================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-QSB

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

                For the quarterly period ended September 30, 2001

                                       OR

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

           For the transition period from ____________ to ____________

                        Commission file number: 000-23291

                               DigiTEC 2000, Inc.
             (Exact name of registrant as specified in its charter)

          Nevada                                        54-1287957
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)

                         99 Madison Avenue, Third Floor
                            New York, New York 10016
               (Address of Principal Executive Offices) (Zip Code)


       Registrant's Telephone Number, Including Area Code: (212) 944-8888

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No |_|

The number of outstanding  shares of the  Registrant's  Common Stock,  par value
$.001 per share (the "Common Stock") as of September 30, 2001 was 7,058,998.

================================================================================



<PAGE>


                               DigiTEC 2000, INC.
                               INDEX TO FORM 10-QSB




                                                                         Page(s)
                                                                         -------



PART I -- FINANCIAL INFORMATION


ITEM 1 -- Financial Statements

Condensed Consolidated Balance Sheet as of September 30,
2001 (Unaudited)........................................................       3

Condensed Consolidated Statements of Loss for the Three
Months Ended September 30, 2001 and September 30,
2000 (Unaudited)........................................................       4

Condensed Consolidated Statement of Stockholders' Deficit for the
Three MonthsEnded September 30, 2001 (Unaudited)........................       5

Condensed Consolidated Statements of Cash Flows for the Three
Months Ended September 30, 2001 and September 30, 2000 (Unaudited)......       6

Notes to Condensed Consolidated Financial Statements (Unaudited)........  7 - 10


ITEM 2 -- Management's Discussion and Analysis of Financial

Condition and Results of Operations..................................... 11 - 14


ITEM 3--Quantitative and Qualitative Disclosures About Market Risk......      14


Signatures..............................................................      15



                                       2
<PAGE>



                                                              DigiTEC 2000, Inc.
                                                                  and Subsidiary

                Condensed Consolidated Balance Sheet (Unaudited)
================================================================================

                                                              September 30, 2001
--------------------------------------------------------------------------------

Assets:
Current:
 Cash and cash equivalents                                         $    284,488
 Accounts receivable, net of allowance for bad
  debts of $1,917,682                                                 2,171,760
 Inventory, net of allowance for obsolescence of $46,513              1,229,284
 Prepaid expenses and other                                             212,345
--------------------------------------------------------------------------------

Total Current Assets                                                  3,897,877

Property and equipment, net of accumulated
 depreciation of $294,106                                               349,248
Other assets                                                            181,861
--------------------------------------------------------------------------------

Total Assets                                                       $  4,428,986
================================================================================

Liabilities and Stockholders' Deficit
Current:
 Notes and accounts payable to TecNet, Inc.                        $ 16,591,858
 Accounts payable - trade                                             1,259,757
 Accrued taxes and penalties                                          2,697,120
 Accounts payable and accrued expenses                                  781,484
 Accrued legal expenses                                                 816,834
 Allowance for sales returns                                          1,221,703
 Short term loans payable                                             1,144,031
--------------------------------------------------------------------------------

Total Liabilities                                                    24,512,787
--------------------------------------------------------------------------------

Deferred gain on disposition of subsidiary                              911,427
--------------------------------------------------------------------------------

Commitments and Contingencies                                                 -
--------------------------------------------------------------------------------
Stockholders' Deficit
 Series A  Convertible  Preferred  Stock,  $.001  par  value,
   1,000,000 shares authorized; 61,050 shares issued
   and outstanding; $100 per share liquidation preference                    61
 Common Stock, $.001 par value, 100,000,000 shares
   authorized; 7,058,998 shares issued and outstanding                    7,059
 Additional paid-in-capital                                          17,184,318
 Accumulated deficit                                                (38,186,666)
--------------------------------------------------------------------------------

Total Stockholders' Deficit                                         (20,995,228)
--------------------------------------------------------------------------------

Total Liabilities and Stockholders' Deficit                        $  4,428,986
================================================================================


     See accompanying notes to Condensed Consolidated Financial Statements.



                                       3



<PAGE>
<TABLE>
<CAPTION>


                                                                   DigiTEC 2000, Inc.
                                                                       and Subsidiary

                                 Condensed Consolidated Statements of Loss (Unaudited)
======================================================================================

                                                      Three Months Ended September 30,
                                                             2001           2000
--------------------------------------------------------------------------------------
<S>                                                      <C>             <C>
Net sales                                                $ 4,328,679     $ 8,874,653
Cost of sales, primarily TecNet                            3,932,659       7,798,496
--------------------------------------------------------------------------------------

      Gross profit                                           396,020       1,076,157

Selling, general and administrative
    expenses                                               1,387,694       1,913,815
--------------------------------------------------------------------------------------

      Loss before other income
        (expenses)                                          (991,674)       (837,658)

--------------------------------------------------------------------------------------
Other income (expenses):
    Interest expense                                        (258,156)       (191,119)
    Other income                                              45,947          26,987
--------------------------------------------------------------------------------------

         Other expenses                                     (212,209)       (164,132)
--------------------------------------------------------------------------------------

Net loss                                                 $(1,203,883)    $(1,001,790)
======================================================================================
Net loss per common share-basic
    and diluted                                          $    ( 0.17)    $     (0.14)
======================================================================================
Weighted average number of common and common
    equivalent shares outstanding used
    in basic and diluted computations                      7,058,998       7,058,998
======================================================================================
</TABLE>

       See accompanying notes to Condensed Consolidated Financial Statements.



