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, 2001

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

     For the transition period from _________ to _________

     Commission File No. 0-25703

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

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

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

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

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

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

Yes  __X__     No  _____

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

     State  issuer's  revenues  for  its most recent fiscal year.    $13,964,544

     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.)  $3,828,010

     State  the  number of shares outstanding of each of the issuer's classes of
common  equity,  as  of  the  latest  practicable  date.  20,371,622

                       DOCUMENTS INCORPORATED BY REFERENCE

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

None.

     Transitional  Small  Business  Disclosure  Format  (check  one):

Yes  ______  No___X___

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<PAGE>
                                TABLE OF CONTENTS


                                     PART I

Item 1          Description of Business.

Item 2          Description of Property.

Item 3          Legal Proceedings.

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

                                     PART II

Item 5          Market for Common Equity and Related Stockholder Matters.

Item 6          Management's Discussion and Analysis.

Item 7          Financial Statements.

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

                                    PART III

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

Item 10         Executive Compensation.

Item 11         Security Ownership of Certain Beneficial Owners and Management.

Item 12         Certain Relationships and Related Transactions.

Item 13         Exhibits and Reports on Form 8-K.


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                                INTRODUCTORY NOTE

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

                                     PART I

ITEM  1  -  DESCRIPTION  OF  BUSINESS

GTC  Telecom  Corp.  (the  "Company"  or  "GTC")  is  a  provider  of  various
Telecommunication  services, including long distance telephone, and calling card
services as well as various Internet related services including Internet Service
Provider  access  and  Web  Page  Hosting.  GTC Telecom Corp. was organized as a
Nevada  Corporation  on  May  17,  1994  and  is  currently based in Costa Mesa,
California.  The  Company's  common  stock  currently  trades  on  the  NASD OTC
Bulletin  Board  under  the  symbol  "GTCC."

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

TELECOMMUNICATIONS  RELATED  SERVICES

GTC  is  currently  licensed  in every state (except Alaska) and the District of
Columbia  to  provide  long  distance  telecommunications  services. The Company
primarily  services  small and medium sized businesses and residential customers
throughout the United States and has positioned itself to be a low-cost provider
in  the marketplace. By offering low rates, the Company expects to add customers
at  an  accelerated  pace. To date, the Company has operated as a switchless(1),
nonfacilities-based  reseller  of  long  distance  services.  By  committing  to
purchase  large  usage volumes from carriers such as MCI/WorldCom, Inc. pursuant
to  contract  tariffs(2),  the  Company  has  been  able  to procure substantial
discounts  and  offer  low-cost,  high-quality  long  distance  services  to its
customers  at  rates  below  the  current  standard  industry  levels.

The  Company  provides long distance telephone service under a variety of plans.
These  include  outbound  service,

-------------------------------------
(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>

inbound  toll-free  800  service and dedicated private line service(3) for data.
The  Company  does  not currently provide local telephone service. The Company's
long  distance  services  are  billed  on a monthly basis either directly by the
Company  or  by  the  Local  Exchange Carrier(4) ("LEC") through the services of
Billing  Concepts, Inc., dba U.S. Billing ("USBI"). If these services are billed
directly  by  the Company, the customer has a choice of paying by credit card or
sending payment to the Company. If these services are billed by the LEC, the LEC
is  responsible  for  collecting the amount billed and remitting the proceeds to
the  Company.  In  addition,  the  Company has recently obtained licenses in the
states  of  California, Florida, New York, New Jersey, and Texas to operate as a
Competitive  Local  Exchange  Carrier ("CLEC"). As a result, the Company is also
exploring  the  possibility  of  providing  local telephone service. Whether the
Company  will  be  able  to provide local telephone services is dependent on its
ability  to  negotiate  contracts  with third-party providers of local telephone
service  on favorable terms. The Company has initiated negotiations with certain
local  telephone  providers but has not reached any agreements. Therefore, there
can  be  no  assurances  that  the Company will be able to offer local telephone
service.

INTERNET  RELATED  SERVICES

The  Company  provides  international  PC-to-phone  telecommunication  services
through  its  wholly  owned  subsidiary  CallingPlanet.com,  Inc.,  as well as 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; Internet Services Provider access through dial-up(5), and
Internet  Web  Page  development and hosting services(6). 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.

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

TELECOMMUNICATIONS  INDUSTRY  BACKGROUND
The $98.2 billion U.S. long distance industry is dominated by the nation's three
largest  long  distance providers, AT&T, MCI/WorldCom and Sprint, which together
generated approximately 74.7% of the aggregate revenue of all U.S. long distance
interexchange  carriers  in  1999.  Other  long  distance  companies,  some with
national  capabilities,  accounted  for  the  remainder  of  the  market.

Based  on published FCC estimates(7) toll service revenues of U.S. long distance
interexchange carriers have grown from $38.8 billion in 1984 to $98.2 billion in
1999.  While  industry  revenues  have grown at a compounded annual rate of 6.4%
since  1984,  the  revenues of carriers other than AT&T, MCI/WorldCom and Sprint
have  grown  at  a compounded rate of 31.4% 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 25.3% in 1999. During the
same  period,  the  market  share  of  AT&T  declined  from  90.1%  to  40.9%.

Prior  to the Telecommunications Act, signed by President Clinton on February 8,
1996,  the long distance telecommunications industry had been principally shaped
by  a  court  decree  between  AT&T and the United States Department of Justice,
known  as the Modification of Final Judgment (the "Consent Decree") that in 1984
required

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

(3)  Private line uses circuits dedicated to a specific customer to connect that
Customer's  equipment  to  both  ends  of  the  line.
(4)  a  company  providing  local  telephone  service.
(5)  Modem  access  via  traditional  telephone  lines.
(6)  Web  page  hosting  services  permits customers to market themselves on the
Internet without having to invest significantly in technology infrastructure and
Operations  staff.
(7)  As published on the FCC's Website located at
www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/SOCC/99socc.pdf.

                                        4
<PAGE>

the  divestiture  by  AT&T  of  its  22 Bell operating companies and divided the
country  into  some  200  Local  Access and Transport Areas, or "LATAs".  The 22
operating  companies,  which  were  combined  into seven Regional Bell Operating
Companies,  or "RBOCs", were given the right to provide local telephone service,
local  access  service  to  long  distance  carriers  and intraLATA toll service
(service  within  LATAs),  but  were prohibited from providing interLATA service
(service  between LATAs).  The right to provide interLATA service was maintained
by  AT&T  and  the  other  carriers.

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

The  Telecommunications  Act  of  1996 (the "Act") is intended to introduce more
competition  to  U.S.  telecommunications  markets. In addition to codifying the
provisions  of  the  Consent Decree, the Act codifies the LEC's equal access and
nondiscrimination  obligations  with  respect  to  the  local services market by
requiring  LECs  to permit interconnection(8) to their networks and establishing
among  other  things,  LEC  obligations  with  respect to access, resale, number
portability(9),  dialing  parity(10),  access  to  rights-of-way(11), and mutual
compensation.  In  essence,  the  Act  codifies  the  LEC's  duty  to provide to
independent  service providers (such as the Company) access to the LEC's network
under  the  same  terms  and  restrictions  which the LEC is subject to. The Act
allows  the  Company  to  compete  with previously established long distance and
local telephone providers under the same terms and conditions as those providers
are  subject  to.

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

DEVELOPMENT  AND  STRATEGY  OF  THE  COMPANY
The  Company's  telecommunication services are currently licensed in every state
(except  Alaska)  and  the  District  of  Columbia.

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

Independent  Affiliates

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

Internet  Use

The  second method of marketing the Company's products and services utilizes the
Internet.  The  Company currently markets and distributes its telecommunications
and  Internet  related  services  through  the  Internet  utilizing  its
www.gtctelecom.com  and  its  wholly-owned  subsidiary  www.ecallingcards.com
websites.  It  also markets international calling plans through its wholly-owned
subsidiary  www.CallingPlanet.com,  as  well  as  co-brand  calling  cards  and
advertise  domestic  long  distance  rates on the Internet.  Co-branding is done
through  joint  agreements  such  as

------------------------------------------
(8) Customer  equipment  (i.e.  customer
(9)  Number  portability  is  the  capability  of  individuals,  businesses, and
organizations  to  retain  their  existing  telephone  number(s)
(10)  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.
(11)  The duty to afford access to the poles, ducts, conduits, and rights-of-way
of a LEC to competing providers of telecommunications services on same rates and
terms  afforded  to  the  LEC.

                                        5
<PAGE>

Community  Connect  Inc.'s  online  community  for  Asian  Americans,
www.AsianAvenue.com.

Regarding  CallingPlanet.com,  GTC  currently focuses on marketing through local
partners  and  vendors in each country. CallingPlanet.com also targets customers
who  do  not have PC's or Internet connections by encouraging the local partners
to open Kiosks equipped with PC's and Internet hook-up.  Through these marketing
partners,  CallingPlanet.com's  goal  is to be a household name worldwide in the
planet  calling  area.

Company  Sales  Force

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

Many  of these professionals have come from competitors of the Company where the
average  calling  rate  is 10-12 cents per minute. The Company Vice President of
Sales  comes  from  WorldCom with an extensive sales and marketing background in
the  telecommunications  industry.

Advertising

GTC  plans  to  employ an aggressive concentrated media campaign that utilizes a
professional  advertising  agency as its fourth method of marketing. The Company
launched  its  first  media  campaign on March 1, 1999, utilizing television and
radio  advertisement  and  print media targeting Southern California, as well as
nationwide  audiences,  using  cable  television  advertisements.  The  Company
intends  to  continue  to utilize both broadcasting and print media campaigns in
the  future  given  sufficient  funds.

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

Direct  Marketing

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

National  Recognition

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

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

COMPETITION

Telecommunication  Services

The long distance telecommunications industry is highly competitive and affected
by  the  introduction  of  new  services by, and the market activities of, major
industry  participants,  including AT&T Corp., MCI/WorldCom, Sprint Corporation,
local  exchange  carriers such as Bell Atlantic, 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.


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                                        8

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.


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

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

Internet  Related  Services

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

                                        8
<PAGE>

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

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.


                                        9
<PAGE>
DEPENDENCE  ON  KEY  CUSTOMERS
The Company is not dependent on any single customer for a significant portion of
its  annual sales.  The Company's customer base changes on a continuous basis as
new  customers  are  added  or  old  customers  removed.

MAJOR  SUPPLIERS
The  Company  does  not  own  its own long distance network, and pursuant to the
Company's  contract  with  MCI/WorldCom, the Company currently depends primarily
upon  MCI/WorldCom  to  provide  for  the  transmission  of  phone  calls by its
customers  and  to  provide the call detail records upon which the Company bases
its  customers  billings.  Under  the  terms  of  the contract entered into with
MCI/WorldCom  on  August  10, 1998 the Company is obligated to a minimum monthly
commitment  of  $10,000  commencing  March  1999.

In  August  1999,  the Company entered into negotiations with MCI/WorldCom in an
effort  to  lower  its  network  transmission  costs.  As  a  result  of  these
negotiations,  MCI/WorldCom  agreed  to  amend the existing contract between the
Company  and  MCI/WorldCom  whereby  MCI/WorldCom agreed to reduce the Company's
network  transmission costs by approximately 40%.  Additionally, under the terms
of  the  amendment,  the  minimum  monthly purchase requirement was increased to
$12,000  per  month  and  the  total  minimum  purchase requirement increased to
$288,000.  In  an  effort  to  continue  to  reduce  its  long  distance network
transmission  costs, the Company successfully negotiated an additional amendment
to  its  contract  with  MCI/WorldCom  in September 2000.  The amendment further
reduces  the  Company's  network  transmission  costs  by approximately 30%.  In
addition,  under  the terms of the amendment, the contract is extended to August
31,  2003 and the minimum monthly purchase requirement increased to $400,000 per
month  for the months August 2000 to January 2001 and then increases to $520,000
per  month  from  February  2001  to the end of the contract.  The total minimum
purchase  requirement  of  the contract increased to $18,000,000.  All remaining
material  terms  of  the  contract  remain  the  same.

Pursuant  to  the  terms of the contract with MCI/WorldCom, the Company must pay
liquidated  damages  in  an  amount  equal  to  the  aggregate  minimum  revenue
requirement for the remaining term of the contract if the Company terminates the
contract  prior  to the expiration date.  Although the Company believes that its
relationship  with  MCI/WorldCom  is  strong and should remain so with continued
contract  compliance,  the  termination  of  the  Company's  contract  with
MCI/WorldCom,  the loss of telecommunications services provided by MCI/WorldCom,
or  a reduction in the quality of service the Company receives from MCI/WorldCom
could have a material adverse effect on the Company's results of operations.  In
addition,  the  accurate  and  prompt  billing  of  the  Company's  customers is
dependent  upon  the  timeliness and accuracy of call detail records provided to
the  Company  by  MCI/WorldCom.  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.

