

                                      F-8
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

NOTE  1  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

ORGANIZATION  AND OPERATIONS - GTC Telecom Corp. and subsidiaries (the "Company"
or  "GTC")  provide  various telecommunication services, including long distance
telephone and calling card services, 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.  The  Company  trades on the Over-The-Counter Bulletin
Board  under  the  symbol  "GTCC".

GOING  CONCERN  -  The  accompanying consolidated 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.  At June 30, 2002, the Company has
negative  working  capital  of  $6,774,446, liabilities from the underpayment of
payroll  taxes  (see  Note  10), contingent liabilities from cancelled contracts
(see  Note  10), and a stockholders' deficit of $6,535,698; in addition, through
June  30,  2002, the Company has losses from operations and a lack of profitable
operational history, among other matters, that raise substantial doubt about its
ability  to  continue  as  a  going  concern.  The  Company hopes to continue to
increase  revenues  from  additional  revenue  sources  and/or  increase margins
through  continued  negotiations  with MCI/WorldCom (see Note 10) and other cost
cutting  measures.  In  the  absence  of  significant  increases in revenues and
margins,  the  Company  intends  to  fund operations through additional debt and
equity  financing  arrangements.  The  successful  outcome  of future activities
cannot  be determined at this time and there are no assurances that if achieved,
the  Company will have sufficient funds to execute its intended business plan or
generate  positive  operating  results.

These  circumstances  raise  substantial  doubt  about  the Company's ability to
continue as a going concern.  The accompanying consolidated financial statements
do  not  include  any  adjustments  that  might  result from the outcome of this
uncertainty.

PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial statements
include  the  accounts  of  GTC Telecom Corp. and its wholly owned subsidiaries.
All  significant  intercompany balances and transactions have been eliminated in
consolidation.

USE  OF  ESTIMATES  - The preparation of financial statements in conformity with
accounting  principles  generally  accepted  in  the  United  States  of America
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 periods.  Actual results
could  differ  from  those  estimates.  Significant estimates made by management
are,  among  others, provisions for losses on accounts receivable, realizability
of  long-lived  assets  and  estimates  for  income  tax  valuations.

RISKS AND UNCERTAINTIES -
The Company operates in a highly competitive industry that is subject to intense
competition, government regulation and rapid technological changes.  The Company
has  limited  operating history and is subject to the substantial business risks
and  uncertainties inherent to such an entity, including financial, operational,
technological,  regulatory  and  other  risks  including  the  potential risk of
business  failure.

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.  The Company performs periodic credit evaluations
of  its  customers.  The  Company maintains reserves for potential credit losses
based  upon  the  Company's historical experience related to credit losses which
management  believes  are  sufficient.  Although  the Company expects to collect
amounts  due,  actual  collections  may  differ  from  the  estimated  amounts.

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



                                      F-9
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

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 customer's billings.  Under the terms of an amended contract
entered into with MCI/WorldCom on August 10, 1998 (and last amended in September
2000),  the Company is obligated to a minimum monthly commitment of $520,000 and
a  total purchase requirement of $18,000,000 over the term of the agreement.  As
of  June  30,  2002,  the  Company had satisfied $15,993,055 of this commitment.

Pursuant  to  the  terms  of  the  contract  with  MCI/WorldCom, the Company may
terminate  the  agreement upon thirty (30) days written notice provided that the
Company  pays  liquidated  damages  in  an amount equal to the aggregate minimum
requirement  for  the  remaining  term  of  the  contract  if  the  agreement is
terminated  for  convenience by the Company or by MCI/WorldCom due to a material
breach by the Company prior to the expiration date.  The remaining commitment to
MCI/WorldCom  through  August  2003  is  $2,006,945  as  of  June  30,2002.

On  July  22,  2002, MCI/WorldCom filed for Chapter 11 Bankruptcy reorganization
protection.  MCI/WorldCom  has,  however, assured the Company that it intends to
continue  supplying  the  Company during its bankruptcy reorganization with long
distance  services  at  the  same  level of service and under the same terms and
conditions  as  previously  existed.  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.  There  can  be  no assurance that
accurate  information  will  be  provided by MCI/WorldCom on a timely basis, the
failure  of  which would have a material adverse effect on the Company's results
of  operations.

To  provide  redundancy  as  well  as additional capacity, on July 26, 2002, the
Company  entered  into an agreement with an additional national facilities based
provider for the transmission of phone calls by its customers and to provide the
call  detail  records upon which the Company bases its customer billings.  Under
the  terms  of  the  contract,  the  Company  is  obligated to a minimum monthly
commitment of $0 for the first four (4) months of the agreement and $25,000 each
month thereafter.  The term of this agreement is for two (2) years.  Pursuant to
the  agreement,  the  Company  may terminate the agreement upon ninety (90) days
written  notice provided that the Company pays a termination fee equal to 50% of
the aggregate minimum revenue requirement for the remaining term of the contract
if  the Company terminates for convenience or by default of the Company prior to
the  expiration date.  The provider may terminate the agreement upon thirty (30)
days  written  notice and then only in the event that the Company is in material
breach  of  the  agreement.

In  the  event  that  the  services provided by MCI/WorldCom to the Company were
discontinued,  the Company believes that its alternate supplier (as noted in the
previous  paragraph)  will  be  able  to  provide  it  with sufficient levels of
services  at  terms  similar to those of MCI/WorldCom.  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.

The  Company  provides its Internet Service Provider Access services pursuant to
agreements  with various outside companies for the provisioning of the Company's
Internet  Service Provider Access service.  These agreements require the Company
to  pay the greater of actual incurred usage or a minimum monthly fee.  Pursuant
to  one  of  these  Agreements,  the  Company  is  subject  to  monthly  minimum
commitments  of $10,300 for June 2002, $23,175 for July 2002, $38,625 for August
2002  and  $51,500 each month thereafter.  The initial term of this agreement is
for  two  (2)  years  with automatic renewals for additional, successive one (1)
year  terms  unless previously terminated by either party rendering a sixty (60)
day  written notice.  In addition, the Company must pay an early termination fee
in  an  amount equal to 75% of the aggregate minimum revenue requirement for the
remaining  term  of the contract if the Company terminates for convenience or by
default  of  the  Company  prior to the expiration date which was $857,475 as of
June  30,  2002.  The  other  agreements  have  no  monthly minimum commitments.