                                         4

<PAGE>
<TABLE>
<CAPTION>


                                                                                                             DigiTEC 2000, Inc.
                                                                                                                 and Subsidiary

                                                           Condensed Consolidated Statement of Stockholders' Deficit (Unaudited)
================================================================================================================================


                                                              Three Months Ended September 30, 2001
--------------------------------------------------------------------------------------------------------------------------------
                                   Preferred Stock        Common Stock                                                 Total
                                   ---------------     -----------------         Additional        Accumulated     stockholders'
                                   Shares   Amount     Shares      Amount      paid-in capital       deficit          deficit
--------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>      <C>        <C>        <C>         <C>                 <C>             <C>
Balance, July 1, 2001              61,050   $ 61       7,058,998  $ 7,059     $ 17,152,818        $(36,982,783)   $(19,822,845)

   Contributed Capital                                                              31,500                              31,500

   Net loss                                                   --       --               --          (1,203,883)     (1,203,883)
--------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 2001        61,050   $ 61       7,058,998  $ 7,059     $ 17,184,318        $(38,186,666)   $(20,995,228)
================================================================================================================================

                          See accompanying notes to Condensed Consolidated Financial Statements.

</TABLE>

                                                        5


<PAGE>
<TABLE>
<CAPTION>


                                                                           DigiTEC 2000, Inc.
                                                                               and Subsidiary

                                   Condensed Consolidated Statements of Cash Flows (Unaudited)
==============================================================================================

                                                              Three Months Ended September 30,
                                                                   2001              2000
----------------------------------------------------------------------------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Cash flows from operating activities:
  Net loss                                                    $(1,203,883)       $(1,001,790)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
        Provision for bad debts - net                              15,010             85,580
        Sales returns                                            (185,397)                 -
        Provision for inventory obsolescence                       24,932                  -
        Depreciation                                               37,725             17,828
        Amortization of intangible assets                             895             23,735
        Deferred rent                                                   -             (1,785)
        Loss on disposal of assets                                 19,600                  -
        Services provided by shareholder                           31,500             30,000
        (Increase) decrease in:
          Accounts receivable                                   1,029,595           (500,380)
          Inventory                                              (170,624)            91,779
          Prepaid expenses and other                             (169,686)          (146,685)
        Increase (decrease) in:
          Accrued taxes and penalties                            (140,847)                 -
          Accounts payable and accrued expenses,
            including TecNet                                   (1,041,267)           908,125
----------------------------------------------------------------------------------------------
           Net cash used in operating activities               (1,752,447)          (493,593)
----------------------------------------------------------------------------------------------

Cash flows from investing activities:
  Capital expenditures                                           (113,711)           (22,206)
----------------------------------------------------------------------------------------------
           Net cash used in investing activities                 (113,711)           (22,206)
----------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Proceeds from issuance of short term loans                    1,144,031                  -
  Proceeds from issuance of TecNet notes                                -          1,732,000
  Repayment of notes payable                                            -           (317,000)
----------------------------------------------------------------------------------------------
           Net cash provided by financing activities            1,144,031          1,415,000
----------------------------------------------------------------------------------------------

           Net (decrease)increase in
             cash and cash equivalents                           (722,127)           899,201

Cash and cash equivalents beginning of period                   1,006,615          1,165,854
----------------------------------------------------------------------------------------------
Cash and cash equivalents end of period                       $   284,488        $ 2,065,055
==============================================================================================
</TABLE>

          See accompanying notes to Condensed Consolidated Financial Statements.


                                              6
<PAGE>


                        DigiTEC 2000, Inc. and Subsidiary
        Notes to Condensed Consolidated Financial Statements (Unaudited)


1.    THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES:

(a)   ORGANIZATION OF BUSINESS

The Company was  organized  as a Nevada  corporation  in May 1987 under the name
Yacht Havens  International Corp, which was subsequently changed in July of 1995
to Promo Tel, Inc.  ("Promo  Tel-Nevada").  In August of 1995,  Promo Tel-Nevada
merged with Promo Tel,  Inc.  ("Promo  Tel-Delaware"),  a Delaware  corporation,
exchanging   1,333,334   shares  of  the  Company's   previously   unissued  and
unregistered  common stock for all of the outstanding  shares of common stock of
Promo  Tel-Delaware.  In October  of 1996,  the  Company  formally  amended  its
Articles  of  Incorporation  to change the legal name of the  Company to DigiTEC
2000, Inc. ("DigiTEC").