                                       10
<PAGE>


In  the  event that MCI/WorldCom were to discontinue its service to the Company,
the Company believes, based upon discussions that the Company has had with other
long distance providers and based on such providers' published contract tariffs,
that  it could negotiate and obtain contracts with other long distance providers
to  resell  long distance services at rates at its current contract tariffs with
MCI/WorldCom.  If  the  Company  were  to  enter  into  contracts  with  another
provider,  however, the Company believes it would take approximately thirty (30)
days  to  switch end users to that provider.  Although the Company has the right
to  switch  its  current  customers  to  an  alternate  underlying  carrier, the
Company's customers have the right to discontinue their service with the Company
at  any  time.  Accordingly,  the  termination  or  non-renewal of the Company's
contract  tariffs  with  MCI/WorldCom or the loss of telecommunications services
from  MCI/WorldCom  would likely have a material adverse effect on the Company's
results  of  operations  and  financial  condition.

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.  Pursuant to these Agreements, the Company is
subject  to  monthly  minimum  commitments  of  $1,500  through  December  2001.
Subsequently,  the  monthly  minimum commitment is $500 per month.  Although the
Company believes that its relationship with these companies is strong and should
remain  so  with continued contract compliance, the termination of the Company's
contracts  with these companies, the loss of Internet services provided by these
companies,  or  a  reduction in the quality of service the Company receives from
these companies could have a material adverse effect on the Company's results of
operations.  In the event that these companies were to discontinue their service
to  the  Company,  the Company believes, based upon discussions that the Company
has  had  with  other  Internet  service  providers, that it could negotiate and
obtain  contracts  with  Internet  service  providers  at  comparable  rates.

REGULATION

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

Federal

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

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

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

                                       11
<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.
Additionally,  the  Company  is  not aware of any pending legislation that would
have  a  material  adverse  effect  on  the  Company's  operations.

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

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

NUMBER  OF  EMPLOYEES

As of July 31, 2001, the Company employed approximately 85 people on a full time
basis.

ITEM  2.  DESCRIPTION  OF  PROPERTY

Effective  June  1,  1998,  the Company began leasing approximately 2,712 square
feet  of  administrative  office  space  in  Costa Mesa, California at a monthly
rental  rate  of  $5,017  per  month.  This  facility  serves  as  the Company's
headquarters  and  primary  place  of  business.

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

                                       12
<PAGE>

On September 23, 1999, the Company entered into an addendum to its existing June
1, 1998 lease.  This addendum which also replaces the February 8, 1999 lease for
its  customer  service  operation.  Beginning October 1, 1999, the revised lease
obligates the Company to an additional lease for approximately 2,973 square feet
for  its  customer service operation, a monthly rental rate of $ 6,095 per month
and  for  the  Company  to  pay  the  first three months rent.  This addendum is
coterminous with the Company's June 1, 1998 lease and was scheduled to expire on
May  31,  2001,  unless  previously terminated by the Company or by Lessor given
ninety (90) days written notice.  The monthly rental rate increased to $6,434 on
June  30,  2000.

Beginning  January  17, 2000, by addendum to its June 1, 1998 lease, the Company
leased  an  additional 2,934 square feet for continued expansion of its customer
service  operation at a monthly rental rate of $6,295 and for the Company to pay
the  first three and one-half months rent.  The monthly rental rate increased to
$6,347  on  June  30,  2000.

On  May  21,  2001,  the  Company  entered into a month-to-month addendum to its
existing  June  1,  1998 lease.  This addendum incorporates all of the Company's
leased  facilities  totaling  8,621  square  feet  into one lease.  The addendum
automatically  expires  on  May  31,  2002,  unless previously terminated by the
Company  or  by  the  lessor  given  seventy-five (75) days written notice.  The
monthly  rental  rate  increased  to  $19,247  on  June  1,  2001.

On  July  24, 2001, the Company entered into a thirty-six (36) month addendum to
its  existing  June  1, 1998 lease.  This addendum replaces 2,934 square feet of
the  May 21, 2001 addendum with 4,939 square feet for continued expansion of its
customer  service  operations.  The  addendum  automatically expires on July 31,
2004,  unless  previously  terminated  by  the  Company  or  by the lessor given
seventy-five  (75)  days  written notice.  The monthly rental rate applicable to
this  addendum  increased  to  $10,859  on  August  1,  2001.

With  this  addendum, the Company leases a total of 10,624 square feet of office
space  for  its  headquarters  and  customer  service  operations in Costa Mesa,
California  at  a  monthly  rental  rate  of  $23,548.

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

ITEM  3.  LEGAL  PROCEEDINGS

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

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

On  December 14, 2000, the Company held its annual shareholder's meeting for the
fiscal  year  ended  June 30, 2000.  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 15, 2001.  No other matters were
submitted  to  a  vote of security holders during the fiscal year ended June 30,
2001.




                                       13
<PAGE>

                                     PART II

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

MARKET  INFORMATION

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


CALENDAR                                BID  PRICES
YEAR          PERIOD                  HIGH         LOW
----          ---------------         ----         ----
1998          First  Quarter          n/a          n/a
              Second  Quarter         n/a          n/a
              Third  Quarter          4.75         4.50
              Fourth  Quarter         4.41         3.33

1999          First  Quarter          11.125       3.25
              Second  Quarter          8.625       3.56
              Third  Quarter           4.9375      2.00
              Fourth  Quarter          3.8125      1.75

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

2001          First  Quarter           0.4844      0.25
              Second  Quarter          0.44        0.22


On  August  31,  2001,  the  last  sales price per share of the Company's common
stock,  as  reported  by  the  NASDAQ  Bulletin  Board,  was  $0.25.

NUMBER  OF  SHAREHOLDERS

The number of beneficial holders of record of the common stock of the Company as
of  the close of business on August 15, 2001 was approximately 209.  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.

                                       14
<PAGE>

RECENT  SALES  OF  UNREGISTERED  SECURITIES

In January 2000, the Company borrowed $200,000 for working capital purposes from
a  third  party.  The  note  was  due February 28, 2000 plus accrued interest of
$20,000.  If  all  unpaid  principal  and  interest was not paid by February 28,
2000,  the  aggregate  balance  is  to  accrue  interest at 2% per month with no
predetermined  due  date.  On April 11, 2000, the Company repaid $100,000 of the
principal  balance.  On  May  15,  2001,  the  noteholder  agreed to convert the
principal  balance outstanding of $100,000 into 285,715 restricted shares of the
Company's  common  stock.  These shares also have piggyback registration rights.
In  addition,  the  Company  will repay $15,000 of the accrued interest in three
equal  installments  in  June,  July, and August 2001 with all remaining accrued
interest  forgiven.  The  issuance  was  an isolated transaction not involving a
public  offering  pursuant  to  section  4(2)  of  the  Securities  Act of 1933.

In  October  2000,  the  Company  entered  into  an  agreement  with  an outside
consultant  for  investor  and  public  relations  services.  Pursuant  to  the
agreement,  the  Company,  in  addition to cash payments, agreed to issue to the
investor  relations  company,  15,000  shares of the Company's restricted common
stock  for  each  month the agreement is in effect.  These shares have piggyback
registration  rights  and were valued using the market price on the date of each
grant.  During the period ended June 30, 2001, the Company issued 105,000 shares
of  common  stock  valued  at  $32,523 (based on the market price on the date of
grant)  pursuant to this agreement and recorded the amount as investor relations
expense  in the accompanying consolidated statement of operations.  The issuance
was  an isolated transaction not involving a public offering pursuant to section
4(2)  of  the  Securities  Act  of  1933.

On  March  2,  2001,  the  Company  issued  a  one-year  convertible  note to an
accredited shareholder of the Company in the amount of $25,000.  Pursuant to the
terms  of the note, the note is convertible by the noteholder into shares of the
Company's  common stock at a conversion rate of $1.00 per share.  The note earns
12% interest payable at maturity.  On May 31, 2001, the noteholder exercised the
conversion  feature  into  25,000  shares  of  the  Company's common stock.  The
issuance was an isolated transaction not involving a public offering pursuant to
section  4(2)  of  the  Securities  Act  of  1933.

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

1.     Warrants  to  purchase  50,000  shares of the Company's restricted common
stock  at  an  exercise price of $0.25 per share valued at approximately $12,500
(based  on  the  Black-Scholes  pricing model) upon execution of the LOI.  These
warrants  have  been  granted  but  will  not  be  earned until execution of the
definitive  agreement.

2.     Warrants  to  purchase  50,000  shares  of the Company' restricted common
stock  priced  at the fair market value on the date of the launch of the Company
on  the marketing company's website.  No warrants have been granted or earned as
of  the  date  of  this  filing.

3.     Additional  warrants  at  the  rate  of one restricted share per customer
brought  to  the  Company  by the marketing company for every 100,000 customers.
The  warrants are priced at the lowest fair market value within 60 calendar days
of the date of grant.  No warrants have been granted or earned as of the date of
this  filing.  The  issuance  was an isolated transaction not involving a public
offering  pursuant  to  section  4(2)  of  the  Securities  Act  of  1933.

During  fiscal  year  2001,  an aggregate of 109,900 Incentive Stock Options (as
defined  by  the  Plan)  were  granted, exercisable at an average of $0.3937 per
share  (each  issuance  priced  at the fair market value of the Company's common
stock  on  the  date of grant) to certain employees of the Company.  The options
are  exercisable  through  April  2011.

During  fiscal  year  2001, the Board issued options to purchase an aggregate of
52,500  shares  of  the Company's common stock, at exercise prices between $0.01
and  $0.2969,  valued  at  $7,800, to the members of the Board pursuant to their
agreement  of  director compensation.  The options are exercisable through April
2004.  The  issuance was an isolated transaction not involving a public offering
pursuant  to  section  4(2)  of  the  Securities  Act  of  1933.

On  August  17,  2001,  the Company agreed to issue to a shareholder warrants to
purchase  up  to  100,000  shares  of  the Company's restricted common stock for
consulting  services  at  an  exercise price of $0.35 per share (the fair market
value  on the date of grant was $0.18) valued at approximately $14,000 (based on
the  Black-Scholes pricing model).  The warrants are exercisable for a period of
two  (2)  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.

                                       15
<PAGE>

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

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

GENERAL  OVERVIEW
The  Company's  principal line of business is to provide long distance telephone
and  value-added  services for small and medium-sized businesses and residential
customers  throughout  the  United  States.  The  Company's strategy has been to
build  a  subscriber  base without committing capital or management resources to
construct  its  own  network  and  transmission  facilities.  This  strategy has
allowed  the  Company  to  add  customers  without  being  limited  by capacity,
geographic coverage, or configuration of any particular network that the Company
might  have  developed.

The  Company provides a number of Internet related services such as: the sale of
electronic  calling cards on its ecallingcards.com web site; Internet access via
Dial-Up,  and  Internet  Web  Page  Hosting  services.  However,  the  Company's
Internet  related  services  are intended to be a value-added service to attract
customers  to  the  Company's Telecommunication services as opposed to a revenue
generating  service.

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

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

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

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

RESULTS  OF  OPERATIONS  OF  THE  COMPANY
FISCAL  YEAR  ENDED  JUNE  30,  2001 COMPARED TO FISCAL YEAR ENDED JUNE 30, 2000

REVENUES  -  Revenues  increased by $9,268,457 or 197.4% from $4,696,087 for the
year  ended  June 30, 2000 to $13,964,544 for the year ended June 30, 2001.  The
increase  was  due  primarily  to the increase in telecommunications revenues of
$9,212,241  and  in Internet revenues of $56,216.  The backbone of GTC's overall
market  and  development  strategy  involves  the  pursuit  and establishment of
strategic  affiliations  and alliances with major telecommunication and Internet
service  companies through partnerships and co-branding.  The Company had 86 and
37  affiliates  as  of June 30, 2001 and 2000, respectively.  In addition, as of
June  30,  2001,  the  Company  had  approximately  116,824  telecommunication
customers,  with  usage  of  long distance services of approximately 218,540,000
minutes  for  the year ended June 30, 2001 as compared with approximately 65,555
telecommunication  customers,  with  usage  of  long  distance  services  of
approximately  74,033,000  minutes  for  the  year  ended  June  30,  2000.

