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

                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 1999

|_|   TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
      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
--------------------------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                   54-1287957
--------------------------------------------------------------------------------
                      (I.R.S. Employer Identification No.)

            8 West 38th Street, Fifth Floor, New York, New York 10018
--------------------------------------------------------------------------------
               (Address of principal executive offices - Zip code)

Registrant's telephone number, including area code: (212) 944-8888

Former name, former address and former fiscal year, if changes since last
report.

Indicate by checkmark 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 |_|

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by checkmark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.

                              Yes |_|        No |_|

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date.

Common Stock, $.001 par value, 7,058,988 outstanding as of May 13,1999.
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                                           Index
================================================================================

Part I - Financial Information

            Item 1. Consolidated Financial Statements (unaudited):

                    Consolidated Balance Sheets as of March 31, 1999
                      and June 30, 1998                                       3

                    Consolidated Statements of Operations (Loss) for the
                      Three and Nine Months ended March 31, 1999 and 1998     4

                    Consolidated Statement of Stockholders' Equity
                      (Deficit) for the Nine Months ended March 31, 1999      5

                    Consolidated Statements of Cash Flows for the
                      Nine Months ended March 31, 1999 and 1998               6

                    Notes to Consolidated Financial Statements             7-14

            Item 2. Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                   15-21

            Item 3. Quantitative and Qualitative Disclosures About
                    Market Risk                                              21

Part II - Other Information

            Item 1. Legal Proceedings                                     22-23

            Item 6. Exhibits and Reports on Form 8-K                         24

            Signatures                                                       25
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                                     Consolidated Balance Sheets

ITEM 1. CONSOLIDATED BALANCE SHEETS

================================================================================
<TABLE>
<CAPTION>
                                                                     March 31, 1999  June 30, 1998
                                                                     (Unaudited)
--------------------------------------------------------------------------------------------------
<S>                                                                  <C>              <C>
Assets
Current:
   Cash                                                              $    183,688    $   108,722
   Accounts receivable, net of allowance for bad debts of
      $1,305,000 and $1,305,000 respectively (Note 3)                     961,011      1,692,222
   Inventory                                                               84,785        393,586
   Prepaid expenses                                                        88,051        123,953
--------------------------------------------------------------------------------------------------
           Total current assets                                         1,317,535      2,318,483
Property and equipment, net                                               156,027        160,040
Customer lists, net of accumulated amortization of $510,417
     and $334,000                                                         481,842        373,882
Carrier deposits and other                                                 78,855        287,385
--------------------------------------------------------------------------------------------------
Total Assets                                                         $  2,034,259    $ 3,139,790
==================================================================================================
Liabilities and Stockholders' Deficit
Current:
   Accounts payable - trade                                          $  7,923,481    $ 1,379,896
   Accounts payable and accrued expenses                                   89,328        464,620
   Payable to Premiere Communications, Inc.                               583,152        597,132
   Accrued legal                                                           75,000        450,188
   Accrued settlement expense (Note 4)                                    139,278        204,126
   Accrued research and development                                       325,000        325,000
   Deferred revenue                                                        91,707        955,117
   Notes payable - current (Notes 8 and 9)                              2,082,032        168,556
   Due to related party (Note 9)                                          100,000
--------------------------------------------------------------------------------------------------
           Total current liabilities                                   11,408,978      4,544,635
Deferred rent                                                              74,556         89,545
--------------------------------------------------------------------------------------------------
           Total liabilities                                           11,483,534      4,634,180
--------------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' deficit:
   Preferred stock, $.001 par value, 1,000,000 shares authorized;
      61,050 shares Series A outstanding                                       61             61
   Common stock, $.001 par value, 100,000,000 shares authorized;
      7,058,988 and 6,814,248 shares issued and outstanding,
      respectively                                                          7,059          6,814
   Additional paid-in capital                                          14,591,163     14,174,283
   Accumulated deficit                                                (24,047,558)   (15,675,548)
--------------------------------------------------------------------------------------------------
           Total stockholders' deficit                                 (9,449,275)    (1,494,390)
--------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit                          $  2,034,259    $ 3,139,790
==================================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                               3
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                           Consolidated Statements of Operations

                                                                     (Unaudited)
================================================================================
<TABLE>
<CAPTION>
                                                              For the Three Months Ended         For the Nine Months Ended
                                                                      March 31,                          March 31,
--------------------------------------------------------------------------------------------------------------------------------
                                                                 1999            1998              1999            1998
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>             <C>               <C>             <C>
Net sales                                                    $ 1,443,787     $  6,359,998      $10,092,133     $31,166,036
Cost of sales                                                  4,139,457        7,704,321       13,391,715      30,856,362
--------------------------------------------------------------------------------------------------------------------------------
  Gross profit                                                (2,695,670)      (1,344,323)      (3,299,582)        309,674

Selling, general and administrative expenses                   1,667,963        3,057,449        5,072,428       5,021,567
--------------------------------------------------------------------------------------------------------------------------------
   Loss from continuing operations                            (4,363,633)      (4,401,772)      (8,372,010)     (4,711,893)
--------------------------------------------------------------------------------------------------------------------------------
Discontinued operations:
Loss from operations of Cellular division (Note 6)                    --               --               --        (527,061)
Loss from operations of World Access (Note 2)                         --               --               --        (105,554)
Loss on disposal of Cellular division                                 --               --               --         (75,000)
--------------------------------------------------------------------------------------------------------------------------------
   Loss from discontinued operations                         $        --               --               --        (707,615)
--------------------------------------------------------------------------------------------------------------------------------
Net loss                                                     $(4,363,633)    $ (4,401,772)     $(8,372,010)    $(5,419,508)
================================================================================================================================
Net loss per common share-basic and diluted:
   From continuing operations                                $      (.63)    $       (.73)     $     (1.22)    $      (.80)
   From discontinued operations                                       --               --               --            (.12)
--------------------------------------------------------------------------------------------------------------------------------
                                                             $      (.63)    $       (.73)     $     (1.22)    $      (.92)
================================================================================================================================
Weighted average number of common and
   common equivalent shares outstanding                        6,914,544        5,992,867        6,836,618       5,863,359
================================================================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                               4
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                        Consolidated Statement of Stockholders' Equity (Deficit)
                                                                     (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Nine Months Ended March 31, 1999
---------------------------------------------------------------------------------------------------------------------------------
                                      Preferred Stock       Common Stock
                                      ----------------    ------------------    Additional      Accumulated   Total stockholders'
                                      Shares    Amount    Shares      Amount  paid-in capital     deficit       equity (deficit)
---------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>        <C>     <C>          <C>       <C>            <C>              <C>
Balance, July 1, 1998
For the nine months ended             61,050     $61     6,814,248    $6,814    $14,174,283    $(15,675,548)    $(1,494,390)
   December 31, 1998:
   Exercise of Warrants (Note 7)          --      --        44,750        45         67,080              --          67,125
   Warrants accompanying
      10% Notes (Note 8)                  --      --            --        --         50,000              --          50,000
      Stock Issued for purchase of
      assets from Total POS Systems   --      --            200,000       200       299,800              --         300,000
      Net loss                            --      --            --        --             --      (8,372,010)     (8,372,010)
---------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1999               61,050     $61     7,058,998    $7,059    $14,591,163    $(24,047,558)    $(9,449,275)
=================================================================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                               5
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                           Consolidated Statements of Cash Flows
                                                                     (Unaudited)
================================================================================
<TABLE>
<CAPTION>
Nine Months Ended March 31,                                                           1999           1998
--------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>             <C>
Cash flows from operating activities:
   Net loss                                                                       $(8,372,010)    $(5,419,508)
   Adjustments to reconcile net loss to net cash used in operating
      activities:
        Amortization                                                                  176,860         165,544
        Depreciation                                                                   35,921          26,325
        Discount on Notes Payable (Note 8)                                             50,000              --
        Deferred rent                                                                 (14,988)         38,408
        Deferred income                                                              (863,409)             --
        Directors Compensation                                                             --       1,248,000
        (Increase) decrease in:
           Accounts receivable                                                        731,211      (3,029,496)
           Inventory                                                                  308,801        (251,469)
           Prepaid expenses and other assets                                          244,431        (420,896)
        Increase (decrease) in:
           Accounts payable and accrued expenses                                    5,714,276       1,342,654
--------------------------------------------------------------------------------------------------------------
                Net cash used in operating activities of continuing
                   operations                                                      (1,988,907)     (8,985,746)
                Net cash used in operating activities of discontinued operations           --        (448,874)
--------------------------------------------------------------------------------------------------------------
                Net cash used in operating activities                              (1,988,907)     (9,434,620)
--------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
   Capital expenditures                                                               (16,726)        (72,442)
--------------------------------------------------------------------------------------------------------------
                Net cash (used in) provided by investing activities                   (16,726)        (72,442)
--------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
   Repayment of Note Payable                                                          (25,574)             --
   Note Payable Auto                                                                    4,049          22,699
   Proceeds from issuance of 10% Notes (Note 8)                                     1,200,000              --
   Proceeds from exercise of warrants                                                  67,125       2,935,876
   Proceeds from investment by Premiere Communications, Inc.                               --       6,105,000
   Proceeds from related party transaction                                            100,000              --
   Proceeds from issuance of Promissory Notes to TECNet, Inc.                         735,000              --
--------------------------------------------------------------------------------------------------------------
                Net cash provided by financing activities                           2,080,600       9,063,575
--------------------------------------------------------------------------------------------------------------
Net decrease in cash                                                                   74,967        (443,487)
Cash, beginning of period                                                             108,722         727,197
--------------------------------------------------------------------------------------------------------------
Cash, end of period                                                               $   183,689     $   283,710
==============================================================================================================
</TABLE>