(b)   NATURE OF OPERATIONS

DigiTEC and its wholly owned subsidiary POS TEC (collectively the "Company") are
primarily  engaged in the  creation,  distribution  and  marketing  of  consumer
prepaid  telephone  calling cards. The Company's prepaid cards provide consumers
with a competitive alternative to the traditional  pre-subscribed  long-distance
telecommunications  services,  credit/calling  cards and  conventional  coin and
other operator assisted long-distance services. It currently markets its prepaid
products throughout the New York/New Jersey metropolitan area. The Company sells
its prepaid  telephone  cards in  approximately  100 cities in twenty-nine  U.S.
states.

In November  of 1998 the Company  initiated a strategy of focusing on the sales,
marketing and  distribution  of prepaid  telephone  calling cards. In connection
with the  initiation  of such  strategy,  TecNet  began to  provide  significant
telecommunications   services   to  the  Company  and  to  finance  its  current
operations.  In February  of 1999,  the  Company  began to receive  semi-monthly
operating cash inflows from TecNet through the issuance of 10% demand promissory
notes.  Although TecNet has not made any formal demands for the repayment of the
advances,  no formal written  agreement exists between the Company and TecNet to
support TecNet's continuing deferral of repayment on such notes. As of September
30, 2001 (and through the issuance date of this filing),  the Company is totally
dependent   on  TecNet   to   provide   consulting   services,   financing   and
telecommunications support until it has achieved profitable operations. However,
there can be no  assurance  that  TecNet can or will  continue  to provide  such
services,  to finance the  current  operations  or to provide  the Company  with
bundled prepaid calling cards at comparable rates in future periods.

(c)   BASIS OF PRESENTATION

The accompanying  unaudited Condensed  Consolidated Financial Statements include
the accounts of DigiTEC and those of its wholly owned subsidiary,  POS TEC. Such
financial statements have been prepared in accordance with accounting principles
generally  accepted  in the  United  States of  America  for  interim  financial
information  and  with  the  instructions  to  Form  10-QSB  and  Article  10 of
Regulation  S-X.  Accordingly,  they  do not  include  all the  information  and
footnotes  required by accounting  principles  generally  accepted in the United
States of America  for  complete  financial  statements.  Although  the  Company
believes that the disclosures  included on the face of the interim  consolidated
financial  statements and in the  accompanying  footnotes are adequate to ensure
that the information  presented is not  misleading,  certain key information and
disclosures  have been condensed or otherwise  omitted pursuant to the SEC rules
and regulations noted above. The financial  information  presented for the three
months ended  September 30, 2001 has not been audited by  independent  auditors;
however,  in the opinion of management,  all  adjustments  (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included in operating  results for the three month period  ended  September  30,
2001 and are not necessarily  indicative of the results that may be expected for
a full fiscal year. All significant intercompany  transactions and balances have
been eliminated in consolidation.

The information  outlined in this Form 10-QSB should be read in conjunction with
the audited consolidated  financial statements and footnotes thereto included in
the  Company's  Annual  Report on Form 10-KSB for the fiscal year ended June 30,
2001.


                                       7
<PAGE>


                        DigiTEC 2000, Inc. and Subsidiary
        Notes to Condensed Consolidated Financial Statements (Unaudited)


The accompanying unaudited Condensed Consolidated Financial Statements have been
prepared on the basis that the Company is a going  concern,  which  contemplates
the  realization  of assets and the  satisfaction  of  liabilities in the normal
course of business.  However,  because of the  Company's  recurring  losses from
operations,  accumulated  deficit,  negative  working  capital  and  significant
arrearages  on  trade  and  other  payables,  such  realization  of  assets  and
satisfaction  of  liabilities  are  subject  to  significant  uncertainty.   The
unaudited  Condensed  Consolidated  Financial  Statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

The Company's  ability to continue as a going concern is highly dependent in the
near term on both the willingness and ability of TecNet to finance the Company's
telecommunications products and services and working capital shortfalls, and the
ability of the Company and TecNet to provide  reliable and  competitive  prepaid
telephone  cards.  However,  there can be no  assurance  that TecNet can or will
continue to provide  such  services,  to finance the current  operations,  or to
provide the Company with bundled  prepaid  calling cards at comparable  rates in
future  periods.  TecNet is a wholly owned  subsidiary of Telephone  Electronics
Corporation   ("TEC")  and  is  a  holder  of  approximately  21%  of  DigiTEC's
outstanding  common  stock.  Additionally,  the Company's  overall  stability is
highly dependent upon its ability to raise working  capital,  to increase market
share  while  developing   existing  markets  and  improving   overall  customer
retention,  to achieve  profitable  operations and to generate  sufficient  cash
flows from  operating and financing  activities to meet its  obligations as they
become due.