COST  OF  SALES - Cost of sales increased by $3,933,195 or 97.5% from $4,032,587
for the year ended June 30, 2000 to $7,965,782 for the year ended June 30, 2001.
The  increase was primarily due to the increase in carrier costs associated with
increased  telecommunications  service  revenues,  partially offset by decreased
costs associated with the local access of $4,132,950 for the year ended June 30,
2001.  In  addition,  the  costs associated with its Internet services decreased
$199,755  for  the year ended June 30, 2001.  In an effort to reduce the monthly
minimum usage fees of internet service provider access, the Company entered into
a  one  year  agreement  with  a  company  which directly ties these fees to the
internet  subscriber  base.  As a percentage of revenue, cost of sales was 57.0%
and  85.9%  resulting  in  a gross margin of 43.0% and 14.1% for the years ended
June  30,  2001  and  2000,  respectively

                                       16
<PAGE>

SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES  -  Selling,  general  and
administrative  ("S,G&A") expenses increased by $620,854 or 8.1% from $7,696,832
for the year ended June 30, 2000 to $8,317,686 for the year ended June 30, 2001.
For  the  year  ended  June 30, 2001, the Company began to realize a significant
increase  in  sales  from its telecommunications customers, thereby resulting in
significantly  increased  S,G&A  expenses  primarily  from  its customer service
operations  and  Internet  support  costs.  In  addition,  non-cash  items  were
approximately  $(123,000)  and approximately $2,290,000 for the years ended June
30,  2001  and  2000,  respectively,  and  cash items increased by approximately
$3,034,000  or  56.1%  from approximately $5,407,000 for the year ended June 30,
2000  to  approximately  $8,441,000  for  the  year  ended June 30, 2001.  S,G&A
expenses for the year ended June 30, 2001 were comprised primarily of $3,704,792
in salaries and related taxes paid to employees; a one-time settlement credit of
$357,800  from the cancellation of a consulting agreement; billing related costs
of  $1,237,465;  advertising  expense of $171,108; rent of $314,172; bad debt of
$312,201;  sales  commissions of $350,364; depreciation and amortization expense
of $220,390; options valued at approximately $140,100 issued to employees of the
Company;  warrants  valued  at  approximately  $40,333  issued  to  an  outside
consultant;  and  $2,184,561  of  other  operating  expenses, primarily investor
relations,  internal  telephone usage, consulting services, costs of third party
verification  for newly acquired customers, internet support costs and audit and
legal  costs.  S,G&A  expenses  for  the year ended June 30, 2000 were comprised
primarily  of  shares  valued  at  approximately $250,000 issued to a vendor for
deferment  of rent; options valued at approximately $121,790 issued to employees
and  directors  of the Company; stock and options valued at $1,918,774 issued in
exchange  for  services;  approximately $2,388,276 in salaries and related taxes
paid to employees; advertising expenses of $1,004,103; Internet support costs of
$667,913; bad debts of $475,241; the costs of third party verification for newly
acquired  customers  of  $260,247;  depreciation  and  amortization  expense  of
$173,946;  and  $436,542  of  other  operating  expenses,  primarily  investor
relations,  legal,  consulting,  audit  services,  and  LEC  fees.

INTEREST  EXPENSE - Net interest expense increased by $362,460 from $142,441 for
the  year ended June 30, 2000 to $504,901 for the year ended June 30, 2001.  The
increase  was  primarily  due  to  interest  owed on outstanding balances due to
WorldCom.

As  a  result, net loss was $2,832,258, or $0.14 loss per share, and $7,180,991,
or  $0.42  loss  per  share,  for  the  years  ended  June  30,  2001  and 2000,
respectively.

ASSETS AND LIABILITIES - Assets increased by $665,392 from $1,512,653 as of June
30,  2000  to $2,178,045 as of June 30, 2001.  The increase was due to increases
in  accounts  receivables  of  $882,421 (due to the increase in customer usage),
notes  receivable  of  $77,500,  net  of decreases in property and equipment and
other  assets  of  $283,071  and  cash  of  $11,458.  Liabilities  increased  by
$3,470,742  from  $3,987,570  as  of  June 30, 2000 to $7,458,312 as of June 30,
2001.  The  increase  was  due  to  increases  in  accounts  payable and accrued
expenses  of $3,062,738, primarily for amounts owed to WorldCom (associated with
the  increase  in  customer  usage),  and  accrued  payroll  and payroll related
liabilities  of $770,015 (primarily for amounts associated with past due payroll
taxes),  offset  primarily  by  the decrease in capitalized lease obligations of
$91,139,  the  conversion  of  notes  payable into common stock of $125,000, the
decrease  in  notes  payable  of  $73,500, and decreases in other liabilities of
$72,372.

STOCKHOLDERS'  DEFICIT  -  Stockholders'  deficit increased by $(2,805,350) from
$(2,474,917)  as  of  June  30,  2000  to ($5,280,267) as of June 30, 2001.  The
increase was attributable to the current year net loss of $2,832,258, a one-time
settlement  credit  of  $357,800  from the cancellation of a contract payable in
stock  and  options  previously  granted to an outside consultant, offset by the
issuance of restricted common stock for conversion of notes payable of $125,000;
the  fair  market  value  of  options  granted  to employees for compensation of
$140,100;  the  fair  market  value  of  options and warrants granted to outside
consultants  of $40,333, the fair market value of warrants granted in connection
with  notes  payable  of  $13,500,  and the fair market value of stock issued to
consultants  of  $54,730  and  note  receivable  officer  of  $11,045.

LIQUIDITY  AND  CAPITAL  RESOURCES
GENERAL - Overall, the Company had a decrease in cash flows of $11,458 in fiscal
year  2001  resulting  from  $33,500  of  cash  used  in the Company's investing
activities,  and  cash  used in financing activities of $176,429, offset by cash
provided  by  operating  activities  of  $198,471.


                                       17
<PAGE>
CASH  FLOWS  FROM  OPERATIONS  -  Net  cash  provided by operating activities of
$198,471  in  fiscal  year  2001  was  primarily due to the changes in operating
assets  and  liabilities,  principally  accounts payable and accrued expenses of
$3,062,738,  accrued  payroll and related taxes of $770,015, offset partially by
accounts  receivable  and other current assets of $1,164,896 and deferred income
of  $60,582,  a  net  loss  of  $2,832,258  and  a one-time settlement credit of
$357,800  from  the  cancellation  of stock and options previously granted to an
outside consultant; the fair market value of warrants granted in connection with
notes  payable of $13,500; the fair market value of options vesting to employees
of  $140,100;  the  fair  market  value  of  options  and  warrants  granted  to
consultants  for  services  rendered  of  $40,333; depreciation and amortization
expense  of  $220,390;  the  fair  market  value of stock issued for services of
$54,730;  and  the  increase  in allowance for doubtful receivables of $312,201.

CASH  FLOWS FROM INVESTING - Net cash used in investing activities of $33,500 in
fiscal  year  2001  funded purchases of property and equipment of $46,109; notes
receivable  of  $100,000,  offset  partially  by  the  reduction  in deposits of
$101,564  and  advances  to  officer  of  $11,045.

CASH FLOWS FROM FINANCING - Net cash used in financing activities of $176,429 in
fiscal  year  2001 was primarily due to principal repayments on notes payable to
stockholders  of  $273,500; principal repayments under capital lease obligations
of  $91,139;  and  principal  repayments  on  notes  payable  of  $36,790 offset
partially  by  borrowings  note  payable  to  stockholder  of  $225,000.

SHORT-TERM  FINANCING  -  On  September  23,  2000,  the  Company entered into a
promissory  note  with  an  unaffiliated accredited shareholder resulting in net
proceeds to the Company in the amount of $200,000.  Pursuant to the terms of the
promissory  note,  the  balance and simple interest in the amount of 12% are due
and  payable  to the noteholder on March 25, 2001 and the note is secured by the
Company's  receivables.  In  addition,  the  Company  agreed  to  issue  to  the
noteholder  warrants to purchase up to 40,000 shares of the Company's restricted
common  stock  at  an  exercise  price  of  $0.50  per  share.  The warrants are
exercisable  for  a  period  of two (2) years from the date of issue and contain
piggy-back  registration  rights.  The  Company repaid the principal of $200,000
and  interest  due  of  $12,000.

On  March  2,  2001,  the  Company  issued  a  one-year  convertible  note to an
accredited shareholder of the Company in the amount of $25,000.  Pursuant to the
terms  of the note, the note is convertible by the noteholder into shares of the
Company's  common stock at a conversion rate of $1.00 per share.  The note earns
12% interest payable at maturity.  On May 31, 2001, the noteholder exercised the
conversion  feature  into  25,000  shares  of  the  Company's  common  stock.

The  funds  from  the  promissory note as described above, were used to fund the
Company's  ongoing  operations.

LONG-TERM  FINANCING  - The Company believes that its funds from operations will
be sufficient to fund its daily operations beginning in December 2001.  However,
the  Company's funds from operations will not be sufficient to fund repayment of
its  long  term  debts  and  contingent liabilities (see below).  Therefore, the
Company  will be required to seek additional funds either through debt or equity
financing  to  finance  these  debts  and  contingencies.  Should the Company be
unable  to  raise additional funds, it may have a material adverse effect on the
Company's  long  term  operational  viability.

EQUITY  FINANCING  -  The  Company  is  currently  negotiating  a three (3) year
agreement  with  an institutional investor for the purchase of up to $10,000,000
of  the  Company's  common  stock  with  an  additional  $10,000,000  if certain
conditions  are  met.  Each  draw  on  the  purchase will be based on 88% of the
volume  weighted  average  price  during  the  draw  period.  The  total minimum
purchase  requirement  is  $500,000.  In  conjunction  with  the investment, the
Company  has  agreed  to register these shares under the Securities Act of 1933.
However,  there  can  be no assurances that the Company will be able to complete
such  sale.

LONG-TERM  DEBT  - The Company currently owes $3,594,394 (including interest) to
WorldCom  for past due amounts and is included in Accounts Payable.  The Company
is finalizing negotiations with WorldCom for repayment of this amount.  However,
no  assurances  can  be  made  that such negotiations will result in a favorable
outcome.

CONTINGENT  LIABILITIES  -  On  April  30,  1999,  the  Company  entered into an
agreement  with  Williams  Communications, a unit of Williams of Tulsa, Oklahoma
("Williams"),  in  which  Williams  was  to  design, install and maintain a high
speed, nationwide VoIP network for the Company.  Subsequently, due to Williams's
inability  to  deliver  the  VoIP  network  as  contracted and as a result of an
amendment  to  the  MCI/WorldCom contract, the Company determined to discontinue
its  agreement  with  Williams.  As a result of the Company's discontinuation of
its  contract  with  Williams,  the  Company  may be subject to accrued costs of
$600,110.  The  Company  is in negotiations with Williams to modify or eliminate
these  charges.  However,  no assurances can be made that such negotiations will
result  in  a  favorable  outcome.  No amounts have been recorded related to the
discontinuation  of  the  contract  as  of  June  30,  2001.

The  Company  has  recorded an accrual for past due payroll taxes as of June 30,
2001  due  to  the under-reporting of the Company's payroll tax liability.  As a
result,  the  Company  has  accrued  approximately  $1,205,000,  including
approximately  $252,000  of  penalties  and  interest, under accrued payroll and
related  taxes  in the accompanying consolidated balance sheet at June 30, 2001.
The  Company  anticipates  having  this  matter  settled  by  December 31, 2001.

CAPITAL  EXPENDITURES

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

SUBSIDIARIES

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

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

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

GOING  CONCERN

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

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

EMPLOYMENT

As  of  July  31,  2001,  the  Company  had  85  full  time  employees.


                                       18
<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 Corbin & Wertz LLP and Management of
the  type  required  to  be  reported  under this Item 8 since the date of their
engagement.









                                       19
<PAGE>
                                    PART III

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

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

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

Name                Age    Position(s)
----                ---    -----------
Paul  Sandhu        40     Chief  Executive  Officer and Chairman of the Board

Eric  Clemons       30     Director,  President, Secretary and Treasurer

Gerald  DeCiccio    43     Director  and  Chief  Financial  Officer

Mark  Fleming       43     Chief  Operating  Officer

John  M.  Eger      61     Director

Clay  T.  Whitehead 62     Director


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

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

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

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


                                       20
<PAGE>
MARK  FLEMING  joined the Company in October 1998 and is currently the Company's
Chief  Operating  Officer.  Mr. Fleming has eighteen years of business strategy,
planning,  and  analysis  experience  within the competitive consumer products /
services  industries.  For  the  past  seven  years,  Mr.  Fleming worked in the
telecommunications  industry,  holding  several finance and marketing management
positions  at  MCI.  Some  of  the  key  business  / operational issues that Mr.
Fleming  managed while at MCI included pricing strategy, market positioning, new
product  development,  sales  channel  and customer service performance reviews,
capital  investment  decisions  and  overall  business  planning  / analysis for
Residential  Markets  and  Local  Services  divisions.  Mr. Fleming received his
Bachelor  of  Arts  degree  in Business Administration from Principia College in
1980,  and attained his Masters in Business Administration, with honors from the
University  of  Southern  California  in  1986.

JOHN  M.  EGER  is  a  telecommunication  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.  Professor  Eger  formerly headed CBS Broadcast International, which he
established,  and  was  Senior  Vice President of the CBS Broadcast Group.  From
1971  through  1973,  Professor  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,  Professor  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.  Until  recently,
Professor  Eger  served  as  Chairman  of  the Board of the San Diego Processing
Corporation,  Chairman  of  San  Diego  Mayor Susan Golding's City of the Future
Advisory  Committee and Chairman of Governor Pete Wilson's California Commission
on  Information  Technology.

