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, 2003

     [   ] 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.  [   ]

     State  issuer's  revenues  for its most recent fiscal year.  $15,147,658

     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.)  $2,666,217

     State  the  number of shares outstanding of each of the issuer's classes of
common  equity,  as  of  the  latest  practicable  date.  20,714,122

                       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  or  Plan of Operation.

Item  7          Financial  Statements.

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

Item  8A         Controls  and  Procedures.

                                    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.

Item  14         Principal  Accountant  Fees  and  Services.


                                      -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.  and  subsidiaries,  (the  "Company"  or "GTC") is a service
provider  whose  services  include  various telecommunication services, Internet
related  services,  and  business  process outsourcing ("BPO") services. GTC 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
NASDAQ  OTC  Bulletin  Board  under  the  symbol  "GTCC."

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.  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  at  or  below  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 calling card
service.  The  Company  does  not  currently  provide  local  telephone service.
However, the Company has recently obtained licenses in the states of California,
Colorado,  Florida,  Massachusetts,  New  Jersey,  Nevada,  New  York,  Ohio,
Pennsylvania,  and  Texas  to operate as a Competitive Local Exchange Carrier (a
competitive  local  telephone  company  or "CLEC").  As a result, the Company is
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.

Telecommunications  Industry  Background

The $90.6 billion U.S. long distance industry is dominated by the nation's three
largest  long  distance providers, AT&T, MCI/WorldCom and Sprint, which together
generated approximately 72.6% of the aggregate revenue of all U.S. long distance
interexchange  carriers  in  2001.  Other  long  distance  companies,  some with
national  capabilities,  accounted  for  the  remainder  of  the  market.

Based  on published FCC estimates(3) toll service revenues of U.S. long distance
interexchange carriers have grown from $38.8 billion in 1984 to $90.6 billion in
2001.  While  industry  revenues  have grown at a compounded annual rate of 5.1%
since  1984,  the  revenues of carriers other than AT&T, MCI/WorldCom and Sprint
have  grown  at  a compounded rate of 27.2% 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 27.4% in 2001. During the
same  period,  the  market  share  of  AT&T  declined  from  90.1%  to  39.8%.

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

To  encourage  the  development  of competition in the long distance market, the
Consent  Decree and the FCC require most Local Exchange Carriers (dominate local
telephone  company  or  "LEC")  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(4) to their networks and establishing
among  other  things,  LEC  obligations  with  respect to access, resale, number
portability(5), dialing parity(6), access to rights-of-way(7) 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.,  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.

________________________

(3) As published on the FCC's Website located at
www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/SOCC/01socc.pdf.
(4)  Customer  equipment  (i.e. customer's telephone or modem) which connects to
the  service  provider's  equipment.
(5)  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.
(6)  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.
(7)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.


                                      -4-
<PAGE>

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

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 access. 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.

BUSINESS  PROCESS  OUTSOURCING  SERVICES

In  its  continuing  efforts  to reduce operating expenses as well as locate new
revenue  opportunities,  the  Company in 2002 began exploring various options to
reduce its labor and overhead costs as well as explore new markets.  The Company
determined  that by developing a call center and IT development center in India,
the  Company  could  take  advantage  of India's highly skilled but vastly lower
labor  and  operating  costs thereby allowing for the reduction of a significant
portion of the Company's operating overhead.  Despite significant start-up costs
associated  with the development of its Perfexa subsidiary, the Company believes
that  its Perfexa operations will result in significant savings for the Company.
Additionally,  the  Company's  Perfexa  operations  were  designed  to  provide
additional  revenue  opportunities  for  the  Company  in  the  Business Process
Outsourcing  Services  market  (see below).  On September 1, 2002, the Company's
Board  of Directors authorized the development of the Perfexa Solutions business
plan.  As  a  result,  on September 13, 2002, GTC's wholly owned subsidiary, GTC
Wireless,  Inc.,  which was then inactive, amended its Articles of Incorporation
changing  its name to Perfexa Solutions, Inc. ("Perfexa-U.S.").  On September 3,
2002,  a  Memorandum  and  Articles  of  Association  was  filed pursuant to the
Companies  Act,  1956  of  India,  creating  Perfexa  Solutions  Pvt.  Ltd
("Perfexa-India").  Perfexa-India  is a subsidiary of Perfexa-U.S.  Perfexa-U.S.
and  Perfexa-India  will  be collectively referred to in this report as Perfexa.
In  April  2003, Perfexa completed the construction of its first call center and
IT  development Center in New Delhi, India. This facility consists of a 100 seat
call  center  and  25 seat information technology development and administrative
center.

The  Company's  Perfexa  operations  provide  inbound  call  center  management
solutions  with  future  plans  for  outbound  call center management solutions,
Information  Technology  ("IT")  management  solutions  and  business operations
management  solutions.  Perfexa's  initial  solution  is  to:  1)  Capitalize on
India's  highly  educated,  English  speaking workforce; 2) utilize the inherent
cost  and  labor  availability advantages within India; and 3) take advantage of
the  low  employee  turnover  rates  in  India,  which  will  enable  Perfexa to
capitalize  on  its  significant  investment  in  ongoing  employee training and
development programs which will dramatically improve the quality of the customer
care  experience.  Future  plans  are to expand into other low cost countries as
business  develops.

Perfexa  currently  provides  customer  service  for the Company's approximately
110,000  telecommunication  and  Internet  users.  Perfexa's  IT group currently
develops IT solutions for GTC's customer care needs and the integration of GTC's
customer  care  system  with  those  of Perfexa's New Delhi Center.  Perfexa has
recently  begun  offering  its  services  to third parties and plans to focus on
marketing  its  outsourced  call  center  services  to  U.S.  based  companies.
Perfexa's  IT  group  will work initially to ensure the integration of Perfexa's
systems  with  those  of  Perfexa's  clients.  Subsequently,  the  IT group will
develop  customized  software  solutions  for  third  parties.

                                      -5-
<PAGE>

Business  Process  Outsourcing  Industry  Background

Business Process Outsourcing ("BPO") is defined as the delegation of one or more
business processes to an external provider who, in turn, owns, administrates and
manages  the selected process(es), based upon defined and measurable performance
metrics.  It  is intensively collaborative because it focuses on integrating the
BPO  client's  skills,  technology  base  and  processes with the BPO provider's
distinctive  offerings.  BPO  falls  into  one  or  more  of  the  six following
categories:  administration,  finance  and  accounting, human resources, payment
services,  logistics  and  distribution,  sales/marketing  and  customer  care.

According  to  a  Gartner  Dataquest  report,  the  global BPO market (excluding
manufacturing services) will grow from $106.7 billion in 1999 to $301 billion in
2004,  at  a  compound  annual  growth rate (CAGR) of 23.1 percent.  Outsourcing
services  in  the U.S. are expected to grow at the same compounded annual growth
rate  through  2004  to $61.6 billion. Many other research reports estimate that
IT-related  outsourcing,  representing  approximately  40 percent of this year's
estimated  $214  billion global outsourcing market, is expected to grow at about
18  percent.

The  accelerating  trend  towards  new  technologies, such as web-based business
solutions,  is  changing  the  way businesses have been traditionally organized,
along  both functional and product lines. Traditional methodologies are becoming
insufficient to take full advantage of the apparent and underlying opportunities
in  measuring customer activity. Many companies are seeking to shift the central
focus  of  corporate  activity  away from products and on to customers or at the
very  least  to learn new ways of managing customer-facing activities. Designing
and  managing these measurement systems and the Customer Relationship Management
("CRM")  technologies around them requires new combinations of skills and roles,
for  which  many companies have not planned or cannot afford. Therefore, GTC and
Perfexa  believe  that  many companies are looking to outsource customer support
services.

-  Outsourcing  of  Call  Center  Operations

Given  the importance of customer interaction, it is not difficult to understand
why many companies have chosen to maintain their call centers in-house. However,
as  companies are starting to observe the success of others in outsourcing their
call  centers,  while at the same time becoming increasingly unwilling to manage
the  human capital and IT complexities internally, the trend towards outsourcing
call  centers  has gained momentum.  IT and Telecommunications research company,
International  Data  Corporation  ("IDC")  predicts  the  worldwide  call center
services  market,  including outsourcing, consulting/implementation, support and
training,  will  reach  approximately  $73  billion  by 2004, representing a 24%
compounded annual growth rate.  Business research company Datamonitor, estimates
that  there  were  approximately 70,000 call centers within the United States in
1999,  accounting  for 53% of the call center services market, which is expected
to  reach  $30.7  billion  by  2003.  There  are  an  additional  30,000
internationally-based  call centers. As a result, there is no dominant player in
the  call  center  arena;  Convergys  Corporation,  the  leading  call  center
outsourcing  provider  in  2001,  captured  only  7%  share  of  the  market.

It  is  important  to  note that according to IDC, by 2004 over 55% of the total
call  center  services market will be dominated by telecommunications, financial
services  and  healthcare.  All  three of these verticals possess high levels of
customer  contact,  are  generally transaction intensive, and have recently gone
through  some  type  of  industry-wide  regulatory  change.  This, combined with
industry consolidation and globalization trends, has encouraged companies within
these  verticals  to  outsource  their  call  centers.

Many  companies  originally  battled  with  the  concept of outsourcing critical
business  functions, especially those regarding direct customer interaction such
as call centers.  However, more definitive parameters surrounding the definition
of  core  and non-core processes have helped in determining whether to buy or to
build  processes.  More  specifically, end-users of outsourcing are increasingly
realizing the importance of outsourcing processes that, while not central to the
completion  of  a  company's  mission, remain critical to the company's success.
Examples  of  departments that generally fall within this non-core, yet critical
definition  include,  but  not limited to, product/service support, sales desks,
market  research  and  human  resource  administration.  Companies  have further
looked  towards  outsourcing  these  departments  as  technology  and  business
processes  more  explicitly  converge.  As  end-users demand tightly integrated,
end-to-end  solutions  that  are  able  to  interface  with  multi-faceted
communications  channels,  companies  are  increasingly  looking  to outsourcing
vendors  to  manage  the  complex  technology  infrastructures  that  result.

                                      -6-
<PAGE>

The  method  of  communication  most  favored by customers is telephone support,
which can be the most expensive when compared to its Internet-based equivalents.
For  that  reason,  companies  are  highly motivated to invest in technology and
equipment  that  supports  and  promotes  more  productive, and thus lower-cost,
Internet-based  contact channels. Datamonitor estimates that approximately 8% of
call  centers  in  the  United  States  were  web-enabled  in  1999. Datamonitor
continues  to  state  that  by  2003,  over 40% will use some type of method for
multi-media  interaction  to  communicate  with customers, including fax, email,
Web-chat,  Web-Callback,  Voice  Over  IP, Web Cam and co-browsing. Call centers
that  are  strategically  positioning  themselves  for  market  dominance  are
responding  to  changes  in  consumer preference by offering a reliable, tightly
integrated,  sophisticated  customer  service  solution  and infrastructure that
enables  a  complete  customer  profile  and  transaction  history.

-  Outsourcing  of  Information  Technology  Development

Rapid  technological change has become an issue for many managers throughout all
industries,  resulting  in more expense to upgrade systems, more time to install
and  increased  complexity  to  master.  For  a company whose IT department is a
non-core  function,  maintaining a "step-above" status under these conditions is
extraordinarily  difficult,  especially  for  small and medium-sized enterprises
where  cost  is  a  critical  factor.  These  factors  have  led IT outsourcing,
including  entire  IT  departments, to experience exponential growth over recent
years.

According  to  IDC,  spending on IT outsourcing service within the United States
was approximately $26 billion in 2000 and is expected to increase to $44 billion
by  2005,  representing an 11.5% compounded growth rate.  The combination of the
banking,  insurance, investment services and other financial services industries
continue  to exhibit strong IT spending in 2000 and as a group is expected to be
the  single  largest  consumer of outsourcing services over the next five years.
IDC  goes  on  to  say  that  the  U.S.  will  continue  to spend the most on IT
outsourcing  services,  accounting for 44 percent in 2005. Western Europe is the
second-biggest  spender,  with  IT outsourcing spending increasing at a compound
annual  growth  rate  of 10.3 percent, from $16 billion in 2000 to more than $26
billion  in  2005.

The  IT outsourcing relationship is focused on customization in order to reflect
each  client's IT needs, and the agreement often supports IT and operations with
the  client's  business  strategy.  Examples  of IT outsourcing services include
hardware  facilities  management,  onsite  and  offsite  support  services,
server-vaults  and  data  security  and  disaster  recovery capabilities.  These
relationships  typically  involve  the  transfer  of  IT  facilities,  staff and
hardware.

Employing  state-of-the-art  technology  that  supports  a  company's  business
strategy  has  become  a  vital  component  to  success  in  the  ever-changing,
Internet-driven  economy.  Further,  tight  labor  conditions  have  made  it  a
challenge  to attract, retain and invest in the necessary technology-based human
capital  and  expertise.  Companies  unable  to  keep  pace  on  their  own have
increasingly  turned  to  third  parties  to  help  manage  their  technological
infrastructures.

The  India  Advantage

India's large English-speaking labor pool is available at a relatively low labor
cost.  Perfexa  will  utilize  India's  highly  skilled  software  and  computer
technology  workforce  to  design  and  develop customized IT solutions for U.S.
based  companies.  According  to  a  survey  of  U.S.  software  service vendors
conducted  by  the World Bank, India is one of the leading offshore destinations
for  companies  seeking  to  outsource  software  development  of  IT  projects.

Well-educated labor market.  India has the second-largest English-speaking labor
pool  in  the world and has a workforce of 390 million.  More importantly, India
has  access  to a pool of 15 million Indian college graduates a year.  According
to  Datamonitor,  it  is not uncommon for a call center in India to have 100% of
agents  holding  graduate  degrees.  Additionally,  most  Indians  hold the call
center  industry  in  high  esteem;  therefore,  being  a call center agent is a
respectable  position.  Moreover, in a country where graduate unemployment rates
can  reach  as  high  as 20% in certain areas, Indian call centers (unlike their
American  equivalents)  have  no problem filling seats.  It is also important to
note that Indian call centers are not faced with the same retention problem that
western  call  centers face.  Indian call center turnover rates remain at around
10%  or  less,  whereas  American call centers can have turnover as high as 90%.

Low  labor  costs.  Datamonitor research indicates that 67% of the costs endured
by  U.S. call centers operating in the US can be directly linked to labor, which
can  reach  as  high  as  72%  when  the  center employs well-educated agents in
metropolitan areas. Well-educated and highly trained labor is available in India
at  much  lower  cost  than  in  the

                                      -7-
<PAGE>

United  States.  Indian  call  centers,  by contrast, spend only 33-40% of their
budgets  on  labor.  This  figure  includes  training and other incentives.  For
example,  the  average  annual  salary  with  benefits  for  a  customer service
representative  in India is approximately $4,000 compared to $30,000 in the U.S.
which  represents  an  86%  savings.  Call  center  managers  in  India  earn
approximately  $19,000,  while  a  similar  position  in  many  areas of the U.S
averages  $60,000.

Twenty-four hour customer service.  India is located four to five hours ahead of
Western  Europe  and  ten to thirteen hours ahead of North America, making it an
ideal  location  for  companies  wishing  to  implement  a  24-hour  operation.

Indian  government  focusing  on  call  center  growth.  It  is  suggested  by
Datamonitor that current tax rates for Indian-majority owned companies are up to
30%,  and  outsourcers  of  technology  and  call centers are allowed a full tax
exemption  on the export of their services.  An initiative has been put in place
by  India's  prime minister in order to create a task force to enforce laws that
allow  duty-free  import  of capital goods.  Outsourcers investing in computers,
switches  and  other  needs  for  a call center can bring goods into the country
while  avoiding  the  normal  25-45%  tax.

Development  of  technology parks.  The government has also been responsible for
the  creation  of technology parks, allowing companies to enjoy low rental costs
compared  to  the  West,  because the cost per square foot is only approximately
$1-$3.  In  general,  the  parks  appear  to  be  most  suitable  for technology
outsourcers  because of their IT infrastructure and ability to provide companies
with a simple way to achieve tax incentives.  However, technology parks are also
located  in  suburbs that are rich with well-educated labor.  The government has
been  dedicated  to  providing  abundant  and  relatively  high-quality
telecommunication  lines  in  these  parks,  which  is  an additional benefit to
outsourcers.

Services  to  be  Offered

Perfexa  offers, or expects to offer, a variety of Inbound and Outbound customer
care  services  to  third-parties.  These  include:

Inbound  Services:

   o Help  desk  services;
   o Telephone  based  customer  service;
   o Electronic  customer  service  utilizing  "chat"  systems;
   o Technical  support;
   o E-mail  based  customer  support;
   o Data  entry;  and
   o Inbound  sales.