                                      F-10
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002


PROPERTY AND EQUIPMENT - Property and equipment is stated at cost.  Depreciation
is computed using the straight-line method over the useful life of 3 to 5 years.
During  the  year  ended  June 30, 2002 and 2001, total depreciation expense was
$217,299  and  $195,890,  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.

LONG-LIVED  ASSETS  -  The Company has adopted 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  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's management believes that no impairment of the
carrying  value of its long-lived assets existed at June 30, 2002.  There can be
no assurance, however, that market conditions will not change or demands for the
Company's services or products will continue which could result in impairment of
long-lived  assets.

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.

Telecommunication  services  cost of sales consists of the cost of long distance
service  provided  by  MCI/WorldCom  and  other  carriers.

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  consists  of  the cost of providing Internet
access.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin  101  ("SAB  101"),  "Revenue  Recognition,"  which  outlines the basic
criteria  that  must  be  met  to  recognize  revenue  and  provide guidance for
presentation  of  revenue  and  for  disclosure  related  to revenue recognition
policies  in  financial  statements  filed  with  the  Securities  and  Exchange
Commission.  Management  believes  the  Company's  revenue  recognition policies
conform  to  SAB  101.

DEFERRED  INCOME  -  Deferred  income represents proceeds from prepaid telephone
calling  cards  which are recorded as deferred income when the cash is received.
The  Company  recognizes  the  revenue  in  the  statement  of operations as the
telephone  service  is  utilized  or  when  the  calling  card  expires.

ADVERTISING  COSTS  -  Advertising  costs are expensed as incurred.  Advertising
expense  was  $87,998  and  $171,108  for  fiscal  2002  and 2001, respectively.

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


                                      F-11
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002
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.

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.

The  Financial Accounting Standards Board ("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  (see  Note  6).

In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"), "Accounting for
Certain Transactions Involving Stock Compensation, an Interpretation of APB 25."
FIN  44  clarifies  the application of APB 25 for (a) the definition of employee
for purposes of applying APB 25, (b) the criteria for determining whether a plan
qualifies  as a noncompensatory plan, (c) the accounting consequence for various
modifications  to the terms of a previously fixed stock option or award, and (d)
the  accounting  for  an  exchange  of  stock  compensation awards in a business
combination.

LOSS  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 (there were 86,450 and no potential common shares as
of  June  30,  2002  and 2001, respectively).  Pro forma per share data has been
computed  using  the weighted average number of common shares outstanding during
the  periods.  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  (see  Note  12).

FAIR  VALUES  OF  FINANCIAL INSTRUMENTS - The 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 related party
notes  receivable  and  note  receivable  officer  are not determinable as these
transactions  are  with  a  related  party.

COMPREHENSIVE INCOME - The Company has adopted Statement of 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.

                                      F-12
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

SEGMENTS  OF  AN  ENTERPRISE  AND  RELATED INFORMATION - The Company has adopted
Statement  of  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.  As approximately 96% of the Company's revenues, loss from operations
and identifiable assets are from the telecommunications segment, the Company has
not  made  segment  disclosures  in  the  accompanying  financial  statements.

DERIVATIVE  INSTRUMENTS  AND  HEDGING ACTIVITIES - In June 1998, the FASB issued
Statement  of  Financial  Accounting Standards No. 133 ("SFAS 133"), "Accounting
for  Derivative  Instruments  and  Hedging Activities."  SFAS 133, as amended by
Statement  of Financial Accounting Standards No. 137, 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.  The Company has no
derivative  or  hedging  activities  as  of  June  30,  2002.

RECENT  ACCOUNTING  PRONOUNCEMENT  -  In July 2001, the FASB issued Statement of
Financial  Accounting  Standards  No. 141 ("SFAS 141"), "Business Combinations,"
which  is  effective  for  business  combinations initiated after June 30, 2001.
SFAS  141  eliminates  the pooling of interest method of accounting for business
combinations and requires that all business combinations occurring after July 1,
2001  are accounted for under the purchase method.  The adoption of SFAS 141 did
not  have  a  material  impact  on  the  Company's  financial  statements.

In  July  2001,  the FASB issued Statement of Financial Accounting Standards No.
142 ("SFAS 142"), "Goodwill and Other Intangible Assets," which is effective for
fiscal years beginning after December 15, 2001.  Early adoption is permitted for
entities  with  fiscal  years  beginning after March 15, 2001, provided that the
first  interim  financial  statements have not been previously issued.  SFAS 142
addresses  how  intangible assets that are acquired individually or with a group
of  other  assets should be accounted for in the financial statements upon their
acquisition  and  after  they  have  been  initially recognized in the financial
statements.  SFAS  142  requires  that  goodwill and intangible assets that have
indefinite  useful lives not be amortized but rather be tested at least annually
for impairment, and intangible assets that have finite useful lives be amortized
over  their  useful  lives.  SFAS  142  provides  specific  guidance for testing
goodwill  and  intangible  assets that will not be amortized for impairment.  In
addition,  SFAS 142 expands the disclosure requirements about goodwill and other
intangible  assets  in  the  years  subsequent to their acquisition.  Impairment
losses  for goodwill and indefinite-life intangible assets that arise due to the
initial application of SFAS 142 are to be reported as resulting from a change in
accounting  principle.  However,  goodwill  and intangible assets acquired after
June  30,  2001  will be subject immediately to the provisions of SFAS 142.  The
Company  does  not  expect  SFAS  142 to have a material effect on its financial
statements.

In  June  2001,  the FASB issued Statement of Financial Accounting Standards No.
143  ("SFAS  143"),  "Accounting  for  Asset  Retirement Obligations."  SFAS 143
establishes  standards  associated  with  the  retirement of tangible long-lived
assets  and  the associated asset retirement costs.  This statement is effective
for  financial statements issued for fiscal years beginning after June 15, 2002.
The  Company does not expect SFAS 143 to have a material effect on its financial
statements.