                                                                               6
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                      Notes To Consolidated Financial Statements
                                                                     (Unaudited)
================================================================================

1.    Summary of Significant Accounting Policies

(a)   Liquidity and Basis of Presentation

      The accompanying Consolidated Financial Statements of DigiTEC 2000, Inc.
      and Subsidiary (formerly Promo Tel, Inc.) (the "Company"), have been
      prepared on the basis that it is a going concern, which contemplates the
      realization of assets and the satisfaction of liabilities, except as
      otherwise disclosed, in the normal course of business. However, because of
      the Company's recurring losses from operations, such realization of assets
      and liquidation of liabilities is subject to significant uncertainty. The
      financial statements do not include any adjustments that might result from
      the outcome of these uncertainties. Further, the Company's ability to
      continue as a going concern is highly dependent near term on its ability
      to raise capital, reduce its costs of providing long distance service,
      develop its collections tactics, develop market share and achieve
      profitable operations thereon, and the ability to generate sufficient cash
      flow from operations and financing sources to meet obligations. During the
      three quarters of fiscal 1999, the Company issued $1.2 million of its 10%
      six-month notes (the "Six Month Notes") with accompanying warrants and
      borrowed an additional $835,000 on a demand basis. The majority of the
      proceeds was used to make payments to providers of telecommunications
      facilities or to satisfy existing financial obligations, and the Company
      remains severely undercapitalized. The Six Month Notes matured during
      March, 1999 and pursuant to agreement with the holders thereof the Six
      Month Notes have been extended for two years from the original maturity
      (See Note 10, "Subsequent Events".)

      As previously reported, the Company intended to migrate its traffic to its
      own facilities, thereby becoming a facilities-based carrier and thereby
      increasing its cash flow. To date the Company, due to liquidity problems,
      has been unable to generate or finance sufficient capital to fully
      implement this strategy. Accordingly, the Company continues negotiate with
      Telephone Electronic Corporation ("TEC"), currently a holder of
      approximately 22% of the Company's Common Stock, with respect to (i) a
      working capital facility to enable the Company to meet its current
      operating expenditures, (ii) a long-term operating agreement pursuant to
      which the Company's traffic can be originated and terminated through the
      network facilities of TecNet, Inc., an affiliate of TEC, including the
      traffic the Company anticipates will be generated as a result of
      implementation of the Company's offering telecommunication services
      through the College Enterprises, Inc. on-campus debit card system, and
      (iii) arrangements to finance the equipment and operations of a point of
      sale distribution network for the Company's Cards. There can be no
      assurances that these negotiations will be successful or that TecNet, Inc.
      will continue to handle traffic for the Company or advance funds for
      working capital expenditures. Moreover, the Company has accured
      significant carrier charges with TecNet, Inc. and third party providers
      which it must satisfy. The Company has borrowed a total of $735,000
      through March 31, 1999 from TecNet, Inc. pursuant to demand promissory
      notes bearing interest at 10% per annum.

      As a result of the Company's review of its selling, general and
      administrative expenses, it has targeted cost reductions and reduced cash
      needs of approximately $2,000,000 during the last three quarters of the
      1999 fiscal year. To date, during fiscal 1999, the Company has reduced its
      workforce by a total of 21 full-time employees, two of whom were hired
      during fiscal 1999, and reduced the working hours of certain other
      hourly-compensated personnel. In addition, the Company has consolidated
      its executive offices with the intention to sublet a significant portion
      of the space originally occupied by the Company. The Company projects
      approximately $600,000 of an annual revenue from this subletting, thereby
      in large part offsetting its lease expense. There can be no assurance that
      further progress toward achievement of these objectives will be made or
      that acceptable alternatives will be found.

(b)   Business

      The Company is primarily engaged in the distribution, marketing and
      management of Cards. It currently markets its telephone calling card
      products principally throughout the New York tri-state metropolitan area.
      On October 18, 1996, the Company changed its name to DigiTEC 2000, Inc.


                                                                               7
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                      Notes To Consolidated Financial Statements
                                                                     (Unaudited)
================================================================================

(c)   Organization

      On July 11, 1995, Promo Tel, Inc., a Delaware corporation ("Promo
      Tel-Delaware"), merged (the "Merger") into Promo Tel, Inc., a Nevada
      corporation ("Promo Tel-Nevada"). Immediately prior to the Merger, Promo
      Tel-Nevada changed its name from Yacht Havens International Corp. ("Yacht
      Havens"). The surviving corporation remained Promo Tel, Inc. Pursuant to
      the terms of the Merger, Promo Tel-Nevada, which had 59,042 shares of its
      common stock previously outstanding, exchanged with the sole stockholder
      of Promo Tel-Delaware an aggregate of 1,333,334 shares of previously
      unissued $.001 Promo Tel-Nevada common stock for the outstanding shares of
      Promo Tel-Delaware's outstanding common stock.

      Since the Merger resulted in voting control by the stockholder of Promo
      Tel-Delaware and Promo Tel-Delaware had the personnel and owned all the
      assets to be utilized for its ongoing business, the Merger was treated as
      a recapitalization of Promo Tel-Delaware and the sale of 59,042 shares of
      previously issued Promo Tel-Nevada common stock for the net assets of
      Promo Tel-Nevada ($-0-).

      Promo Tel-Delaware is the continuing entity for financial reporting
      purposes, and the financial statements prior to July 11, 1995 represent
      its financial position and results of operations. The assets, liabilities
      and results of operations of Promo Tel-Nevada are included as of July 11,
      1995. The Company was formed on May 18, 1995 and commenced operations in
      July 1995. Accordingly, the Company had no results of operations for
      fiscal years ended prior to June 30, 1996. Although Promo Tel-Delaware is
      deemed to be the acquiring corporation for financial accounting and
      reporting purposes, the legal status of Promo Tel-Nevada as the surviving
      corporation has not changed. Promo Tel-Nevada had amended its Articles of
      Incorporation to change its name from Promo Tel, Inc. to the Company's
      current name.