Outbound  Services:

   o Outbound  telesales  campaigns;
   o Market  research  and  opinion  polls;  and
   o Product  promotion.

Target  Market

Customer  support/service is essential to all businesses.  Perfexa will focus on
markets  where  it  will  have  a competitive advantage.  These markets include:

   o Companies  that  currently  outsource  their customer care functions. These
     customers  are  already  convinced  of  the  advantages  of  an  outsourced
     solution.  Perfexa will focus on taking these customers to the next logical
     step,  an  outsourced,  offshore  solution  that  offers  significant  cost
     reductions;  and

   o Companies  with  customer  care  needs  that  require  intensive  human
     interaction.  Since  labor  costs  are dramatically lower in India, Perfexa
     will  be  able  to  offer  these  companies  significant  cost  reductions.

                                      -8-
<PAGE>

As  previously  noted,  telecommunications,  financial  services  and healthcare
industries currently dominate the call center market.  These industries meet all
of  the  above  criteria.  By outsourcing customer support functions to Perfexa,
these companies will experience additional cost reductions due to Perfexa's cost
advantages.

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.

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

                                      -9-
<PAGE>

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.

Business  Process  Outsourcing  Services

IT  Outsourcing.  Electronic  Data  Systems  Corporation  (EDS) is currently the
largest  IT  outsourcer.  According  to  IDC, EDS captured over 25% of the $25.7
billion  IT  outsourcing  market  in  2000.  Given the strength of the company's
competition,  maintaining  its  sizable market share is not easily accomplished;
EDS's  most  formidable  competitor  in  terms  of  revenue  generation  is  IT
outsourcing  giant  IBM  Global  Services,  which  captured 14% of the segment's
market  share  in 2000. Other competitors include Computer Sciences Corporation,
Unisys,  Affiliated  Computer  Systems  (ACS),  CGI  Group  Inc.  and  Science
Applications  International  Corporation  (SAIC).

Perfexa's  ability  to  obtain  business  is dependent upon its ability to offer
better  strategic  concepts  and  technical  solutions,  better value, a quicker
response,  or  a combination of these factors.  Many of these competitors have a
more  substantial  amount of resources and therefore have the greater ability to
obtain client contracts where large asset purchases or investments are required.
In  order to sustain competitive prices, Perfexa must operate with efficient and
minimal  overhead  while  building  a  stable  client  base.  India provides the
infrastructure  to  leverage  low  cost  IT  solutions.

Call Center Outsourcing.  Convergys is a leading provider of outsourced services
within  the  billing  services  and  software segment as well as the call center
services  segment.  The  company handles more than one million customer contacts
daily  through  its  28,000  workstations and manages customer interactions that
range  from initial product information requests, account activation and product
sales to service renewal, billing inquiries and complaint resolution. Additional
competitors  include  Exult, NCO Group, ProBusiness, SITEL Corporation, Synhrgy,
Teletech  Holdings,  Inc,  West  Corporation,  and  Peopleclick.

Pricing  strategies  and  cost  structures  of these major players are generally
built  on  labor  rates,  technical and operation capabilities, and industry and
process  knowledge.  The  required  competency  is  optimization of the business
process  at hand, and pricing models may be based on cost plus incentives, fixed
fee,  or  per  transaction.  Perfexa's initial revenues will be derived from the
areas  of  call  center  and  administrative  outsourcing  services.  Critical
competitive  factors  include  the  ability  to  measure  the  quality  of  job
performance  and  pricing  and obtain a solid understanding of clients' specific
job  requirements  through  consultative  assessments.

Value-added  services  is one of the key advantages that Perfexa expects to have
over  other players.  By leveraging a highly educated and cost-effective team in
India,  this advantage is expected to reduce customers' business operating costs
by  40%  to  50%  lower  than  onshore outsourcing providers.  To be successful,
Perfexa  will  offer  a  distinct  value proposition to the client---significant
savings  by  converting  fixed  employee costs to flexible, variable costs while
avoiding  large  capital  expenditures  required  to implement and maintain call
center  technologies.  The challenge that Perfexa may face is whether it will be
able to provide high quality service at a cost savings while at the same time be
both  profitable  and  lower-priced  than  its  competitors.  There  can  be  no
assurances  that  Perfexa will be able to compete successfully in these markets.

                                      -10-
<PAGE>

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.

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 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.  Pursuant  to  the terms of the agreement, the
Company  was  obligated  to  meet a total purchase requirement of $18,000,000 by
August  2003.  The  Company has met this requirement and is no longer subject to
any  monthly  minimums.  The  current  contract term expired on August 31, 2003,
reverting  to  a month-to-month agreement allowing either party to terminate the
agreement  upon  thirty  (30) day's written notice.  The Company is currently in
negotiations  with  MCI/WorldCom  for  new  contract  terms.

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  $25,000  as of June 30, 2003.  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 which was $175,000 as of
June  30,  2003.  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 may have a material adverse effect on the Company's
results  of  operations  and  financial  condition.

                                      -11-
<PAGE>

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
$51,500  as  of  June  30,  2003.  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 $424,875 as of June 30, 2003.
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  provisioning 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.

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.

                                      -12-
<PAGE>

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.  The
Company  is  not  aware  of  any  pending legislation that would have a material
adverse  effect  on  the  Company's  operations.

The  Company's domestic BPO operations are not currently subject to any State or
Federal  regulations.  However,  the  Company's  Perfexa-India  operations  are
regulated  by  the policies of the Indian government.  Indian law regulates call
center  activities  requiring  the  registration of call centers with the Indian
Department  of  Telecommunications.  The  Company's Perfexa-India subsidiary has
obtained all required permits and licenses to operate its call center.  Pursuant
to  such  licenses,  however, the Company must notify and obtain permission from
the Indian DOT prior to expansion of its call center.  Additionally, in times of
war,  the  Indian  government  may have the power to appropriate Perfexa-India's
facilities.

PATENTS,  TRADEMARKS,  LICENSES
The Company is in the process of obtaining Perfexa service marks for its Perfexa
BPO  business.  However,  the  Company  does  not  depend  upon  any  patents or
trademarks  to  conduct  its business.  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
As  of  August  31, 2003, the Company employed approximately 37 people on a full
time  basis  in  the  United States and 86 people on a full time basis in India.

                                      -13-
<PAGE>

RISK  FACTORS

The  success of the Company and its results of operations are subject to several
risks  and  uncertainties.  Such  risks  include  but,  are  not limited to, the
following:

GTC HAS LIMITED OPERATING HISTORY AND LARGE ACCUMULATED DEFICIT. GTC's executive
officers  commenced  its  major  lines of business - providing long distance and
Internet service - relatively recently. Accordingly, your evaluation of GTC will
be  based on a limited operating history. You must consider that GTC's prospects
are  subject  to the risks, expenses and uncertainties frequently encountered by
companies in the early stage of development in new and rapidly evolving markets.
As  of  June  30,  2003,  GTC  had  an accumulated deficit of $15,248,585. GTC's
limited  operating  history  and the uncertain nature of the markets it services
makes  the  prediction  of future results of operations difficult or impossible.
Period-to-period  comparisons  of  GTC's  results  of  operations  may  not  be
meaningful  and  you  should  not  rely  on  the  results  for  any period as an
indication  of  future  performance.

GTC  IS  DEPENDENT  ON  A LIMITED NUMBER OF SUPPLIERS.  GTC does not own its own
long  distance  network,  and  pursuant  to  GTC's  contract  with WorldCom, GTC
currently  depends  primarily  upon  WorldCom to provide for the transmission of
phone  calls  by its customers and to provide the call detail records upon which
GTC  bases  its  customer's  billings.  For additional details, please see Major
Suppliers  above.

YOU  MAY BE UNABLE TO EFFECTIVELY EVALUATE THE BUSINESS OF THE COMPANY'S PERFEXA
SUBSIDIARY  BECAUSE  PERFEXA'S OUTSOURCED CALL CENTER AND INFORMATION TECHNOLOGY
SERVICE  BUSINESS HAS EXISTED FOR ONLY A SHORT PERIOD OF TIME.  Perfexa-U.S. was
originally  incorporated  on  October  3,  2000  as  GTC  Wireless, Inc. and was
inactive until September 13, 2002 when it changed its name to Perfexa Solutions,
Inc.  Perfexa-U.S.  owns  98%  of  the  issued  and outstanding capital stock of
Perfexa Solutions Pvt. Ltd., a corporation formed under the laws of the Republic
of  India.  Perfexa  develops  and  markets  offshore  outsourced  call  center
solutions and information technology services to small and medium size companies
and  does  not  have  an  established  operating  history.  Accordingly, you can
evaluate  Perfexa's business, and therefore its future prospects, based only its
very  limited  operating  history.  In  addition,  you  must  consider Perfexa's
prospects  in  light  of  the  risks,  expenses,  and  difficulties  frequently
encountered in the establishment of a new business in a rapidly evolving market.

PERFEXA  WILL  BE SUBJECT TO CERTAIN INHERENT RISKS ASSOCIATED WITH THE REPUBLIC
OF  INDIA.  Perfexa's  operating  subsidiary,  Perfexa  Solutions  Pvt. Ltd., is
incorporated in the Republic of India, and substantially all of Perfexa's assets
and  employees  are  located  in  India.  Consequently,  Perfexa's  financial
performance  will  be  affected  by  political, social and economic developments
affecting  India,  Government  of India policies, including taxation and foreign
investment policies, government currency exchange control, as well as changes in
exchange  rates  and  interest  rates.

Regional  conflicts  in  South  Asia  could adversely affect the Indian economy,
disrupt  Perfexa's  operations  and cause its business to suffer. South Asia has
from  time  to  time experienced instances of civil unrest and hostilities among
neighboring  countries, including between India and Pakistan.  India's relations
with neighboring Pakistan, each a nuclear power, are tense. In April 1999, India
and  Pakistan each conducted long-range missile tests.  Since May 1999, military
confrontations  between  India  and  Pakistan  have  occurred  in  the  disputed
Himalayan  region  of Kashmir. India's relations with neighboring China are also
tense.  Events  of  this nature in the future could influence the Indian economy
and  have  a  material  adverse  effect  on  Perfexa's  business.

The  potential  for  such  hostilities  has  recently  increased  as a result of
terrorist attacks in the U.S. and the recent attack on the Indian Parliament has
increased  tensions  between  India  and  Pakistan. Events of this nature in the
future  could  influence  the  Indian  economy and could have a material adverse
effect  on  Perfexa's  operations  and  on  the  market  for Perfexa's services.

Political  instability  or  changes  in  the government in India could delay the
liberalization of the Indian economy and adversely affect economic conditions in
India  generally,  which could impact Perfexa's financial results and prospects.

Since  1991,  successive  Indian  governments  have pursued policies of economic
liberalization,  including  significantly  relaxing  restrictions on the private
sector.  Nevertheless,  the  role of the Indian central and state governments in
the  Indian  economy  as  producers,  consumers  and  regulators  has  remained
significant.  The  Government  of  India  has changed five times since 1996. The
current  Government of India, formed in October 1999, has announced policies and
taken  initiatives  that  support the continued economic liberalization policies
that have been pursued by previous governments.  There can be no assurances that
that  these  liberalization  policies  will  continue in the future. The rate of
economic  liberalization  could change, and specific laws and policies affecting
technology  companies,  foreign  investment, currency exchange and other matters
affecting  investment  in  its  securities  could  change as well. A significant
change  in  India's  economic  liberalization  and  deregulation  policies could
adversely  affect  business  and  economic  conditions  in  India  generally and
Perfexa's  business  in  particular.

                                      -14-
<PAGE>

PERFEXA'S  BUSINESS IS SUBJECT TO FLUCTUATIONS IN FOREIGN CURRENCIES.  Perfexa's
business is subject to fluctuations in the value of the Indian Rupee against the
U.S.  dollar  due  to  Perfexa's Indian subsidiary.  Operational costs including
labor,  equipment,  and facilities leases could fluctuate depending on the value
of the Rupee vis-a-vis the U.S. dollar. In the future, Perfexa may also sell its
products  and  services  in  other currencies which would make the management of
currency  fluctuations  more  difficult.

THE  COMPANY'S  SECURITIES MAY BE SUBJECT TO REGULATIONS REGARDING PENNY STOCKS.
The  Company's securities may be subject to a Securities and Exchange Commission
rule  that  imposes  special sales practice requirements upon broker-dealers who
sell  such  securities to persons other than established customers or accredited
investors.  For  purposes  of the rule, the phrase "accredited investors" means,
in  general  terms,  institutions  with  assets  in  excess  of  $5,000,000,  or
individuals  having  a  net  worth  in  excess of $1,000,000 or having an annual
income  that  exceeds  $200,000  (or that, when combined with a spouse's income,
exceeds $300,000).  For transactions covered by the rule, the broker-dealer must
make  a  special  suitability  determination  for  the purchaser and receive the
purchaser's  written  agreement  to  the  transaction  prior  to  the  sale.
Consequently,  the  rule  may  affect  the ability of broker-dealers to sell the
Companies'  securities  and  also may affect the ability of shareholders to sell
their  securities.

In  addition,  the  Securities  and  Exchange Commission has adopted a number of
rules  to  regulate  "penny  stocks."  Such  rules  include Rules 3a51-1, 15g-1,
15g-2,  15g-3,  15g-4, 15g-5, 15g-6, and 15g-7 under the Securities Exchange Act
of  1934,  as  amended.  Because the Companies' securities may constitute "penny
stocks"  within the meaning of the rules, the rules would apply to the Companies
and their securities.  The rules may further affect the ability of owners of the
Companies'  securities  to  sell  these  securities.

Current and potential shareholders should be aware that, according to Securities
and  Exchange  Commission,  the  market  for penny stocks has suffered in recent
years  from  patterns  of fraud and abuse.  Such patterns include (i) control of
the  market  for  the  security  by  one  or a few broker-dealers that are often
related  to  the  promoter  or  issuer of the stock; (ii) manipulation of prices
through  prearranged  matching  of  purchases and sales and false and misleading
press  releases;  (iii)  "boiler  room"  practices involving high-pressure sales
tactics  and  unrealistic price projections by inexperienced sales persons; (iv)
excessive  and  undisclosed  bid-ask  differentials  and  markups  by  selling
broker-dealers;  and  (v)  the  wholesale  dumping  of  the  same  securities by
promoters  and  broker-dealers  after  prices have been manipulated to a desired
level,  along  with  the  resulting inevitable collapse of those prices and with
consequent  investor  losses.  We  are  aware  of  the abuses that have occurred
historically  in  the  penny stock market.  Although we do not expect to be in a
position  to  dictate  the  behavior  of  the  market  or  of broker-dealers who
participate  in  the  market  for  our  stock, management will strive within the
confines  of  practical limitations to prevent the described patterns from being
established  with  respect  to  our  securities.

IN  ADDITION  TO THE FOREGOING RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS THAT
ARE  NOT  FORESEEN OR FULLY APPRECIATED BY MANAGEMENT.  SHAREHOLDERS SHOULD KEEP
IN  MIND  THAT  OTHER  IMPORTANT  RISKS  COULD  ARISE.

AVAILABLE  INFORMATION

The  Company  files  annual  reports  on  Form 10-KSB, quarterly reports on Form
10-QSB,  current  reports  on  Form 8-K and proxy and information statements and
amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of
the  Securities  Exchange Act of 1934, as amended.  The public may read and copy
these  materials  at  the  SEC's  Public Reference Room at 450 Fifth Street, NW,
Washington,  D.C.  20549.  The public may obtain information on the operation of
the  public  reference  room by calling the SEC at 1-800-SEC-0330.  The SEC also
maintains  a  website  (http://www.sec.gov)  that  contains  reports,  proxy and
information  statements  and  other  information regarding the Company and other
companies  that file materials with the SEC electronically.  You may also obtain
copies  of  reports  filed  with  the  SEC,  free  of  charge, on our website at
http://www.gtctelecom.com.  The  Company's  headquarters  are  located  at  3151
Airway  Ave.,  Suite  P-3,  Costa Mesa, CA 92626.  The Company's phone number at
that  address  is  (714)  549-7700  and  the  Company's  e-mail  address  is
info@gtctelecom.com.

                                      -15-
<PAGE>

ITEM  2.  DESCRIPTION  OF  PROPERTY

The Company leases a total of 10,624 square feet (including 5,685 square feet on
a  month  to  month  lease)  of  office  space for its headquarters and customer
service  operations  in  Costa  Mesa,  California  at  a  monthly rental rate of
approximately  $9,413  (excluding  month  to month lease) through July 31, 2004,
unless  terminated  by  either  party  with  75  days  written  notice.