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

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

Section  16(a)  of  the  Securities  Exchange Act of 1934 requires the Company's
directors  and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the SEC initial
reports  of  ownership  and  reports of changes in ownership of common stock and
other  equity  securities  of the Company.  Officers, directors and greater than
ten  percent shareholders are required by SEC regulations to furnish the Company
with  copies  of  all Section 16(a) forms they file. To the Company's knowledge,
based  solely  on  the review of copies of such reports furnished to the Company
and  written representations that no other reports were required and to the best
of  its knowledge, during the year ended June 30, 2001, all Section 16(a) filing
requirements  applicable  to  the Company's officers, directors and greater than
ten  percent  shareholders  were  complied  with.

ITEM  10.  EXECUTIVE  COMPENSATION

On  December 1, 1998, the Company entered into an Employment Agreement with Paul
Sandhu, the Company's Chief Executive Officer, whereby the Company agreed to pay
Mr. Sandhu an annual salary of $84,000.  Pursuant to the Agreement, Mr. Sandhu's
salary  shall increase to $168,000 should the Company either maintain a positive
cash  flow  for  two consecutive months, or the Company successfully completes a
Form  SB-2  registered  offering  of  its  securities.  On  January 15, 1999 the
Company  voluntarily  agreed to increase his salary to $168,000.  In addition to
his  annual  salary,  the  Agreement  confirmed the prior issuance of options to
purchase  200,000  shares  of the Company's common stock at an exercise price of
$0.2375  previously  granted  to  Mr. Sandhu pursuant to an employment agreement
between  Mr. Sandhu and GenTel dated January 5, 1998.  These options vested upon
execution of the Agreement.  The Agreement may be canceled at any time by either
the  Company  or  Mr.  Sandhu.  However, if the Company terminates the Agreement
without  cause,  as  defined in the Agreement, the Company shall be obligated to
pay  Mr.  Sandhu  25%  of  his  annual  salary  as  severance.


                                       21
<PAGE>
On  December 1, 1998, the Company entered into an Employment Agreement with Eric
Clemons,  the Company's President, whereby the Company agreed to pay Mr. Clemons
an  annual  salary  of  $76,000.  Pursuant to the Agreement, Mr. Clemons' salary
shall  increase  to  $152,000 should the Company either maintain a positive cash
flow  for  two  consecutive months, or the Company successfully completes a Form
SB-2  registered  offering  of  its securities.  On January 15, 1999 the Company
voluntarily increased his salary to $152,000.  In addition to his annual salary,
the Agreement confirmed the prior issuance of options to purchase 100,000 shares
of the Company's common stock at an exercise price of $0.2375 previously granted
to  Mr.  Clemons  pursuant  to  an  employment agreement between Mr. Clemons and
GenTel  dated  January  5,  1998.  These  options  vested  upon execution of the
Agreement.  The  Agreement  may be canceled at any time by either the Company or
Mr. Clemons.  However, if the Company terminates the Agreement without cause, as
defined  in the Agreement, the Company shall be obligated to pay Mr. Clemons 25%
of  his  annual  salary  as  severance.

On  December  1,  1998,  the  Company  entered into an Employment Agreement with
Gerald  DeCiccio,  the  Company's  Chief  Financial Officer, whereby the Company
agreed  to  pay  Mr.  DeCiccio  an  annual  salary of $105,000.  Pursuant to the
Agreement,  Mr.  DeCiccio's salary shall increase to $144,000 should the Company
either  maintain a positive cash flow for two consecutive months, or the Company
successfully  completes  a  Form SB-2 registered offering of its securities.  On
December  23, 1999 the Company voluntarily increased his salary to $144,000.  In
addition  to  his  annual  salary,  the Agreement grants Mr. DeCiccio options to
purchase  150,000  shares  of  the Company's common stock.  Twenty-five thousand
(25,000) of the options are set to vest six (6) months from the execution of the
Agreement  at  an  exercise price of $.01, expiring three years from the date of
vesting  if  not exercised.  The remaining 125,000 options are scheduled to vest
in  1/3  increments  each  following year provided that Mr. DeCiccio is employed
with  the  Company.  The  Agreement  may  be  canceled at any time by either the
Company  or  Mr.  DeCiccio.  However,  if  the  Company terminates the Agreement
without  cause,  as  defined in the Agreement, the Company shall be obligated to
pay  Mr.  DeCiccio  25%  of  his  annual  salary  as  severance.

On  October 14, 1998, the Company entered into an Employment Agreement with Mark
Fleming,  the  Company's  Chief Operating Officer, whereby the Company agreed to
pay  Mr.  Fleming  an  annual salary of $70,000.  Pursuant to the Agreement, Mr.
Fleming's salary shall increase to $107,000 should the Company either maintain a
positive  cash  flow  for  two  consecutive  months, or the Company successfully
completes  a  Form  SB-2  registered offering of its securities.  On January 23,
2000  the  Company voluntarily increased his salary to $130,000.  In addition to
his  annual salary, the Agreement grants Mr. Fleming options to purchase 100,000
shares  of the Company's common stock.  Ten thousand (10,000) of the options are
set  to  vest  six (6) months from the execution of the Agreement at an exercise
price  of  $.01, expiring three years from the date of vesting if not exercised.
The  remaining  90,000  options  are  scheduled  to  vest in 1/3 increments each
following  year  provided  that  Mr.  Fleming is employed with the Company.  The
Agreement  may  be  canceled  at  any time by either the Company or Mr. Fleming.
However,  if  the  Company terminates the Agreement without cause, as defined in
the  Agreement,  the  Company  shall  be obligated to pay Mr. Fleming 25% of his
annual  salary  as  severance.

SUMMARY  COMPENSATION  TABLE
The  Summary  Compensation  Table  shows  certain  compensation  information for
services  rendered  in  all capacities for the fiscal years ended June 30, 2001,
2000,  and  1999.  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.

                                       22
<PAGE>

<TABLE>
<CAPTION>


                                                             SUMMARY COMPENSATION TABLE

                                          ANNUAL  COMPENSATION                          LONG  TERM  COMPENSATION
                                         ----------------------                         AWARDS           PAYOUTS
                                                                                    -------------------------------
                                                                OTHER        RESTRICTED  SECURITIES                 ALL
NAME AND                                                        ANNUAL         STOCK     UNDERLYING    LTIP        OTHER
PRINCIPAL                          SALARY        BONUS       COMPENSATION      AWARDS     OPTIONS     PAYOUTS   COMPESATION
POSITION               YEAR         ($)           ($)            ($)            ($)       SARS (#)      ($)         ($)
---------------------------------------------------------------------------------------------------------------------------
<S>                   <C>       <C>             <C>          <C>               <C>       <C>          <C>       <C>
Paul Sandhu           2001
(CEO)                (6/30)     $  105,000        -0-           10,000(1)       -0-        132,500      -0-       13,000(2)

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

                      1999
                     (6/30)         85,500        -0-             -0-           -0-          -0-        -0-         -0-

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

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

                      1999
                     (6/30)         90,836        -0-             -0-           -0-          -0-        -0-         -0-
---------------------------------------------------------------------------------------------------------------------------

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

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

                      1999
                     (6/30)         54,102        -0-              -0-          -0-        150,000      -0-         -0-
---------------------------------------------------------------------------------------------------------------------------

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

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

                          1999
                         (6/30)     62,083        -0-              -0-          -0-        100,000      -0-         -0-
---------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1)     Amounts  paid  for  directors  fees
(2)     Non-business  expenses  paid  on  behalf  of  the  officers

                                       23
<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                    7,500(1)                      <1%  $                   0.01           1/2/04
                             125,000(2)                    15.8%  $                 0.6875          10/5/10
                 ----------------------  -----------------------  ------------------------  ---------------
Eric Clemons                   7,500(3)                      <1%  $                   0.01           1/2/04
                             125,000(2)                    15.8%  $                 0.6875          10/5/10
                 ----------------------  -----------------------  ------------------------  ---------------
Gerald DeCiccio              125,000(4)                    15.8%  $                   0.50          11/2/03
                               2,500(5)                      <1%  $                   0.01           1/2/04
                              50,000(2)                     6.3%  $                 0.6875          10/5/10
                 ----------------------  -----------------------  ------------------------  ---------------
Mark Fleming                  50,000(2)                     6.3%  $                 0.6875          10/5/10
                 ----------------------  -----------------------  ------------------------  ---------------
</TABLE>

(1)  Represents  options  issued  on  1/2/01  pursuant  to Mr. Sandhu's Director
Compensation  agreement.
(2)  Represents  options  issued  on  10/5/00  in accordance with the 1999 Stock
Option  Plan.
(3)  Represents  options  issued  on  1/2/01  pursuant  to Mr. Clemon's Director
Compensation  agreement.
(4)  Represents  options  issued  on 11/2/00 pursuant to Mr. DeCiccio's Director
Compensation  agreement.
(5)  Represents  options  issued  on  1/2/01 pursuant to Mr. DeCiccio's Director
Compensation  agreement.

<TABLE>
<CAPTION>



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


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

Paul Sandhu                           0                       n/a            65,000 / 285,000                   7,250 / 0
Eric Clemons                          0                       n/a            55,000 / 245,000                   7,250 / 0
Gerald DeCiccio                       0                       n/a           225,834 / 151,666                     725 / 0
Mark Fleming                          0                       n/a            85,000 / 140,000                   2,900 / 0
</TABLE>

COMPENSATION  OF  DIRECTORS

For  the  fiscal  years  ended  1996,  1997  and  1998, and the six months ended
December 31, 1998, Directors of the Company received no compensation.  Beginning
with  the third quarter of fiscal year 1999 through December 31, 2000, Directors
received  $1,500  and  2,500  options to purchase the Company's common stock per
quarter.  Beginning  January  1, 2001, the outside directors each receive $4,000
per  quarter,  $1,000  per  major  committee  meeting  as  contemplated  in  the
respective  committee  charter,  $1,000  each  for the Chairman of the Audit and
Compensation committees per year of service, 2,500 options per quarter priced at
fair  market  value  on  the  date  of

                                       24
<PAGE>

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.  The
inside  directors  receive  no  compensation.

1999  STOCK  OPTION  PLAN

On September 20, 1999, the Company's Board of Directors approved the GTC Telecom
Corp.  Omnibus Stock Option Plan (the "Option Plan"), effective October 1, 1999.
The  Option  Plan  was approved and ratified by the shareholders on December 13,
1999  at the Company's 1999 annual shareholder's meeting. Under the terms of the
Option Plan, the Board of Directors has the sole authority to determine which of
the  eligible  persons  shall receive options, the number of shares which may be
issued upon exercise of an option, and other terms and conditions of the options
granted  under  the Plan to the extent they don't conflict with the terms of the
Plan.  An  aggregate of 750,000 shares of common stock are reserved for issuance
under  the  Plan during the year October 1, 1999 to September 30, 2000. For each
subsequent  year beginning October 1, 2000, there shall be reserved for issuance
under  the  Plan that number of shares equal to 10% of the outstanding shares of
common  stock  on July 1 of that year or 1,996,754 shares for the year beginning
October  1, 2000. The exercise price for all statutory options granted under the
Plan shall be 100% of the fair market value of the Company's common stock on the
date  of  grant,  unless  the  recipient  is  the holder of more than 10% of the
already  outstanding securities of the Company, in which case the exercise price
shall be 110% of the fair market value of the Company's common stock on the date
of  grant.  The  exercise  price for all non-statutory options granted under the
Plan shall be between 25% to 100% of the fair market value on the date of grant.
All  options  shall  vest  equally  over a period of five years from the date of
issuance.  The Company registered 750,000 shares underlying the options pursuant
to its 1999 Stock Option Plan on Form S-8 filed with the Securities and Exchange
Commission  on  October  6,  1999.

On October 5, 2000, the Company's Board of Directors ("Board") granted, pursuant
to  the Option Plan, an aggregate of 203,650 Incentive Stock Options (as defined
by  the  Plan),  exercisable  at $0.6875 per share (the fair market value of the
Company's  common stock on the day of grant) to certain employees of the Company
and  an  aggregate  of  300,000  Non-statutory  Stock Options (as defined by the
Option  Plan),  exercisable  at  $0.6875 per share (the fair market value of the
Company's  common  stock  on  the day of grant) to the directors of the Company.
During  fiscal  year  2001,  an  aggregate of 109,900 additional Incentive Stock
Options  (as  defined  by  the  Plan) were granted, exercisable at an average of
$0.3937  per  share  (each  issuance  priced  at  the  fair  market value of the
Company's common stock on the day of grant) to certain employees of the Company.