In  August 2001, the FASB issued Statement of Financial Accounting Standards No.
144  ("SFAS  144"),  "Accounting  for  the  Impairment or Disposal of Long-Lived
Assets."  SFAS  144  addresses  financial  accounting  and  reporting  for  the
impairment  of  long-lived  assets  and for long-lived assets to be disposed of.
The  provisions  of  SFAS  144 are effective for financial statements issued for
fiscal years beginning after December 15, 2001, and interim periods within these
fiscal  years, with early adoption encouraged.  The Company does not expect SFAS
144  to  have  a  material  impact  on  its  financial  statements.

In August 2002, the FASB issued Statement on Financial Accounting Standards No.
146 ("SFAS 146").  SFAS 146, "Accounting for Costs Associated with Exit or
Disposal Activities," is effective for such activities initiated after December
31, 2002.  Activities of this type include restructurings (such as relocation of
a business and fundamental reorganizations of a business itself), which may give
rise to costs such as contract cancellation provisions, employee relocation, and
one-time termination costs.  SFAS 146 prohibits liability recognition based
solely on management's intent, and requires that liabilities be measured at
estimated fair value.  Management has not determined the effect, in any, of SFAS
146 on the Company's future financial statements.

                                      F-13
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

NOTE  2  PROPERTY  AND  EQUIPMENT

Property  and  equipment  consist  of  the  following  at  June  30,  2002:

Computer equipment . . . . . .  $ 487,690
Furniture and office equipment    156,902
Telephone equipment. . . . . .    129,526
                                ----------
                                  774,118
Less accumulated depreciation.   (520,067)
                                ----------
                                $ 254,051
                                ==========


NOTE  3  OBLIGATION  UNDER  CAPITAL  LEASE

The  Company  is  a lessee of certain property and equipment under capital lease
obligations that expire on various dates through January 2006.  The terms of the
capital  lease  obligations  provide  for  monthly  lease  payments ranging from
approximately  $200  to  $750.  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 asset.  The assets are depreciated over the
shorter  period  of  the  lease  term  or  the  estimate  useful  life.

Future  minimum  annual  commitments  under  lease  arrangements are as follows:

Years Ending
June 30,
------------

2003. . . . . . . . . . . . . . . . . . . .  $11,000
2004. . . . . . . . . . . . . . . . . . . .   11,000
2005. . . . . . . . . . . . . . . . . . . .    6,000
2006. . . . . . . . . . . . . . . . . . . .      500

                                             --------

Total minimum future lease payments . . . .   28,500

Less: Amounts representing interest . . . .   (5,109)
                                             --------

Present value of net minimum lease payments  $23,391
                                             ========

The  following is an analysis of the leased equipment under capital leases as of
June  30,  2002,  which  is  included  in  property  and  equipment  (Note  2).

Computer equipment . . . . . .  $ 7,098
Telephone equipment. . . . . .   21,000
                                -------
                                 29,098
                                -------
Less: Accumulated depreciation   (6,465)
                                -------
                                $21,633
                                =======

Interest  incurred  pursuant  to  the  capital  lease obligations was $5,886 and
$16,065  for  fiscal  years  2002  and  2001,  respectively.

                                      F-14
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

NOTE  4  RELATED  PARTY  TRANSACTIONS

NOTE  RECEIVABLE  OFFICER

As of June 30, 2002, the Company has net advances to an officer of $60,306.  The
advances accrue interest at 10% (no interest income has been recorded as of June
30,  2002)  and  are  due  on  demand.  The  Company  has  reclassified the note
receivable  as  an  increase  to  stockholders'  deficit  in  the  accompanying
consolidated  balance  sheet  at  June  30,  2002.

NOTE  RECEIVABLE

During  fiscal  year  2001,  the Company recorded a note receivable for $100,000
advanced  to  a  company related to a shareholder.  The Company has not received
payment  for  the  related  party note receivable, which was due March 25, 2001.
Therefore,  the Company has determined that there is a significant risk that the
Company's  related  party  note  receivable will not be repaid.  The Company has
established  an  allowance  for  the  possible  uncollectibility of such note of
$100,000  which the Company has charged to general and administrative expense in
the  accompanying  consolidated  statement  of  operations  as of June 30, 2002.

NOTE  5  NOTES  PAYABLE
On October 19, 2001, the Company converted $4,861,604 of a total payable balance
of  $6,173,612 due to a third party (see Note 10) into a short-term note payable
("the  Note").  The  Note bears interest at 12%, unless the Company is unable to
make the monthly payments as required, at which time the interest rate increases
to  18%.  The  Note provides for interest only payments of approximately $48,000
for  the first three months, commencing October 15, 2001, with monthly principal
and  interest  payments  of $100,000 commencing January 15, 2002, with a balloon
payment  of  $4,480,475  due  on  September  15,  2002.  On January 9, 2002, the
Company  renegotiated the monthly payments due in the Note in exchange for a 20%
reduction  in  the Company's transportation cost due to MCI/WorldCom.  The Note,
as amended, provides for monthly principal and interest payments of $100,000 due
January  15,  2002  and  February  15, 2002, with monthly principal and interest
payments  of  $125,000  commencing  March  15,  2002,  with a balloon payment of
$4,027,646  due  on December 15, 2002.  The Note is secured by substantially all
of  the  assets  of  the  Company  (as defined in the agreement).  The Note also
provides  that if the Company makes all scheduled payments pursuant to the Note,
the  noteholder may renegotiate the Note in good faith with the then outstanding
balance  being  due under a new promissory note with terms similar to this Note.
As  of the date of this report, the Company has made all payments as required by
the Note.  During the fiscal year ended June 30, 2002, the Company made payments
totaling  $845,449  (including  interest payments totaling $425,536) pursuant to
this  Note.  The  outstanding  balance  totaled  $4,441,691  at  June  30, 2002.

On February 15, 2002, the Company financed certain components of a new telephone
system  placed  into  service  by  entering into a term note (the "Note") in the
amount  of  $70,400.  The Note provides for the Company to make monthly payments
of  $5,500, including interest at a rate of 14.6%, and matures in February 2003.
The  total  outstanding balance on the note was $41,683 and is included in notes
payable  in  the  accompanying  consolidated  balance  sheet  at  June 30, 2002.

                                      F-15
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002


NOTE  6  STOCK  OPTIONS

From time to time, the Company issues non-plan stock options pursuant to various
agreements  and  other compensatory arrangements to employees and third parties.