Effective  October  1,  2002,  Perfexa-India  began leasing approximately 15,422
square  feet  of  office  space  in  Gurgaon, India, a suburb of New Delhi, at a
monthly  rate  of  Rs. 524,348 (approximately $11,300) per month.  This facility
serves as Perfexa-India's call center, IT development center, and administrative
offices.  The  lease is for a term of three years with an option to renew for an
additional  three  year  term  with  an  increase  in  the  rental  rate of 20%.
Effective  October  1,  2002,  Perfexa-India  also  entered  into  a maintenance
agreement  for  its  New Delhi facility. Pursuant to the terms of the agreement,
Perfexa-India  is  obligated  to  pay  a  monthly maintenance fee of Rs. 138,798
(approximately  $3,000)  per month for the first twelve months.  Thereafter, the
monthly  fee  will  be  calculated  based  on  the  actual  costs of maintenance
(including  electricity  and  water)  plus  a  20%  mark-up.

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.

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

On  December  3, 2002, the Company held its annual shareholder's meeting for the
fiscal  year  ended  June 30, 2002.  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 14, 2003.  No other matters were
submitted  to  a  vote of security holders during the fiscal year ended June 30,
2003.






                                      -16-
<PAGE>
                                     PART II

ITEM  5.       MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  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  NASDAQ OTC  Bulletin  Board  under  the  symbol  "GTCC."


            CALENDAR                         BID  PRICES
              YEAR       PERIOD          HIGH          LOW
              ----       ------          ----          ---

              2001    First  Quarter     0.48          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
                      Third  Quarter     0.25          0.15
                      Fourth Quarter     0.22          0.13

              2003    First  Quarter     0.23          0.13
                     Second  Quarter     0.24          0.14

On  September  15,  2003, the last sales price per share of the Company's common
stock,  as  reported  by  the  NASDAQ OTC Bulletin  Board, was $0.16.

NUMBER  OF  SHAREHOLDERS

The number of beneficial holders of record of the common stock of the Company as
of  the  close of business on September 15, 2003 was approximately 409.  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, 2003, the Company
issued  the  following  unregistered  securities:

In August 2002, pursuant to an agreement with an outside consultant for investor
and  public  relations  services,  the Company issued warrants to purchase up to
100,000  shares of the Company's restricted common stock at an exercise price of
$0.17  per  share  valued  at  approximately $16,000 (based on the Black-Scholes
pricing  model).  The  warrants  vest 25,000 upon execution of the agreement and
25,000 every three months thereafter, so long as the Company retains the outside
consultant.  On  May  31,  2003  the  final  25,000 of the warrants vested.  The
warrants  are exercisable for a period of three years from the date of issuance.
The  issuance  was  an  isolated  transaction  not  involving  a public offering
pursuant  to  Section  4(2)  of  the  Securities  Act  of  1933.

                                      -17-
<PAGE>

In  March 2003, pursuant to an agreement with an outside consultant for investor
services,  the  Company  issued  warrants to purchase up to 40,000 shares of the
Company's restricted common stock at an exercise price of $0.25 per share valued
at  approximately  $6,400  (based  on  the  Black-Scholes  pricing  model).  The
warrants  vest  in April 2003 and are exercisable for a period of two years from
the  date of issuance.  The issuance was an isolated transaction not involving a
public  offering  pursuant  to  Section  4(2)  of  the  Securities  Act of 1933.

During  the fourth quarter of the fiscal year ended June 30, 2003, in connection
with  a  note  payable,  the  Company  issued  30,000  shares  of  the Company's
restricted  common  stock  valued  at  approximately $5,181 (based on the market
price on the date of issuance) to a third-party accredited investor (see Item 6.
Management's  Discussion  and  Analysis or Plan of Operation - Short-term Debt).
The  issuance  was  an  isolated  transaction  not  involving  a public offering
pursuant  to  Section  4(2)  of  the  Securities  Act  of  1933.

During  the  fiscal  year  ended  June  30,  2003,  the  Company's  subsidiary,
Perfexa-U.S.  issued  the  following  unregistered  securities:

On  March  1, 2003, Perfexa-U.S. issued 50,000 shares of its "restricted" common
stock  to an unrelated "accredited" third-party investor at a price of $0.50 per
share,  resulting  in  cash  of  $22,500,  net of offering costs of $2,500.  The
issuance was an isolated transaction not involving a public offering pursuant to
Section  4(2)  of  the  Securities  Act  of  1933.

On  April 23, 2003, Perfexa-U.S. issued a short-term convertible note, principal
amount of $125,000, to an unrelated third-party investor.  The note bears simple
interest  of 10% per annum, interest and principal due upon maturity on July 31,
2003.  Pursuant  to  the  terms  of  the Note, the Note is convertible (prior to
maturity)  at  the  election  of the Holder into shares of Perfexa-U.S.'s common
stock  at  the rate of $0.50 per share (estimated to be the fair market value on
the  date  of  issuance,  based  on current third party transaction).  In August
2003,  the  Company  repaid  $100,000  of the principal balance and issued 8,152
shares  of  Perfexa-U.S.  restricted common stock valued at $4,076 (based on the
terms  of the note) in lieu of an equivalent amount of interest due on the note.
Perfexa-U.S.  is  in  the  process  of renegotiating the terms of the note.  The
issuance was an isolated transaction not involving a public offering pursuant to
Section  4(2)  of  the  Securities  Act  of  1933.

In  May  2003,  Perfexa-U.S.  issued  an  aggregate  of  160,000  shares  of its
"restricted" common stock to two "accredited" unrelated third-party investors at
a  price of $0.50 per share, resulting in cash of $70,400, net of offering costs
of  $9,600.  The  issuance  was  an  isolated transaction not involving a public
offering  pursuant  to  Section  4(2)  of  the  Securities  Act  of  1933.

In  June  2003, Perfexa-U.S. initiated a private placement offering of 2,000,000
shares  of  its  "restricted" common stock at a price of $1.00 per share.  As of
September  15,  2003,  60,000  shares have been issued pursuant to the offering.
The  issuances  were  conducted  without  general  solicitation  to  "accredited
investors"  pursuant  to Rule 506 of Regulation D of the Securities Act of 1933.

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.

                                      -18-
<PAGE>

The  Company provides a number of telecommunications, Internet, and BPO services
as  previously  described.  The  Company's revenues consist of revenues from the
sale of these services.  Telecommunication 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.  BPO
services revenues are billed each month based on a client contract that provides
for  either  a  dedicated  or  per  minute  rate  as  the services are rendered.

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.  The  Company  is  currently  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

The  Results  of  Operations are based on telecommunications services, which are
the  majority  of the business, and that Perfexa is immaterial to the operations
at  June  30,  2003.

FISCAL  YEAR  ENDED  JUNE  30,  2003 COMPARED TO FISCAL YEAR ENDED JUNE 30, 2002

REVENUES - Revenues decreased by $1,983,396 or 11.6% to $15,147,658 for the year
ended  June  30,  2003  from  $17,131,054 for the year ended June 30, 2002.  The
decrease  was  due  primarily  to  a  decrease in telecommunications revenues of
$2,152,257 despite an increase in Internet revenues of $168,861.  As of June 30,
2003,  the  Company  had approximately 102,041 long distance customers and 5,965
internet  customers,  with  usage  of  long  distance  services of approximately
219,237,000  minutes  for  the  year  ended  June  30,  2003  as  compared  with
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.  Although the number of customers and minutes of usage
have  decreased,  the  monthly  average  revenue  per long distance customer has
increased  to  $11.64  for  the year ended June 30, 2003 from $8.77 for the year
ended  June  30, 2002.  Management believes that the increase in monthly average
revenue  per  long  distance  customer  is  due  to  the  loss  of lower revenue
generating  customers.  Management  also believes that lower customer counts and
minutes  are  a  result  of  several recent competitive pressures including: the
increase  in  the  number  of  low-priced  long distance calling plans currently
available,  the  expansion  of  bundled  local/long distance services offered by
Local  Exchange  Carriers  and/or  Competitive  Local Exchange Carriers, and the
migration  of  traditional  long  distance  usage  to cellular long distance and
internet usage.  In an effort to increase revenue, the Company has initiated new
affinity  marketing  relationships  with  groups  such  as the American Diabetes
Association-Western  Region,  Calvary  Chapel-Golden  Springs,  and  the  Jewish
Community  Center-Orange  County and signed an affiliate partnership with Kmart,
Inc.  Additionally,  the  Company  is  in  the  process of exploring alternative
marketing  strategies to increase revenue.  As of June 30, 2003, Perfexa did not
generate  any  third-party  revenue.

COST OF SALES - Cost of sales decreased by $1,642,874 or 18.1% to $7,410,590 for
the  year  ended June 30, 2003 from $9,053,464 for the year ended June 30, 2002.
The  decrease was primarily due to the decrease in carrier costs associated with
decreased  telecommunications  service  revenues  of $1,134,527 and by decreased
costs  associated  with  a  20%  reduction  in the Company's transportation cost
negotiated  in  January  2002  of $749,002 for the year ended June 30, 2003.  In
addition, the costs associated with Internet services increased $240,655 for the
year  ended  June  30,  2003 in proportion with the Company's increased Internet
services  revenue.  Currently, the Company's actual incurred usage is lower than
the  monthly  minimum  commitment  relative  to  its  Internet  service provider
contract due to lower than expected customer counts (See above for the Company's
efforts  to  increase).  As a percentage of revenue, cost of sales was 48.9% and
52.8%  resulting  in  a gross margin of 51.1% and 47.2% for the years ended June
30,  2003  and  2002,  respectively.

                                      -19-
<PAGE>

OPERATING  EXPENSES  -  Operating  expenses  decreased by $1,102,907 or 12.5% to
$7,742,666  for  the year ended June 30, 2003 from $8,845,573 for the year ended
June  30,  2002.  The Company has continued to streamline operations in the year
ended  June 30, 2003, thereby decreasing operating expenses when compared to the
year  ended  June  30,  2002.  As part of its efforts, the Company developed its
Perfexa operations which is expected to significantly lower its customer support
and  related  costs.

Operating  expenses,  individually  net  of  Perfexa related costs, for the year
ended  June  30,  2003  were  comprised primarily of $3,433,528 (net of $371,092
related  to the Company's Perfexa subsidiary) in salaries and related taxes paid
to  employees;  billing related costs of $935,486; rent of $313,661; bad debt of
$112,770;  sales  commissions of $149,814; depreciation and amortization expense
of  $132,257;  amortization  of previously issued options to employees valued at
$113,925;  start-up  costs  of  $949,509  (including  the  $371,092  of  Perfexa
salaries)  associated  with  the Company's Perfexa subsidiary; and $1,601,716 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.

Operating  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.

OTHER  EXPENSE  - Net other expense (including waiver of penalties and interest)
decreased  by $473,626 to $38,913 for the year ended June 30, 2003 from $512,539
for  the year ended June 30, 2002.  The decrease was primarily due to a one-time
credit of $332,018 resulting from waived penalties and interest related to prior
past  due  payroll  taxes  on  the Company's past due payroll tax liability (see
below  -  Contingent  Liabilities)  and the decrease in interest on the recently
renegotiated  WorldCom  Note.

LOSS ON SALE OF EQUIPMENT - Loss on sale of equipment was $2,419 and $14,878 for
the  year  ended  June  30,  2003  and  2002, respectively, primarily due to the
disposal  of  a  telephone  system.

NET  LOSS  - As a result, net loss decreased $1,282,561 to $29,106, or $0.00 per
share  for  the  year  ended  June  30,  2003, from a net loss of $1,311,667, or
$(0.06) loss per share, for the year ended June 30, 2002, respectively.  The net
loss  for  the  year  ended June 30, 2003 included a one-time credit of $332,018
resulting  from  waived penalties and interest on the Company's past due payroll
tax  liability  and  Perfexa  start-up  costs  of  $949,509.

ASSETS  AND LIABILITIES - Assets decreased by $139,870 to $1,818,726 at June 30,
2003  from $1,958,596 at June 30, 2002. The decrease was due to net decreases in
accounts  receivables  of  $374,567,  cash and cash equivalents of $225,566, and
deposits  of  $44,021;  net  of increases in property and equipment of $376,891,
other  assets of $75,562, and prepaid expenses of $51,831. Liabilities decreased
by $354,917 to $8,139,377 at June 30, 2003 from $8,494,294 at June 30, 2002. The
decrease  was  due  to  decreases  in  accounts  payable and accrued expenses of
$1,148,593  (excluding  the  conversion  of  $2,485,551  of  previously recorded
accounts  payable  into a long-term note payable), primarily for amounts owed to
WorldCom  (associated  with  customer  usage),  decreases in accrued payroll and
payroll related liabilities of $862,226 (excluding a one time credit of $332,018
resulting  from  waived penalties and interest related to prior past due payroll
taxes  on  the  Company's  past  due  payroll tax liability), deferred income of
$44,169,  and  obligations  under  capital  lease  of  $8,192  primarily  due to
principal repayments, net of increases in notes payable of $1,708,263 (including
the  conversion  of  $2,485,551  of  previously  recorded  accounts payable into
along-term note payable, the addition of notes payable of $628,283 and principal
repayments  of  $1,405,571),  associated with the decrease in telecommunications
service  costs,  Internet  service  provider  access  fees  and customer service
operations  as  a  result  of  the  decrease  in  customers.

                                      -20-
<PAGE>

STOCKHOLDERS'  DEFICIT  -  Stockholders'  deficit  decreased  by  $(142,731)  to
$(6,392,967)  at June 30, 2003 from $(6,535,698) at June 30, 2002.  The decrease
was  attributable  to  the  amortization  of  compensation  expense  related  to
previously  issued  options  to  employees  in  the amount of $113,925, the fair
market  value of warrants granted under a third party agreements of $26,900, the
fair  market value of stock issued for services of $8,250, the fair market value
of  stock  issued  and warrants granted pursuant to a note payable of $12,327, a
cumulative  translation adjustment of $10,010, and the exercise of stock options
by  officers  of  $425,  net  of  current  year  net  loss  of  $29,106.

LIQUIDITY  AND  CAPITAL  RESOURCES

GENERAL  -  Overall,  the  Company had negative cash flows of $225,566 in fiscal
year  2003  resulting  from $985,137 of cash provided by the Company's operating
activities,  offset  partially  by cash used in investing activities of $475,275
and  cash  used  in  financing  activities  of  $745,438.

CASH  FLOWS  FROM  OPERATIONS  ACTIVITIES  -  Net  cash  provided  by  operating
activities  of  $985,137  in fiscal year 2003 was primarily due to a net loss of
$29,106;  changes  in  operating  assets  and  liabilities, principally accounts
payable and accrued expenses of $1,336,958, and accounts receivable of $261,796,
offset  partially  by  accrued  payroll  and related taxes of $530,208, deferred
income of $44,169, prepaid expenses of $39,115, and deposits and other assets of
$44,256;  the  fair  market  value  of  stock issued for services of $8,250; the
amortization  of  previously  issued options vesting to employees in the current
period  of $113,925; the fair market value of warrants granted under third party
agreements  of  $26,900;  the  fair  market  value  of stock issued and warrants
granted  pursuant  to  a  note payable of $12,327; depreciation and amortization
expense  of  $149,248;  bad  debt  expense  of $112,770, and the loss on sale of
equipment  of  $2,419, offset partially by minority interest of $20,584, and the
waiver  of  payroll  tax  penalties  and  interest  of  $332,018.

CASH  FLOWS FROM INVESTING ACTIVITIES - Net cash used in investing activities of
$475,275  in  fiscal  year  2003  funded  purchases of property and equipment of
$490,413, primarily related to fixed assets purchased in the construction of its
call  center  and  technology  development center located near New Delhi, India,
offset  partially  by  the  proceeds  from  the  sale  of  equipment of $15,138.

CASH  FLOWS FROM FINANCING ACTIVITIES - Net cash used in financing activities of
$745,438  in fiscal year 2003 was primarily due to principal repayments on notes
payable  of $1,405,571; and principal repayments under capital lease obligations
of  $8,192,  offset  primarily  by  borrowings on notes payable of $575,000, net
proceeds from the issuance of stock of subsidiary totaling $92,900, and proceeds
from  the  exercise  of  stock  options  by  officers  of  $425.

FINANCING - The Company's funds from operations are currently sufficient to fund
daily  operations.  However,  the Company does not have sufficient funds to meet
its monthly obligations on its WorldCom Note and its past due payroll taxes.  In
order  to  meet  these  monthly commitments, GTC accumulates an accounts payable
deficit  with  WorldCom.  As  of  June 30, 2003, GTC has an outstanding accounts
payable  balance of $536,629 owed to WorldCom.  In addition, the Company's funds
from  operations  are  currently insufficient to fund immediate repayment of its
short  and  long-term  debts, its contingent liabilities, as well as its planned
expansion  into  India  (see  below).  Therefore, the Company may be required to
seek  additional  funds either through debt or equity financing to finance these
debts,  contingencies  and  plans.  Failure to raise additional funds may have a
material  adverse  effect  on  the  Company's  long-term  operational viability.