(d)   REVENUE RECOGNITION

Sales of bundled prepaid calling cards from third-party  providers for which the
Company acts solely as a distributor are recorded at the sales price of the card
and are  recognized  as revenue upon delivery to the  Company's  customers.  The
related costs are simultaneously charged to the cost of sales accounts upon such
delivery.    These   costs   primarily    include   the   charge   for   related
telecommunications  services from TecNet which amounted to approximately  85% of
the sales price of the cards,  net of discounts  and the  printing  costs of the
underlying calling cards.

Revenue from Point of Sale ("POS")  sales by the Company's  subsidiary  POS TEC,
are recognized upon the initial  activation by the retailer upon the sale of the
underlying  prepaid  calling  card  to the  end  user.  The  related  costs  are
simultaneously  charged  to the  respective  cost of  sales  accounts  upon  the
activation of the card.

The Company provides appropriate provisions for prepaid phone card sales returns
in the same period as the related revenues.

(e)   DEFERRED INCOME TAXES

Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences  attributable  to temporary  differences  between the  consolidated
financial  statement  carrying  amounts of existing  assets and  liabilities and
their  respective tax bases and any operating loss or tax credit  carryforwards.
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.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period  that  includes  the  enactment  date of such  change.  The  Company  has
established a full valuation allowance against its entire net deferred tax asset
due to uncertainty of realizing certain tax credits and loss carryforwards.

(f)   RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 141 "Business  Combinations" and SFAS No.
142,  "Goodwill and Other Intangible  Assets." SFAS No. 141 is effective for all
business  combinations  initiated after June 30, 2001. SFAS No. 141 will require
companies to recognize acquired  identifiable  intangible assets separately from
goodwill if control over the future economic  benefits of the asset results from
contractual  or other legal rights or the  intangible  asset is capable of being
separated or divided and sold, transferred,  licensed,  rented or exchanged. The
Standards will require the value of a separately  identifiable  intangible asset


                                       8
<PAGE>


                        DigiTEC 2000, Inc. and Subsidiary
        Notes to Condensed Consolidated Financial Statements (Unaudited)


meeting any of the above  criteria  to be  measured at fair value.  SFAS No. 142
requires  companies  to cease  amortizing  goodwill  acquired  through  business
combinations.  However,  SFAS No. 142 requires that  companies  assess  acquired
goodwill for impairment  upon adoption of the statement,  and at least annually,
at the  lowest  individual  reporting  unit  level  that  can be  distinguished,
physically and operationally,  for internal reporting  purposes,  from the other
activities, operations, and assets of the entity, utilizing a two-step approach.
The  Company  expects to  implement  SFAS No. 142  effective  July 1, 2002,  and
believes  that such  adoption  will not have a material  effect on the Company's
results of operations or financial position.

In August 2001, the FASB issued SFAS No. 143  "Accounting  for Asset  Retirement
Obligations".  SFAS No. 143  addresses  financial  accounting  and reporting for
obligations  and costs  associated  with the  retirement of tangible  long-lived
assets.  The Company is required to implement  SFAS No. 143 on July 1, 2002, and
has not yet  determined  the impact that this statement will have on its results
of operations or financial position.

In October 2001, the FASB issued SFAS No. 144  "Accounting for the Impairment or
Disposal of Long-Lived  Assets".  SFAS No. 144 replaces SFAS No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of" and establishes  accounting and reporting standards for long-lived assets to
be  disposed  of by  sale.  This  standard  applies  to all  long-lived  assets,
including  discontinued  operations.  SFAS No. 144 requires that those assets be
measured at the lower of carrying  amount or fair value less cost to sell.  SFAS
No. 144 also  broadens the reporting of  discontinued  operations to include all
components of an entity with operations that can be distinguished  from the rest
of the entity that will be eliminated from the ongoing  operations of the entity
in a disposal transaction.  The Company is required to implement SFAS No. 144 on
July 1, 2002,  and has not yet  determined  the impact that this  statement will
have on its results of operations or financial position.  In September 2000, the
Emerging  Issues Task Force  ("EITF") of the FASB  reached a final  consensus on
Issue No. 00-10,  "Accounting  for Shipping and Handling  Fees and Costs".  EITF
00-10 is  effective  for fiscal  year 2001 and  addresses  the income  statement
classification  of amounts  charged to customers for shipping and  handling,  as
well as costs incurred related to shipping and handling.  The Company classifies
shipping and handling  costs billed to customers as revenues and costs  incurred
relating to shipping and handling as costs of sales, which is in accordance with
the consensus in EITF 00-10.