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

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

                                       25
<PAGE>

ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT

The  following table sets forth, as of August 15, 2001, 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.                3,997,215      19.62%
----------------------- -----------------------------        ----------   ------------

                        Eric Clemons(2)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  750,522       3.68%
----------------------- -----------------------------        ----------   ------------
                        Mark Fleming(3)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  135,000       0.67%
----------------------- -----------------------------        ----------   ------------
                        Gerald A. DeCiccio(4)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  265,834       1.30%
----------------------- -----------------------------        ----------   ------------
                        John M. Eger(5)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  563,500       2.77%
----------------------- -----------------------------        ----------   ------------
                        Clay T. Whitehead(6)
                        3151 Airway Avenue, Suite P-3
Common Stock            Costa Mesa, CA 92626.                  561,816       2.76%
----------------------- -----------------------------        ----------   ------------
                        Reet Trust(7)
                        21520 Yorba Linda,Suite 6227
Common Stock            Yorba Linda, CA 92887                2,000,000       9.82%
----------------------- -----------------------------        ----------   -------------

All Directors and
Officers as a
Group (6
Persons in total)                                            6,273,917       30.80%
----------------------- -----------------------------        ----------   -------------

</TABLE>
(1)     Includes  120,000  options  to acquire shares of Company common stock in
accordance  with  Mr. Sandhu's director compensation agreement and the Company's
employee  benefit  plan.  Does  not  include  an  aggregate  of 230,000 unvested
options to acquire shares of Company common stock granted in accordance with the
Company's  employee  benefit  plan.
(2)     Includes  100,000  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 200,000 unvested
options  to  acquire  shares  of  Company  common  stock  in accordance with the
Company's  employee  benefit  plan.
(3)     Includes  an  aggregate  of 135,000 options to acquire shares of Company
common  stock  in  accordance  with  Mr.  Fleming's employment agreement and the
Company's  employee  benefit  plan.  Does  not  include  an  aggregate of 90,000
unvested  options  to  acquire shares of Company common stock in accordance with
the  Company's  employee  benefit  plan.
(4)     Includes  an  aggregate  of 245,834 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 131,666 unvested options to acquire shares of Company
common  stock  in  accordance  with  the  Company's  employee  benefit  plan.

                                       26
<PAGE>
(5)     Includes  an  aggregate  of 563,500 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 45,000
unvested  options  to  acquire shares of Company common stock in accordance with
the  Company's  benefit  plan.
(6)     Includes  an  aggregate  of  50,000 options to acquire shares of Company
common  stock in accordance with Mr. Whitehead's director compensation agreement
and  the  Company's  employee  benefit  plan.  Does  not include an aggregate of
45,000  unvested options to acquire shares of Company common stock in accordance
with  the  Company's  benefit  plan.
(7)     The  trustee  of  the  Reet  Trust is Teg Sandhu, father of Paul Sandhu.
However,  Paul  Sandhu  disclaims any beneficial ownership to the shares held by
the  Reet  Trust.

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

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

The Company borrows funds from the Company's Chief Executive Officer for working
capital  purposes.  The  borrowings  totaling $73,500 and accrue interest at 10%
and  are  due  on  demand.  As  of  June  30,  2001,  the Company has repaid the
principal  balance.  No  interest  was  accrued  or paid as of June 30, 2001 and
2000.

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

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

During  fiscal  year  2000,  Paul  Sandhu  ("Mr.  Sandhu"),  the Company's Chief
Executive Officer, Eric Clemons ("Mr. Clemons"), the Company's President, Gerald
DeCiccio,  the  Company's  Chief  Financial  Officer, and other employees of the
Company,  exercised  options  (previously  granted  pursuant to their employment
contracts)  to  purchase a total of 375,000 shares of the Company's common stock
in  lieu  of  salary  for  $72,250.

During  fiscal  year  2000,  Mr.  Sandhu  and  Mr.  Clemons canceled 619,848 and
154,962,  respectively,  shares  of  the  Company's common stock held by each of
them.  It  was  determined  that  these  shares  were  not cancelled in a timely
manner.  As  a  result,  these cancellations are reflected as a reduction in the
outstanding  shares  as  of  July  1,  1998.

On  October  20, 1999, the Company granted options to purchase 526,000 shares of
restricted  Common Stock, at an exercise price of $1.00 per share, to John Eger,
a  director  of the Company (the fair market value of the Company's Common Stock
on  the  day  of  grant).  The  issuance  was  exempt  under Section 4(2) of the
Securities  Act  of  1933.
The  options  are  exercisable  through  October  2002.

                                       27
<PAGE>
ITEM  13.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

INDEX  TO  FINANCIAL  STATEMENTS
                                                                         Page

Report  of  Independent  Auditors                                        F-1

Consolidated  balance  sheet  at  June  30,  2001                        F-2

Consolidated  statements  of  operations  for  the  years  ended
 June  30,  2001  and  2000                                              F-3

Consolidated statements of stockholders' deficit for the years ended
June  30,  2001  and  2000                                               F-4

Consolidated  statements  of  cash  flows  for  the  years  ended
June  30,  2001  and  2000                                               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).

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

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

         *(10.2.1)     Program  Enrollment

         *(10.2.2)     Rate  and  Discount  Schedule

         *(10.2.3)     Service  Schedule

         *(10.2.4)     Telecommunications  Service  Agreement

          (10.2.5)     Amendment  dated  September  14,  2000

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

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

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

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


                                       28
<PAGE>
(10.7)  Addendum to Lease dated May 21, 1998 between Southern California Sunbelt
Developers, Inc., and GTC Telecom Corp., a Nevada corporation; Eric Clemons; and
Paul  Sandhu  Jointly and Severally as Tenant ("Tenant") relating to premises at
Suites  K-103,  K-104,  and  K-108  The  John Wayne Executive Guild Center, 3151
Airway  Avenue,  Costa  Mesa,  California  92626

(10.8)  Addendum to Lease dated May 21, 1998 between Southern California Sunbelt
Developers, Inc., and GTC Telecom Corp., a Nevada corporation; Eric Clemons; and
Paul  Sandhu  Jointly and Severally as Tenant ("Tenant") relating to premises at
Suites  P-1,  P-3  and  L-2  The  John Wayne Executive Guild Center, 3151 Airway
Avenue,  Costa  Mesa,  CA  92626

(10.9) Internet  Services  Agreement  dated  July  17,  2001

(21.1)  Subsidiaries  of  the  Registrant

(23.1)  Consent  of  independent  auditors

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

REPORTS  ON  FORM  8-K

None.






                                       29
<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  6,  2001

                                GTC TELECOM CORP.
                                  (Registrant)

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

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

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

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

Signature                Capacity         Date
---------                --------         ----
/s/  CLAY  WHITEHEAD     Director         September  6,  2001
  CLAY  WHITEHEAD

/s/  JOHN  EGER          Director         September  6,  2001
  JOHN  EGER



                                       30
<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,  2001  and  the  related
consolidated  statements of operations, stockholders' deficit and cash flows for
each of the years in the two-year period then ended.  These financial statements
are  the  responsibility  of the Company's management.  Our responsibility is to
express  an  opinion  on  these  financial  statements  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements  are free of material misstatement. An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  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. at June 30, 2001 and the consolidated results of their operations
and their cash flows for each of the years in the two-year period then ended, in
conformity with accounting principles generally accepted in the United States of
America.

The  accompanying  consolidated financial statements have been prepared assuming
that  the Company will continue as a going concern.  As disclosed in Note 1, the
Company  has  incurred operating losses in the last two years, and has a working
capital  deficit  of  $5,522,587,  liabilities  from the underpayment of payroll
taxes  and  contingent liabilities from cancelled contracts, and a stockholders'
deficit  of  $5,280,267  at  June  30, 2001.  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/  CORBIN  &  WERTZ



Irvine,  California
July  27,  2001


                                      F-1
<PAGE>

<TABLE>
<CAPTION>


                        GTC TELECOM CORP. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEET




                                                                      June 30,
                                                                        2001

<S>                                                                 <C>
ASSETS
  Cash                                                              $    219,878
  Accounts receivable, net of allowance for doubtful accounts of
   $210,518                                                            1,514,972
  Deposits                                                                77,426
  Related party note receivable                                          100,000
  Prepaid expenses                                                        23,449
                                                                    -------------
    Total current assets                                               1,935,725

Property and equipment, net of accumulated depreciation of
  $377,523                                                               222,584

Other assets                                                              19,736
                                                                    -------------

    Total assets                                                    $  2,178,045
                                                                    =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable and accrued expenses                                5,675,073
  Accrued payroll and related taxes                                    1,644,228
  Obligation under capital lease                                          88,124
  Deferred income                                                         50,887
                                                                    -------------
    Total current liabilities                                          7,458,312
                                                                    -------------

Commitments and contingencies

Stockholders' deficit:
  Preferred stock, $0.001 par value; 10,000,000 shares authorized;
    none issued and outstanding                                               --
  Common stock, $0.001 par value; 50,000,000 shares authorized;
    20,371,622 shares issued and outstanding                              20,372
  Additional paid-in-capital                                           8,667,479
  Note receivable officer                                                (60,306)
  Accumulated deficit                                                (13,907,812)
                                                                    -------------
    Total stockholders' deficit                                       (5,280,267)
                                                                    -------------

    Total liabilities and stockholders' deficit                     $  2,178,045
                                                                    =============



                      See independent auditors' report and
            accompanying notes to consolidated financial statements.




</TABLE>

                                      F-2
<PAGE>

<TABLE>
<CAPTION>



                  GTC  TELECOM  CORP.  AND  SUBSIDIARIES
                 CONSOLIDATED  STATEMENTS  OF  OPERATIONS


                                                      Year Ended June 30,
                                                     2001           2000
                                                  -------------------------
<S>                                               <C>           <C>
Revenues:
  Telecommunications                              $13,867,163   $ 4,654,922
  Internet services                                    97,381        41,165
                                                  ------------  ------------
    Total revenues                                 13,964,544     4,696,087
                                                  ------------  ------------

Cost of sales:
  Telecommunications                                7,888,648     3,755,698
  Internet services                                    77,134       276,889
                                                  ------------  ------------
    Total cost of sales                             7,965,782     4,032,587
                                                  ------------  ------------

Gross profit                                        5,998,762       663,500

Selling, general, and administrative expenses       8,317,686     7,696,832
                                                  ------------  ------------

Operating loss                                     (2,318,924)   (7,033,332)

Interest expense, net                                (504,901)     (142,441)
                                                  ------------  ------------

Loss before provision for income taxes             (2,823,825)   (7,175,773)

Provision for income taxes                              8,433         5,218
                                                  ------------  ------------

Net loss                                          $(2,832,258)  $(7,180,991)
                                                  ============  ============

Net loss available to common shareholders
  Per common share                                $     (0.14)  $     (0.42)
                                                  ============  ============

Basic and diluted weighted average common shares
  outstanding                                      20,031,313    17,105,139
                                                  ============  ============


</TABLE>


                      See independent auditors' report and
            accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

<TABLE>
<CAPTION>


                                        GTC  TELECOM  CORP.  AND  SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                      FOR THE TWO-YEAR PERIOD ENDED JUNE 30, 2001




                                                           Additional         Note                           Total
                                       Common Stock         Paid-in        Receivable      Accumulated    Stockholders'
                                   Shares      Amount       Capital          Officer         Deficit        Deficit
                                ------------  --------  ----------------  -------------  ---------------  ------------
<S>                             <C>           <C>       <C>               <C>            <C>              <C>
BALANCE AT JUNE 30, 1999          15,286,824  $ 15,287  $      3,452,282  $         --   $   (3,894,563)  $  (426,994)

Issuance of common stock
  pursuant to private
  placements, net of offering
  costs of $288,395                2,825,000     2,825         2,533,780            --               --     2,536,605
Sale of common stock for
  cash                               250,000       250           249,750            --               --       250,000
Estimated fair market value of
  stock issued for services
  rendered                         1,175,720     1,176         2,009,798            --               --     2,010,974
Estimated fair market value of
  options granted to
  consultants for services
  rendered                                --        --           157,800            --               --       157,800
Estimated fair market value of
  options granted to directors
  and employees for
  compensation                            --        --           121,790            --               --       121,790
Cashless exercise of stock
  options                            375,000       375            71,875            --               --        72,250
Issuance of restricted
  common stock for
  conversion of note payable          55,000        55            54,945            --               --        55,000
Advances to officer, net                  --        --                --       (71,351)              --       (71,351)
Net loss                                  --        --                --            --       (7,180,991)   (7,180,991)
                                ------------  --------  ----------------  -------------  ---------------  ------------

BALANCE AT JUNE 30, 2000          19,967,544    19,968         8,652,020       (71,351)     (11,075,554)   (2,474,917)
                                ------------  --------  ----------------  -------------  ---------------  ------------
</TABLE>



                      See independent auditors' report and
            accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

<TABLE>
<CAPTION>



                                        GTC  TELECOM  CORP.  AND  SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                      FOR THE TWO-YEAR PERIOD ENDED JUNE 30, 2001