Since inception, Perfexa-U.S. and its Indian subsidiary Perfexa-India has relied
upon  its  parent, GTC Telecom Corp. for funding and for administrative services
required  in  the  development  of  its  business  plan. Perfexa is obligated to
reimburse  GTC  for such advances and its share of such expenses. As of June 30,
2003, the Company has advanced Perfexa-U.S. $1,244,500 in cash and equipment, of
which  $525,606  was  for  capitalized  equipment,  and  allocated  $870,302  of
administrative  expenses. Cash and equipment advances accrue interest of 10% per
annum and are due upon demand. Shared administrative expenses accrue no interest
and  are  also  due  upon  demand.


                                      -21-
<PAGE>

Pursuant  to  a  Master  Services  Agreement between Perfexa-US and GTC, Perfexa
provides call center and IT development services to GTC on a cost plus 5% basis.
As  of  June  30,  2003, Perfexa-U.S. has billed GTC $200,047 for such services.

During  fiscal  year 2003, Perfexa-U.S. issued an aggregate of 210,000 shares of
its  restricted  common stock to third party investors resulting in net proceeds
to  Perfexa-U.S.  of  $92,900.  In  April 2003, Perfexa-U.S. issued a short-term
convertible note with a principal amount of $125,000 to an unrelated third party
investor  (see  Short-Term  Debt  below).  Proceeds  from  the sale of stock and
issuance  of  the  note were transferred to GTC as partial repayment of the cash
and  equipment  advances.

As  of June 30, 2003, Perfexa-U.S. owes GTC $1,676,855 net of $217,900 repaid by
Perfexa-U.S.  from  funds  raised  and  $200,047  in amounts billed for services
rendered.

On  June  3,  2003,  Perfexa-U.S.  initiated  a  private  placement  offering of
2,000,000  shares  of its restricted common stock at a price of $1.00 per share.
Subsequent  to  June  30,  2003,  Perfexa  sold  60,000  shares pursuant to this
offering,  resulting  net  proceeds  of $54,000 which were transferred to GTC as
partial  repayment  of  accrued  advances.

SHORT-TERM  DEBT  -  In September 2003, the Company borrowed $25,000 for working
capital  purposes  from  a third party.  The note pays simple interest of 8% per
annum with principal and interest due upon maturity at December 3, 2003.  In the
event  of default, the investor shall be entitled to accelerate the repayment of
the  note.  In  addition, the Company issued to the third party 25,000 shares of
the  Company's  restricted  common  stock  valued at $3,070 (based on the market
price  on the date of grant and the related pro-rata value of the common stock).
The  Company  will  record  the value of the common stock to interest expense in
September  2003.

In  April  2003,  Perfexa-U.S.  issued  a  short-term  convertible  note  with a
principal  amount  of  $125,000  to an unrelated third party investor.  The note
provides  for  simple  interest of 10% per annum with principal and interest due
upon maturity at July 31, 2003.  Pursuant to the terms of the note, the note may
be  converted,  at  the  election of the noteholder prior to the maturity of the
note, into shares of common stock of Perfexa-U.S. at the rate of $0.50 per share
(estimated to be the fair market value on the date of issuance, based on current
third  party  transaction).  In  August 2003, the Company repaid $100,000 of the
principal  balance  and  issued  8,152  shares of Perfexa-U.S. restricted common
stock valued at $4,076 (based on the terms of the note) in lieu of an equivalent
amount  of  interest  due  on  the  note.  Perfexa-U.S.  is  in  the  process of
renegotiating  the  terms  of  the  note.

On  May 2, 2003, the Company borrowed $200,000 for working capital purposes from
an  unrelated third party.  The note, as amended, matures on August 1, 2003.  In
the event of default, the investor shall be entitled to accelerate the repayment
of  the  note.  In addition, the Company issued to the third party 30,000 shares
of  the  Company's restricted common stock valued at $5,181 (based on the market
price  on the date of grant and the related pro-rata value of the common stock).
The  Company  recorded  the value of the common stock to interest expense in the
accompanying  consolidated  statements of operations for the year ended June 30,
2003.  On  August  4,  2003,  the  note  and  interest  of  $16,000 were repaid.

On  March  31,  2003, the Company financed certain components of a new telephone
system  placed  into  service  by  entering  into  a  term note in the amount of
$34,398.  The  note provides for the Company to make monthly payments of $5,500,
including  interest  at a rate of 29.7%, and matures in October 2003.  As of the
date  of this report, the Company has made all payments as required by the note.

On  December  5, 2002, GTC borrowed $150,000 for working capital purposes from a
third  party.  Pursuant  to  the  terms  of  the note, principal plus $25,000 in
interest  is  to be repaid in $25,000 weekly payments beginning January 17, 2003
and ending February 28, 2003.  In addition, GTC issued to the third party 10,000
shares  of  its  restricted  common  stock valued at $1,485 (based on the market
price  on the date of grant and the related pro-rata value of the common stock).
As  of the date of this report, the Company has made all payments as required by
the  note.

                                      -22-
<PAGE>

On  October  2, 2002, the Company borrowed $100,000 for working capital purposes
from  a third party.  Pursuant to the terms of the note, principal plus interest
of  $20,000  is to be repaid as follows: 1) $7,500 on March 31, 2003, 2) $15,000
on  June  30, 2003, 3) $22,500 on September 30, 2003, 4) $30,000 on December 31,
2003,  and  5) $45,000 on March 31, 2004.  In the event of default, the investor
shall  be  entitled to receive either 6,250 shares of the Company's common stock
for  each  week  that  the  default  exists  or  acceleration  of repayment.  In
addition,  the  Company  issued 25,000 shares of the Company's restricted common
stock  valued  at $3,066 (based on the market price on the date of grant and the
related  pro-rata  value  of  the common stock) and granted warrants to purchase
25,000  shares  of the Company's restricted common stock at an exercise price of
$0.25  per  share  valued  at  approximately  $2,595 (based on the Black-Scholes
pricing  model  and  the  related pro-rata value of the warrants).  The warrants
vest  immediately and are exercisable for a period of two years from the date of
issuance.  The  Company  recorded  the  value  of  the  related common stock and
warrants  immediately  to  interest  expense  in  the  accompanying consolidated
statements  of  operations  as of June 30, 2003.  As of the date of this report,
the  Company  has  made  all  payments  as  required  in  the  note.

LONG-TERM DEBT - On September 30, 2002, and amended on May 30, 2003, the Company
renegotiated  a previous note payable (the "Previous Note") due to WorldCom into
a  new  note  payable  (the  "New  Note").  The Previous Note had an outstanding
balance  of  $4,195,706  on  the date of renegotiation. In addition, the Company
negotiated  to  convert  $2,485,551  of  accounts payable to WorldCom to the New
Note.  The  New  Note bears interest at 6%, unless the Company is unable to make
the  monthly payments required, at which time the interest rate increases to 18%
and the entire unpaid principal balance plus accrued interest is immediately due
and  payable. The New Note, as amended, requires principal and interest payments
of  $125,000 per month through September 15, 2003, $250,000 per month thereafter
through  October  15,  2004, $250,672 per month thereafter through May 15, 2005,
$300,000  per  month  thereafter  through  July 15, 2005, and a final payment of
$176,335  on August 15, 2005. All other terms remain the same. As of the date of
this  report,  the  Company  has  made all payments as required in the New Note.

In February 2003, the Company financed the purchase of computer equipment placed
into service by entering into revolving line of credit in the amount of $18,885.
The  revolving  line of credit provides for the Company to make monthly payments
of  $485, including interest at a rate of 12.99%.  The total outstanding balance
on  the revolving line of credit was $16,710 and is included in notes payable in
the accompanying consolidated balance sheet at June 30, 2003.  As of the date of
this report, the Company has made all payments as required in the revolving line
of  credit.

In  August 2003, the Company financed certain component upgrades to its existing
telephone  system  by entering into long term obligations totaling $78,282.  One
obligation, totaling $42,066, is a note that provides for the Company to make 12
payments of approximately $3,505 per month, with no interest charged, commencing
September 2003.  The other obligation, totaling $36,216, is a capital lease that
provides  for  the  Company to make 60 payments of approximately $822 per month,
including  interest  at  a  rate  of  12.9%,  and  matures  August  2008.

CONTINGENT LIABILITIES - At June 30, 2003, the Company has accrued approximately
$175,000  related  to penalties and interest in connection with past due payroll
taxes  of  prior  periods.  In accordance with the repayment schedule negotiated
with  the Internal Revenue Service ("IRS"), as of December 31, 2002, the Company
has  repaid  all  principal amounts that were past due.  In addition, as of June
30,  2003,  the  Company  has  successfully negotiated the waiver of $332,018 in
penalties and interest, resulting in a corresponding one-time credit recorded in
Other  Income/Expense  in the accompanying consolidated statement of operations.
The  Company  continues to reflect $175,000 of penalties and interest related to
prior  past  due  payroll  taxes  under accrued payroll and related taxes in the
accompanying  consolidated  balance  sheet  at  June  30,  2003.  The Company is
continuing  its  discussions  with the IRS with respect to this remaining amount
and  expects  this matter to be settled and the related accrual paid by December
2003.

In  September  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.
Pursuant  to  the  Agreement,  the  Company  must  draw a minimum of $500,000 by
January  23, 2005, or the Company shall be required to pay liquidated damages as
defined  in  the  Agreement.  As of the date of this filing, the Company has not
drawn  down  any  shares  under  this  Agreement.

                                      -23-
<PAGE>

CAPITAL  EXPENDITURES

The  Company  expects to purchase approximately $200,000 of additional equipment
on  top  of  the  purchases already made in connection with the expansion of its
business.  In  addition,  as  previously  discussed,  the  Company  expanded its
operations  into  the  Republic  of  India  through its Perfexa subsidiary.  The
Company  expects  to continue funding this expansion with an additional $200,000
to  Perfexa  primarily  for  leasehold  improvements,  equipment  (computer  and
telephone), furniture and fixtures, and deposits.  Because the Company presently
does  not  have  the  capital for such expenditures, it will have to raise these
funds.  (See  Financing  in  this  section).

OFF-BALANCE  SHEET  ARRANGEMENTS

The  Company  does  not  currently  have  any  off-balance  sheet  arrangements.

SUBSIDIARIES

The  Company  has  formed  four  wholly  owned subsidiaries that offer different
products  and  services.  The  four  subsidiaries  are: CallingPlanet.com, Inc.,
ecallingcards.com,  Inc.,  U.S.  Main  Corporation,  and Perfexa Solutions, 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, and U.S. Main Corporation,
currently  inactive,  was  set  up to offer private label telecommunications and
Internet  related  needs.  Perfexa  Solutions,  Inc.  offers  business  process
outsourcing  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.

CRITICAL  ACCOUNTING  POLICIES

The  preparation  of  financial statements and related disclosures in conformity
with  accounting  principles  generally accepted in the United States of America
requires management to make judgments, assumptions and estimates that affect the
amounts  reported  in  the  Company's  consolidated financial statements and the
accompanying  notes.  The  amounts  of  assets  and  liabilities reported on our
balance  sheet and the amounts of revenues and expenses reported for each of our
fiscal  periods  are  affected by estimates and assumptions, which are used for,
but not limited to, the accounting for revenue recognition, accounts receivable,
doubtful  accounts  and  inventories.  Actual  results  could  differ from these
estimates.  The  following  critical  accounting  policies  are  significantly
affected  by judgments, assumptions and estimates used in the preparation of the
financial  statements:

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 deferred income tax asset valuations.

                                      -24-
<PAGE>

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.

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.

SFAS  No.  123  ("SFAS 123"), "Accounting for Stock-Based Compensation" 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.

SFAS No. 148 ("SFAS 148"), "Accounting for Stock-Based Compensation - Transition
and  Disclosure, an amendment of FASB Statement No. 123," was issued in December
2002  and is effective for fiscal years ending after December 15, 2002. SFAS 148
provides  alternative  methods  of transition for a voluntary change to the fair
value  method  of accounting for stock-based employee compensation. In addition,
this  Statement  amends  the  disclosure  requirements  of  SFAS  123 to require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method  used  on  reported  results.

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.

TRANSLATION  OF  FOREIGN  CURRENCIES - GTC uses the U.S. dollar as it functional
currency  while  the  Company's  foreign subsidiary uses the Indian Rupee as its
functional  currency.  Assets  and  liabilities  of  foreign  subsidiaries  are
translated  into  U.S.  dollars  at  year-end  exchange  rates, and revenues and
expenses  are  translated  at  average rates prevailing during the year or other
period  presented.  In  accordance  with  SFAS  No.  52,  "Foreign  Currency
Translation",  net  exchange gains or losses resulting from such translation are
excluded  from  net loss, but are included in comprehensive loss and accumulated
in  a  separate  component  of  stockholders'  deficit.

                                      -25-
<PAGE>

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

There  have been no disagreements between Squar, Milner, Reehl & Williamson, LLP
and  Management  of the type required to be reported under this Item 8 since the
date  of  their  engagement.

ITEM  8A.  CONTROLS  AND  PROCEDURES

As  of  the  end of the period covered by this report, Management carried out an
evaluation  of  the  effectiveness  of the design and operation of the Company's
disclosure controls and procedures, pursuant to Exchange Act Rules 13a-15(c) and
15d-15(c)  which  includes  inquiries  made  to  certain other of our employees.
Based  on the foregoing, the Principal Executive Officer and Principal Financial
Officer  concluded  that  the  Company's  disclosure controls and procedures are
effective  to  timely  alert  them  to  any material information relating to the
Company,  including its consolidating subsidiaries, that must be included in the
Company's  periodic  SEC  filings.  In  addition, there have been no significant
changes  in  the  Company's  internal  controls  or  in other factors that could
significantly affect internal controls subsequent to the date of the most recent
evaluation.


                                      -26-
<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
appointed  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         42     Chief  Executive  Officer and Chairman of the Board

Eric Clemons        32     Director,  President, Secretary and Treasurer

Gerald DeCiccio     45     Director  and  Chief  Financial  Officer

John M. Eger        63     Director

Marilyn Creson      51     Director


PAUL  SANDHU  is currently the Company's Chief Executive Officer and Chairman of
the  Board  of  the  Company.  Mr.  Sandhu  has  been with the Company since its
inception.  Mr. Sandhu has over thirteen (13) 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 and a member of the Board of
Directors  of  the  Company.  Mr. Clemons has been with GTC since its inception.
Mr.  Clemons  has  over  eleven  (11)  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.

GERALD  DECICCIO  joined  the Company in January 1999 as Chief Financial Officer
and  a  member  of the Board of Directors of the Company.  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.

                                      -27-
<PAGE>

JOHN M. EGER has been a member of the Company's Board of Directors since October
1999.  He  is  currently the Chairman of the Board's Compensation and Nominating
Committee  and  a  member  of  the  Board's  Audit  Committee.  Mr.  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.

MARILYN  CRESON  was  appointed to the Company's Board of Directors on April 21,
2003.  She  is  currently  the  Chairwoman  of the Board's Audit Committee and a
member  of  the Board's Compensation and Nominating Committee.  Between November
1994  to  March  2002,  Ms. Creson served as the Director of Finance for The San
Diego Union-Tribune, the nation's 20th largest daily newspaper.  From March 1989
to  October  1994,  Ms.  Creson  served  as  the  Chief Financial Officer of BSD
Bancorp,  a  bank holding company with combined bank assets of $500 million. Ms.
Creson  began her career with Price Waterhouse Coopers where she was a Certified
Public  Accountant  in  the  State of Illinois.  Ms. Creson holds an M.B.A. from
Michigan  State  University  and  a  B.S.B.A.  from  Kansas  State  University.

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 ,
during  the  year  ended  June  30,  2003, all Section 16(a) filing requirements
applicable  to  the  Company's  officers, directors and greater than ten percent
shareholders  were  complied with except as follows:  Mr. Sandhu and Mr. Clemons
were  each late in filing a Form 4 detailing an exercise of options in May 2003.

Family  Relationships

There  are  no  family  relationships  between or among the directors, executive
officers  or  persons nominated or charged by the Company to become directors or
executive  officers.

Involvement  in  Legal  Proceedings

To  the best of the Company's knowledge, during the past five years, none of the
following  occurred  with  respect  to a present or former director or executive
officer  of  the  Company:  (1)  any bankruptcy petition filed by or against any
business  of which such person was a general partner or executive officer either
at  the  time  of the bankruptcy or within two years prior to that time; (2) any
conviction  in  a  criminal  proceeding  or  being subject to a pending criminal
proceeding  (excluding  traffic  violations and other minor offenses); (3) being
subject  to  any order, judgment or decree, not subsequently reversed, suspended
or  vacated,  of  any  court  of  any  competent  jurisdiction,  permanently  or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in  any  type of business, securities or banking activities; and (4) being found
by  a  court  of  competent  jurisdiction  (in  a  civil action), the SEC or the
Commodities  Futures  Trading  Commission  to  have  violated a federal or state
securities or commodities law, and the judgment has not been reversed, suspended
or  vacated.