(g)  SEGMENT DISCLOSURES

The Company adopted SFAS No. 131,  "Disclosures  about Segments of an Enterprise
and  Related  Information"  in the  prior  fiscal  year.  SFAS  131  established
standards  for  the  way  that  public  business  enterprises  report  financial
information  on  operating  business  segments.  As the  Company  has  only  one
reportable business segment, prepaid  telecommunications  services, the adoption
and  implementation  of  the  disclosure  and  reporting  requirements  did  not
significantly  affect the  presentation of the results of operation or financial
position of the Company.

(h)   RELATED PARTY TRANSACTIONS

TecNet    continues   to   provide    consulting    services,    financing   and
telecommunications  support to the Company on an on-going  basis. As the primary
provider of bundled  prepaid  calling card  services to the Company and the sole
carrier  for  carrying  the traffic and  processing  the minutes  related to the
prepaid   calling  cards,   TecNet  provided   approximately   $2.2  million  in
telecommunications services for the three month period ended September 30, 2001.
In addition, TecNet provided approximately $32,000 of consulting services to the
Company during the quarter ended  September 30, 2001,  which have been accounted
for as a capital contribution.


                                       9
<PAGE>


                        DigiTEC 2000, Inc. and Subsidiary
        Notes to Condensed Consolidated Financial Statements (Unaudited)



However, as there is no formalized  agreement between the parties,  there can be
no assurance that TecNet will continue to provide such services,  to finance the
current  operations or to provide the Company with bundled prepaid calling cards
at comparable rates in future periods.

Short term loans of  approximately  $1.1 million were issued by various  related
parties to Everything Prepaid, Inc. during the quarter ended September 30, 2001,
until such time as the reorganization of POSTEC/Everything  Prepaid,  Inc. could
be finalized.  The $1.1 million in short term loans were subsequently  converted
into common stock of  Everything  Prepaid,  Inc.  after  September  30, 2001, as
further discussed in footnote 1(i) below.

(i)   REORGANIZATION OF POS TEC

On July 3, 2001, the Board of Directors of DigiTEC decided to reorganize POS TEC
from an LLC to a Chapter C  corporation  to enable  POS TEC to raise  additional
capital  from  other  investors.   DigiTEC  formed  a  new  Nevada  corporation,
Everything Prepaid, Inc. ("EP").

EP was  organized  with  authorized  capital of  10,000,000  of common stock and
1,000,000  of  preferred  stock  with all shares  having a $.01 par  value.  The
preferred  stock  may be  issued  with  such  relative  rights,  privileges  and
qualifications  as determined by EP's Board of Directors.  Upon its organization
EP issued 1,000  shares of its common  stock to DigiTEC for $1,000.  POS TEC was
then merged into EP with DigiTEC  receiving  99,000 shares of EP's common stock.
At the time of the merger,  DigiTEC and TecNet,  Inc.,  an indirect 21% owner of
DigiTEC,  each agreed to convert certain intercompany debt and trade payables of
POS TEC assumed by EP in the Merger  into  shares of EP's common  stock at $1.00
per share  resulting  in the  issuance  of 911,427  shares to TecNet,  Inc.  and
988,573 shares to DigiTEC. As a result of the merger, the Company deferred a net
gain of $911,427  representing the conversion of certain  temporary loans due to
TecNet, Inc.  The gain will remain  deferred until certain  factors are present,
including EP's ability to generate cash flows from operating activities.

On  September  27,  2001 and after  unsuccessful  attempts  to raise  additional
capital  for  EP,  the  Company  concluded  that  it was  unable  to  assist  or
participate in the further necessary  financing of EP and approved a transaction
in which an  aggregate  of  8,000,000  shares of EP's common  stock were sold on
October  2,  2001 at $.25 per  share  for  total  proceeds  of  $2,000,000.  The
purchasers of this stock include: (i) Telephone Electronics Corporation (TEC), a
principal  shareholder of DigiTEC; (ii) persons who are principals or associates
of TEC or  TecNet,  Inc.;  (iii)  affiliates  of EP; and (iv) the  President  of
DigiTEC. As a result of the additional $2 million capitalization,  the Company's
ownership  percentage in EP was reduced to  approximately  11%, and therefore EP
will  be  accounted  for  as an  investee  and no  longer  included  within  the
consolidated financial statements of the Company effective October 2, 2001.

(j)   SUBSEQUENT EVENTS

TecNet    continues   to   provide    consulting    services,    financing   and
telecommunications  support.  The Company has  continued to be financed  through
advances  from its joint  customer  deposit  account with TecNet,  Inc. with the
acquiescence  of TecNet,  Inc. As there is no formalized  agreement  between the
parties,  there can be no  assurance  that TecNet will  continue to provide such
services,  to finance the  current  operations  or to provide  the Company  with
bundled prepaid calling cards at comparable rates in future periods.