In  December  2001,  the  Company's  Chief  Operating  Officer exercised options
(previously  granted pursuant to his employment contract) to purchase a total of
10,000  shares  of  the  Company's  common  stock  for  $100.

2001  Stock  Incentive  Plan

On  October  17,  2001, the Company's Board approved the GTC Telecom Corp. Stock
Incentive  Plan  (the  "SIP Plan"), effective January 1, 2002.  The SIP Plan was
approved  and ratified by the shareholders on December 13, 2001 at the Company's
2001  annual  shareholder's  meeting.  The  SIP  Plan  provides for the grant of
various  types of equity based incentives, including qualified and non-qualified
stock  options,  stock appreciation rights, restricted stock, bonuses, and other
awards.  A  maximum  of  5,000,000  shares  of the Company's common stock may be
issued  pursuant  to  the  SIP  Plan.  The  SIP  plan  is  administered  by  the
Compensation  Committee  of  the  Board  of  Directors.

On  April  23,  2002,  the  Company's  Board  granted, pursuant to the SIP Plan,
Incentive  Stock  Options (as defined by the SIP Plan), to purchase an aggregate
of  1,330,000 shares of the Company's common stock at an exercise price of $0.19
per  share  (the  fair  market value of the Company's common stock on the day of
grant), vesting equally over a period of five years from the date of issuance to
certain  employees of the Company and Non-qualified Stock Options (as defined by
the  SIP  Plan),  to  purchase  an  aggregate of 600,000 shares of the Company's
common  stock  at an exercise price of $0.19 per share (the fair market value of
the  Company's  common  stock  on the day of grant), and vest immediately to the
officers and directors of the Company.  During fiscal year 2002, Incentive Stock
Options  (as  defined by the SIP Plan) were granted, to purchase an aggregate of
28,000 shares of the Company's common stock (net of 13,000 granted and cancelled
during  the  fiscal  year  2002) at an average exercise price of $0.21 per share
(each  issuance priced at the fair market value of the Company's common stock on
the day of grant) to certain employees of the Company.  The options vest equally
over  a  period of five years from the date of grant and are exercisable through
June  2012.

1999  Stock  Option  Plan

On  September  20, 1999, the Company's Board 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 or 2,037,162 shares for the year beginning October
1,  2001.  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.  Upon the approval and ratification of the
Company's  2001  Stock Incentive Plan, the Company elected to terminate the 1999
Omnibus  Stock  Option  Plan.

During  fiscal  year 2002, the Board granted Incentive Stock Options (as defined
by  the Option Plan), to purchase 43,000 shares of the Company's common stock at
an  average  exercise price of $0.28 per share (each issuance priced at the fair
market  value  of  the  Company's  common  stock on the day of grant) to certain
employees  of the Company.  The options vest equally over a period of five years
from  the  date  of  grant  and  are  exercisable  through  October  2011.

On October 5, 2000, the Company's Board granted, pursuant to the Option Plan,
Incentive Stock Options (as defined by the Option Plan), to purchase 203,650
shares of the Company's common stock at an exercise price of $0.6875 per share
(the fair market value of the Company's common stock on the day of grant) to
certain employees of the Company and Non-statutory Stock Options (as defined by
the Option Plan), to purchase 300,000 shares of the Company's common stock at an
exercise price of $0.6875 per share (the fair market value of the Company's
common stock on the day of grant) to the directors of the Company.  The options
vest equally over a period of five years from the date of grant and are
exercisable through October 2010.  During fiscal year 2001, additional Incentive
Stock Options (as defined by the Option Plan) were granted, to purchase 109,900
shares of the Company's common stock at an average exercise price of $0.3937 per
share (each issuance priced at the fair market value of the Company's common
stock on the day of grant) to certain employees of the Company.  The options
vest equally over a period of five years from the date of grant and are
exercisable through April 2011.

                                      F-16
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

Non-Plan  Issuances

During  fiscal  year  2002,  the  Company  issued  options  to  certain board of
directors,  in  accordance  with  their  director  compensation  agreements,  to
purchase an aggregate of 40,000 shares of restricted common stock, at an average
exercise  price  of  $0.24 per share (each issuance priced at the estimated fair
market value on the date of grant).  The options vested on the date of grant and
are  exercisable  through  April  2005.

On  August  17, 2001, the Company issued to a shareholder options to purchase up
to  100,000  shares  of  the  Company's restricted common stock for fund raising
activities  performed  in  fiscal  year  2001, at an exercise price of $0.35 per
share.  The options vested on the date of grant and are exercisable for a period
of  two  years  from  the  date  of  issuance.  No compensation expense is to be
recognized  due  to  the  fact  the  options were issued in connection with fund
raising  activities.

During  fiscal  year  2001, the Board issued options to purchase an aggregate of
52,500  shares  of  the Company's common stock, at exercise prices between $0.01
and  $0.2969  per  share,  valued at $7,800, to members of the Board pursuant to
their  agreement  of  director  compensation.  The options vested on the date of
grant  and  are  exercisable  through  April  2004.

On  November  3, 2000, the Company granted options to purchase 125,000 shares of
restricted  common stock, at an exercise price of $0.50 per share, to a director
of  the Company (the fair market value of the Company's common stock on the date
of  grant).  The options vested on the date of grant and are exercisable through
November  2003.

The  Company  recorded  compensation  expense  for  previously issued options of
$132,300  and  $132,300  in  the  fiscal  year  ended  June  30,  2002 and 2001,
respectively.