      In September 1996, the Board of Directors of the Company approved a
      reverse stock split of the Company's common stock. Each stockholder of
      record on October 18, 1996 received one share of new common stock for each
      six shares of common stock held. The equity accounts of the Company and
      all disclosures have been retroactively adjusted to reflect the
      recapitalization and the one-for-six reverse stock split.

(d)   Principles of Consolidation

      The Consolidated Financial Statements include the accounts of the Company
      and, from March 4, 1999, its wholly owned subsidiary POS TEC Systems, LLC.
      All significant intercompany balances have been eliminated. (See Note 6,
      "Acquisition of Assets".)

      The Consolidated Financial Statements and related notes thereto as of
      March 31, 1999 and for the nine and three months ended March 31, 1999 and
      1998 are unaudited but, in the opinion of management, include all
      adjustments necessary to present fairly the information set forth therein.
      These adjustments consist solely of normal recurring accruals. The
      Consolidated Balance Sheet for June 30, 1998 was derived from the audited
      Consolidated Financial Statements and the Consolidated Balance Sheet for
      March 31, 1998 was derived from the unaudited Consolidated Financial
      Statements included in the Company's Annual Report on Amendment No. 1 to
      Form 10-K/A for the period ended June 30, 1998. These interim financial
      statements should be read in conjunction with that report. The interim
      results are not necessarily indicative of the results for any future
      periods.


                                                                               8
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                      Notes To Consolidated Financial Statements
                                                                     (Unaudited)
================================================================================

(e)   Earnings Per Share

      The Company adopted the provisions of Statement of Financial Accounting
      Standards ("SFAS") No. 128 "Earnings per Share" for the fiscal year ended
      June 30, 1998. The adoption of this standard did not have a material
      impact on the Company's income (loss) per share computation. The
      computation of income (loss) per common share is based on the weighted
      average number of common shares and common stock equivalents (convertible
      preferred shares, stock options and warrants), assumed to be outstanding
      during the year. The dilutive earnings (loss) per share have not been
      presented since the effect of the options and warrants to purchase common
      stock and the convertible preferred stock were anti-dilutive. Net income
      (loss) per share amounts for all periods have been presented and the
      amount for prior period has been restated to comply with provisions of
      SFAS 128. The weighted average shares have been retroactively adjusted to
      reflect the exchange of the 1,333,334 shares and the one-for-six reverse
      stock split.

(f)   Reclassifications

      Certain amounts as previously reported have been reclassified to conform
      to the fiscal 1999 presentation.

(g)   Recent Accounting Pronouncements

      In June 1997, the Financial Accounting Standards Board ("FASB") issued
      SFAS No. 130, "Reporting Comprehensive Income," which established
      standards for reporting and display of comprehensive income, its
      components and accumulated balances. Comprehensive income is defined to
      include all changes in equity except those resulting from investments by,
      or distributions to, owners. Among other disclosures, SFAS No. 130
      requires that all items that are required to be recognized under current
      accounting standards as components of comprehensive income be reported in
      a financial statement that is displayed with the same prominence as other
      financial statements.

      In June 1997, FASB issued SFAS No. 131, "Disclosures about Segments of an
      Enterprise and Related Information," which supersedes SFAS No. 14,
      "Financial Reporting for Segments of a Business Enterprise." SFAS No. 131
      establishes standards for the reporting of certain information about
      operating segments by public companies in both annual and interim
      financial statements. SFAS No. 131 defines an operating segment as a
      component of an enterprise for which separate financial information is
      available and whose operating results are reviewed regularly by the chief
      operating decision maker to make decisions about resources to be allocated
      to the segment and to assess its performance.

      SFAS Nos. 130 and 131 are both effective for financial statements for
      years beginning after December 15, 1997 and both require comparative
      information for earlier years to be restated. Accordingly, the Company has
      adopted both the foregoing standards for the accompanying financial
      statements. SFAS No. 130 divides comprehensive income into net income and
      other comprehensive income, and specifies that an enterprise that has no
      items of other comprehensive income in any period presented is not
      required to report comprehensive income. Accordingly, since the Company
      did not have any items of other comprehensive income in any period
      presented, comprehensive income is not separately reported. The adoption
      of SFAS No. 131 did not have a material effect on the Company's financial
      position or results of operations. The Company continually evaluates SFAS
      No. 131 in order to fully evaluate the impact, if any, the adoption of the
      provisions of this Statement will have on future financial disclosures.


                                                                               9
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                      Notes To Consolidated Financial Statements
                                                                     (Unaudited)
================================================================================

2.    Related Party Transactions

(a)   On January 20, 1996, the Company purchased certain Internet service
      provider assets consisting primarily of computer hardware, software and
      office equipment from TEC in exchange for 1,605,385 shares of the
      Company's restricted Common Stock valued at approximately $1.7 million
      based on the estimated fair values of the assets received. TEC is a
      communications company headquartered in Jackson, Mississippi that provides
      local and long distance telephone exchange services and provides other
      telecommunications services nationally. Subsequent to the purchase date,
      the purchase agreement was amended to reflect certain assets which were
      not delivered by TEC, resulting in a receivable from TEC of $135,276 at
      June 30, 1996. In November 1996, TEC returned 130,259 of the Company's
      shares to the Company. TEC's current ownership interest at June 30, 1998
      was approximately 22%.

(b)   The Company helped establish TecLink, Inc. ("TecLink") as a
      Mississippi-based Internet service provider by selling to TecLink certain
      Internet service provider assets, intellectual property, computer
      hardware, software and office equipment (that it had previously purchased
      from TEC and others) as well as a value added reseller contract (the
      "Contract") from Hughes Corporation ("Hughes"). The Company received in
      the sale $50,000 cash and a 6% per annum promissory note of $2,405,000 due
      the earlier of December 31, 1998 or upon the completion of TecLink's
      initial public offering. In accordance with the terms of the promissory
      note, collateralized by the assets of TecLink, the $250,000 became due
      upon the completion of a private placement of TecLink's common stock.
      TecLink's management believed that Hughes never met their responsibility
      under the contract, as such, TecLink was never able to fully implement its
      business plan. As a result of this and other factors, TecLink's initial
      public offering was never consummated and TecLink continued to experience
      losses. Due to the continuing losses, the Company entered into an
      agreement to acquire the net assets as partial satisfaction of its
      outstanding balance of its note receivable from TecLink ($2,105,000). As a
      result, the Company recorded a loss of $1,340,230. The Company established
      World Access as a wholly-owned subsidiary providing Internet access with
      the net assets re-acquired from TecLink.

      As of June 30, 1997, management determined that it needed to focus on its
      core business and would discontinue the operations of World Access by
      selling its net assets.

(c)   During September, 1998, the Company issued $1,200,000 of the Six Month
      Notes with warrants to purchase 600,000 shares of the Company's Common
      Stock at an exercise price of $2.375 per share (the "$2.375 Warrants"),
      subject to certain adjustments. The $2.375 Warrants are exercisable for


                                                                              10
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                      Notes To Consolidated Financial Statements
                                                                     (Unaudited)
================================================================================

      five years from the date of issuance. The exercise price under the $2.375
      Warrants was set at the closing price of the Common Stock on September 4,
      1998. Nine investors participated in this offering, including an
      officer/director and his family, and a director, with related party
      investments totaling $600,000. The issuance and sale of the Notes and
      $2.375 Warrants are exempt from registration under the Securities Act of
      1933, as amended (the "Securities Act") pursuant to Regulation D. See Note
      8, "Issuance of 10% Six-Month Notes with Warrants." The Six Month Notes
      and Warrants were amended as of the original maturity date of the Notes.
      (See Note 10, "Subsequent Events")

3.    Concentrations of Credit Risk

      The Company experiences risk concentration due to geographic and customer
      concentrations and a limited number of suppliers.