                                      -28-
<PAGE>

ITEM  10.  EXECUTIVE  COMPENSATION

On  December 1, 1998, the Company entered into an Employment Agreement with Paul
Sandhu,  the  Company's  Chief Executive Officer.  The Agreement was approved by
the  Board of Directors of the Company.  On September  6, 2001, the Compensation
Committee  of  the  Board agreed to revise the Agreement increasing Mr. Sandhu's
salary  to  $184,800.  The Agreement continues for an indefinite term but 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 then annual salary as
severance.

On  December 1, 1998, the Company entered into an Employment Agreement with Eric
Clemons,  the  Company's  President.  The Agreement was approved by the Board of
Directors  of  the Company.  On September 6, 2001, the Compensation Committee of
the  Board  agreed  to  revise  the  Agreement increasing Mr. Clemon's salary to
$167,200.  The Agreement continues for an indefinite term but 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  then annual salary as
severance.

On  December  1,  1998,  the  Company  entered into an Employment Agreement with
Gerald  DeCiccio,  the  Company's  Chief  Financial  Officer.  The Agreement was
approved  by  the  Board of Directors of the Company.  On September 6, 2001, the
Compensation  Committee  of  the Board agreed to revise the Agreement increasing
Mr.  DeCiccio's  salary  to $158,400.  The Agreement continues for an indefinite
term  but  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.




                                      -29-
<PAGE>

SUMMARY  COMPENSATION  TABLE
The  Summary  Compensation  Table  shows  certain  compensation  information for
services  rendered  in  all capacities for the fiscal years ended June 30, 2003,
2002,  and  2001.  Other than as set forth herein, no executive officer's salary
and  bonus  exceeded  $100,000  in  any  of the applicable years.  The following
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted and certain other compensation, if any, whether paid or
deferred.

<TABLE>
<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           2003
(CEO)                (6/30)     $  184,800        -0-           40,000(1)       -0-          -0-        -0-         -0-

                      2002
                     (6/30)        186,450       16,800         12,000(2)       -0-        280,000      -0-       27,139(4)

                      2001
                     (6/30)        105,000        -0-           10,000(3)       -0-        132,500      -0-       13,000(5)

---------------------------------------------------------------------------------------------------------------------------
Eric Clemons          2003
(President)          (6/30)        160,233        -0-              -0-          -0-          -0-        -0-         -0-

                      2002
                     (6/30)        198,550(6)     1,520         12,000(2)       -0-        270,000      -0-       24,554(4)

                      2001
                     (6/30)        145,667       13,680         10,000(3)       -0-        132,500      -0-      100,000(5)
---------------------------------------------------------------------------------------------------------------------------
Gerald DeCiccio       2003
(CFO)                (6/30)        158,400        -0-              -0-          -0-          -0-        -0-        6,092(4)

                      2002
                     (6/30)        155,100       14,400          12,000(2)      -0-        260,000      -0-       17,169(4)

                      2001
                     (6/30)        138,000        -0-              -0-          -0-        177,500      -0-         -0-
---------------------------------------------------------------------------------------------------------------------------
Mark Fleming(7)       2003
(COO)                (6/30)         99,092        -0-            37,850(7)      -0-           -0-       -0-         -0-

                      2002
                     (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-
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)     Amounts  paid  on  deferred  salary  from  prior  years
(2)     Amounts  paid for director's fees earned in fiscal year 2001 and paid in
         fiscal  year  2002
(3)     Amounts  paid  for  director's  fees
(4)     Amounts  paid  for  vacation
(5)     Includes  $13,000  for  Mr.  Sandhu  and  $31,820  for  Mr.  Clemons  in
          non-business  expenses  paid  on  behalf  of the officers relating to
          travel and entertainment  expenses and $68,180 paid to Mr. Clemons for
          services rendered on behalf of the Company relating to fund raising
          activities
(6)     Includes $24,383 of salary advances
(7)     Mr.  Fleming's  resigned  on  February  28, 2003 and was paid $37,850 as
          severance  and  accrued  vacation  benefits


                                      -30-
<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                          0                         0  $                      0             n/a
                 ----------------------  -----------------------  ------------------------  ---------------
Eric Clemons                         0                         0  $                      0             n/a
                 ----------------------  -----------------------  ------------------------  ---------------
Gerald DeCiccio                      0                         0  $                      0             n/a
                 ----------------------  -----------------------  ------------------------  ---------------
Mark Fleming(1)                      0                         0  $                      0             n/a
                 ----------------------  -----------------------  ------------------------  ---------------

(1) Mr.  Fleming  resigned  on  February  28,  2003

</TABLE>
<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                      17,500                     2,975           113,500 / 299,000                   1,125 / 0
Eric Clemons                     25,000                     4,250           174,000 / 271,000                       0 / 0
Gerald DeCiccio                       0                       n/a           407,833 / 188,000                     375 / 0
Mark Fleming(1)                       0                       n/a                 0 / 0                             0 / 0

</TABLE>

(1) Mr.  Fleming  resigned  on  February  28,  2003

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.

                                      -31-
<PAGE>

ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT

The  following  table  sets forth, as of September 15, 2003, 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.                3,863,215      18.65%
----------------------- -----------------------------        ----------   ------------

                        Eric Clemons(2)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  554,522       2.68%
----------------------- -----------------------------        ----------   ------------
                        Gerald A. DeCiccio(3)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  447,833       2.16%
----------------------- -----------------------------        ----------   ------------
                        John M. Eger(4)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  187,500       0.91%
----------------------- -----------------------------        ----------   ------------
                        Marilyn Creson(5)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                    5,000       0.02%
----------------------- -----------------------------        ----------   ------------
                        Mark Fleming(6)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                   10,000       0.04%
----------------------- -----------------------------        ----------   ------------
                        Clay T. Whitehead(7)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  511,816       2.47%
----------------------- -----------------------------        ----------   ------------
                        Reet Trust(8)
                        21520 Yorba Linda, Suite 6227
Common Stock            Yorba Linda, CA 92887                2,000,000       9.66%
----------------------- -----------------------------        ----------   -------------

All Directors and
Officers as a
Group (5
Persons in total)                                            5,058,100       24.42%
----------------------- -----------------------------        ----------   -------------
</TABLE>

(1)     Includes  168,500  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 244,000 unvested
options to acquire shares of Company common stock granted in accordance with the
Company's  employee  benefit  plan.
(2)     Includes  219,000  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 226,000 unvested options
to  acquire  shares  of  Company  common  stock in accordance with the Company's
employee  benefit  plan.
(3)     Includes  an  aggregate  of 427,833 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 168,000 unvested options to acquire shares of Company
common  stock  in  accordance  with  the  Company's  employee  benefit  plan.
(4)     Includes  an  aggregate  of 187,500 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 20,000
unvested  options  to  acquire shares of Company common stock in accordance with
the  Company's  benefit  plan.
(5)     Includes  an  aggregate  of  5,000  options to acquire shares of Company
common stock in accordance with Ms. Creson's director compensation agreement and
the  Company's  employee  benefit  plan.
(6)     Mr.  Fleming  resigned  on  February  28,  2003.
(7)     Mr.  Whitehead  resigned  on  September  30,  2002.
(8)     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.

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.

                                      -32-
<PAGE>

<TABLE>
<CAPTION>

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS


                                     EQUITY COMPENSATION PLANS AS OF JUNE 30, 2003


<S>                        <C>                          <C>                     <C>
                                     (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                        (#)                         ($)                              (#)
-------------------------  ---------------------------  ----------------------  --------------------------------------
Equity compensation plans
approved by security
holders                           2,580,000(1)                 $ 0.45                          3,271,000(2)
-------------------------  ---------------------------  ----------------------  --------------------------------------
Equity compensation plans
not approved by security
holders                            1,416,900                   $ 0.84                                   0
-------------------------  ---------------------------  ----------------------  --------------------------------------
Total                              3,996,900                   $ 0.59                           3,271,000
</TABLE>


(1)  consists  of  851,000  options  issued under the 1999 Stock Option Plan and
1,729,000  options  issued  under  the  2001  Stock  Incentive  Plan
(2)  does  not include any ungranted options under the 1999 Omnibus Stock Option
Plan  as  this  plan  was  terminated.

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 "1999 Plan"), effective October
1,  1999.  The  1999  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 1999 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 1999 Plan to the extent they don't conflict with the terms of
the  1999  Plan.

Upon  implementation  of  the  Company's 2001 Stock Incentive Plan (as described
below),  the  Company  closed  the  1999 Plan.  As of the date of this report, a
total  of  851,000  options,  previously  issued  to employees, exercisable at a
weighted  average  of  $0.99  per  share  remain  outstanding.

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 including 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").

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.

                                      -33-
<PAGE>

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 and
Nominating  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.

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
(except  executive  officers  of  the  Company)  in  the  amount  necessary  for
participants to pay the withholding taxes due in connection with the exercise or
vesting  of  Awards.  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.

During  the  fiscal  year  ended  June  30,  2003, the Company issued options to
certain  employees to purchase an aggregate of 420,000 shares of common stock at
a  weighted  average  exercise price of $0.18 per share pursuant to the SIP Plan
(each issuance priced at the estimated fair market value of the Company's common
stock  on  the date of grant). The options vest over five years from the date of
grant  and  are  exercisable  through  March  2013.

During the year ended June 30, 2003, the Company issued options pursuant to the
SIP  Plan to certain board of directors and an employee to purchase an aggregate
of  55,000 shares of common stock, at a weighted average exercise price of $0.20
per  share  (each  issuance  priced  at  the  estimated 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  April  2006.

NON-PLAN  ISSUANCES

In August 2002, pursuant to an agreement with an outside consultant for investor
and  public  relations  services,  the Company issued warrants to purchase up to
100,000  shares of the Company's restricted common stock at an exercise price of
$0.17  per  share  valued  at  approximately $16,000 (based on the Black-Scholes
pricing  model).  The  warrants  vest 25,000 upon execution of the agreement and
25,000 every three months thereafter, so long as the Company retains the outside
consultant.  As of the date of this report all of the warrants have vested.  The
warrants  are  exercisable for a period of three years from the date of issuance
and  contain  piggyback  registration  rights.

In  March 2003, pursuant to an agreement with an outside consultant for investor
services,  the  Company  issued  warrants to purchase up to 40,000 shares of the
Company's restricted common stock at an exercise price of $0.25 per share valued
at  approximately  $6,400  (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.

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

In  May  2003, the Company's Chief Executive Officer and the Company's President
exercised  options  (previously  granted pursuant to their director compensation
agreement) to purchase a total of 17,500 and 25,000 shares, respectively, of the
Company's  common  stock  for  $175  and  $250,  respectively.

As  of June 30, 2003, 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, 2003) 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, 2003.  There
have  been  no  additional  advances  since  June  2001.

In  February,  2003,  Perfexa-U.S. entered into a Master Services Agreement with
its parent, GTC Telecom Corp. whereby Perfexa-U.S. agreed to provide call center
outsourcing and Information Technology systems development for GTC.  Pursuant to
the  terms  of  the  Agreement, GTC has agreed to reimburse the Company for such
services  on a cost plus 5% basis.  Work on this agreement commenced May 1, 2003
upon  completion  of  the  Company's  call  center.

                                      -34-
<PAGE>

Since inception, Perfexa-U.S. and its Indian subsidiary Perfexa-India has relied
upon  its  parent, GTC Telecom Corp. for funding and for administrative services
required  in  the  development  of  its  business plan.  Perfexa is obligated to
reimburse  GTC for such advances and its share of such expenses.  As of June 30,
2003, the Company has advanced Perfexa-U.S. $1,244,500 in cash and equipment and
has  been  allocated $870,302 as its share of administrative expenses.  Cash and
equipment  advances  accrue  interest  of 10% per annum and are due upon demand.
Shared  administrative expenses accrue no interest and are also due upon demand.
See  Part  II,  Item  6  Management's Discussion and Analysis, Financing further
details.  As  of June 30, 2003, Perfexa-U.S. owes GTC $1,676,855 net of $217,900
repaid  by  Perfexa-U.S.  from  funds  raised and $200,047 in amounts billed for
services  rendered.

See  Item  11.  Executive Compensation for transactions relating to issuances of
options  to  Officers  and  Directors  from  the  Company's  stock option plans.

                                      -35-
<PAGE>

ITEM  13.     EXHIBITS  AND  REPORTS  ON  FORM  8-K


INDEX  TO  FINANCIAL  STATEMENTS                                    Page
                                                                    ----

Independent Auditors' Report                                        F-1

Consolidated balance sheet at June 30, 2003                         F-2

Consolidated statements of operations for the two year period
ended June  30,  2003  and  2002                                    F-3

Consolidated statements of comprehensive loss for the years
ended June  30,  2003  and  2002                                    F-4

Consolidated statements of stockholders' deficit for the years
ended June  30,  2003  and  2002                                    F-5

Consolidated statements of cash flows for the years ended
June  30,  2003  and  2002                                          F-6

Notes  to  consolidated  financial  statements                      F-8

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

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)              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).

                     *(10.1.1)     Program  Enrollment

                     *(10.1.2)     Rate  and  Discount  Schedule

                     *(10.1.3)     Service  Schedule

                     *(10.1.4)     Telecommunications  Service  Agreement

                     *(10.1.5)     Amendment  dated  September  14,  2000

                                      -36-
<PAGE>

*(10.2)              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).

*(10.3)              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).

*(10.4)              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).

*(10.5)              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).

*(10.6)              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).

(10.7)               Lease  dated  October  1,  2002 between Unitech Limited and
                     Perfexa Solutions Pvt. Ltd. relating to the lease of 1st
                     Floor, Tower A, Unitech Business  Park,  South  City  I,
                     Gurgaon,  Haryana  122001  India.

*(10.8)              UUNET  Internet  Services  Agreement  dated  May  15, 2002
                     (incorporated by reference to Exhibit 10.9 in the Company's
                     Form 10 KSB for the year  ended  June  30,  2002).

21                   Subsidiaries  of  the  Registrant

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

31.1                 Rule 13a-14(a) Certification of Chief Executive Officer

31.2                 Rule 13a-14(a) Certification of Chief Financial Officer

32.1                 Section 1350 Certification of Chief Executive Officer

32.2                 Section 1350 Certification of Chief Financial Officer


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

                                      -37-
<PAGE>

REPORTS  ON  FORM  8-K

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

ITEM  14.  PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES

For  the  fiscal  year  ended June 30, 2003, the Company's fees for professional
services  rendered  by  its  Independent  Auditors  were  as  follows:

(a) Audit Fees: Aggregate fees billed for professional services rendered for the
audit of the Company's fiscal year 2003 annual consolidated financial statements
and  review of the consolidated financial statements in the Company's reports on
Form  10-QSB:  $57,825.

(b)  Audit  Related  Fees:  $7,000.

(c)  Tax  Fees:  $23,765.

(c)  All  Other  Fees:  The  aggregate  fees  billed  for all other professional
services  provided to the Company (other than the services described above under
(a), (b), and (c)) for the fiscal year ended June 30, 2003:  None.

The  Audit Committee has considered and determined that the services rendered by
the  independent certified public accountants with respect to the foregoing fees
are  compatible  with  maintaining  their  independence  and  all  services  are
pre-approved  by  the  Audit  Committee.


                                      -38-
<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  September  29,  2003

                                GTC TELECOM CORP.
                                -----------------
                                  (Registrant)

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

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

By:  /s/  GERALD  DECICCIO
     ---------------------
     GERALD  DECICCIO
     Chief  Financial  Officer  and  Director  and
     Principal  Accounting  Officer

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

     Signature           Capacity                   Date
     ---------           --------                   ----

/s/  JOHN EGER           Director          September  29,  2003
--------------------
     JOHN EGER

/s/  MARILYN  CRESON     Director          September  29,  2003
--------------------
     MARILYN  CRESON


                                      -39-
<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,  2003  and  the  related
consolidated statements of operations, comprehensive loss, stockholders' deficit
and cash flows for each of the years in the two-year period ended June 30, 2003.
These  financial  statements are the responsibility of the Company's management.
Our  responsibility is to express an opinion on these financial statements based
on  our  audits.