On January 11,  2002,  the  Company's  Board of  Directors  accepted an informal
verbal  offer  from  TecNet  and/or  a  group  of its  associates  to loan up to
$1,200,000  to the Company.  The terms of the proposed loan call for the payment
of interest only for 12 months with  amortization of the loan over the following
36 months to be  secured by the  Company's  accounts  receivable  and such other
terms as are negotiated between the parties. Pending completion of the loan, the
Company  will  have to rely upon  additional  advances  from the joint  customer
deposit account.

                                       10
<PAGE>


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

GENERAL

The  following  discussion  should  be read in  conjunction  with the  unaudited
Condensed  Consolidated  Financial Statements,  including the notes thereto, and
other detailed information regarding the Company included elsewhere in this Form
10-QSB.  Certain  statements  set forth  below  regarding  matters  that are not
historical facts, such as statements  concerning the expansion and growth of the
Company,  future  growth in the demand for prepaid phone cards and the Company's
plans to become a sales, marketing and distribution company, are forward-looking
statements  within the meaning of Section 27A of the  Securities Act and Section
21E of the Exchange Act. Because such  forward-looking  statements include risks
and uncertainties,  actual results may differ materially from those expressed or
implied by such forward-looking statements.

The Company commenced  operations under present management in 1995 to capitalize
upon  opportunities  in the  prepaid  phone  card  sector  of the long  distance
telecommunications   market.   The  Company's   target  markets  include  ethnic
communities with substantial  international long distance calling  requirements.
The  Company's   prepaid  phone  cards  provide  consumers  with  a  competitive
alternative  to  traditional  calling  cards  and  presubscribed  long  distance
telecommunications  services.  Retail rates in the  international  long distance
market have declined in recent years and, as  competition in this segment of the
telecommunications  industry  continues to intensify,  the Company believes that
this  downward  trend in rates is likely to continue.  Although  there can be no
assurance,  the Company  believes  that any reduction in rates will be offset in
whole or in part by efficiencies  attributable  to the planned  expansion of the
Company's  services as well as by lower  transmission costs per minute resulting
from the Company's increased volume of minutes. In addition, the Company expects
to produce favorable  operating results in the future by increasing its existing
retail distribution market, to introduce new products to its target market which
are cost  competitive on a per minute basis and to capitalize  upon economies of
scale within existing markets.

The Company's total revenues were approximately  $50,309,000,  $13,733,000,  and
$10,395,000,  and its net losses were approximately $3,241,000,  $4,500,000, and
$13,567,000   for  the  fiscal  years  ended  June  30,  2001,  2000  and  1999,
respectively.

The Company believes that future growth is dependent on the continued receipt of
operational and financial support from TecNet,  providing  customers with a high
quality  prepaid  product  at a  competitive  price,  and the  ability to obtain
competitive bundled prepaid cards from TecNet on favorable terms. However, there
can be no  assurance  that the Company  will  continue to receive the support of
TecNet or be able to achieve favorable operating results in future periods.

OPERATIONS

THREE MONTHS ENDED  SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED  SEPTEMBER
30, 2000

NET SALES:

Sales, net of discount and returns,  decreased  approximately $4.5 million (51%)
to  approximately  $4.3 million for the three month period ended  September  30,
2001 as compared to approximately  $8.9 million for the three month period ended
September 30, 2000. The Company  attributes the decrease of  approximately  $5.2
million in net sales on its  prepaid  calling  card  products  to  increases  in
per-minute  rates on its prepaid calling cards which impacted  volume,  which is
offset  against an  increase  in net  prepaid  wireless  sales of  approximately
$634,000.  The Company  expects to increase  overall sales in future  periods by
working   directly  with  TecNet  to  introduce  new  products  which  are  cost
competitive  and will  focus on the  specific  needs of its target  markets.  In
addition,  the Company  expects to utilize its future cash flows from operations
for  the  expansion  of  its  existing  master  distributor  network  and  other
distribution channels and the development of prospective markets for its prepaid
products.

COST OF SALES:

The  Company's  cost of sales  decreased  approximately  $3.9  million  (50%) to
approximately  $3.9 million for the three month period ended  September 30, 2001
as compared to  approximately  $7.8  million  for the three month  period  ended
September 30, 2000.  The overall cost of sales  decrease is directly  related to
the decreased volume of prepaid cards sales discussed above.