(a)   Geographic Concentration of Sales

      The Company currently distributes and markets its Cards primarily in the
      New York/New Jersey metropolitan area (the "Metro Area"). The Company
      sells Cards in 29 states, Puerto Rico and the U.S. Virgin Islands. The
      Metro Area sales accounted for approximately 81% and 84% of the Company's
      total sales for the quarters ended December 31, 1998 and March 31, 1999,
      respectively. No other areas accounted for more than 10% of the Company's
      sales.

(b)   Concentration of Customer Accounts

      For the years ended June 30, 1998 and 1997, one master distributor
      accounted for approximately 0% and 48% of the Company's accounts
      receivable and 19% and 52% of the Company's sales, respectively. During
      September 1997, the Company amended its agreement with the master
      distributor by terminating the exclusivity clause of the distribution
      agreement, and sales to this master distributor declined significantly
      thereafter. An additional customer, who replaced a significant portion of
      the former master distributor's sales, accounted for approximately 73% of
      the Company's accounts receivable as of June 30, 1998, and approximately
      19% of the Company's sales for the year ended June 30, 1998. The primary
      reason that this customer accounted for an apparently disproportionate
      share of receivables at June 30, 1998 versus sales during fiscal 1998 was
      the significant ramp-up of sales to this customer during the last four
      months of fiscal 1998. During the period from March through June, 1998,
      this customer accounted for over $5 million in sales and represented
      approximately 72% of the Company's total sales during this four-month
      period. The foregoing percentage of sales matched very closely to the 73%
      of total accounts receivable due from this customer as of June 30, 1998.
      This customer and one additional master distributor accounted for 4% and
      18% respectively of the Company's sales for the quarter ended December 31,
      1998 and represented 38% and 0% respectively of the Company's accounts
      receivable as of December 31, 1998.

      During the quarter ended June 30, 1998, due to the increased amount of
      receivables aged over 90 days and the related greater risk of asset
      impairment, the Company recorded a bad debt reserve of $1,467,000, and
      wrote off approximately $223,000 of accounts receivable against that
      reserve. The bad debt reserve included approximately $487,000 related to
      the foregoing customer which represented 73% of the Company's receivables
      as of June 30, 1998. As this customer had previously exhibited a favorable
      payment history and had an excellent relationship with the Company, the
      Company believed that at least the unreserved portion of the amounts due
      from this customer would be collected. Since June 30, 1998 the Company has
      received approximately $1,076,000 in payments from this customer, which
      amount paid


                                                                              11
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                      Notes To Consolidated Financial Statements
                                                                     (Unaudited)
================================================================================

      off the entire receivable balance from the customer, with the remainder
      applying to sales of approximately $1.7 million to this customer
      subsequent to June 30, 1998.

      The Company has engaged one of the top outside collection agencies in the
      United States with respect to collecting overdue accounts. Costs for
      collection of such accounts will be on a contingent basis billed to the
      Company as a percentage of collected funds. The Company does not expect
      any cash requirements associated with implementing this program and
      expects that its liquidity position will improve as a result of its
      implementation. Concurrently with the foregoing effort, the Company plans
      to improve its documentation of processes and procedures by developing a
      formal Credit and Collections Policy including, but not limited to,
      customer credit file requirements, standard credit application processes
      and procedures and standard procedures for the collection of past due
      accounts. The Company believes that the combination of the foregoing
      actions will result in reduced credit risk to the Company, improved
      liquidity and enhanced ability to establish an asset-backed working
      capital credit facility due to the increased quality of the receivables
      portfolio. Since these planned actions are in an early stage of
      implementation, it is not possible at this time to estimate the
      anticipated effects, if any, on sales to current customers.

(c)   Concentration of Suppliers of Telecommunications Services

      Prior to June 30, 1998, the Company purchased its long distance services
      primarily from three suppliers of bundled Cards, Frontier Communications,
      Inc. ("Frontier"), Premiere Communications, Inc. ("Premiere") and ATI
      Telecom, Inc. ("ATI"). For the year ended June 30, 1998, Frontier
      accounted for approximately 35%, Premiere accounted for approximately 43%
      and ATI accounted for approximately 14%, respectively, of those services.
      During the nine month period ended March 31, 1999, none of these suppliers
      accounted for more than 10% of purchases of long distance services. During
      the nine month period ended March 31, 1999, TecNet, Inc., an affiliate of
      TEC, and Allied Communications Holdings ("Allied") became key suppliers of
      facilities-based services to the Company, providing approximately 28% and
      22% of total communications services purchased by the Company. No other
      supplier accounted for more than 10% of such purchases. As of March 31,
      1999, the amounts of accounts payable to TecNet, Inc., Frontier, Premiere,
      ATI and Allied were approximately $3,789,740, $0, $583,152, $243,015 and
      $0, respectively.

4.    Accrued Settlement

      During March 1998, Vanity Fair Intimates, Inc. ("Vanity Fair") commenced
      an action for breach of a sublease agreement, seeking, inter alia,
      eviction and judgment against the Company for a total of $472,799. The
      matter was settled in September, 1998 for $208,916, to be paid in monthly
      installments of approximately $35,000 commencing in September 1998 and
      continuing through and including the month of February, 1999. The Company
      made the first payment due in September in accordance with the settlement
      agreement. However, due to its liquidity problems, the Company failed to
      make the payments due in October and November, 1998. Due to the Company's
      failure to make the foregoing payments, Vanity Fair gave notice of its
      intention to enter a Confession of Judgment for $369,774, less the amount
      previously paid by the Company. The Company subsequently negotiated an
      alternative payment plan with Vanity Fair, and to date is in compliance
      with the revised payment terms.


                                                                              12
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                      Notes To Consolidated Financial Statements
                                                                     (Unaudited)
================================================================================

5.    Settlement of Promissory Note with Frontier

      In June, 1998, the Company was served with a Summons and Motion for
      Summary Judgment by Frontier seeking judgment on a promissory note (the
      "Frontier Note") issued by the Company for $893,061 in connection with
      Frontier's termination of its Card division. The outstanding amount on the
      Frontier Note as of June 30, 1998 was reflected in accounts payable of the
      Company with a balance of approximately $502,000. During August, 1998, the
      Company negotiated a settlement with Frontier for $200,000. The Company
      satisfied the settlement in September, 1998 and as a result, a security
      interest held by Frontier against certain assets of the Company was
      removed. This recovery was recognized during the quarter ended September
      30, 1998.

6.    Acquisition of Assets.

      On March 4, 1999, the Company acquired certain point of sale assets of
      Total POS Solutions, a Texas limited liability company through its wholly
      owned subsidiary, POS TEC Systems, LLC, a Delaware limited liability
      company, in exchange for 200,000 shares of the Company's Common Stock. The
      assets acquired consisted of primarily of a number of Reseller Agreements
      and Pre-paid Long Distance Reseller Agreements pursuant to which cards are
      distributed and activated in retail stores.

7.    Redemption of $1.50 Warrants

      On August 20, 1998, the Company notified the holders of the 52,250
      outstanding warrants to purchase shares of the Company's Common Stock at
      $1.50 per share (the "$1.50 Warrants") of its election to redeem all
      unexercised portions of the $1.50 Warrants at $.10 per share thirty days
      following the date of the notice. Upon the expiration of the notice
      period, the $1.50 Warrants terminated with respect to any then unexercised
      portion and only the right of the $1.50 Warrant holder to receive payment
      of the redemption price survived. At the expiration of the notice period,
      44,750 of the $1.50 Warrants had been exercised, yielding net proceeds of
      $67,125 to the Company, and the remainder have been terminated.