A  following  is  a status of the stock options outstanding at June 30, 2002 and
2001  and  the  changes  during  the  years  then  ended:

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEARS ENDED JUNE 30, 2002

                                          2002                2001
                                            Weighted             Weighted
                                             Average              Average
                                            Exercise             Exercise
                                  Options      Price    Options     Price
                                -----------  -------  ----------  -------
Outstanding, beginning of year   2,692,000   $1.2671  2,156,500   $1.7365
       Granted . . . . . . . .   2,154,000    0.2005    791,050    0.5788
       Exercised . . . . . . .     (10,000)     0.01         --        --
       Expired/Forfeited . . .    (243,400)   1.7138   (255,550)    3.097
                                -----------  -------  ----------  -------
Outstanding, end of year . . .   4,592,600   $0.7459  2,692,000   $1.2671
                                ===========  =======  ==========  =======
Exercisable at end of year . .   2,423,710   $  0.99  1,441,730   $1.3216
                                ===========  =======  ==========  =======
Wtd avg fair value of options
granted. . . . . . . . . . . .               $  0.19              $  0.81
                                             -------              -------

3,477,850  of  the  options  outstanding  at  June 30, 2002 have exercise prices
between  $0.01  and $1.00, with a weighted average exercise price of $0.42 and a
weighted  average  remaining contractual life of 6.18 years.  1,702,770 of these
options are exercisable at June 30, 2002.  863,250 of the options outstanding at
June  30,  2002  have  exercise  prices between $1.01 and $2.00, with a weighted
average  exercise  price  of  $1.16 and a weighted average remaining contractual
life  of 6.28 years.  488,940 of these options are exercisable at June 30, 2002.
The remaining 251,500 options have exercise prices between $2.94 and $5.00, with
a  weighted  average  exercise  price  of $3.88 and a weighted average remaining
contractual life of 3.0 years.  232,000 of these options are exercisable at June
30,  2002.

SFAS  123  Proforma  Information:

The fair market value of each option granted in 2002 and 2001 to consultants and
other  third  parties is estimated using the Black-Scholes option pricing method
per  SFAS  123.  The  Black-Scholes  option-pricing  model  used  the  following
assumptions  for  the  years  ended June 30, 2002 and 2001, respectively: (i) no
dividend  yield  for  each  year, (ii) average volatility of 222 percent and 203
percent,  respectively,  (iii)  weighted-average risk-free interest rate ranging
from  3.5  percent  to  4.82  percent  and  6.25 percent, respectively, and (iv)
expected  life  of  3  to  5  years.

                                      F-17
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002


Had  compensation  cost  for  the  Company's  2002  and  2001 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, 2002 and 2001 would approximate
the  pro  forma  amounts  below:

<TABLE>
<CAPTION>
                                                                   Years ended June 30,
                                                                  ----------------------
                                                             2002                        2001
                                                             ----                        ----
                                              As Reported         Pro Forma    As Reported    Pro Forma
                                        ----------------------  -------------  ------------  ------------
<S>                                     <C>                     <C>            <C>           <C>
Net loss . . . . . . . . . . . . . . .  $          (1,311,667)  $ (1,720,708)  $(2,832,258)  $(3,017,965)
      Basic and diluted loss per share  $               (0.06)  $      (0.08)  $     (0.14)  $     (0.15)
</TABLE>

NOTE  7  WARRANTS

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

In  September  2000,  the  Company  agreed  to issue to a noteholder warrants to
purchase  up  to  40,000  shares  of the Company's restricted common stock at an
exercise  price of $0.50 per share valued at approximately $13,500 (based on the
Black-Scholes pricing model).  The warrants vest immediately and are exercisable
for  a  period  of  two  years  from  the date of issuance and contain piggyback
registration  rights.

In  November  2000,  pursuant  to  an  agreement  with an outside consultant for
investor and public relations services, the Company granted warrants to purchase
100,000  shares  of  the  Company's common stock.  The warrants have an exercise
price as follows: 1) 33,333 shares at the closing bid price on November 1, 2000,
2)  33,333  shares  at  the closing bid price on November 1, 2000 plus $0.50 per
share  and,  3)  33,334 shares at the closing bid price on November 1, 2000 plus
$1.00  per  share.  The  warrants  vest  immediately  and  shall  have piggyback
registration  rights  and  were  valued  at  $40,333 (based on the Black Scholes
pricing  model)  which  the  Company  recorded  as  investor relation's expense.

In  May  2001,  the Company entered into a letter of intent ("LOI") with a third
party to market the Company's products and services.  The agreement requires the
Company  to  pay  a  monthly  commission  for  each  customer minute charged and
collected  from  the  third party's efforts.  In addition, the Company agreed to
issue  warrants  to  purchase  shares  of the Company's common stock as follows:

1.  Warrants  to  purchase  50,000  shares  of our restricted common stock at an
exercise  price of $0.28 per share valued at $13,500 (pursuant to SFAS 123 based
on the Black-Scholes option pricing model).  The warrant vested upon the signing
of  the  agreement  in  October  2001,  and  as a result, the Company recognized
compensation  expense  of  $13,500  related  to  these warrants in the Company's
consolidated statement of operations during the fiscal year ended June 30, 2002.

2.  During  fiscal  year  2002,  warrants  to  purchase  50,000  shares  of  our
restricted  common  stock  at  an  exercise  price  of $0.24 per share valued at
$11,500  (pursuant to SFAS 123 based on the Black-Scholes option pricing model).
The  warrant  vested  in  October  2001 when the third party began to market the
Company's products, and as a result, the Company recognized compensation expense
of  $11,500 related to these warrants in the Company's consolidated statement of
operations  during  the  fiscal  year  ended  June  30,  2002.

3.  Additional warrants at the rate of one restricted share per customer brought
to  us  by the marketing company for every 100,000 customers.  The warrants will
be priced at the lowest fair market value within 60 calendar days of the date of
grant.  No  warrants  have  been  earned  or  issued  pursuant to this agreement
through  the  date  of  this  report.

In May 2002, pursuant to an investment banking agreement, the Company granted
warrants to purchase 100,000 shares of the Company's restricted common stock at
an exercise price of $0.50 per share, valued at approximately $14,000 (based on
the Black-Scholes pricing model).  The warrants vested upon signing of the
agreement (see Note 10).


                                      F-18
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

The  following represents a summary of the warrants outstanding at June 30, 2002
and  2001  and  changes  during  the  years  then  ended:


                                           2002                2001
                                           ----                ----

                                               Weighted           Weighted
                                               Average             Average
                                               Exercise            Exercise
                                    Warrants    Price    Warrants   Price
                                    --------  ---------  --------  -------
Outstanding, beginning of year . .   190,000  $  0.7056        --  $    --
       Granted . . . . . . . . . .   300,000     0.3802   190,000   0.7056
       Exercised . . . . . . . . .        --         --        --       --
       Expired/Forfeited . . . . .        --         --        --       --
                                    --------  ---------  --------  -------
Outstanding, end of year . . . . .   490,000  $  0.5094   190,000  $0.7056
                                    ========  =========  ========  =======
Exercisable at the end of the year   490,000  $  0.5094   140,000  $  0.87
                                    ========  =========  ========  =======

The  fair  value of each warrant granted during 2002 and 2001 is estimated using
the  Black-Scholes option-pricing model on the date of grant.  The Black-Scholes
option-pricing model used the following assumptions for the years ended June 30,
2002  and  2001, respectively: (i) no dividend yield for each year, (ii) average
volatility  of  500  percent  and  170 percent, (iii) weighted-average risk-free
interest  rate  ranging from 3.5 percent to 6.25 percent, and (iv) expected life
of  3  to  5  years.