                                                             Additional       Note                            Total
                                         Common Stock         Paid-in      Receivable     Accumulated    Stockholders'
                                     Shares       Amount      Capital        Officer         Deficit        Deficit
                                  -------------  ---------  ------------ -------------  ---------------  ------------
<S>                               <C>            <C>        <C>           <C>            <C>              <C>
Estimated fair market value of
  stock issued for services
  rendered                             150,000        150        54,580             --               --        54,730
Estimated fair market value of
  options granted to consultants
  for services rendered                     --         --        53,833             --               --        53,833
Estimated fair market value of
  options granted to directors
  and employees for
  compensation                              --         --       140,100             --               --       140,100
Cancellation of previously
  issued stock and options             (56,637)       (57)     (357,743)            --               --      (357,800)
Issuance of restricted common
  stock for conversion of notes
  payable                              310,715        311       124,689             --               --       125,000
Advances to officer, net                    --         --            --         11,045               --        11,045
Net loss                                    --         --            --             --       (2,832,258)   (2,832,258)
                                  -------------  ---------  ------------ -------------  ---------------  ------------

BALANCE AT JUNE 30, 2001            20,371,622   $ 20,372   $ 8,667,479   $    (60,306)  $  (13,907,812)  $(5,280,267)
                                  -------------  ---------  ------------ -------------  ---------------  ------------
</TABLE>

                      See independent auditors' report and
            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,
                                                                                               2001          2000
                                                                                             ----------   -----------
<S>                                                                                        <C>           <C>
Cash Flows From Operating Activities:
Net loss                                                                                   $(2,832,258)  $(7,180,991)
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities:
  Estimated fair market value of  options granted
    to directors and employees for compensation                                                140,100       121,790
  Estimated fair market value of warrants granted in
    connection with notes payable                                                               13,500            --
  Estimated fair market value of options and warrants
    granted to consultants for services rendered                                                40,333       157,800
  Estimated fair market value of stock issued for services                                      54,730     2,010,974
  Cancellation of previously issued stock and options                                         (357,800)           --
  Increase in allowance for doubtful accounts                                                  312,201       475,241
  Interest accrued on debt converted                                                                --         5,000
  Depreciation and amortization                                                                220,390       173,946
  Changes in operating assets and liabilities:
    Accounts receivable and other current assets                                            (1,164,896)   (1,241,749)
    Accounts payable and accrued expenses                                                    3,062,738     2,014,343
    Accrued payroll and related taxes                                                          770,015       778,955
    Deferred income                                                                            (60,582)       98,987
                                                                                             ----------   -----------
Net cash provided by/(used in) operating activities                                            198,471    (2,585,704)
                                                                                             ----------   -----------

Cash Flows From Investing Activities:
Purchases of property and equipment                                                            (46,109)     (156,686)
Loan to related party under note receivable                                                   (100,000)      (22,500)
Advances to officer, net                                                                        11,045       (71,351)
Deposits                                                                                       101,564       150,000
                                                                                             ----------   -----------

Net cash used in investing activities                                                          (33,500)     (100,537)
                                                                                             ----------   -----------

Cash Flows From Financing Activities:
Principal borrowings on notes payable to stockholders                                          225,000        48,500
Principal repayments on notes payable to stockholders                                         (273,500)           --
Principal borrowings on notes payable                                                               --       310,000
Principal repayments on notes payable                                                          (36,790)     (213,396)
Proceeds from sale of stock, net of offering costs of
  $288,395                                                                                          --     2,786,605
Principal repayments under capital lease obligations                                           (91,139)      (14,632)
                                                                                             ----------   -----------
Net cash provided by/(used in) financing activities                                           (176,429)    2,917,077
                                                                                             ----------   -----------
Net increase/(decrease) in cash                                                                (11,458)      230,836

Cash at beginning of period                                                                    231,336           500
                                                                                             ----------   -----------

Cash at end of period                                                                      $   219,878   $   231,336
                                                                                             ==========   ===========
</TABLE>


                      See independent auditors' report and
            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,
                                                         2001          2000
     Cash  paid  during  the  year  for:                -----          -----
     Interest                                          $69,772       $127,621
     Income  taxes                                       8,433          5,218

Supplemental disclosure of non-cash investing and financing activities:

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

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

During  the  year  ended  June  30,  2000,  the  Company issued 55,000 shares of
restricted  common  stock  pursuant  to  the conversion of a note payable with a
principal  amount  of  $50,000  and  accrued  interest  of  $5,000.

During  the  year ended June 30, 2000, the Company converted $90,189 of accounts
payable  into  a  promissory  note  (see  Note  6).

During  the  year  ended  June  30, 2000, certain employees exercised options to
purchase  375,000  shares  of  the  Company's  common stock in lieu of salary of
$72,250.

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

                                      F-7
<PAGE>

NOTE  1  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

ORGANIZATION  AND OPERATIONS - GTC Telecom Corp. and subsidiaries (the "Company"
or  "GTC")  provide  various telecommunication services, including long distance
telephone and calling card services as well as various Internet related services
including  Internet  service  provider access and web page hosting.  GTC Telecom
Corp.  was  organized  as  a Nevada Corporation on May 17, 1994 and is currently
based  in  Costa  Mesa,  California.

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, 2001, the Company has
negative  working  capital  of  $5,522,587, liabilities from the underpayment of
payroll  taxes  (see  Note  11), contingent liabilities from cancelled contracts
(see  Note  11),  and a stockholders' deficit of $5,280,267; in addition through
June  30,  2001, the Company has losses from operations and a lack of profitable
operational history, among other matters, that raise substantial doubt about its
ability  to  continue  as  a  going  concern.  The  Company hopes to continue to
increase  revenues  from  additional  revenue  sources  and/or  increase margins
through  continued  negotiations  with MCI/WorldCom (see Note 11) and other cost
cutting  measures.  In  the  absence  of  significant  increases in revenues and
margins,  the  Company  intends  to  fund operations through additional debt and
equity  financing  arrangements.  The  successful  outcome  of future activities
cannot  be determined at this time and there are no assurances that if achieved,
the  Company will have sufficient funds to execute its intended business plan or
generate  positive  operating  results.

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

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

USE  OF  ESTIMATES  - The preparation of financial statements in conformity with
accounting  principles  generally  accepted  in  the  United  States  of America
requires  management  to make estimates and assumptions that affect the reported
amounts  of  assets  and  liabilities  and  disclosures of contingent assets and
liabilities  at  the  date  of the financial statements, as well as the reported
amounts  of  revenues and expenses during the reporting periods.  Actual results
could  differ  from  those  estimates.  Significant estimates made by management
are,  among  others, provisions for losses on accounts receivable, realizability
of  long-lived  assets  and  estimates  for  income  tax  valuations.

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

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

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
pursuant  to  the  Company's  contract  with MCI/WorldCom, the Company currently
depends  primarily  upon  MCI/WorldCom  to provide for the transmission of phone
calls  by  its  customers  and to provide the call detail records upon which the
Company  bases  its  customers billings.  Under the terms of an amended contract
entered into with MCI/WorldCom on August 10, 1998 (and last amended in September
2000),  the Company is obligated to a minimum monthly commitment of $520,000 per
month  through  August  2003.

Pursuant  to  the  terms of the contract with MCI/WorldCom, the Company must pay
liquidated  damages  in an amount equal to the aggregate minimum requirement for
the  remaining term of the contract if the Company terminates the contract prior
to  the  expiration  date.  Although  the Company believes that its relationship
with  MCI/WorldCom  is  strong  and  should  remain  so  with continued contract
compliance,  the  termination  of  the Company's contract with MCI/WorldCom, the
loss  of telecommunications services provided by MCI/WorldCom, or a reduction in
the  quality  of  service  the  Company  receives from MCI/WorldCom could have a
material  adverse  effect  on the Company's results of operations.  In addition,
the accurate and prompt billing of the Company's customers is dependent upon the
timeliness  and  accuracy  of  call  detail  records  provided to the Company by
MCI/WorldCom.

                                      F-8
<PAGE>

PROPERTY AND EQUIPMENT - Property and equipment is stated at cost.  Depreciation
is computed using the straight-line method over the useful life of 3 to 5 years.
During  the  year  ended  June 30, 2001 and 2000, total depreciation expense was
$195,890  and  $149,447,  respectively.

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

LONG-LIVED  ASSETS  -  The Company has adopted Statement of Financial Accounting
Standards  No.  121  ("SFAS  121"), "Accounting for the Impairment of Long-Lived
Assets  and  for  Long-Lived  Assets  to  be  Disposed  Of," which requires that
long-lived assets and certain identifiable intangibles to be held and used by an
entity  be  reviewed  for impairment whenever events or changes in circumstances
indicate  that  the  carrying  amount  of  an  asset may not be recoverable.  In
accordance  with  the  provisions  of  SFAS  121,  the Company regularly reviews
long-lived  assets  for  impairment  whenever events or changes in circumstances
indicate  that  the carrying amount of the assets may not be recoverable.  Based
on  this  analysis,  the  Company  management believes that no impairment of the
carrying  value  of  its  long-lived  assets  existed  at  June  30,  2001.

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.  The  effective  date of this pronouncement is the fourth quarter of
the  fiscal  year beginning after December 15, 1999. The adoption of SAB 101 did
not  have  a  material impact on the Company's financial position or  results of
operations.

DEFERRED  REVENUE  - Deferred revenue represents proceeds from prepaid telephone
calling  cards which are recorded as deferred revenue 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  $171,108  and  $1,004,103  for fiscal 2001 and 2000, respectively.

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

                                      F-9
<PAGE>

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

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

The  adoption  of  the  accounting  methodology  of SFAS 123 is optional and the
Company  has  elected to continue accounting for stock-based compensation issued
to  employees  using  APB  25; however, pro forma disclosures, as if the Company
adopted  the  cost  recognition  requirements under SFAS 123, are required to be
presented  (see  Note  7).

In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"), "Accounting for
Certain Transactions Involving Stock Compensation, an Interpretation of APB 25."
FIN  44  clarifies  the application of APB 25 for (a) the definition of employee
for purposes of applying APB 25, (b) the criteria for determining whether a plan
qualifies  as a noncompensatory plan, (c) the accounting consequence for various
modifications  to the terms of a previously fixed stock option or award, and (d)
the  accounting  for  an  exchange  of  stock  compensation awards in a business
combination.  The  adoption  of  FIN  44  did  not have a material effect on the
Company's financial statements.

LOSS  PER  SHARE  -  The  Company  has adopted Statement of Financial Accounting
Standards  No.  128  ("SFAS  128"), "Earnings Per Share."  Under SFAS 128, basic
earnings  per  share  is  computed  by  dividing  income  available  to  common
shareholders  by  the  weighted-average  number  of  common shares assumed to be
outstanding  during  the  period  of computation.  Diluted earnings per share is
computed  similar  to  basic  earnings  per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common  shares  were dilutive.  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.

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

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

                                      F-10
<PAGE>
SEGMENTS  OF  AN  ENTERPRISE  AND  RELATED INFORMATION - The Company has adopted
Statement  of  Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosures
about  Segments  of an Enterprise and Related Information." SFAS 131 changes the
way  public  companies  report  information  about segments of their business in
their  annual  financial statements and requires them to report selected segment
information in their quarterly reports issued to shareholders.  It also requires
entity-wide  disclosures about the products and services an entity provides, the
material  countries  in which it holds assets and reports revenues and its major
customers.  As approximately 99% of the Company's revenues, loss from operations
and identifiable assets are from the telecommunications segment, the Company has
not  made  segment  disclosures  in  the  accompanying  financial  statements.

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

ACCOUNTING  FOR  WEB SITE DEVELOPMENT COSTS - In March 2000, the Emerging Issues
Task  Force  reached  a  consensus  on  Issue No. 00-2, "Accounting for Web Site
Development  Costs"  ("EITF  00-2") to be applicable to all web site development
costs  incurred  for  the  quarter beginning after June 30, 2000.  The consensus
states  that  for  specific  web site development costs, the accounting for such
costs  should  be  accounted  for  under  AICPA Statement of Position 98-1 ("SOP
98-1"), "Accounting for the Costs of Computer Software Developed or Obtained for
Internal  Use."  The adoption of EITF 00-2 did not have a material effect on the
Company's  financial  statements.

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

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


                                      F-11
<PAGE>
NOTE  2  PROPERTY  AND  EQUIPMENT
Property  and  equipment  consist  of  the  following  as  of  June  30,  2001:



Computer equipment                $465,965
Furniture and office equipment      58,238
Telephone equipment                 75,904
                                  --------
                                   600,107
Less accumulated depreciation     (377,523)
                                  --------
                                  $222,584
                                  ========


NOTE  3  OTHER  ASSETS

Other  assets  consist  of PUC carrier certifications the Company must obtain in
order to provide interstate and intrastate telephone service.  They are recorded
at  cost  and are being amortized using the straight-line method over the useful
life  of  3  years.  Amortization  expense for the years ended June 30, 2001 and
2000  is  $24,500  and  $24,499,  respectively.

NOTE  4  OBLIGATION  UNDER  CAPITAL  LEASE

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

Future  minimum  annual  commitments  under  lease  arrangements are as follows:

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

         2002                                               $93,872
                                                           --------
Total  minimum  future  lease  payments                      93,872

Less:  Amounts  representing  interest                       (5,748)
                                                           --------

Present  value  of  net  minimum  lease  payments           $88,124
                                                           ========

The  following is an analysis of the leased equipment under capital leases as of
June  30,  2001,  which  is  included  in  property  and  equipment  (Note  2).