8.    Issuance of 10% Six-Month Notes with Warrants

      During September, 1998, the Company issued the Six Month Notes with
      accompanying $2.375 Warrants to purchase 600,000 shares of the Company's
      Common Stock at an exercise price of $2.375 per share, subject to certain
      adjustments. The $2.375 Warrants are exercisable for five years from the
      date of issuance. The exercise price under the $2.375 Warrants was set at
      the closing price of the Common Stock on September 4, 1998. Nine investors
      participated in this offering, including an officer/director and his
      family, and a director, with related party investments totaling $600,000.
      The issuance and sale of the Notes and $2.375 Warrants was exempt from
      registration under the Securities Act pursuant to Regulation D. The Six
      Month Notes and the $2.375 Warrants were amended and exchanged as of the
      original maturity dates of the Six Month Notes (See Note 10, "Subsequent
      Events").

      The $2.375 Warrants are detachable from the Notes. The amounts
      attributable to the debt and the purchase warrants were computed based
      upon the relative values of the two securities at the time of issuance.
      Accordingly, the value of the $2.375 Warrants was calculated as the
      difference between the Net Present Value ("NPV") of the known series of


                                                                              13
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                       Item 1. Consolidated Financial Statements
                                      Notes To Consolidated Financial Statements
                                                                     (Unaudited)
================================================================================

      cash flows associated with the Six Month Notes using the 10% interest rate
      of the Notes and the NPV of the same series of cash flows using a
      market-based rate of 19%. The latter rate was determined based upon
      several quotations to the Company by non-affiliated potential lenders
      during arms-length negotiations of potential financing arrangements. The
      value of the $2.375 Warrants so calculated was approximately $50,000,
      which was recorded as additional paid-in-capital. The related $50,000
      discount on notes payable was being amortized commencing September 15,
      1998 over the six-month life of the Six Month Notes, approximately
      $29,167, during the first nine months of fiscal 1999. As a result of the
      amendment and exchange of the Six Month Notes and $2.375 Warrants, the
      related discount on notes payable will be adjusted for the new life of the
      New Notes and the value of the New Warrants, each as defined below, for
      the following fiscal quarters.

9.    Due to Related Party

      In December, 1998, TecNet, Inc., an affiliate of Telephone Electronic
      Corporation ("TEC"), entered into an arrangement with the Company pursuant
      to which it assumed certain carrier charges. In addition, TecNet, Inc. has
      since November, 1999 provided carrier services to the Company without
      current payment. At March 31, 1999, total carrier charges due to third
      parties were $5,673,914, including carrier charges due to TecNet, Inc., of
      $3,789,740.

      On November 2, 1998, Ms. Doreen Porecca, Mr. Magliato's mother in-law,
      lent the Company an additional $100,000 on a demand basis bearing interest
      at ten percent per annum.

      From February 16, 1999 through March 31, 1999, TecNet, Inc. lent the
      Company an aggregate of $735,000 pursuant to demand notes bearing interest
      at 10% per annum. (See Note 10, "Subsequent Events") The temporary
      borrowings by the Company are being used to finance current expenditures
      pending negotiations of an agreement to provide interim financing of
      current operations while the Company establishes its point of sales
      business through its new subsidiary, initiates activities under its letter
      agreement with College Enterprises, Inc. ("CEI") pursuant to which the
      Company will offer telecommunication services through the CEI network and
      implements it's new card program. There are no assurances that the Company
      will successfully conclude the negotiations or that the point of sale and
      CEI activities or the new card program will be successfully implemented.

10.   Subsequent Events

      In May, 1999, the Company's 10% Six Month Notes and $2.375 Warrants were
      exchanged, as of the original maturity date of such notes, for two year
      promissory notes (the "New Notes") in the same principal amounts bearing
      interest at 10% per annum which notes are payable interest only for the
      first four calendar quarters and interest plus 25% of principal for the
      four following calendar quarters and are convertible into Common Stock of
      the Company at $1.10 per share, together with Warrants to purchase a total
      of 1,800,000 shares of the Company's Common Stock at $1.10 per share (the
      "New Warrants").

      Since March 31, 1999, the Company has issued additional 10% Promissory
      Notes to TecNet, Inc. in the principal amount of $492,415.

                                                                              14
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                 Item 2. Management's Discussion and Analysis of
                                   Financial Condition and Results of Operations
================================================================================

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

The following discussion should be read in conjunction with the Consolidated
Financial Statements, including the notes thereto, and other detailed
information regarding DigiTEC 2000, Inc. (the "Company") included elsewhere in
this Form 10-Q and in conjunction with the corresponding discussion and analysis
included in the Company's Annual Report on Amendment No. 1 to Form 10-K/A (the
"10-K/A") for the year ended June 30, 1998. The information set forth in this
Form 10-Q includes "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act") and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
words "estimated," "intends," "believes," "plans," "planning," "expects," and
"if" are intended to identify forward-looking statements. Although management
believes that the assumptions made and expectations reflected in the
forward-looking statements are reasonable, because such forward-looking
statements include risks and uncertainties, it must be recognized that there is
no assurance that the underlying assumptions will, in fact, prove to be correct,
or that actual future results will not differ materially from the Company's
expectations, either 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 prepaid telephone calling cards
("Cards") provide consumers with a competitive alternative to traditional
calling cards and pre-subscribed long distance telecommunications services. The
Company's total revenues were $35,032,533, $26,027,909 and $17,425,199, and its
net losses were $11,996,759, $3,549,514 and $129,275, for the fiscal years ended
June 30, 1998, 1997 and 1996, respectively, after losses from discontinued
operations of $813,178, $1,069,261 and $0, respectively. The Company sold
approximately six million Cards, of which approximately five million were its
own proprietary branded Cards, and provided more than one hundred million
minutes of telecommunications services, during the fiscal year ended June 30,
1998. During the nine month period ended March 31, 1999, the Company sold
approximately 1.4 million Cards, of which approximately 1.1 million were its own
proprietary branded Cards, and provided approximately thirty-five million
minutes of telecommunications services.

The Company's target markets include ethnic communities with substantial
international long distance calling requirements. For the year ended June 30,
1998 and the nine month period ended March 31, 1999 approximately 75% and 79%
respectively of the Company's total minutes were derived from the sale of
international 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.

The Company's fiscal 1997 and 1998 sales were derived primarily from the resale
of bundled Cards. The Company resold the Cards at a discount off the retail
value of the Cards to either independent distributors or retail locations,
depending on the locality of distribution. The Company's fiscal 1997 and 1998
cost of sales consisted primarily of the purchase of the Cards at a greater
discount off the face value than the price at which the Cards were resold by the
Company. As a result, the Company received its gross margin on the difference
between discounts given to its customers and the discounts the Company received
from its long distance provider. Since the Cards were sold to the Company as a
bundled product, the supplier was liable to the end user for the long distance
time on the

                                                                              15
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                 Item 2. Management's Discussion and Analysis of
                                   Financial Condition and Results of Operations
================================================================================

Cards. At the point of sale, the Company had no further obligation with respect
to the Cards sold and revenues were recognized upon sale of the Cards.

During the last quarter of fiscal 1998 the Company became predominantly a
facilities-based carrier. Under these arrangements the Company negotiated and
was responsible to the long distance carriers and platform providers for the
long distance usage and related platform fee charges incurred in connection with
providing service to the end users. Since the Company was not liable for the
usage and platform fees on the underlying traffic until it was consumed by the
end user, the Company records all sales as deferred revenue until the time on
Cards sold is actually used by the consumer. During the nine month period ended
March 31, 1999, approximately 74% of the Cards sold by the Company were
facilities-based Cards.