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<PAGE>


GROSS PROFIT:

The Company  realized a gross  profit of  approximately  $396,000  for the three
month  period  ended  September  30,  2001  as  compared  to a gross  profit  of
approximately  $1.1 million for the three month period ended September 30, 2000.
The gross profit decline is due to the overall decrease in the volume of prepaid
card sales noted above.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

The  Company's   selling,   general  and   administrative   expenses   decreased
approximately  $526,000 (27%) to approximately  $1.4 million for the three month
period ended  September 30, 2001 as compared to  approximately  $1.9 million for
the three month period ended September 30, 2000. The overall decrease is related
to the  combined  effect of several  factors.  Factors  directly  related to the
significant  decrease in overall sales of the Company's prepaid cards during the
quarter ended  September 30, 2001 include an overall  decrease in federal excise
taxes of approximately  $263,000,  decreased shipping and fulfillment charges of
approximately  $34,000,  and a decrease of approximately  $40,000 in advertising
and promotional  expenses.  In addition,  the Company  experienced a decrease in
payroll and employee  benefit costs of  approximately  $99,000 and a decrease in
contract labor cost of approximately  $21,000 due primarily to a decrease in the
total  number of  employees  of the Company  attributable  to the reduced  sales
volumes noted above. Other contributing  factors include decreased rent expenses
of  approximately  $50,000,  an overall  decrease  in office and office  related
expenses of approximately  $16,000,  a decrease in bank charges of approximately
$4,000,  professional  services expenses decreased  approximately  $54,000,  and
decreased   depreciation  and  amortization  charges  of  approximately  $3,000.
Offsetting  factors  include an increase in telephone  expense of  approximately
$39,000,   an  increase  in  travel  and  business   related   expenditures   of
approximately $11,000 and an overall increase in repair and maintenance expenses
of  approximately  $8,000.

LOSS BEFORE OTHER INCOME (EXPENSES):

The Company's loss before other income (expenses) of approximately  $992,000 for
the three month period ended September 30, 2001 increased approximately $154,000
(18%) as compared to the loss before other income  (expenses)  of  approximately
$838,000  for the three month  period  ended  September  30,  2000.  The overall
increase is directly  related to the  combination of factors noted above for net
sales, cost of sales and selling, general and administrative expenses.

OTHER INCOME (EXPENSES):

The Company's other income  (expenses)  changed  approximately  $48,000 (30%) to
approximately  $212,000  (expense,  net),  for  the  three  month  period  ended
September 30, 2001 as compared to approximately $164,000 (expense, net), for the
three month period ended September 30, 2000. The overall change is primarily due
to an increase  in current  period  interest  expense of  approximately  $67,000
related to the 10% demand  promissory notes payable to TecNet and an increase in
penalties and interest  attributed to accrued  federal excise tax obligations of
approximately $104,000.

NET LOSS:

The Company's net loss of  approximately  $1,204,000  for the three month period
ended September 30, 2001 increased by  approximately  $202,000 (20%) as compared
to the net loss of  approximately  $1,002,000  for the three month  period ended
September  30,  2000.  The overall  increase is directly  related to the factors
noted above for gross profit and other income (expenses).


LIQUIDITY AND CAPITAL RESOURCES

FINANCING REQUIREMENTS

To date, the Company has funded its operations through: (i) two offerings, which
aggregated  $1,000,000  of  proceeds  to  the  Company;  (ii)  the  exercise  of
approximately  2,280,000  warrants to purchase shares of the Common Stock of the
Company  at  $1.50  per  share  (the   "$1.50   Warrants"),   which   aggregated
approximately $3,400,000 of proceeds to the Company; (iii) sale of 61,050 shares
of the Company's Series A Preferred Stock,  which resulted in the elimination of
an accounts payable balance to Premiere totaling approximately $6,105,000;  (iv)
sale of  $1,200,000  principal  amount of the  Company's  Notes  with the $2.375
Warrants  (as  subsequently  exchanged,  the "10%  Notes");  (v)  issuance  of a
$100,000 10% promissory note to an officer/director  family member; and (vi) the
infusion  of  approximately  $18.6  million of  operating  capital  through  the
issuance of 10% demand  promissory  notes and the  extension  of trade credit by
TecNet.  All of the above  offerings  were  exempt from  registration  under the
applicable  Securities Act and have been utilized to fund the Company's  current
operations.

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<PAGE>


The  Company has no existing  bank lines of credit and has not  established  any
sources for such financing.

The Company's major components of cash flow are as follows:


                                                THREE MONTHS ENDED SEPTEMBER 30,
                                                --------------------------------
                                                     2001               2000
                                                 ------------       ------------
Net cash used in operating activities.........   $(1,752,447)       $  (493,593)

Net cash used in investing activities.........      (113,711)           (22,206)

Net cash provided by financing activities.....     1,144,031          1,415,000
                                                 -----------         ----------
Net change in cash and cash equivalents.......   $  (722,127)        $  899,201
                                                 ===========         ==========


The Company's net cash used in operating activities increased approximately $1.3
million (255%) to $(1,752,447)  for the three months ended September 30, 2001 as
compared to  $(493,593)  for the three months  ended  September  30,  2000.  The
overall  increase in net cash used in operating  activities for the three months
ended  September  30,  2001 is related  to the  combined  effect of several  key
factors.  These  include  an  decrease  in the  allowance  for sales  returns of
approximately  $185,000,  an  increase  in the  collection  velocity of accounts
receivable  of  approximately  $1.5  million,  a  decrease  in the  net  loss of
approximately  $36,000,  a decrease in the cash flow effect of accounts  payable
and other accrued expenses of approximately $1.9 million, a decrease in the cash
flow  effect of  accrued  taxes and  penalties  of  approximately  $141,000,  an
increase  in the cash  flow  effect of  prepaid  expenses  and  other  assets of
approximately  $23,000,  and an increase in the cash flow effect of inventory of
approximately $262,000.