               Computer equipment                 $205,416
               Less: Accumulated depreciation     (142,649)
                                                  --------
                                                   $62,767
                                                  ========

Interest  incurred  pursuant  to  the  capital  lease obligation was $16,065 and
$19,653  for  fiscal  years  2001  and  2000,  respectively.

                                      F-12
<PAGE>
NOTE  5  RELATED  PARTY  TRANSACTIONS

NOTE  RECEIVABLE  OFFICER

As of June 30, 2001, 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,  2001)  and  are  due  on  demand.  The  Company  has  reclassified the note
receivable  as  an  increase  to  stockholders'  deficit  at  June  30,  2001.

OTHER

In  September  2000,  the Company borrowed $200,000 for working capital purposes
from  a  shareholder of a   related-party company.  The borrowings, which accrue
interest  at  12%,  require  no monthly principal and interest payments with all
unpaid  principal  and  interest  due  on  March 25, 2001 and are secured by the
Company's  receivables.  As  of  June  30,  2001,  the  Company  has  repaid the
principal  and  interest  due.  In  addition, the Company agreed to issue to the
noteholder warrants to purchase 40,000 shares of the Company's restricted common
stock  at  an  exercise  price  of  $0.50  per  share  (see  Note  8).

OTHER

In  September  2000,  the Company borrowed $200,000 for working capital purposes
from  a  shareholder of the related-party company.  The borrowings, which accrue
interest  at  12%,  require  no monthly principal and interest payments with all
unpaid  principal  and  interest  due  on  March 25, 2001 and are secured by the
Company's  receivables.  As  of  June  30,  2001,  the  Company  has  repaid the
principal  and  interest  due.  In  addition, the Company agreed to issue to the
noteholder warrants to purchase 40,000 shares of the Company's restricted common
stock  at  an  exercise  price  of  $0.50  per  share  (see  Note  8).

During  fiscal  year  2001,  in connection with the transaction noted above, the
Company  advanced  $100,000  to  a  company  related  to  the  above  referenced
noteholder.  The  advance,  which  accrues  interest at 12%, required no monthly
principal  or  interest  payments  with all unpaid principal and interest due on
March  25,  2001.  The Company is in the process of renegotiating the repayment.
No  interest  has  been  paid  or accrued as of June 30, 2001.  In addition, the
Company was issued warrants to purchase 50,000 shares of restricted common stock
of  the  related-party  company  at an exercise price of $2.00 per share.  Since
this  company  is  not  a  public  entity,  GTC  valued the warrants at $0.  The
warrants  are  exercisable  for  a  period  of  ten  (10) years from the date of
issuance.

The Company borrows funds from the Company's Chief Executive Officer for working
capital  purposes  from  time to time. The borrowings accrue interest at 10% and
are  due  on  demand.  As of June 30, 2001, the Company has repaid the principal
balance.  No  interest was accrued or paid for the years ended June 30, 2001 and
2000.

NOTE  6  NOTES  PAYABLE
In January 2000, the Company borrowed $200,000 for working capital purposes from
a  third  party.  The  note  was  due February 28, 2000 plus accrued interest of
$20,000.  If  all  unpaid  principal  and  interest was not paid by February 28,
2000,  the  aggregate  balance  was  to  accrue interest at 2% per month with no
predetermined  due  date.  On April 11, 2000, the Company repaid $100,000 of the
principal  balance.  On  May  15,  2001,  the noteholder converted the principal
balance  outstanding of $100,000 into 285,715 restricted shares of the Company's
common stock at $0.35 per share (the fair market value on the date of conversion
was $0.32).  These shares also have piggyback registration rights.  In addition,
the  Company  will  repay  $15,000  of  the  accrued  interest  in  three  equal
installments  in June, July, and August 2001 with all remaining accrued interest
forgiven  (see  Note  9).

On  March  2,  2001,  the  Company  issued  a  one-year  convertible  note to an
accredited shareholder of the Company in the amount of $25,000.  Pursuant to the
terms  of the note, the note is convertible by the noteholder into shares of the
Company's  common stock at a conversion rate of $1.00 per share.  The note earns
12% interest payable at maturity.  On May 31, 2001, the noteholder exercised the
conversion  feature  into  25,000 shares of the Company's common stock (see Note
9).

In fiscal 1999, the Company borrowed $50,000 for working capital purposes from a
third  party.  The  note,  which  accrued  interest at 10% per annum, was due on
August  6,  1999.  During fiscal 2000, the noteholder converted the note payable
and  accrued  interest,  totaling  $55,000  into  55,000 shares of the Company's
restricted  common  stock  at  $1.00  per share (estimated to be the fair market
value  on  the  date  of  conversion based on the price per share of the current
private  placement  memorandum).

On  February  3,  2000,  the  Company terminated its agreement with a vendor and
signed  a  promissory  note  for  amounts  owed of $90,189.  The promissory note
required  the Company to make nine monthly installment payments of approximately
$10,000  per month beginning February 15, 2000 through October 15, 2000.  If the
Company  failed  to  make  an  installment  payment, then the unpaid balance was
immediately  due  and  payable.  The  Company  has  repaid the balance due.  The
promissory  note  was  personally  guaranteed  by  the Company's Chief Executive
Officer.

                                      F-13
<PAGE>
NOTE  7  STOCK  OPTIONS

On September 20, 1999, the Company's Board of Directors approved the GTC Telecom
Corp.  1999  Omnibus Stock Option Plan (the "Option Plan"), effective October 1,
1999.  An  aggregate of 750,000 shares of common stock are reserved for issuance
under  the  Plan during the year October 1, 1999 to September 30, 2000. For each
subsequent  year beginning October 1, 2000, there shall be reserved for issuance
under  the  Plan that number of shares equal to 10% of the outstanding shares of
common  stock  on July 1 of that year or 1,996,754 shares for the year beginning
October  1,  2000.  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. The Company registered 750,000
shares underlying the options pursuant to its 1999 Stock Option Plan on Form S-8
filed  with  the  Securities  and  Exchange  Commission  on  October  6,  1999.

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

On October 5, 2000, the Company's Board of Directors ("Board") granted, pursuant
to  the Option Plan, an aggregate of 203,650 Incentive Stock Options (as defined
by  the  Plan),  exercisable  at $0.6875 per share (the fair market value of the
Company's  common stock on the day of grant) to certain employees of the Company
and  an  aggregate  of  300,000  Non-statutory  Stock Options (as defined by the
Option  Plan),  exercisable  at  $0.6875 per share (the fair market value of the
Company's  common  stock  on  the day of grant) to the directors of the Company.
During  fiscal  year  2001,  an  additional  109,900 Incentive Stock Options (as
defined  by the Plan) were granted, exercisable at exercise prices between $0.25
and  $0.72  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.

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

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

On  October  18, 1999, the Company's Board of Directors granted, pursuant to the
Option  Plan,  an aggregate of 73,000 Incentive Stock Options (as defined by the
Plan),  exercisable at $2.9375 per share (the fair market value of the Company's
common  stock  on  the  day of grant) to certain employees of the Company and an
aggregate  of  360,000  Non-statutory  Stock  Options  (as defined by the Option
Plan), exercisable at $1.10 per share, to the officers of the Company, resulting
in  $661,500  of compensation expense to be charged to the Company over the five
year  vesting  period at $132,300 per year beginning in fiscal year 2001 through
fiscal  year  2005.  During  fiscal year 2000, an aggregate of 94,000 additional
Incentive  Stock  Options  (as defined by the Plan) were granted, exercisable at
$1.37  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  are  exercisable  through  October  2009.

During  fiscal  2000,  the  Company  entered  into various employment agreements
wherein  the  Company  has  agreed  to  supplement  compensation  to certain key
employees in the form of stock options.  Pursuant to the agreements, the Company
issued  options  to  purchase  75,000  shares  of restricted common stock during
fiscal  2000,  at  an  exercise  price of $2.72 per share and vesting over three
years  from  date  of  grant.  A  total of approximately $50,490 of compensation
expense  was  recorded  in fiscal 2000 relating to employment agreement options.

In  January  2000,  the  Company  entered  into  an  agreement  with  an outside
consultant  for  investor  and  public  relations  services.  Pursuant  to  the
agreement,  the  Company issued 56,637 shares of common stock valued at $200,000
for  services (see Note 9).  In addition, the Company issued options to purchase
60,000 shares of the Company's common stock as follows: 1) 20,000 shares at 100%
of  the  closing  bid price on January 28, 2000, 2) 20,000 shares at 200% of the
closing  bid  price  on  January  28,  2000 and, 3) 20,000 shares at 300% of the
closing  bid  price  on  January  28, 2000.  The options were valued at $157,800
using  the Black Scholes method and recorded as investor relations expense under
Selling,  General  and  Administrative  expense in the accompanying Statement of
Operations.  In  October 2000, pursuant to an agreement, the consultant accepted
a  cash  payment  of $6,280 in lieu of the 56,637 shares of the Company's common
stock and the 60,000 options.  As a result, the Company reversed the transaction
and  recorded  the value of the previously issued stock and warrants of $357,800
as  a  reduction  in  Selling,  General,  and  Administrative  expense.

                                      F-14
<PAGE>
On  May  1,  2000,  the  Board issued options to purchase an aggregate of 57,500
shares  of  the Company's common stock, at an exercise price of $0.01, valued at
$71,300,  to  the  members  of the Board pursuant to their agreement of director
compensation.  The  options  are  exercisable  through  May  2003.

On  May 1, 2000, the Board granted, pursuant to the Option Plan, an aggregate of
194,100  Non-statutory  Stock  Options  (as defined by the Plan), exercisable at
$1.25  per share (the fair market value of the Company's common stock on the day
of  grant)  to  certain employees and officers of the Company.  In addition, the
Board  granted options to purchase 100,000 shares of restricted common stock, at
an  exercise  price  of  $1.25 per share (the fair market value of the Company's
common  stock on the day of grant) to the members of the Board.  However, in the
event  that  the  trading price of the Company's common stock closes at or above
$5.00  per  share  for  a  minimum of five consecutive trading days, the options
shall  become  fully  vested.  The  options  are  exercisable  through May 2010.

On  October  20, 1999, the Company granted options to purchase 526,000 shares of
restricted  common stock, at an exercise price of $1.00 per share, to a director
of  the  Company (the fair market value of the Company's common stock on the day
of  grant).  The  options  are  exercisable  through  October  2002.

A  following  is  a status of the stock options outstanding at June 30, 2001 and
2000  and  the  changes  during  the  years  then  ended:

                                          2001                  2000
                                         ------                ------
                                              Weighted             Weighted
                                              Average               Average
                                              Exercise             Exercise
                                 Options       Price      Options    Price
                                -----------  ---------  ----------  -------
Outstanding, beginning of year   2,156,500   $  1.7365    765,000   $1.7577
       Granted                     791,050      0.5788  1,779,000    1.4189
       Exercised                        --          --   (375,000)   0.1920
       Expired/Forfeited          (255,550)      3.097    (12,500)   4.1750
                                -----------  ---------  ----------  -------
Outstanding, end of year         2,692,000   $  1.2671  2,156,500   $1.7365
                                ===========  =========  ==========  =======
Exercisable at end of year       1,441,730   $  1.3216  1,089,401   $1.5578
                                ===========  =========  ==========  =======
Wtd avg fair value of options
 granted                                     $    0.81              $  1.39
                                             ----------             -------

1,436,950  of  the  options  outstanding  at  June 30, 2001 have exercise prices
between  $0.01  and $1.00, with a weighted average exercise price of $0.74 and a
weighted  average  remaining  contractual  life  of 4.7 years.  876,000 of these
options are exercisable at June 30, 2001.  951,050 of the options outstanding at
June  30,  2001  have  exercise  prices between $1.01 and $2.00, with a weighted
average  exercise  price  of  $1.16 and a weighted average remaining contractual
life  of  7.4years.  381,730  of these options are exercisable at June 30, 2001.
The remaining 304,000 options have exercise prices between $2.94 and $5.50, with
a  weighted  average  exercise  price  of $4.10 and a weighted average remaining
contractual  life of 4.1years.  184,000 of these options are exercisable at June
30,  2001.

SFAS  123  Proforma  Information:

The fair market value of each option granted in 2001 and 2000 to consultants and
other  third  parties is estimated using the Black-Scholes option pricing method
per  SFAS  123.  The  Black-Scholes  option-pricing  model  used  the  following
assumptions  for  the  years  ended June 30, 2001 and 2000, respectively: (i) no
dividend  yield  for  each  year, (ii) average volatility of 203 percent and 152
percent,  (iii)  weighted-average  risk-free interest rate of approximately 6.25
percent  and  6.25  percent,  and  (iv)  expected  life  of  1  year.