Operations

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998

Net Sales. Net Sales for the three months ended March 31, 1999 decreased by
approximately $4,916,211 or 77% from $6,359,998 during the three months ended
March 31, 1998 to $1,443,787 for the three months ended March 31, 1999. The
decrease in sales is due primarily to:

      1.    The Company terminating, during the quarter ended December 31, 1997,
            the exclusivity clause in an agreement with a key master distributor
            who accounted for sales of approximately $5.6 million during the
            quarter ended September 30, 1997, and the failure to fully replace
            the sales accounted for by the distributor.

      2.    The Company's inability to market its new facilities-based Cards as
            rapidly as planned, due to liquidity issues which precluded the
            Company from securing facilities as quickly as planned. This lack of
            facilities forced the curtailment of sales activities on certain
            Cards, since additional sales would have degraded the service
            available to all customers due to the lack of adequate facilities to
            complete the calls.

      3.    The Company continued to be unable to market to its distributors
            products comparable to the products available in the same period in
            the previous year due to the suspension and repricing of two of the
            Company's most successful Cards.

In addition to the foregoing, due to the introduction of its branded,
facilities-based Cards during the fourth quarter of fiscal 1998, the Company
began phasing out the sale of its bundled products, which were no longer
competitively priced and which required greater capital resources to market than
the facilities-based Cards. Due to liquidity problems, the Company has been
unable to continue with establishing its own branded facilities-based Cards.

During the three months ended September 30, 1998, the Company's agreement with
Premiere Communications, Inc. ("Premiere") expired. Premiere previously has been
a significant supplier of bundled Cards and telecommunications services to the
Company. Since the expiration of the agreement with Premiere, the Company has
negotiated arrangements with other telecommunications service providers for the
supply of the Company's telecommunications needs.

Cost of Sales. The Company's cost of sales for the three months ended March
31, 1999 decreased to approximately $4,139,457 from $7,704,321 for the three
months ended March 31, 1998. The decrease of $3,564,864 or 46% was primarily
related to the decrease in revenues that the Company experienced in the three
months ended March 31, 1999 as compared to the third quarter in the prior
year. Cost of sales continued to exceed net sales due to the Company not being
able to route its traffic on its least cost providers due to its inability to
prepay the carriers as a result of its limited capital resources, thereby
increasing the cost of goods sold significantly over budgeted amounts.

Gross Profit. For the three months ended March 31, 1999, the Company experienced
a gross loss of approximately $2,695,670 as compared to a gross loss of
approximately $1,344,323 for the three months ended March 31, 1998. The increase
of $1,351,347 was primarily related to the lower volume of sales during the
current period and the higher cost of sales due to the higher facilities costs,
as discussed above. In addition, the initiation of the Company's
facilities-based Cards was accompanied by introductory pricing, thereby further
reducing the gross profit on those sales. During the three months ended March
31, 1999, the Company completed its phase out bundled products since they
were no longer competitively priced and since the Company's agreement with
Premiere, a major supplier of such Cards, had expired.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended March 31, 1999 decreased
to approximately $1,667,963 from $3,057,449 for the three months ended March
31, 1998. This decrease of $1,389,486 is primarily related to decreases in
personnel instituted by the Company.

Loss from Continuing Operations/Net Loss. The Company incurred a loss from
continuing operations of approximately $4,363,633 for the three months ended
March 31, 1999, as compared to a loss from continuing operations of
approximately $4,401,772 for the three months ended March 31, 1998. The loss is
primarily due to the combination of lower gross margin resulting from the
decreased sales and higher facilities costs but is offset by reductions in
Selling, General and Adminstrative Expenses.


                                                                              16
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                 Item 2. Management's Discussion and Analysis of
                                   Financial Condition and Results of Operations
================================================================================

Nine Months Ended March 31, 1999 Compared to Nine Months Ended March 31,
1999

Net Sales. Net Sales for the nine months ended March 31, 1999 decreased by
approximately $20,073,905 or 64% from $31,166,036 during the nine months ended
March 31, 1998 to $10,092,133 for the nine months ended March 31, 1999. Two
master distributors accounted for approximately 20% and 16% of sales during the
nine months ended March 31, 1999. The decrease in sales is due primarily to:

      1.    The Company terminating, during the quarter ended December 31, 1997,
            the exclusivity clause in an agreement with a key master distributor
            who accounted for sales of approximately $5.6 million during the
            quarter ended September 30, 1997, and the failure to fully replace
            the sales accounted for by the distributor.

      2.    The Company's inability to market its new facilities-based Cards as
            rapidly as planned, due to liquidity issues which precluded the
            Company from securing facilities as quickly as planned. This lack of
            facilities forced the curtailment of sales activities on certain
            Cards, since additional sales would have degraded the service
            available to all customers due to the lack of adequate facilities to
            complete the calls.

The Company continued phasing out the sale of its bundled products, which were
no longer competitively priced and which required greater capital resources to
market than the facilities-based Cards, and has not been able to establish the
facilities-based cards due to liquidity problems.

Cost of Sales. The Company's cost of sales for the nine months ended March 31,
1999 decreased to approximately $13,391,715 from $30,856,362 for the nine months
ended March 31, 1998. The decrease of $17,464,647 or 57% was primarily related
to the decrease in revenues that the Company experienced in the nine months
ended March 31, 1999 as compared to the first two quarters in the prior year.
Cost of sales exceeded net sales due to the Company not being able to route its
traffic on its least cost providers due to its inability to prepay the carriers
as a result of its limited capital resources, thereby increasing the cost of
goods sold significantly over budgeted amounts.

Gross Profit. For the nine months ended March 31, 1999, the Company experienced
a gross loss of approximately $3,299,582 as compared to a gross profit of
approximately $309,674 for the nine months ended March 31, 1999. The decrease of
$3,609,256 or 1,166% was primarily related to the lower volume of sales during
the current period and the higher cost of sales due to the higher facilities
costs, as discussed above. In addition, the transition of the Company's brands
from bundled Cards to facilities-based Cards was accompanied by introductory
pricing, thereby further reducing the gross profit on those sales. During the
nine months ended March 31, 1999, the Company phased out its bundled products
since they were no longer competitively priced and since the Company's agreement
with Premiere, a major supplier of such Cards, had expired, but could not
establish its facilities-based Cards due to liquidity difficulties.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the nine months ended March 31, 1999 increased to
approximately $5,072,428 from $5,021,567 for the nine months ended March 31,
1998. This increase of $50,861 or 1% is primarily related to:

      1.    Increases in salaries, wages and personnel-related expenses of
            approximately $443,123, as the Company's employee base peaked at 80
            full-time employees prior to being reduced to 50.

      2.    Increases in rent, telephone, general office and non-wage-related
            customer service expenses of approximately $462,283, which were
            related to the larger workforce.

      3.    Increases in professional fees of approximately $408,322, primarily
            due to increased corporate consulting fees and legal expenses
            related to litigation, regulatory filings and financing.

These increases were offset by a decrease in directors compensation of
$1,248,000, which amount represented a one-time noncash charge relating the
grants of options and a decrease in promotion and advertising expenses of
$648,970.

Loss from Continuing Operations. The Company incurred a loss from continuing
operations of approximately $8,372,010 for the nine months ended March 31, 1999,
as compared to a loss from continuing operations of approximately $4,711,893 for
the nine months ended March 31, 1998. This loss is primarily due to the
combination of lower gross margin resulting from the decreased sales and higher
facilities costs, coupled with the write off of $495,312 of amounts related to
cancelled Card print jobs and expired Cards previously purchased.