490,000  of  the  warrants  outstanding  at  June  30, 2002 have exercise prices
between  $0.24 and $1.516, with a weighted average exercise price of $0.51 and a
weighted  average  remaining  contractual  life of 2.48 years.  490,000 of these
warrants  are  exercisable  at  June  30,  2002.

NOTE  8  COMMON  STOCK  ISSUANCES

During  fiscal  2002,  pursuant to an agreement with an investment banking firm,
the  Company issued a total of 150,000 shares of the Company's restricted common
stock, valued at approximately $25,750 (based on the market price on the date of
issuance)  (see  Note  10).  Subsequent  to  year-end, the Company has issued an
additional  50,000  shares  of  the Company's restricted common stock, valued at
approximately  $8,250  (based  on  the  market  price  on  the date of issuance)
pursuant  to  the  investment  banking  agreement).

In  September  2001,  the  Company  entered  into  an  agreement with an outside
consultant  for  investor  and  public  relations  services.  Pursuant  to  the
agreement, the Company issued to the investor relations company 25,000 shares of
our  restricted  common stock valued at $7,250 (based on the market price on the
date  of  grant)  and  recorded  the  amount as investor relations expense under
selling,  general  and  administrative expenses in the accompanying consolidated
statement  of  operations.

In  October  2000,  the  Company issued 20,000 shares of restricted common stock
valued  at $11,250 (based on the market price on the date of grant) for services
rendered.  In  connection  with  this issuance, the Company recorded advertising
expense  of  $11,250.  These  shares  also  have  a  provision  for  piggyback
registration  rights.

In October 2000, the Company entered into an agreement with an outside
consultant for investor and public relations services.  Pursuant to the
agreement, the Company agreed to issue to the investor relations company 15,000
shares of the Company's restricted common stock for each month the agreement is
in effect.  These shares shall have piggyback registration rights and were
valued using the market price on the date of each grant.  During the period
ended June 30, 2001, the Company issued 105,000 shares of common stock valued at
$32,524 (based on the market price on the date of grant) pursuant to this
agreement and recorded the amount as investor relation's expense.

                                      F-19
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

In  November  2000,  the  Company  entered  into  an  agreement  with an outside
consultant  for  investor  and  public  relations  services.  Pursuant  to  the
agreement,  the Company agreed to issue to the investor relations company 25,000
shares  of the Company's restricted common stock valued at $10,956 (based on the
market price on the date of grant) and recorded the amount as investor relations
expense.

On  May  31,  2001, a $25,000 noteholder exercised the conversion feature of the
note  into  25,000  restricted  shares  of  the  Company's  common  stock.

On  May  15,  2001,  a noteholder converted the principal balance outstanding of
$100,000  into  285,715 restricted shares of the Company's common stock at $0.35
per  share  (the  fair market value on the date of conversion was $0.32).  These
shares  also  have  piggyback  registration  rights.

In  January  2000,  the  Company  entered  into  an  agreement  with  an outside
consultant  for  investor  and  public  relations  services.  Pursuant  to  the
agreement,  the  Company issued 56,637 shares of common stock valued at $200,000
for services.  In addition, the Company issued options to purchase 60,000 shares
of  the  Company's  common  stock  as  follows:  1) 20,000 shares at 100% of the
closing  bid  price on January 28, 2000, 2) 20,000 shares at 200% of the closing
bid  price  on January 28, 2000 and, 3) 20,000 shares at 300% of the closing bid
price  on January 28, 2000.  The options were valued at $157,800 using the Black
Scholes method and recorded as investor relations expense under Selling, General
and  Administrative  expense  in  the  accompanying Statement of Operations.  In
October  2000,  pursuant to an agreement, the consultant accepted a cash payment
of  $6,280  in  lieu  of the 56,637 shares of the Company's common stock and the
60,000  options.  As a result, the Company reversed the transaction and recorded
the value of the previously issued stock and warrants of $357,800 as a reduction
in  Selling,  General,  and  Administrative  expense.

NOTE  9  INCOME  TAXES

The tax effects of temporary differences that give rise to deferred taxes are as
of  June  30,  2002:

Deferred  tax  asset:
      Net  operating  loss  carryforward     $ 9,025,000
      Allowance  for  doubtful  accounts          45,000
                                             -----------

      Total  gross  deferred  tax  asset       9,070,000

     Less  valuation  allowance               (9,070,000)
                                             -----------
      Net  deferred  tax  asset              $        --
                                             ===========

The  valuation  allowance  increased  by $530,000 during the year ended June 30,
2002.  No current provision for income taxes for the periods ended June 30, 2002
and 2001 is required, except for minimum state taxes, since the Company incurred
taxable  losses  during  such  years.