Cash used in investing  activities for the three months ended September 30, 2001
and 2000 is related solely to capital expenditures of approximately $114,000 for
the three  months ended  September  30, 2001 and  approximately  $22,000 for the
three months ended September 30, 2000.

During the three months ended  September 30, 2001,  cash provided from financing
activities  related  solely to the  issuance of  approximately  $1.1  million in
short-term debt to a related party of the Company. During the three months ended
September 30, 2000, cash provided from financing activities related primarily to
the  issuance of  approximately  $1.7 million of 10% demand  promissory  note to
TecNet,  the repayment of  approximately  $17,000 in principal on an outstanding
loan  with a  family  member  of an  officer/director  of the  Company,  and the
repayment  of  approximately  $300,000 in  principal  to the holders of the $1.2
million promissory notes.

The Company expects capital  requirements of  approximately  $1.0 million during
fiscal 2002. The foregoing amount includes the necessary  capital to further the
expansion of the Company's prepaid products into additional cities and expanding
the Company's existing master distribution network. As the Company increases the
sales of its bundled prepaid products,  its capital requirements are expected to
progressively decline. If cash needs prove to be greater than contemplated,  the
Company  will need to slow the  expansion  of its prepaid  product  offerings to
additional cities during fiscal year 2002.

Since June 30, 1999, the Company has raised cash primarily  through the issuance
of 10% demand  promissory  notes payable to TecNet.  Since February of 1999, the
Company has been dependent on TecNet  financing its shortfalls in cash flows and
current operations and the provisioning of telecommunication services by TecNet.
The Company  expects to consider other financing  opportunities  during the 2002
fiscal year.  The Company  believes that with the  continued  support of TecNet,
internally  generated cash from  operations in fiscal 2002 will be sufficient to
fund its operations  throughout  the 2002 fiscal year.  Although the Company has
achieved  significant  improvements in cash flows from  operations,  it does not
expect to achieve positive cash flows from operations in the foreseeable future.
Additionally,  there can be no assurance that the foregoing  external sources of
financing  will be available to the Company,  or that the Company's  projections
for internal cash generation from current operations will be realized.

The  Company's  ability  to expand  its  operations  as a sales,  marketing  and
distribution  company and to generate  sufficient  cash flow to begin to address
its  obligations to TecNet and other  suppliers will be dependent upon continued
financing   by  TecNet  of  cash  flow   needs  and   continued   financing   of
telecommunications  services by TecNet.  In  addition,  the Company will need to
raise  long-term  capital.  There can be no assurance  that such  financing will
continue to be available to the Company from TecNet or that long-term  financing
will be obtained,  or if available,  will be available in either a timely manner
or upon terms and conditions acceptable to the Company.

                                       13
<PAGE>



For the three  months  ended  September  30, 2001,  the Company  experienced  an
operating loss of approximately $1.0 million and used approximately $1.7 million
of cash in operating  activities.  The Company's  cash position at September 30,
2001 approximated  $284,000 and its working capital deficit  approximated  $20.6
million.  The Company remains  undercapitalized and to date has not been able to
finance its expansion as quickly as opportunities have arisen.

INFLATION

Management  does not believe that inflation has had, or is expected to have, any
significant  adverse impact on the Company's  financial  condition or results of
operations.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not hold any  derivatives  or  investments  that are subject to
material  market risk. The carrying values of financial  instruments,  including
cash and notes payable at September 30, 2001  approximates fair value as of such
date, due to the short-term  maturity of such  instruments and the fact that the
underlying interest rates approximates current market rates of interest.




                                       14
<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  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.


Date: January 25, 2002              DigiTEC 2000, Inc.
                                    (Registrant)


                                    By: /s/ Frank C. Magliato
                                        ----------------------------------------
                                        Frank C. Magliato
                                        Chief Executive Officer, President,
                                        Chairman of the Board of Directors and
                                        Chief Financial Officer


     January 25, 2002               By: /s/ Diego E. Roca
                                        ----------------------------------------
                                        Diego E. Roca
                                        Senior Vice President, Chief
                                        Accounting Officer, Treasurer,
                                        Secretary and Director






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