                                                                              17
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                 Item 2. Management's Discussion and Analysis of
                                   Financial Condition and Results of Operations
================================================================================

Liquidity and Capital Resources

The Consolidated Financial Statements of the Company have been prepared on the
basis that it is a going concern, which contemplates the realization of assets
and the satisfaction of liabilities, except as otherwise disclosed, in the
normal course of business. However, because of the Company's recurring losses
from operations, such realization of assets and liquidation of liabilities is
subject to significant uncertainty. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties. Further,
the Company's ability to continue as a going concern is highly dependent near
term on its ability to raise capital, reduce its costs of providing long
distance service, develop its collections tactics, develop market share and
achieve profitable operations thereon, and the ability to generate sufficient
cash flow from operations and financing sources to meet obligations.

As previously reported, the Company intended to migrate its traffic to its own
facilities, thereby becoming a facilities-based carrier and thereby increasing
its cash flow. To date the Company, due to liquidity problems, has been unable
to generate or finance sufficient capital to fully implement this strategy.
Accordingly, the Company has entered into negotiations with Telephone Electronic
Corporation ("TEC"), currently a holder of approximately 22% of the Company's
Common Stock, with respect to (i) a working capital facility to enable the
Company to meet its current operating expenditures, (ii) a long-term operating
agreement pursuant to which the Company's traffic can be originated and
terminated through the network facilities of TecNet, Inc., an affiliate of TEC,
including the traffic the Company anticipates will be generated as a result of
implementation of the Company's offering telecommunication services through the
College Enterprises, Inc. on-campus debit card system, and (iii) arrangements to
finance the equipment and operations of a point of sale distribution network for
the Company's Cards. There can be no assurances that these negotiations will be
successful or that TecNet, Inc. will continue to handle traffic for the Company
or advance funds for working capital expenditures. Moreover, the Company has
accured significant carrier charges with TecNet, Inc. and third party providers
which it must satisfy.

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 which have been exchanged for two year promissory notes and the
Warrants; (v) the sale of a $100,000 demand promissory note bearing 10% interest
per annum; and (vi) the sale of an aggregate of $1,227,415 in demand promissory
notes bearing 10% interest per annum (including sales of $492,415 of principal
amount of notes since March 31, 1999), all in offerings exempt from registration
under the Securities Act.

The Company has no existing bank lines of credit and has not established any
sources for such financing. During June 1998, the Company initiated discussions
with several entities regarding short-term financing related to accounts
receivable to provide funding for the immediate internal expansion of the
business. As of May 18, 1999, no such arrangement has been consummated. The
Company believes that such an arrangement can be consummated, but also believes
that the potential terms of such an arrangement will be more favorable following
the implementation of the additional credit and collection activities discussed
in Note 3(b) to the Consolidated Financial Statements. However, there can be no
assurance that such funding will be available to the Company, or if available,
will be available in either a timely manner or upon terms and conditions which
are acceptable to the Company.

During the nine month periods ended March 31, 1999 and 1998, the Company's major
components of cash flow were as follows:

                                                    NINE MONTHS ENDED MARCH 31,
                                                  ------------------------------
                                                      1999               1998
                                                  -------------      -----------
Net cash used in operating activities .........   $(1,988,907)      $(9,434,620)

Net cash used in investing activities .........       (16,726)          (72,442)

Net cash provided by financing activities .....     2,080,600       $ 9,063,575
                                                  -----------        ----------
Net increase in cash ..........................   $    74,967       $  (443,487)
                                                  ===========        ==========

Net cash used by operating activities during the nine months ended March 31,
1999 was $1,988,907 as compared to $9,434,620 for the nine months ended March
31, 1998. The decrease of approximately $7,445,713 was caused by a net loss of
$8,372,010 for the nine months ended March 31, 1999 as compared to net loss of
$5,419,508 for the nine months ended March 31, 1998 and an increase in accounts
payable and accrued expenses of $5,714,276 for the nine months ended March 31,
1999 as compared to an increase of $1,342,654 for the nine months ended March
31, 1998.


                                                                              18
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                 Item 2. Management's Discussion and Analysis of
                                   Financial Condition and Results of Operations
================================================================================

During the nine months ended March 31, 1999 the Company experienced a much
smaller increase in sales and inventory, as compared to the corresponding prior
year period.

To date, capital expenditures have not been material. Cash used in investing
activities for nine month periods ended March 31, 1999 and 1998 related solely
to capital expenditures of approximately $16,726 for the nine months ended
March 31, 1999 and $72,442 for the nine months ended March 31, 1998.

Cash provided from financing activities of $2,080,600 during the nine month
period ended March 31, 1999 consisted of $1,935,000 net proceeds from the
Company's sale of the Notes, $67,000 proceeds from the exercise of certain $1.50
Warrants and $147,000 demand note sales less payments of approximately $25,000
related to the Prime Communications, Inc. note payable.

For the nine month period ended March 31, 1999, the Company experienced a
substantial operating loss of $8,372,010 and used $1,988,907 cash in operating
activities. The Company's cash position at March 31, 1999 approximated $183,689
and its working capital deficit approximated $10,091,443. Of the Company's
working capital deficit, approximately $91,707 consists of deferred revenue,
which represents sales for which provision of the underlying telecommunications
service has not yet been rendered or paid for by the Company. This does not
represent an immediate cash requirement. However, due to operating losses and
the Company's expansion, the Company remains severely undercapitalized and to
date has not been able to finance its expansion as quickly as opportunities have
arisen. During the nine months ended March 31, 1999, the Company has experienced
substantial difficulty in making timely payments to its vendors and satisfying
other financial obligations, including payments to its landlord, employees and
the providers of its telecommunications facilities, professional services and
other general corporate services. Because of the lack of liquidity and the
difficulty in making payments to the providers of certain telecommunications
facilities, the Company has not been able to add the requisite facilities as
rapidly as planned, and the Company's sales of Cards has been adversely
affected.


                                                                              19
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                 Item 2. Management's Discussion and Analysis of
                                   Financial Condition and Results of Operations
================================================================================

The Company has engaged one of the top outside collection agencies in the United
States with respect to collecting overdue accounts. Costs for collection of such
accounts will be on a contingent basis billed to the Company as a percentage of
collected funds. The Company does not expect any cash requirements associated
with implementing this program and expects that its liquidity position will
improve as a result of its implementation. Concurrently with the foregoing
effort, the Company plans to improve its documentation of processes and
procedures by developing a formal Credit and Collections Policy including, but
not limited to, customer credit file requirements, standard credit application
processes and procedures and standard procedures for the collection of past due
accounts. The Company believes that the combination of the foregoing actions
will result in reduced credit risk to the Company, improved liquidity and
enhanced ability to establish an asset-backed working capital credit facility
due to the increased quality of the receivables portfolio. Since these planned
actions are in an early stage of implementation, it is not possible at this time
to estimate the anticipated effects, if any, on sales to current customers.

TEC, a holder of approximately 22% of the Company's issued and outstanding
Common Stock, in December, 1998, (i) intervened with certain of the Company's
traffic-providers and (ii) through an affiliate, TecNet, Inc., (a) continues to
originate and terminate domestic and international telecommunications traffic
for the Company and (b) lent $1,227,415 to the Company on a demand basis through
May 14, 1999, thereby reducing the immediate and short-term capital shortfall of
the Company. The Company is in the process of negotiating a long-term operating
agreement and working capital facility with TEC. However, there can be no
assurances that the parties will reach an agreement or that TecNet, Inc. will
continue to originate and terminate telecommunications traffic for the Company
and purchase demand notes of the Company.

Seasonality

The business of the Company does not experience significant seasonality.

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.

The Year 2000 Issue

Many existing computer programs use only two digits to identify a year in their
date fields. These programs were designed and developed without considering the
impact of the upcoming change in the century (the "Year 2000 Issue"). If not
corrected, many computer applications could fail or create erroneous results by
or at the year 2000.