                                      F-20
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

The  provision  for  income  taxes for fiscal 2002 and 2001 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,
                                                           2002          2001
                                                       ----------   -----------
Computed tax benefit at federal statutory rate. . . .  $ (444,000)  $  (960,000)
     State income tax benefit, net of federal effect.     (86,000)      (83,000)
     Increase in valuation allowance. . . . . . . . .     530,000     4,060,629
     Tax benefit from exercise of stock options in
       fiscal 2000 and 2001 not previously recognized          --    (3,009,196)
     Other. . . . . . . . . . . . . . . . . . . . . .      16,267            --
                                                       ----------   -----------
                                                       $   16,267   $     8,433
                                                       ===========  ===========
As  of  June  30,  2002,  the  Company  had  net operating loss carryforwards of
approximately  $19,730,000  and  $17,880,000  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  10  COMMITMENTS  AND  CONTINGENCIES

COMMITMENTS  - In April 2002, the Company entered into an agreement with a third
party  for  investment banking services.  Pursuant to the agreement, the Company
is required to pay an initial fee of $25,000 and make monthly payments of $5,000
over  the  term of the agreement, which expires in March 2003.  In addition, the
Company  issued  to  the investment banking firm 100,000 shares of the Company's
restricted  stock  valued  at  $16,000 (based on the market price on the date of
issuance)  (see  Note  7)  and  granted warrants valued at approximately $14,000
(based  on the Black-Scholes option pricing model) to purchase 100,000 shares of
the Company's restricted stock at an exercise price of $0.50 per share (see Note
8).  The  warrants  vested  immediately  and are exercisable through April 2005.
The agreement also provides for the Company to issue the investment banking firm
on a monthly basis 25,000 shares of restricted common stock over the term of the
agreement.  During  the  year  ended  June  30,  2002,  the  Company  issued  an
additional  50,000  shares of restricted common stock valued at $9,750 (based on
the  current  market  price on the date of issuance) (see Note 8).  As a result,
the Company has recorded total consulting expense of $39,750 in the accompanying
consolidated  statement  of  operations  as  of  June  30,  2002.

CONTINGENCIES  -  On  April 30, 1999, the Company entered into an agreement with
Williams  Communications, a unit of Williams of Tulsa, Oklahoma ("Williams"), in
which Williams was to design, install and maintain a high speed, nationwide VoIP
network  for  the  Company.  Subsequently, due to Williams' inability to deliver
the  VoIP  network  as  contracted  and  as a result of the previously discussed
amendments  to  the MCI/WorldCom contract, the Company determined to discontinue
its  agreement  with  Williams.  As a result of the Company's discontinuation of
its contract with Williams, the Company may be subject to $600,110 in fees.  The
Company  is  in negotiations with Williams to modify or eliminate these charges.
However,  no  assurances  can  be  made  that such negotiations will result in a
favorable outcome.  No amounts have been recorded related to the discontinuation
of  the  contract  as  of  June  30,  2002.

PAYROLL  TAXES  - The Company has recorded an accrual for past due payroll taxes
as  of  June  30,  2002  due to the under-reporting of the Company's payroll tax
liability.  As  a  result,  the  Company  has  accrued  approximately $1,011,000
(including  approximately  $422,000  of  penalties  and  interest) under accrued
payroll  and  related  taxes  and  accounts  payable and accrued expenses in the
accompanying  balance sheet at June 30, 2002. The Company expects this matter to
be  settled  and  the  related  accrual  paid  by  December  2002.

                                      F-21
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002


LEGAL  MATTERS  -  Online Choice.com, Inc., v. GTC Telecom Corp. On November 30,
2001,  Online  Choice.com,  Inc. filed a claim against the Company for breach of
contract  and  declaratory  relief  in the United States District Court, Central
District  of  California. Plaintiffs alleged they purchased substantially all of
the  assets  out  of  the bankruptcy estate of a company that was an independent
sales  affiliate  of GTC. Plaintiffs further allege that GTC's independent sales
affiliate  agreement  with  that  previous affiliate was among those assets, and
that  GTC  has breached the agreement by failing to continue to pay commissions.
On  August  22,  2002,  the  Company  and  Online  Choice.com,  Inc.,  reached a
settlement  in which the action and all related cross-actions were dismissed. No
money  changed  hands  as  a  result  of  the  settlement.

OPERATING LEASES - Effective July 24, 2001, the Company leases a total of 10,624
square feet of office space for its headquarters and customer service operations
in  Costa  Mesa,  California  at  a monthly rental rate of $22,205.  The Company
leases  5,685  square  feet  on  a month-to-month basis with the remaining 4,939
square feet leased through July 31, 2004, unless terminated by either party with
75  days  written  notice.

Future  minimum  annual  commitments under long-term facility lease and supplier
arrangements  (see  below)  are  as  follows:

               Facility Leases
Years Ending.  and Other         Internet    Telecom
June 30,. . .  Commitments       Supplier    Supplier    Total
-------------  ----------------  ----------  ----------  ----------
2003. . . . .  $        145,000  $  575,000  $2,160,000  $2,880,000
2004. . . . .           120,000     568,000     300,000     988,000
2005. . . . .            10,000           0      50,000      60,000
               ----------------  ----------  ----------  ----------
               $        275,000  $1,143,000  $2,510,000  $3,928,000
               ================  ==========  ==========  ==========

Rent  expense for the fiscal years ended June 30, 2002 and 2001 was $315,135 and
$315,317,  respectively.

CONTRACTS  AND  AGREEMENTS  - The Company provides its Internet Service Provider
Access  services  pursuant  to agreements with various outside companies for the
provisioning  of  the Company's Internet Service Provider Access service.  These
agreements  require the Company to pay the greater of actual incurred usage or a
minimum  monthly  fee.  Pursuant  to  one  of  these  Agreements, the Company is
subject  to  monthly  minimum  commitments of $10,300 for June 2002, $23,175 for
July  2002,  $38,625  for  August  2002  and $51,500 each month thereafter.  The
initial  term  of  this  agreement  is two (2) years with automatic renewals for
additional,  successive  one  (1)  year terms unless previously terminated given
sixty  (60)  days  written  notice.  In  addition, the Company must pay an early
termination  fee  in  an  amount  equal  to 75% of the aggregate minimum revenue
requirement for the remaining term of the contract if the Company terminates for
convenience  or by default of the Company prior to the expiration date which was
$857,475  as  of  June  30,  2002.  The other agreements have no monthly minimum
commitments.  For  the  years  ended  June  30,  2002 and 2001, the Company paid
$369,171  and  $63,363,  respectively,  pursuant  to  these  agreements.

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 customer's billings.  Under the terms of an amended contract entered into
with MCI/WorldCom on August 10, 1998 (and last amended in September 2000), the
Company is obligated to a minimum monthly commitment of $520,000 and a total
purchase requirement of $18,000,000 over the term of the agreement.  As of June
30, 2002, the Company had satisfied $15,993,055 of this commitment.  For the
years ended June 30, 2002 and 2001, the Company paid $7,284,922 and $5,468,164,
respectively, pursuant to this agreement.  The remaining commitment to
MCI/WorldCom through August 2003 is $2,006,945 as of June 30,2002.  Currently,
the Company owes $6,422,396 to WorldCom of which $1,989,705 is included in
Accounts Payable and the remaining amount of $4,441,691 is included in Notes
Payable (see Note 5) in the accompanying Balance Sheet at June 30, 2002.