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

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects, the consolidated financial position of GTC
Telecom  Corp. and subsidiaries at June 30, 2003 and the consolidated results of
their  operations  and  their  cash  flows for each of the years in the two-year
period  ended  June 30, 2003, 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, has a working
capital  deficit  of  $3,601,382,  liabilities  from the underpayment of payroll
taxes,  an  accumulated  deficit  of $15,248,585, and a stockholders' deficit of
$6,392,967  at  June  30,  2003.  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  &  WILLIAMSON, LLP



Newport  Beach,  California
August  29,  2003,  except  for  Note  14,  as  to  which  the
date  is  September  19,  2003

                                      F-1
<PAGE>

<TABLE>
<CAPTION>


                        GTC TELECOM CORP. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEET

<S>                                                                 <C>
                                                                      June 30,
                                                                        2003
                                                                    -------------
ASSETS
  Cash                                                              $        500
  Accounts receivable, net of allowance for doubtful accounts of
   approximately $125,000                                                950,088
  Deposits                                                                76,805
  Prepaid expenses                                                        84,829
                                                                    -------------
    Total current assets                                               1,112,222

Property and equipment, net                                              630,942
Other assets                                                              75,562
                                                                    -------------

    Total assets                                                    $  1,818,726
                                                                    =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable and accrued expenses                             $  1,529,827
  Accrued payroll and related taxes                                      399,469
  Obligation under capital lease                                           8,914
  Current portion of notes payable                                     2,772,149
  Deferred income                                                          3,245
                                                                    -------------
    Total current liabilities                                          4,713,604
                                                                    -------------

Long-term liabilities:
  Obligation under capital lease, net of current portion                   6,285
  Notes payable, net of current portion                                3,419,488
                                                                    -------------

    Total Liabilities                                                  8,139,377
                                                                    -------------

Commitments and contingencies

Minority interest in consolidated subsidiary                              72,316

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;
    20,714,122 shares issued and outstanding                              20,714
  Additional paid-in-capital                                           8,885,200
  Note receivable officer                                                (60,306)
  Accumulated deficit                                                (15,248,585)
  Accumulated other comprehensive income                                  10,010
                                                                    -------------
    Total stockholders' deficit                                       (6,392,967)
                                                                    -------------

    Total liabilities and stockholders' deficit                     $  1,818,726
                                                                    =============

</TABLE>

           See accompanying notes to consolidated financial statements



                                      F-2
<PAGE>

<TABLE>
<CAPTION>

                               GTC TELECOM CORP. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                   Year Ended June 30,
                                                                               --------------------------
                                                                                   2003          2002
                                                                               ------------  ------------
<S>                                                                            <C>           <C>

Revenues:
  Telecommunications                                                          $ 14,254,029  $ 16,406,286
  Internet services                                                                893,629       724,768
                                                                               ------------  ------------
    Total revenues                                                              15,147,658    17,131,054
                                                                               ------------  ------------

Cost of sales:
  Telecommunications                                                             6,764,779     8,648,308
  Internet services                                                                645,811       405,156
                                                                               ------------  ------------
    Total cost of sales                                                          7,410,590     9,053,464
                                                                               ------------  ------------

Gross profit                                                                     7,737,068     8,077,590

Operating expenses
  Payroll and related expenses                                                   3,804,620     3,975,505
  Selling, general, and administrative expenses                                  3,938,046     4,870,068
                                                                               ------------  ------------
    Total operating expenses                                                     7,742,666     8,845,573
                                                                               ------------  ------------

Operating loss                                                                      (5,598)     (767,983)

Interest expense                                                                  (370,931)     (512,539)
Waiver of payroll tax penalties and interest                                       332,018            --
Loss on sale of equipment                                                           (2,419)      (14,878)
                                                                               ------------  ------------

Loss before provision for income taxes and minority interest                       (46,930)   (1,295,400)

Provision for income taxes                                                           2,760        16,267
                                                                               ------------  ------------

Loss before minority interest                                                      (49,690)           --

Minority interest in loss of consolidated subsidiaries                              20,584            --
                                                                               ------------  ------------

Net loss available to common shareholders                                      $   (29,106)  $(1,311,667)
                                                                               ============  ============

Basic and diluted net loss available to common
 shareholders per common share:                                                $      0.00   $     (0.06)
                                                                               ============  ============

Basic and diluted weighted average common shares
 outstanding:                                                                   20,634,314    20,412,375
                                                                               ============  ============
</TABLE>


           See accompanying notes to consolidated financial statements




                                      F-3
<PAGE>

<TABLE>
<CAPTION>


                 GTC TELECOM CORP. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


                                                 Year Ended June 30,
                                               -------------------------
                                                   2003        2002
                                               ----------  -------------
<S>                                            <C>         <C>
Net loss                                       $ (29,106)  $ (1,311,667)

Foreign currency translation adjustment           10,010            --
                                               ----------  -------------
Comprehensive loss                             $ (19,096)  $ (1,311,667)
                                               ==========  =============

</TABLE>








     See 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, 2003


                                                                                            Accumulated
                                                     Additional      Note                      Other         Total
                                     Common Stock       Paid-in   Receivable  Accumulated  Comprehensive  Stockholders'
                                  Shares     Amount     Capital     Officer     Deficit       Income        Deficit
                                ----------  -------  ----------   ---------  -------------  -----------   -----------
<S>                             <C>         <C>      <C>          <C>        <C>            <C>           <C>
BALANCE AT JUNE 30, 2001        20,371,622  $20,372  $8,667,479   $(60,306)  $(13,907,812)  $        --   $(5,280,267)

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
 vested 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)
                                ----------  -------  ----------   ---------  -------------  -----------   -----------

Estimated fair market value of
 stock issued for services
 rendered                           50,000       50       8,200         --             --            --         8,250
Estimated fair market value of
 stock and warrants issued in
 connection with notes payable      65,000       65      12,262         --             --            --        12,327
Estimated fair market value of
 warrants granted to
 consultants for services
 rendered                               --       --      26,900         --             --            --        26,900
Estimated fair market value of
 vested options granted to
 employees for compensation             --       --     113,925         --             --            --       113,925
Exercise of stock options by
 officers                           42,500       42         383         --             --            --           425
Net loss                                --       --          --         --        (29,106)           --       (29,106)
Cumulative translation
 adjustment                             --       --          --         --             --        10,010        10,010
                                ----------  -------  ----------   ---------  -------------  -----------   -----------

BALANCE AT JUNE 30, 2003        20,714,122  $20,714  $8,885,200   $(60,306)  $(15,248,585)  $    10,010   $(6,392,967)
                                ==========  =======  ==========   =========  =============  ===========   ===========
</TABLE>


            See accompanying notes to consolidated financial statements
                                      F-5
<PAGE>

<TABLE>
<CAPTION>

                                GTC TELECOM CORP. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                   Year Ended June 30,
                                                                                 -------------------------
                                                                                    2003           2002
                                                                                 -----------   -----------
<S>                                                                              <C>           <C>
Cash Flows From Operating Activities:
Net loss                                                                         $   (29,106)  $(1,311,667)
Adjustments to reconcile net loss to net cash provided by operating activities:
  Estimated fair market value of vested options granted
    to employees for compensation                                                    113,925       132,300
  Estimated fair market value of options and warrants
    granted to consultants for services rendered                                      26,900        39,000
  Estimated fair market value of stock issued for services                             8,250        33,000
  Estimated fair market value of stock and warrants
    granted in connection with notes payable                                          12,327            --
  Bad debt expense                                                                   112,770       364,225
  Depreciation and amortization                                                      149,248       237,035
  Waiver of payroll tax penalties and interest                                      (332,018)           --
  Minority interest in loss of consolidated subsidiaries                             (20,584)           --
  Allowance for related party note receivable                                             --       100,000
  Loss on sale of equipment                                                            2,419        14,878
  Changes in operating assets and liabilities:
    Accounts receivable and other current assets                                     178,425      (226,857)
    Accounts payable and accrued expenses                                          1,336,958     1,864,951
    Accrued payroll and related taxes                                               (530,208)     (382,533)
    Deferred income                                                                  (44,169)       (3,473)
                                                                                 -----------   -----------

Net cash provided by operating activities                                            985,137       860,859
                                                                                 -----------   -----------

Cash Flows From Investing Activities:
Purchases of property and equipment                                                 (490,413)     (171,771)
Proceeds from sale of equipment                                                       15,138         6,625
                                                                                 -----------   -----------

Net cash used in investing activities                                               (475,275)     (165,146)
                                                                                 -----------   -----------

Cash Flows From Financing Activities:
Principal repayments on notes payable                                             (1,405,571)     (448,630)
Principal borrowings on notes payable                                                575,000            --
Proceeds from issuance of stock of subsidiary, net of
  offering costs of $12,100                                                           92,900            --
Principal repayments under capital lease obligations                                  (8,192)      (92,831)
Proceeds from exercise of stock options                                                  425           100
Payment of registration statement costs                                                   --      (148,164)
                                                                                 -----------   -----------

Net cash used in financing activities                                               (745,438)     (689,525)

Cumulative translation adjustment                                                     10,010            --

Net increase/(decrease) in cash                                                     (225,566)        6,188

Cash at beginning of period                                                          226,066       219,878
                                                                                 -----------   -----------

Cash at end of period                                                            $       500   $   226,066
                                                                                 ===========   ===========
</TABLE>


            See accompanying notes to consolidated financial statements
                                      F-6
<PAGE>


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



Supplemental  disclosure  of  cash  flow  information:

                                                  Year  Ended  June  30,
                                                  ----------------------
                                                    2003          2002
                                                    ----          ----
     Cash  paid  during  the  year  for:
        Interest                                 $ 358,686      $ 439,068
        Income  taxes                            $   2,760      $  16,267

On  May  30,  2003,  the  Company  converted  trade  accounts  payable  totaling
$2,485,551,  into  a  note  payable  (see  Note  5).

During  the  year  ended  June  30,  2003,  the Company financed the purchase of
equipment  totaling  $53,283  (see  Note  5).

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).

See  accompanying  notes  to  consolidated  financial  statements for additional
non-cash  investing  and  financing  activities.















                                      F-7
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

NOTE  1  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

ORGANIZATION  AND OPERATIONS - GTC Telecom Corp. and subsidiaries (the "Company"
or  "GTC") provide various services including, telecommunication services, which
includes  long  distance  telephone  and calling card services, Internet related
services  including  Internet  service  provider  access,  and  business process
outsourcing  ("BPO")  services.  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".

PERFEXA  -  The  Company  provides inbound call center management solutions with
future  plans  for  outbound  call  center  management  solutions,  Information
Technology  ("IT")  management  solutions  and  business  operations  management
solutions  through  its  majority  owned  subsidiary  Perfexa  Solutions,  Inc.
("Perfexa"  or  "Perfexa-US").  On  September 1, 2002, the Board of Directors of
GTC  authorized  the  development  of the Perfexa Solutions business plan.  As a
result,  on  September  13,  2002,  GTC's wholly owned subsidiary, GTC Wireless,
Inc.,  which  was  then inactive, amended its Articles of Incorporation changing
its  name  to  Perfexa  Solutions,  Inc.  On September 3, 2002, a Memorandum and
Articles  of Association was filed pursuant to the Companies Act, 1956 of India,
creating  Perfexa  Solutions Pvt. Ltd ("Perfexa-India").  In April 2003, Perfexa
completed the construction of its first call center and IT development Center in
New  Delhi,  India. This facility consists of a 100-seat call center and 25-seat
information  technology  development  and  administrative  center.

Perfexa  currently provides customer service for the Company's telecommunication
and  Internet  users.  Perfexa's  IT  group  currently develops IT solutions for
GTC's customer care needs and the integration of GTC's customer care system with
those  of  Perfexa's  New Delhi Center.  Perfexa has recently begun offering its
services  to  third  parties and plans to focus on marketing its outsourced call
center services to U.S. based companies.  Perfexa's IT group will work initially
to  ensure the integration of Perfexa's systems with those of Perfexa's clients.
Subsequently,  the IT group will develop customized software solutions for third
parties.

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, 2003, the Company has
negative  working  capital  of  $3,601,382, liabilities from the underpayment of
payroll  taxes  (see  Note  10),  an  accumulated  deficit of $15,248,585, and a
stockholders'  deficit  of  $6,392,967;  in  addition, the Company has 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 subsidiaries which are
CallingPlanet.com,  Inc.,  ecallingcards.com,  Inc.,  U.S. Main Corporation, and
Perfexa  Solutions, Inc.  All significant intercompany balances and transactions
have  been  eliminated  in  consolidation.

MINORITY  INTEREST  -  Minority  interest  represents the minority stockholders'
proportionate  share  of  the equity of Perfexa Solutions, Inc. At June 30, 2003
and 2002, the Company owned approximately 98% and 100%, respectively, of Perfexa
Solutions, Inc.'s common stock. The Company's controlling interest requires that
Perfexa  Solutions,  Inc.'s operations be included in the consolidated financial
statements.  The 2% equity interest of Perfexa Solutions, Inc. that is not owned
by  the  Company is shown as minority interest in consolidated subsidiary in the
fiscal  2003  consolidated  balance  sheet  and  the  fiscal  2003  consolidated
statements  of  operations.


                                      F-8
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

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.  Additionally, the Company's
operations  in India are subject to various political, economic, and other risks
and  uncertainties  inherent  in  such  country.

CONCENTRATION OF CREDIT RISK - The Company currently maintains substantially all
of  its  cash with one major financial institution.  At times, cash balances may
be in excess of the amounts insured by the Federal Deposit Insurance Corporation
("FDIC").  At June 30, 2003, the Company had approximately $310,000 in excess of
the  FDIC  limit  of  $100,000.

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.

ALLOWANCE  FOR  DOUBTFUL  ACCOUNTS  -  The  Company establishes an allowance for
doubtful  accounts  based  on  a  qualitative  and quantitative review of credit
profiles of customers, contractual terms and conditions, current economic trends
and  historical  payments.  The  Company  assesses  the  allowance  for doubtful
accounts  each  period.  If  the  Company  made  different judgments or utilized
different  estimates  for  any  period,  material  differences in the amount and
timing  of  revenue  recognized  could  result.

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.

MAJOR  SUPPLIERS  -  The  Company does not own its own long distance network and
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.  See  Note 10 for details of the
Company's  agreement  with  MCI/WorldCom.

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.  See
Note  10  for  the  details  of  the  Company's  agreement  with its alternative
telecommunications  supplier.

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 may have a material adverse effect on the Company's
results  of  operations  and  financial  condition.


                                      F-9
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

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.  See  Note  10  for details of the
Company's  agreement  with  its  Internet  service  providers.

PROPERTY AND EQUIPMENT - Property and equipment is stated at cost.  Depreciation
is  computed using the straight-line method over the estimated useful lives of 3
to 5 years.  Leasehold improvements are amortized using the straight-line method
over  the  shorter of the lease term or the estimated useful life of the related
asset.  During the year ended June 30, 2003 and 2002, total depreciation expense
was  $149,248  and  $217,299,  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  -  In  July  2001, the Financial Accounting Statements Board
("FASB")  issued  Statement  of  Financial Accounting Standards ("SFAS") No. 144
("SFAS  144"),  "Accounting  for  the  Impairment  of  Long-Lived Assets and for
Long-Lived  Assets  to be Disposed Of."  SFAS 144 addresses financial accounting
and  reporting  for  the  impairment of disposal of long-lived assets.  SFAS 144
requires  that  long-lived  assets be reviewed for impairment whenever events or
changes  in  circumstances  indicate  that  their  carrying  amounts  may not be
recoverable.  If  the  cost  basis  of  a  long-lived  asset is greater than the
projected  future  undiscounted  net  cash  flows  from  such  asset  (excluding
interest),  an  impairment loss is recognized.  Impairment losses are calculated
as  the  difference  between  the  cost basis of an asset and its estimated fair
value.

SFAS  144  also  requires companies to separately report discontinued operations
and  extends  that reporting requirement to a component of an entity that either
has  been  disposed  of (by sale, abandonment or a distribution to owners) or is
classified as held for sale.  Assets to be disposed of are reported at the lower
of  the  carrying  amount  or  the estimated fair value less costs to sell.  The
Company  adopted SFAS 144 on July 1, 2002.  The provisions of this statement for
assets  held  for  sale  or  other disposal generally are required to be applied
prospectively  after the adoption date to newly initiated commitments to plan to
sell  or  dispose of such assets by management.  As a result, the Company cannot
determine  the  potential  effects  that  adoption  of SFAS 144 will have on the
financial  statements  with respect to future disposal decisions, if any.  As of
June  30,  2003,  management  has  determined that no such impairment exists and
therefore,  no  adjustments  have been made to the carrying values of long-lived
assets.  There  can  be  no assurance, however, that market conditions or demand
for  the  Company's  products  or  services  will continue which could result in
impairment  of  long-lived  assets  in  the  future.

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.



                                      F-10
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

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  approximately  $44,000  and  $88,000  for  fiscal  2003  and 2002,
respectively.

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

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.

SFAS  No.  123 ("SFAS 123"), "Accounting for Stock-Based Compensation," 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.