                                      F-15
<PAGE>
Had  compensation  cost  for  the  Company's  2001  and  2000 options granted to
employees  been  determined consistent with SFAS 123, the Company's net loss and
net  loss  per share for the year ended June 30, 2001 and 2000 would approximate
the  pro  forma  amounts  below:

                                        Years  ended  June  30,
                                       --------------------------
                                 2001                           2000
                     As Reported     Pro Forma        As Reported    Pro Forma
                    ------------     ----------       -----------    ----------
Net loss            $(2,832,258)     $(3,017,965)     $(7,180,991)  $(7,455,503)
  Basic and diluted      $(0.14)          $(0.15)          $(0.42        $(0.44)
  loss per share

NOTE  8  WARRANTS

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

In  September  2000,  the  Company  agreed  to issue to a noteholder warrants to
purchase  up  to  40,000  shares  of the Company's restricted common stock at an
exercise  price of $0.50 per share valued at approximately $13,500 (based on the
Black-Scholes  pricing  model) (see Note 5).  The warrants are exercisable for a
period  of  two  years  from  the  date  of  issuance  and  contain  piggy-back
registration  rights.

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

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

1.     Warrants  to  purchase  50,000  shares of the Company's restricted common
stock  at  an  exercise price of $0.25 per share valued at approximately $12,500
(based  on  the  Black-Scholes  pricing model) upon execution of the LOI.  These
warrants  have  been granted but will not vest until execution of the definitive
agreement.
2.     Warrants  to  purchase  50,000  shares  of the Company' restricted common
stock  priced  at the fair market value on the date of the launch of the Company
on  the marketing company's website.  No warrants have been granted or earned as
of  the  date  of  this  filing.
3.     Additional  warrants  at  the  rate  of one restricted share per customer
brought  to  the  Company  by the marketing company for every 100,000 customers.
The  warrants are priced at the lowest fair market value within 60 calendar days
of the date of grant.  No warrants have been granted or earned as of the date of
this  filing.

No  warrants  were  granted  or  issued  during  fiscal  2000.

In  January  2000,  the  Company entered into an agreement 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  up  to  1,000,000  shares  of  the Company's common stock at $1.88 per
share,  at  the  rate  of  one  share per customer brought to the Company by the
marketing  company, subject to a minimum of 250,000 customers.  No warrants have
been  earned  or  granted  as  of  the  date  of  this  filing.

                                      F-16
<PAGE>
The  following represents a summary of the warrants outstanding at June 30, 2001
and  2000  and  changes  during  the  years  then  ended:

                                           2001

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

The  fair  value  of  each  warrant  granted  during 2001 is estimated using the
Black-Scholes  option-pricing  model  on  the  date of grant using the following
assumptions:  (i)  no  dividend  yield,  (ii) average volatility of 170 percent,
(iii) weighted-average risk-free interest rate of approximately 6.2 percent, and
(iv)  expected  life  of  3  years.

190,000  of  the  warrants  outstanding  at  June  30, 2001 have exercise prices
between  $0.25 and $1.516, with a weighted average exercise price of $0.71 and a
weighted  average  remaining  contractual  life  of 4.3 years.  140,000 of these
warrants  are  exercisable  at  June  30,  2001.

NOTE  9  COMMON  STOCK  ISSUANCES


During  the fiscal year ended June 30, 2000, the Company issued 2,825,000 shares
of  restricted  common  stock  pursuant  to  a  private placement memorandum for
$2,536,605, net of offering costs of $288,395.  The private placement memorandum
was  closed  as  of  June  2000.

During the fiscal year ended June 30, 2000, the Company issued 250,000 shares of
restricted  common  stock  for  $250,000  to  two  unaffiliated  investors.

During the fiscal year ended June 30, 2000, the Company issued 305,000 shares of
restricted  common  stock,  valued  at  $305,000 (estimated by the Company to be
$1.00  per  share)  in  exchange  for  consultation  services  rendered.

In  September  1999, the Company issued 67,675 shares of common stock, valued at
$271,247  (based  on  the  market  value on the date of grant) to consultants in
exchange  for  consultation  and  legal  services  rendered.

In  December  1999, the Company issued 282,575 shares of common stock, valued at
$539,666  (based  on  the  market  value on the date of grant) to consultants in
exchange  for  consultation  and  legal  services  rendered.

In  January  2000, the Company issued 7,000 shares of the Company's common stock
valued  at  $13,118 (based on the market value on the date of grant) in exchange
for  consultation  services  rendered.

In  January  2000,  the  Company  entered  into  an  agreement  with  an outside
consultant  for  investor  and  public  relations  services.  Pursuant  to  the
agreement,  the  Company issued 56,637 shares of common stock valued at $200,000
(based on the market value on the date of grant) for services.  In October 2000,
pursuant  to  an  agreement, the consultant accepted a cash payment of $6,280 in
lieu  of  the  56,637  shares  of  the  Company's  common  stock  (see  Note 7).

In  May  2000,  the  Company  issued  456,833  shares of common stock, valued at
$682,000  (based  on  the  market  value on the date of grant) to consultants in
exchange  for  consultation  and  legal  services  rendered.

During  fiscal  year 2000, the Company issued 55,000 shares of restricted common
stock  pursuant  to  the conversion of a note payable with a principal amount of
$50,000  and  accrued  interest  of  $5,000.

During  fiscal  year 2000, the Company's Chief Executive Officer, President, and
Chief  Financial  Officer,  and  certain  other  employees, exercised options to
purchase  a  total  of  375,000  shares of the Company's common stock in lieu of
salary  for  $72,250.

                                      F-17
<PAGE>
In  October  2000,  the  Company issued 20,000 shares of restricted common stock
valued  at $11,250 (based on the market price on the date of grant) for services
rendered.  In  connection  with  this issuance, the Company recorded advertising
expense  of  $11,250.  These  shares  also  have  a  provision  for  piggyback
registration  rights.

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

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

On  May  31,  2001, a $25,000 noteholder exercised the conversion feature of the
note  into  25,000 restricted shares of the Company's common stock (see Note 6).

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

During  fiscal  year  2000,  Mr.  Sandhu  and  Mr.  Clemons canceled 619,848 and
154,962 shares,  respectively,  of  the  Company's  common stock held by each of
them. It was determined that these shares were not cancelled in a timely matter.
As  a  result,  these  cancellations  are  reflected  as  a  reduction  in  the
outstanding shares  as  of  July  1,  1998.

                                      F-18
<PAGE>
NOTE  10  INCOME  TAXES

The tax effects of temporary differences that give rise to deferred taxes are as
of  June  30,  2001:


   Deferred  tax  asset:
      Net  operating  loss  carryforward                            $7,880,000
      Expense  recognized  for  granting  options  and  warrants       570,000
      Allowance  for  doubtful  accounts                                90,000
                                                                    ----------

      Total  gross  deferred  tax  asset                             8,540,000

      Less  valuation  allowance                                    (8,540,000)

      Net  deferred  tax  asset                                      $      --

The  valuation  allowance increased by $4,060,629 during the year ended June 30,
2001.  No current provision for income taxes for the periods ended June 30, 2001
and 2000 is required, except for minimum state taxes, since the Company incurred
taxable  losses  during  such  years.

The  provision  for  income  taxes for fiscal 2001 and 2000 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,

                                                           2001        2000
                                                         -------      ------
Computed  tax  benefit at federal statutory rate       $(960,000)  $(2,440,000)
     State  income tax benefit, net of federal effect    (83,000)     (237,000)
     Increase  in  valuation  allowance                4,060,629     2,682,218
     Tax benefit from exercise of stock options in
      fiscal 1999 and 2000 not previously recognized  (3,009,196)            -
                                                       _________   ___________
                                                       $   8,433   $     5,218

As  of  June  30,  2001,  the  Company  had  net operating loss carryforwards of
approximately  $18,900,000  and  $16,400,000 for  federal  and  state income tax
reporting  purposes,  which  begin  expiring  in  2013  and  2003, respectively.

NOTE  11  COMMITMENTS  AND  CONTINGENCIES

Contingencies  -  On  April 30, 1999, the Company entered into an agreement with
Williams  Communications, a unit of Williams of Tulsa, Oklahoma ("Williams"), in
which Williams was to design, install and maintain a high speed, nationwide VoIP
network  for  the  Company.  Subsequently, due to Williams' inability to deliver
the  VoIP  network  as  contracted  and  as a result of the previously discussed
amendments  to  the MCI/WorldCom contract, the Company determined to discontinue
its  agreement  with  Williams.  As a result of the Company's discontinuation of
its contract with Williams, the Company may be subject to $600,110 in fees.  The
Company  is  in negotiations with Williams to modify or eliminate these charges.
However,  no  assurances  can  be  made  that such negotiations will result in a
favorable outcome.  No amounts have been recorded related to the discontinuation
of  the  contract  as  of  June  30,  2001.

PAYROLL TAXES -The Company has recorded an accrual for past due payroll taxes as
of  June  30,  2001  due  to  the  under-reporting  of the Company's payroll tax
liability.  As  a  result,  the  Company  has  accrued  approximately $1,205,000
(including  approximately  $252,000  of  penalties  and  interest) under accrued
payroll  and  related  taxes in the accompanying balance sheet at June 30, 2001.
The  Company  expects  this  matter  to  be settled and the related accrual paid
byDecember,  2002.

                                      F-19
<PAGE>
OPERATING LEASES - Effective July 24, 2001, the Company leases a total of 10,624
square feet of office space for its headquarters and customer service operations
in  Costa  Mesa, California at a monthly rental rate of $23,548 through July 31,
2004,  unless  terminated  by  either  party  with  75  days  notice.

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

Years Ending   Facility
June 30,       Leases       Supplier        Total
-------------  -----------  -----------  -----------
2002           $   278,000  $ 6,240,000  $ 6,518,000
2003               283,000    4,160,000    4,443,000
2004               283,000           --      283,000
2005                24,000           --       24,000
               -----------  -----------  -----------
                   868,000  $10,400,000  $11,268,000
               ==========   ===========  ===========

Rent  expense for the fiscal years ended June 30, 2001 and 2000 was $315,317 and
$322,880,  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.  The
Company  is  subject  to  monthly minimum commitments of $1,500 through December
2001.  Subsequently,  the  monthly  minimum commitment is $500 per month.  Total
amount  paid pursuant to this agreement was $63,363 for the year ended  June 30,
2001.

The  Company  does  not  own  its own long distance network, and pursuant to the
Company's  contract  with  MCI/WorldCom, the Company currently depends primarily
upon  MCI/WorldCom  to  provide  for  the  transmission  of  phone  calls by its
customers  and  to  provide the call detail records upon which the Company bases
its  customers  billings.  Under  the  terms of an amended contract entered into
with  MCI/WorldCom  on August 10, 1998 (and last amended in September 2000), the
Company  is  obligated  to  a  minimum  monthly commitment of $520,000 per month
through  August  2003.  For  the years ended June 30, 2001 and 2000, the Company
paid  $5,468,164  and  $2,239,778  respectively,  pursuant  to  this  agreement.
Currently,  the  Company owes $5,186,503 to WorldCom (including accrued interest
on  the  unpaid balance totaling $463,483 at June 30, 2001) which is included in
Accounts  Payable at June 30, 2001.  The Company is finalizing negotiations with
WorldCom for the repayment of this amount.  The Company is currently required to
accrue  interest  on  unpaid  balances  of  18%  per  annum.


                                      F-20
<PAGE>
The  Company  has  an  agreement  with a billing company who provides processing
services  for customer billing and collections.  In addition the billing company
will  provide  financing  through  a third-party lender for amounts up to 60% of
eligible  accounts  receivable,  as defined.   For the years ended June 30, 2001
and  2000,  the  Company paid $70,921 and $121,043, respectively, in fees to the
billing  company  pursuant  to  this  agreement.

The  Company  has an agreement to become a licensed user of a telecommunications
management  and  accounting  software  program.  The agreement, which expires in
October  2003, unless terminated by the Company, has a five-year renewal feature
and  provides  for  the  Company  to pay a minimum of $1,425 per month.  For the
years  ended  June  30,  2001  and  2000,  the Company paid $41,021 and $17,309,
respectively,  pursuant  to  this  agreement.

NOTE  12  EARNINGS  PER  SHARE

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

                                                       Years  Ended  June  30,
                                                          2001         2000
                                                          ____         ____

 Numerator for basic and diluted earnings per share:
  Net loss charged to common stockholders             $ (2,832,258) $(7,180,991)

 Denominator for basic and diluted earnings per share:
  Weighted average shares                               20,031,313   17,105,139

     Basic  and  diluted  earnings  per  share        $      (0.14) $     (0.42)

NOTE  13  SUBSEQUENT  EVENT:

On  August  17,  2001,  the Company agreed to issue to a shareholder warrants to
purchase  up  to  100,000  shares  of  the Company's restricted common stock for
consulting  services  at  an  exercise price of $0.35 per share (the fair market
value  on the date of grant was $0.18) valued at approximately $14,000 (based on
the  Black-Scholes pricing model).  The warrants are exercisable for a period of
two  years  from  the  date  of  issuance.














                                      F-21
<PAGE>