                                      F-22
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

Pursuant  to  the  terms  of  the  contract  with  MCI/WorldCom, the Company may
terminate  the  agreement upon thirty (30) days written notice provided that the
Company  pays  liquidated  damages  in  an amount equal to the aggregate minimum
requirement for the remaining term of the contract if the Company terminates the
contract  for  convenience  or if MCI/WorldCom terminates the agreement due to a
material  breach  on  the part of the Company prior to the expiration date.  The
remaining  commitment  to  MCI/WorldCom  through August 2003 is $2,006,945 as of
June  30,2002.

On  July  22,  2002, MCI/WorldCom filed for Chapter 11 Bankruptcy reorganization
protection.  MCI/WorldCom  has,  however, assured the Company that it intends to
continue  supplying  the  Company during its bankruptcy reorganization with long
distance  services  at  the  same  level of service and under the same terms and
conditions  as  previously  existed.  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.  There  can  be  no assurance that
accurate  information  will  be  provided by MCI/WorldCom on a timely basis, the
failure  of  which would have a material adverse effect on the Company's results
of  operations.

To  provide  redundancy  as  well  as additional capacity, on July 26, 2002, the
Company  entered  into an agreement with an additional national facilities based
provider for the transmission of phone calls by its customers and to provide the
call  detail  records upon which the Company bases its customer billings.  Under
the  terms  of  the  contract,  the  Company  is  obligated to a minimum monthly
commitment of $0 for the first four (4) months of the agreement and $25,000 each
month thereafter.  The term of this agreement is for two (2) years.  Pursuant to
the  agreement,  the  Company  may terminate the agreement upon ninety (90) days
written  notice provided that the Company pays a termination fee equal to 50% of
the aggregate minimum revenue requirement for the remaining term of the contract
if  the Company terminates for convenience or by default of the Company prior to
the  expiration date.  The provider may terminate the agreement upon thirty (30)
days  written  notice and then only in the event that the Company is in material
breach  of  the  agreement.

In  the  event  that  the  services provided by MCI/WorldCom to the Company were
discontinued,  the Company believes that its alternate supplier (as noted in the
previous  paragraph)  will  be  able  to  provide  it  with sufficient levels of
services  at  terms  similar to those of MCI/WorldCom.  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.

The  Company  has  an  agreement  with a billing company who provides processing
services  for customer billing and collections.  In addition the billing company
will  provide  financing  through  a third-party lender for amounts up to 60% of
eligible  accounts  receivable,  as defined.   For the years ended June 30, 2002
and  2001,  the  Company  paid $45,953 and $70,921, respectively, in fees to the
billing  company  pursuant  to  this  agreement.

The  Company  has an 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 a minimum of $1,425 per month.  For the
years  ended  June  30,  2002  and  2001,  the Company paid $46,204 and $41,021,
respectively,  pursuant  to  this  agreement.

                                      F-23
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       FOR THE YEARS ENDED JUNE 30, 2002

NOTE  11  EQUITY  FINANCING

Effective  September  19, 2001, the Company entered into a common stock purchase
agreement ("Agreement") with Bluefire Capital, Inc. ("Bluefire").  The Agreement
entitles  the  Company to issue and sell common stock to Bluefire in the form of
draws  for  up to an aggregate of $20,000,000, as defined in the Agreement, from
time  to  time during a three year period beginning on the date of the filing of
an  effective registration statement.  On November 20, 2001, the Company filed a
registration statement under the Securities Act with the Securities and Exchange
Commission  ("SEC")  for  15,000,000  shares  available to be issued to Bluefire
under  the  Agreement should the Company choose to draw down on these shares and
on  January  23, 2002, the registration statement was declared effective.  As of
June  30,  2002, the Company has recorded fees incurred to date in the amount of
$148,164 related to the registration statement, under additional paid-in-capital
in  the  accompanying  consolidated  balance  sheet.

Under the Agreement, each draw must be for a minimum of $100,000 up to a maximum
draw  amount equal to 10% of the weighted average price for the Company's common
stock  for  the  60  calendar  days  immediately  prior to the draw down pricing
period,  as defined, multiplied by the total aggregate trading volume in respect
of  the  common stock for such period.  In the event the minimum draw is greater
than  the  maximum  draw, the minimum draw shall equal the maximum draw, but the
minimum  draw  shall  not  be less than $25,000.  Pursuant to the Agreement, the
Company  must  draw a minimum of $500,000 over the term of the Agreement, or the
Company  shall  pay  liquidated  damages  within  five  days from the end of the
Agreement,  as  defined  in  the  Agreement.

The  number  of shares of common stock to be issued in connection with each draw
shall  be equal to the draw amount divided by either 88% of the lowest bid price
during  the  short  pricing  period  or 88% of the volume weighted average price
during  the long pricing period, dependent on whether the Company elects a short
pricing period or a long pricing period at the time the draw notice is delivered
to  Bluefire,  as  defined  in  the  Agreement.

In addition, the Company issued a warrant to Bluefire to purchase 150,000 shares
of  common stock at an exercise price of $0.3471 per share.  The warrants vested
on  the date of grant and are exercisable through March 19, 2005.  No consulting
expense  is  to  be  recognized  due  to  the  fact  the warrants were issued in
connection  with  equity  fund  raising  activities.

As  of  the date of this filing, the Company has not drawn down any shares under
this  Agreement.

NOTE  12  LOSS  PER  SHARE

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

                                                      Years  Ended  June  30,
                                                        2002         2001
                                                        ----         ----
Numerator for basic and diluted loss per share:
  Net loss charged to common stockholders. . . . .  $(1,311,667)  $(2,832,258)

 Denominator for basic and diluted loss per share:
  Weighted average shares. . . . . . . . . . . . .   20,412,375    20,031,313
                                                    ------------  ------------

     Basic and diluted loss per share. . . . . . .  $     (0.06)  $     (0.14)
                                                    ============  ============
                                      F-24
<PAGE>