SFAS No. 148 ("SFAS 148"), "Accounting for Stock-Based Compensation - Transition
and  Disclosure, an amendment of FASB Statement No. 123," was issued in December
2002  and is effective for fiscal years ending after December 15, 2002. SFAS 148
provides  alternative  methods  of transition for a voluntary change to the fair
value  method  of accounting for stock-based employee compensation. In addition,
this  Statement  amends  the  disclosure  requirements  of  SFAS  123 to require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method  used  on  reported  results.

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.

At  June  30,  2003, the Company has two stock-based employee compensation plans
(see  Note  6).  For  fixed awards with pro-rata vesting, the Company recognizes
compensation  cost  ratably  over  the  vesting  period.  Stock-based  employee
compensation  cost  totaling  $113,925 and $132,300 is reflected in net loss for
the years ended June 30, 2003 and 2002, respectively, as certain options granted
under  those  plans  had  an  exercise  price  less than the market value of the
underlying  common  stock  on the date of grant. The following table illustrates
the  effect  on net income and earnings per share if the Company had applied the
fair  value  recognition  provisions  of  SFAS  123  to  stock-based  employee
compensation.

                                      F-11
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>


                                                                    Years Ended June 30
                                                                     2003         2002
                                                                  ----------  ------------
<S>                                                               <C>         <C>
Net loss                                                          $ (29,106)  $(1,311,667)
    As reported
    Deduct: total stock-based employee compensation expense
         Determined under fair value based method for all awards   (251,600)     (409,061)
                                                                  ----------  ------------

    Pro-forma                                                     $(280,706)  $(1,720,728)
                                                                  ==========  ============

Basic and diluted net loss per share:
    As reported                                                   $   (0.00)  $     (0.06)
                                                                  ==========  ============
    Pro-forma                                                     $   (0.01)  $     (0.08)
                                                                  ==========  ============
</TABLE>

LOSS  PER  SHARE  -  Under SFAS No. 128 "Earnings Per Share", 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  (using  the  treasury  stock  method,  51,806  and  86,450 shares were
potential  additional common shares as of June 30, 2003 and 2002, 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  11).

FAIR  VALUES  OF  FINANCIAL INSTRUMENTS - The FASB issued 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, accounts receivables,
trade  payables,  accrued  expenses,  and  notes  payables  approximates  their
estimated  fair  values  due  to  the  short-term  maturities of those financial
instruments.  The  fair value of long term debts approximates its carrying value
because  their  rates  of  interest  approximate current market rates.  The fair
value of note receivable officer is not determinable as this transaction is with
a  related  party.

COMPREHENSIVE  INCOME  -  The  Company  has  adopted  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.  Total  comprehensive  loss  represents the net change in
stockholders'  equity  during a period from sources other than transactions with
stockholders and as such, includes net earnings. For the Company, the components
of  other  comprehensive loss are the changes in the cumulative foreign currency
translation adjustments and are recorded as components of stockholders' deficit.

SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION - The Company has adopted SFAS
No.  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  (see  Note  13).



                                      F-12
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

TRANSLATION  OF  FOREIGN  CURRENCIES - GTC uses the U.S. dollar as it functional
currency  while  the  Company's  foreign subsidiary uses the Indian Rupee as its
functional  currency.  Assets  and  liabilities  of  foreign  subsidiary  are
translated  into  U.S.  dollars  at  year-end  exchange  rates, and revenues and
expenses  are  translated  at  average rates prevailing during the year or other
period  presented.  In  accordance  with  SFAS  No.  52,  "Foreign  Currency
Translation",  net  exchange gains or losses resulting from such translation are
excluded  from  net loss, but are included in comprehensive loss and accumulated
in  a  separate  component  of  stockholders'  deficit.  The  Company recorded a
foreign  translation  gain  of  $10,010  for  the year ended June 30, 2003.  The
Company  had  no  foreign  subsidiary's  in  its previous fiscal years.  Foreign
currency  transaction  gains  and  losses were not material for any other period
presented.

STARTUP  ACTIVITIES  -  The  Company has adopted Statement of Position No. 98-5,
("SOP  98-5")  "Reporting  the  Costs of Startup Activities."  SOP 98-5 requires
that  all  non-governmental  entities  expense  the costs of startup activities,
including  organizational  costs  as  these costs are incurred.  During the year
ended June 30, 2003, the Company incurred and expensed start-up costs related to
Perfexa  (see  above)  of  approximately  $950,000.

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

RECENT  ACCOUNTING  PRONOUNCEMENTS

<TABLE>
<CAPTION>
Significant  recent  accounting  pronouncements  include:

<S>                <C>                                                             <C>
                                                                                   Adoption/Effective
Pronouncement      Title                                                                   Date
--------------     -----                                                                   ----
SFAS  No.  141     Business  Combinations                                              July 1, 2002
SFAS  No.  142     Goodwill  and  Other  Intangible  Assets                            July 1, 2002
SFAS  No.  143     Accounting  for Asset Retirement Obligations                        July 1, 2003
SFAS  No.  145     Rescission  of  FASB  Statements  No.  4,  44,  and  64,
                   Amendment  of  FASB Statement No. 13, and Technical Corrections     May 15, 2002
SFAS  No.  146     Accounting  for  Costs  Associated  with  Exit  or  Disposal
                   Activities                                                       January 1, 2003
SFAS  No.  149     Amendment  of  Statement  133  on  Derivative Instruments and
                   Hedging Activities                                                  July 1, 2003
SFAS  No.  150     Accounting  for  Certain  Financial  Instruments  with
                   Characteristics of Both Liabilities and Equity                      June 1, 2003
FIN  45            Guarantor's Accounting and Disclosure Requirements for Guarantees,
                   Including Indirect Guarantees of Indebtedness of others - an
                   Interpretation of FASB Statements No. 5, 57, and 107 and
                   Rescission of FASB Interpretation No. 34                       December 31, 2002
FIN  46            Consolidation of Variable Interest Entities  -
                   An Interpretation of ARB No. 51                                 February 1, 2003

</TABLE>

Other recent accounting pronouncements are discussed elsewhere in these notes to
the  consolidated  financial  statements.  In  the opinion of management, recent
accounting  pronouncements  did  not  or  will not have a material effect on the
consolidated  financial  statements.

NOTE  2  PROPERTY  AND  EQUIPMENT

Property  and  equipment  consist  of  the  following  at  June  30,  2003:

Computer equipment                   $ 480,232
Furniture and office equipment         249,782
Telephone equipment                    532,518
Leasehold Improvements                   4,338
Automobiles                                677
                                    ----------
                                     1,267,547
Less accumulated depreciation        (636,605)
                                    ----------
                                     $ 630,942
                                    ==========



                                      F-13
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

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 October 2005.  The terms of the
capital  lease  obligations  provide  for  monthly  lease  payments ranging from
approximately $200 to $750.  The assets and liabilities 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,
           ------------

              2004                                    $11,000
              2005                                      6,000
              2006                                        259
                                                    ----------

Total  minimum  future  lease  payments                17,259

Less:  Amounts  representing  interest                 (2,060)
                                                    ----------

Present value of net minimum lease payments           $15,199
                                                    ==========

The  following is an analysis of the leased equipment under capital leases as of
June  30,  2003,  which  is  included  in  property  and  equipment  (Note  2).

                                  Computer equipment     $7,098
                                 Telephone equipment     21,000
                                                         ------
                                                         28,098
                      Less: Accumulated depreciation    (17,014)
                                                         ------
                                                        $11,084
                                                         ======


Interest  incurred  pursuant  to  the  capital  lease obligations was $3,039 and
$5,886  for  fiscal  years  2003  and  2002,  respectively.

NOTE  4  RELATED  PARTY  TRANSACTIONS

NOTE  RECEIVABLE  OFFICER

As of June 30, 2003, 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,  2003)  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,  2003.

NOTE  5  NOTES  PAYABLE

In  April  2003,  Perfexa-U.S.  issued  a  short-term  convertible  note  with a
principal  amount  of  $125,000  to an unrelated third party investor.  The note
pays  simple  interest  of  10%  per  annum with principal and interest due upon
maturity  at  July 31, 2003.  Pursuant to the terms of the note, the note may be
converted,  at the election of the noteholder prior to the maturity of the note,
into  shares  of  common  stock  of  Perfexa-U.S. at the rate of $0.50 per share
(estimated to be the fair market value on the date of issuance, based on current
third  party  transactions).  In August 2003, the Company repaid $100,000 of the
principal  balance  and  issued  8,152  shares of Perfexa-U.S. restricted common
stock valued at $4,076 (based on the terms of the note) in lieu of an equivalent
amount  of  interest  due  on  the  note.  Perfexa-U.S.  is  in  the  process of
renegotiating  the  terms  of  the  note.


                                      F-14
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

On  May 2, 2003, the Company borrowed $200,000 for working capital purposes from
an  unrelated third party.  The note, as amended, matured on August 1, 2003.  In
addition,  the  Company issued to the third party 30,000 shares of the Company's
restricted  common stock valued at $5,181 (based on the market price on the date
of  grant and the related pro-rata value of the common stock) (see Note 8).  The
Company  amortized  the  value  of  the  common stock to interest expense in the
accompanying  consolidated  statements of operations for the year ended June 30,
2003.  On  August  4, 2003, the note  plus interest of $16,000, were repaid (see
Note  8).

On  March  31,  2003, the Company financed certain components of a new telephone
system  placed  into  service  by  entering  into  a  term note in the amount of
$34,398.  The  note provides for the Company to make monthly payments of $5,500,
including  interest  at a rate of 29.7%, and matures in October 2003.  The total
outstanding  balance on the note was $15,101 and is included in notes payable in
the accompanying consolidated balance sheet at June 30, 2003.  As of the date of
this  report,  the  Company  has  made  all  payments  as  required in the note.

In February 2003, the Company financed the purchase of computer equipment placed
into service by entering into revolving line of credit in the amount of $18,885.
The  revolving  line of credit provides for the Company to make monthly payments
of  $485, including interest at a rate of 12.99%.  The total outstanding balance
on  the revolving line of credit was $16,710 and is included in notes payable in
the accompanying consolidated balance sheet at June 30, 2003.  As of the date of
this report, the Company has made all payments as required in the revolving line
of  credit.

On  December 5, 2002, the Company borrowed $150,000 for working capital purposes
from an unrelated third party. The principal plus $25,000 of interest was repaid
in  $25,000  weekly  payments beginning January 17, 2003 and ending February 28,
2003.  In  addition,  the Company issued to the third party 10,000 shares of its
restricted  common stock valued at $1,485 (based on the market price on the date
of  grant  and the related pro-rata value of the common stock) (see Note 8). The
Company  amortized  the  value  of the related common stock to interest expense.

On  October  2, 2002, the Company borrowed $100,000 for working capital purposes
from  an  unrelated  third  party.  The  note  is  to be repaid plus interest of
$20,000 as follows: 1) $7,500 on March 31, 2003, 2) $15,000 on June 30, 2003, 3)
$22,500  on  September 30, 2003, 4) $30,000 on December 31, 2003, and 5) $45,000
on  March  31, 2004.  In the event of default, the investor shall be entitled to
receive either 6,250 shares of the Company's common stock for each week that the
default  exists  or  acceleration of repayment.  In addition, the Company issued
25,000  shares  of the Company's restricted common stock valued at $3,066 (based
on  the  market price on the date of grant and the related pro-rata value of the
common stock) (see Note 8) and granted warrants to purchase 25,000 shares of the
Company's restricted common stock at an exercise price of $0.25 per share valued
at  approximately  $2,595  (based  on  the  Black-Scholes  pricing model and the
related  pro-rata  value  of  the  warrants)  (see  Note  7).  The warrants vest
immediately  and  are  exercisable  for  a  period of two years from the date of
issuance.  The  Company  amortized  the  value  of  the related common stock and
warrants  to  interest  expense  in  the accompanying consolidated statements of
operations  as  of  June  30,  2003.

On  September  30, 2002, and amended on May 30, 2003, the Company renegotiated a
previous  note  payable  (the  "Previous  Note") due to WorldCom into a new note
payable  (the  "New  Note").  The  Previous  Note  had an outstanding balance of
$4,195,706 on the date of renegotiation.  In addition, the Company negotiated to
convert  $2,485,551  of  accounts  payable to WorldCom to the New Note.  The New
Note  bears  interest  at  6%,  unless the Company is unable to make the monthly
payments  required,  at  which  time  the interest rate increases to 18% and the
entire  unpaid  principal  balance  plus accrued interest is immediately due and
payable.  The  New Note, as amended, requires principal and interest payments of
$125,000  per  month  through  September 15, 2003, $250,000 per month thereafter
through  October  15,  2004, $250,672 per month thereafter through May 15, 2005,
$300,000  per  month  thereafter  through  July 15, 2005, and a final payment of
$176,335  on  August  15,  2005.



                                      F-15
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

Future minimum principal payments on notes payable approximate the following for
the  years  ending  June  30:

                   2004   $ 2,772,000
                   2005     2,947,000
                   2006       473,000
                           ----------
                          $ 6,192,000
                           ==========

NOTE  6  STOCK  OPTIONS

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

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.

During  the  year  ending  June  30, 2003, the Company issued options to certain
employees  to  purchase  an  aggregate  of  420,000  shares of common stock at a
weighted  average  exercise  price  of $0.18 per share pursuant to the Company's
2001  Stock  Incentive  Plan  (each issuance priced at the estimated fair market
value  of  the  Company's  common stock on the date of grant).  The options vest
over  five  years from the date of grant and are exercisable through March 2013.

During the year ending June 30, 2003, the Company issued options pursuant to the
Company's  2001  Stock  Incentive  Plan  to  certain  board  of directors and an
employee  to  purchase  an  aggregate  of  55,000  shares  of common stock, at a
weighted  average exercise price of $0.20 per share (each issuance priced at the
estimated 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 April 2006.

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.  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.


                                      F-16
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

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.

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.

The  Company  recorded compensation expense for the vesting of previously issued
options to employees of $113,925 and $132,300 in the fiscal years ended June 30,
2003  and  2002,  respectively.

A  following  is  a status of the stock options outstanding at June 30, 2003 and
2002  and  the  changes  during  the  years  then  ended:

                                                 2003              2002
                                                 ----              ----
                                                    Weighted           Weighted
                                                     Average            Average
                                                    Exercise           Exercise
                                           Options     Price   Options    Price
                                         ------------  -----  ----------  -----
Outstanding, beginning of year            4,592,600   $0.75  2,692,000   $1.27
       Granted                              475,000    0.18  2,154,000    0.21
       Exercised (see Note 8)               (42,500)   0.01    (10,000)   0.01
       Expired/Forfeited                 (1,168,200)   0.86   (243,400)   1.71
                                        ------------  -----  ----------  -----
Outstanding, end of year                  3,356,900   $0.62  4,592,600   $0.75
                                        ============  =====  ==========  =====
Exercisable at end of year                1,819,580   $0.80  2,423,710   $0.99
                                        ============  =====  ==========  =====
Wtd avg fair value of options granted                 $0.17              $0.19
                                                      -----              -----


The  following table summarizes information concerning currently outstanding and
exercisable  options:

                          WEIGHTED          WEIGHTED                   WEIGHTED
              NUMBER OF   AVERAGE           AVERAGE      NUMBER OF     AVERAGE
EXERCISE      OPTIONS     REMAINING         EXERCISE     OPTIONS       EXERCISE
PRICE RANGE   OUTSTANDING CONTRACTUAL LIFE  PRICE        EXERCISABLE   PRICE
------------- ----------- ----------------- ----------   ------------  ---------

0.01 - $1.00    2,499,100         6.45 years  $     0.32     1,174,740  $   0.37
1.01 - $2.00      749,300         4.91 years  $     1.16       545,340  $   1.15
2.94 - $5.00      108,500         2.44 years  $     3.80        99,500  $   3.88
              -----------                                -------------
                3,356,900         5.98 years  $     0.62     1,819,580  $   0.80
              ===========                                =============

Other  Information:
------------------

The fair market value of each option granted in 2003 and 2002 is estimated using
the  Black-Scholes  option  pricing  method  per  SFAS  123.  The  Black-Scholes
option-pricing  model  used  the  following weighted average assumptions for the
years ended June 30, 2003 and 2002, respectively: (i) no dividend yield for each
year,  (ii)  volatility  of  173  percent  and  222 percent, respectively, (iii)
risk-free interest rate of 3.13 percent and 3.65 percent, respectively, and (iv)
expected  life  of  4.8  years  and  4.9  years,  respectively.

NOTE  7  WARRANTS

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

In  March 2003, pursuant to an agreement with an outside consultant for investor
services,  the  Company  issued  warrants to purchase up to 40,000 shares of the
Company's restricted common stock at an exercise price of $0.25 per share valued
at  approximately  $6,400  (based  on  the  Black-Scholes  pricing  model).  The
warrants vested in April 2003 and are exercisable for a period of two years from
the  date  of  issuance.

In October 2002, pursuant to a note with a third party (see Note 5), the Company
granted  warrants  to  purchase 25,000 shares of the Company's restricted common
stock  at  an  exercise  price of $0.25 per share valued at approximately $2,595
(based  on the Black-Scholes pricing model and the related pro-rata value of the
warrants).  The  warrants  vest  immediately and are exercisable for a period of
two  years  from  the  date  of  issuance.  The amount was amortized to interest
expense in the accompanying consolidated statements of operations for the fiscal
year  ended  June  30,  2003.

In  September  2002,  pursuant  to  an  agreement with an outside consultant for
investor  and public relations services, the Company issued warrants to purchase
up  to  25,000  shares  of  the Company's restricted common stock at an exercise
price  of  $0.20  per  share  valued  at  approximately  $4,500  (based  on  the
Black-Scholes  pricing  model),  which was recorded to consulting expense in the
accompanying consolidated statement of operations for the fiscal year ended June
30,  2003.  The  warrants  vest  immediately and are exercisable for a period of
three years from the date of issuance and contain piggyback registration rights.

In August 2002, pursuant to an agreement with an outside consultant for investor
and  public  relations  services,  the Company issued warrants to purchase up to
100,000  shares of the Company's restricted common stock at an exercise price of
$0.17  per  share  valued  at  approximately $16,000 (based on the Black-Scholes
pricing  model).  The  warrants  vest 25,000 upon execution of the agreement and
25,000 every three months thereafter, so long as the Company retains the outside
consultant.  The  warrants  are exercisable for a period of three years from the
date of issuance and contain piggyback registration rights.  During fiscal 2003,
all  100,000 warrants vested, in which the Company recorded the related value of
$16,000  as investor relations expense under selling, general and administrative
expenses  in  the  accompanying  consolidated  statements  of  operations.

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:


                                      F-17
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------


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.

In  September  2001,  pursuant to a common stock purchase agreement, the Company
granted  warrants  to purchase 150,000 shares of the Company's restricted 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  (see  Note  8).

The  following represents a summary of the warrants outstanding at June 30, 2003
and  2002  and  changes  during  the  years  then  ended:

                                          2003               2002
                                          ----               ----

                                             Weighted            Weighted
                                             Averaged            Average
                                             Exercise            Exercise
                                    Warrants    Price  Warrants  Price
                                    ---------  ------  --------  -----
Outstanding, beginning of year       490,000   $ 0.51   190,000  $0.71
       Granted                       190,000     0.20   300,000   0.38
       Exercised                          --       --        --     --
       Expired/Forfeited             (40,000)    0.50        --     --
                                    ---------  ------  --------  -----
Outstanding, end of year             640,000   $ 0.45   490,000  $0.51
                                    =========  ======  ========  =====
Exercisable at the end of the year   640,000   $ 0.45   490,000  $0.51
                                    =========  ======  ========  =====

The outstanding and exercisable warrants above have prices ranging between $0.17
and  $1.516,  with  a  weighted average remaining contractual life of 1.9 years.

The  fair  value of each warrant granted during 2003 and 2002 is estimated using
the  Black-Scholes  option-pricing model on the date of grant. The Black-Scholes
option-pricing  model  used  the  following weighted average assumptions for the
years ended June 30, 2003 and 2002, respectively: (i) no dividend yield for each
year,  (ii)  volatility  of  212  percent  and  213 percent, respectively, (iii)
risk-free interest rate of 3.02 percent and 3.98 percent, respectively, and (iv)
expected  life  of  2.8  years  and  3.3  years,  respectively.

                                      F-18
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------


NOTE  8  COMMON  STOCK  ISSUANCES

During  the fourth quarter of the fiscal year ended June 30, 2003, in connection
with  a  note  payable  (see  Note  5),  the Company issued 30,000 shares of the
Company's  restricted  common stock valued at approximately $5,181 (based on the
market  price  on  the  dates  of  issuance).

In  May  2003, the Company's Chief Executive Officer and the Company's President
exercised  options  (previously  granted pursuant to their director compensation
agreement) to purchase a total of 17,500 and 25,000 shares, respectively, of the
Company's  common  stock  for  $175  and  $250,  respectively.

In  December  2002,  pursuant  to  a  note  with a third party (see Note 5), the
Company  issued 10,000 shares of the Company's restricted common stock valued at
$1,485  (based on the market price on the date of grant and the related pro-rata
value  of  the  common  stock).

In October 2002, pursuant to a note with a third party (see Note 5), the Company
issued  25,000  shares of the Company's restricted common stock valued at $3,066
(based  on  the market price on the date of grant and the related pro-rata value
of  the  common  stock).

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).  During  fiscal  2003, the Company issued an additional 50,000 shares
of  the Company's restricted common stock, valued at $8,250 (based on the market
price  on  the  date  of issuance) pursuant to the investment banking agreement.

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.

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  for  the  period  fiscal  year  ended  June 30, 2002.

In  September  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.
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.  As of the date
of  this filing, the Company has not drawn down any shares under this 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  (see  Note  7  and  10).


                                      F-19
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

NOTE  9  INCOME  TAXES

The tax effects of temporary differences that give rise to deferred taxes are as
of  June  30,  2003:

Deferred  tax  asset:
      Net  operating  loss  carryforward     $ 9,037,000
      Allowance  for  doubtful  accounts          60,000
                                               ---------

      Total  gross  deferred  tax  asset       9,097,000

      Less  valuation  allowance              (9,097,000)
                                               ---------

      Net  deferred  tax  asset              $        --
                                               =========

The  valuation  allowance  increased  by  $27,000 during the year ended June 30,
2003.  No current provision for income taxes for the periods ended June 30, 2003
and 2002 is required, except for minimum state taxes, since the Company incurred
taxable  losses  during  such  years.

The  provision  for  income  taxes for fiscal 2003 and 2002 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,
                                                           2003          2002
                                                        ---------     ---------

Computed  tax  benefit  at  federal statutory rate     $  (23,000)   $ (444,000)
 State  income  tax benefit, net of federal effect         (4,000)      (86,000)
 Increase  in  valuation  allowance                        27,000       530,000
 Other                                                      2,760        16,267
                                                        ---------     ---------
                                                       $    2,760     $  16,267
                                                        =========     =========

As  of  June  30,  2003,  the  Company  had  net operating loss carryforwards of
approximately  $22,500,000  and  $11,000,000  for  federal  and state income tax
reporting  purposes,  which  begin  expiring  in  2014  and  2005, 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.



                                      F-20
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------

NOTE  10  COMMITMENTS  AND  CONTINGENCIES

PAYROLL  TAXES  -The  Company has an accrual for past due penalties and interest
related  to  prior  past  due  payroll taxes as of June 30, 2003 due to the late
payment  of  the  Company's  payroll  tax  liabilities.  In  accordance with the
repayment  schedule  negotiated with the Internal Revenue Service ("IRS"), as of
December  31,  2002, the Company has repaid all principal amounts that were past
due.  In  addition, as of June 30, 2003, the Company has successfully negotiated
the  waiver  of $332,018 of previously accrued penalties and interest, resulting
in  a  corresponding  one-time  credit  recorded  in Other Income/Expense in the
accompanying  consolidated  statements  of  operations.  At  June  30, 2003, the
Company  has accrued approximately $175,000 related to penalties and interest in
connection  with  past  due  payroll  taxes  of  prior  periods.  The Company is
continuing  its  discussions  with the IRS with respect to this remaining amount
and  expects  this matter to be settled and the related accrual paid by December
2003.


STOCK  PURCHASE  AGREEMENT  -  Pursuant  to  a  common  stock purchase agreement
("Agreement")  with Bluefire Capital, Inc. ("Bluefire"), the Company is entitled
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.  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  (see  Notes 7 and 8).

OPERATING LEASES - Effective July 24, 2001, the Company leases a total of 10,624
square  feet  (including  5,685 square feet on a month to month lease) of office
space  for  its  headquarters  and  customer  service  operations in Costa Mesa,
California  at  a monthly rental rate of $9,413 (excluding month to month lease)
through  July  31,  2004, unless terminated by either party with 75 days written
notice.

Effective  October  1, 2002, Perfexa-U.S.'s Indian subsidiary, Perfexa Solutions
Pvt.  Ltd.  ("Perfexa-India"), began leasing approximately 15,422 square feet of
office  space in Gurgaon, India, a suburb of New Delhi, at a monthly rate of Rs.
524,348  (approximately  $11,300)  per  month.  This  facility  serves  as
Perfexa-India's  call center, IT development center, and administrative offices.
The lease is for a term of three years with an option to renew for an additional
three  year  term with an increase in the rental rate of 20%.  Effective October
1,  2002,  Perfexa-India  also  entered into a maintenance agreement for its New
Delhi  facility.  Pursuant  to  the  terms  of  the  agreement, Perfexa-India is
obligated to pay a monthly maintenance fee of Rs. 138,798 (approximately $3,000)
per  month  for  the  first  twelve months.  Thereafter, the monthly fee will be
calculated  based  on the actual costs of maintenance (including electricity and
water)  plus  a  20%  mark-up.

Future  minimum  annual  commitments under long-term facility lease and supplier
arrangements  (see  below)  approximate  the  following:


                    Facility Leases
      Years Ending    and Other     Internet     Telecom
      June 30,      Commitments     Supplier     Supplier          Total
      --------      -----------     --------     --------     ----------
       2004           $ 300,000    $ 567,000     $300,000     $1,167,000
       2005             181,000           --       50,000        231,000
       2006              43,000           --           --         43,000
      --------      -----------     --------     --------     ----------
                     $  524,000     $567,000     $350,000     $1,441,000
                    ===========     ========     ========     ==========

Rent  expense for the fiscal years ended June 30, 2003 and 2002 was $408,065 and
$315,135,  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 $51,500.  The initial term of this
agreement  is  two  (2) years with automatic renewals for additional, successive
one  (1)  year


                                      F-21
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------


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 $424,875 as of June 30, 2003.  The other
agreements  have  no  monthly minimum commitments.  For the years ended June 30,
2003 and 2002, the Company paid $487,672 and $369,171, respectively, pursuant to
these  agreements.

The  Company  does  not  own its own long distance network and 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.  Pursuant  to  the terms of the agreement, the
Company  was  obligated  to  meet a total purchase requirement of $18,000,000 by
August  2003.  The Company met this requirement in October 2002 and therefore is
no longer subject to any monthly minimums.  The current contract term expired on
August  31,  2003, reverting to a month-to-month agreement allowing either party
to  terminate  the agreement upon thirty (30) day's written notice.  The Company
is  currently in negotiations with MCI/WorldCom for new contract terms.  For the
years  ended June 30, 2003 and 2002, the Company paid $7,324,597 and $7,284,922,
respectively,  pursuant  to  this  agreement.  Currently,  the  Company  owes
$6,275,176  to  WorldCom  of  which $536,629 is included in accounts payable and
accrued  expenses  and  the  remaining amount of $5,738,547 is included in Notes
Payable  (see Note 5) in the accompanying consolidated balance sheet at June 30,
2003.

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.

Under  the  terms  of  the  Company's  contract  with  its  alternative
telecommunications  supplier (see Note 1), the Company is obligated to a minimum
monthly commitment of $25,000.  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 which is $175,000 at June 30, 2003.  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.

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,  2003  and  2002,  the Company paid $43,900 and $46,204,
respectively,  pursuant  to  this  agreement.

NOTE  11  LOSS  PER  SHARE

The  following  is  a  reconciliation  of  the  number  of  shares  used  in the
calculation  of  basic earnings per share and diluted earnings per share for the
years  ended  June  30,  2003  and  2002:

                                                             2003       2002
                                                      -----------   -----------
Net loss                                              $   (29,106)  $(1,311,667)
                                                      ===========   ===========

Weighted average number of common shares outstanding   20,634,314    20,412,375
Incremental shares from the assumed
 exercise of dilutive stock options and warrants               --            --
                                                      -----------   -----------
Dilutive potential common shares                       20,634,314    20,412,375
                                                      ===========   ===========

Net earnings per share:
Basic                                                 $      0.00   $     (0.06)
                                                      ===========   ===========
Diluted                                               $      0.00   $     (0.06)
                                                      ===========   ===========


For  the  years  ended  June 30, 2003 and 2002, potentially dilutive incremental
shares  totaling 51,806 and 86,450, respectively, (based on the assumed exercise
of  dilutive  stock  options  and warrants to acquire 277,500 and 91,000 shares,
respectively,  of  the  Company's  common  stock)  were  not  included  in  the
computation  of diluted net income per share because the Company had a net loss,
which would make their inclusion antidilutive.  Options and warrants to purchase
3,719,400  and  4,991,600  shares  of  the  Company's  common  stock  that  were
outstanding  at  June  30,  2003  and  2002,  respectively,  were not considered
potentially  dilutive because the exercise price of the options and warrants was
greater  than  the average market price of the common shares and, therefore, the
effect  of  their  inclusion  would  be  antidilutive.

NOTE  12  -  PERFEXA  SOLUTIONS  SUBSIDIARY:

On  June  3,  2003,  Perfexa-U.S.  initiated  a  private  placement  offering of
2,000,000  shares  of its restricted common stock at a price of $1.00 per share.
Subsequent  to  June  30,  2003,  Perfexa  sold  60,000  shares pursuant to this
offering,  resulting  net  proceeds  of $54,000 which were transferred to GTC as
partial  repayment  of  accrued  advances.

During  fiscal  year 2003, Perfexa-U.S. issued an aggregate of 210,000 shares of
its  restricted  common  stock  to third party investors at a price of $0.50 per
share,  resulting  in  cash  of  $92,900,  net  of  offering  costs  of $12,100.


                                      F-22
<PAGE>

                       GTC TELECOM CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE YEAR ENDED JUNE 30, 2003
-------------------------------------------------------------------------------


NOTE  13  BUSINESS  SEGMENT  INFORMATION

Segment and geographical information is assigned by region based upon management
responsibility  for  such items.  The following table presents information about
the  Company's operations by geographical area for the year ended June 30, 2003.
The  Company  had  no  segments  in  prior  years.

Revenues                            Total
--------                            -----------
    Telecommunications              $15,147,658
    BPO
       Perfexa-U.S.                          --
       Perfexa-India                         --
                                    ------------
         Total                      $15,147,658
                                    ============

Cost of Sales
-------------
    Telecommunications              $ 7,410,590
    BPO
       Perfexa-U.S.                          --
       Perfexa-India                         --
                                    ------------
         Total                      $ 7,410,590
                                    ============

Operating Loss
--------------
    Telecommunications              $ 1,813,280
    BPO
       Perfexa-U.S.                  (1,341,974)
       Perfexa-India                   (476,904)
                                    ------------
         Total                      $    (5,598)
                                    ============

Assets
------
    Telecommunications              $ 1,222,734
    BPO
       Perfexa-U.S.                      26,130
       Perfexa-India                    569,862
                                    ------------
         Total                      $ 1,818,726
                                    ============

Capital Expenditures
--------------------
    Telecommunications              $    18,090
    BPO
       Perfexa-U.S.                      28,609
       Perfexa-India                    496,997
                                    ------------
         Total                      $   543,696
                                    ============

NOTE  14  SUBSEQUENT  EVENTS  (UNAUDITED)

On June 3, 2003, Perfexa-U.S. issued a confidential private placement memorandum
of  2,000,000  shares  of  Perfexa's restricted common stock at $1.00 per share.
Subsequent  to  June  30,  2003, Perfexa had sold 60,000 shares pursuant to this
offering,  resulting  in  cash  of  $54,000,  net  of  offering costs of $6,000.

In  August 2003, the Company financed certain component upgrades to its existing
telephone  system  by  entering  into  term  obligations  totaling $78,282.  One
obligation, totaling $42,066, is a note that provides for the Company to make 12
payments of approximately $3,505 per month, with no interest charged, commencing
September  2003.  The other obligation, totaling $36,216 is a capital lease that
provides  for  the  Company to make 60 payments of approximately $822 per month,
including  interest  at  a  rate  of  12.9%,  and  matures  August  2008.

In  September  2003,  the  Company borrowed $25,000 for working capital purposes
from  a third party.  The note provides for simple interest of 8% per annum with
principal  and  interest due upon maturity at December 3, 2003.  In the event of
default, the investor shall be entitled to accelerate the repayment of the note.
In  addition,  the  Company  issued  to  the  third  party  25,000 shares of the
Company's restricted common stock valued at $3,070 (based on the market price on
the  date  of  grant  and  the related pro-rata value of the common stock).  The
Company  will  record  the  value  of  the  common  stock to interest expense in
September  2003.

                                      F-23
<PAGE>