None of the Company's Card activations are date-dependent. All activations and
deactivations are based on payment and usage only, as a normal debit account
works. Further, the Company currently is not utilizing any integrated software
which will be impacted significantly by the Year 2000 Issue. As a result,

                                                                              20
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                  Part I - Financial Information
                                 Item 2. Management's Discussion and Analysis of
                                   Financial Condition and Results of Operations
================================================================================

the Company does not anticipate significant expense in ensuring that the Company
has adequately provided for any corrections to its existing hardware or
software. Furthermore, the Company is currently evaluating an upgrade of its
financial and accounting software and has obtained documentation from vendors of
such software stating that the Year 2000 Issue has been addressed.

In addition, the Company continues the process of contacting its key suppliers
and other vendors to assure that they have addressed the Year 2000 issue as
regards continuing provision of services to the Company.

Recent Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
130, "Reporting Comprehensive Income", which established standards for reporting
and display of comprehensive income, its components and accumulated balances.
Comprehensive income is defined to include all changes in equity except those
resulting from investments by, or distributions to, owners. Among other
disclosures, SFAS No. 130 requires that all items that are required to be
recognized under current accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other financial statements.

In June 1997, FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which supersedes SFAS No. 14, "Financial
Reporting for Segments of a Business Enterprise." SFAS No. 131 establishes
standards for the reporting of certain information about operating segments by
public companies in both annual and interim financial statements. SFAS No. 131
defines an operating segment as a component of an enterprise for which separate
financial information is available and whose operating results are reviewed
regularly by the chief operating decision maker to make decisions about
resources to be allocated to the segment and to assess its performance.

SFAS Nos. 130 and 131 are both effective for financial statements for years
beginning after December 15, 1997 and both require comparative information for
earlier years to be restated. Accordingly, the Company has adopted both the
foregoing standards for the accompanying financial statements for the quarter
ended September 30, 1998. SFAS No. 130 divides comprehensive income into net
income and other comprehensive income, and specifies that an enterprise that has
no items of other comprehensive income in any period presented is not required
to report comprehensive income. Accordingly, since the Company did not have any
items of other comprehensive income in any period presented, comprehensive
income is not separately reported. The adoption of SFAS No. 131 did not have a
material effect on the Company's financial position or results of operations.
The Company continually evaluates SFAS No. 131 in order to fully evaluate the
impact, if any, the adoption of the provisions of this Statement will have on
future financial disclosures.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not hold any derivatives or investments that are subject to
market risk. The carrying values of financial instruments, including cash and
notes payable at March 31, 1999 and June 30, 1998, respectively, approximate
fair value as of those dates because of the relatively short-term maturity of
these instruments which eliminates any potential market risk associated with
such instruments.

                                                                              21
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                     Part II - Other Information
================================================================================

ITEM 1. LEGAL PROCEEDINGS

In June of 1996, the Company became a co-defendant in a legal action in the
Circuit Court for the First Judicial District of Hinds County in Jackson,
Mississippi in the case entitled Heritage Graphics, Inc. ("Heritage"), et. al.
v. Telephone Electronics Corporation, et. al. Civ. No. 251-96-000492. The named
plaintiffs in the action are: Heritage Graphics, Inc.; Thomas L. Gould, Jr.;
Suzanne G. Gould; and Raine Scott. The named defendants in the action are:
Telephone Electronics Corporation d/b/a TECLink; TECLink, Inc.; the Company;
Asynchronous Technologies, Inc.; Barbara Scott; Ronald D. Anderson, Sr. d/b/a
Anderson Engineering; Walter Frank; and Frank C. Magliato. The second Amended
Complaint filed in the action alleges a conspiracy on the part of all of the
defendants to destroy Heritage and to eliminate it as a competitor in the
Internet services provider market. The Company and others allegedly duped
Heritage into surrendering its trade secrets, its services, its intellectual
property, its expertise, etc. to the Company. The complaint's lesser allegations
are that (i) defendants conspired to slander the business reputations of
Heritage and Tom Gould; and (ii) TEC and the Company are jointly and severally
liable to it for $268,245 worth of production work and consulting services
provided over the September to December 1995 time period. The plaintiffs seek
damages of $500 million. The Company believes that the plaintiffs' claims are
without merit. Further, the Company believes that its counterclaims are
sufficiently well grounded to offset any judgment entered against the Company.
The Company intends to vigorously contest this case. The case is set for trial
on September 7, 1999 in Jackson, Mississippi.

In October of 1997, the Company initiated a lawsuit against IDT Corporation
("IDT"), CG Com, Inc. ("CG Com"), and Carlos Gomez in the Supreme Court of the
State of New York for the County of New York (Index No. 604920/97). The Company
initially sought and was granted a temporary restraining order which enjoined CG
Com and Carlos Gomez from distributing Prepaid Phone Cards of IDT, a competitor
of the Company, which the Company alleged was in violation of an Independent
Master Distributor Agreement (the "Distribution Agreement") with the Company
which provided for CG Com and Carlos Gomez to act as exclusive distributors of
the Company's Prepaid Phone Cards in the state of New York. The Amended
Complaint sought preliminary injunctive relief against both CG Com and IDT,
which was denied by the court. Subsequently, the Company discontinued the action
against Mr. Gomez and CG Com. The action seeks $50 million in damages for
tortious interference with the Distribution Agreement against IDT. The Amended
Complaint alleges, among other things that IDT entered into its distributorship
arrangement with CG Com and Mr. Gomez with full knowledge of the business
relationship between the Company and those parties. This matter was settled on
or about January 28, 1998 pursuant to a Settlement Agreement with IDT which
provides the Company with certain services at rates negotiated between the
parties.

During March 1998, Vanity Fair Intimates, Inc. ("Vanity Fair") commenced an
action entitled Vanity Fair Intimates, Inc. formerly known as Vanity Fair Mills,
Inc. v. Promo Tel, Inc. also known as and/or trading as Digitec 2000, Inc., in
the Civil Court of the City of New York for the County of New York, L&T Index
No. 066018-98 seeking eviction and judgment against the Company for a total of
$472,799. The matter was settled in September, 1998 for $208,916, to be paid in
monthly installments of approximately $35,000 commencing in September 1998 and
continuing through and including the month of February, 1999. The Company made
the first payment due in September in accordance with the settlement agreement.
However, due to its liquidity problems, the Company failed to make the payments
due in October and November, 1998. Due to the Company's failure to make the
foregoing payments, Vanity Fair gave notice of its intention to enter a
Confession of Judgment for $369,774, less the amount previously paid by the
Company. The Company subsequently negotiated an alternative payment plan with
Vanity Fair, and to date is in compliance with the revised payment terms.

                                                                              22
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                     Part II - Other Information
================================================================================

In June, 1998, the Company was served in an action entitled Michael Bodian, as
Chapter 11 Trustee of Communications Network Corp. ("Conetco"), a/k/a Conetco v.
Digitec 2000, Inc. f/k/a Promo Tel, Inc., Bankruptcy Case No. 96-B-53504 (PCB),
Adv. Proc. No. 98-8621-A, pending in the United States Bankruptcy Court,
Southern District of New York, wherein the plaintiff alleges that a preferential
payment or fraudulent transfer in the amount of $150,800 was made to the Company
by Magic Communications, Inc. ("Magic"), an affiliate of Conetco. Conetco, a
reseller of long distance telecommunications services which it purchased from
WorldCom Network Services ("WorldCom"), sold prepaid telephone debit cards
through Magic which acted as its master sales agent. After WorldCom terminated
Conetco's access to its long distance network because of Conetco's failure to
pay its large outstanding balance, the debit cards became useless. Conetco
alleges that a "refund" of $150,800 in the form of a credit was given by Magic
to the Company as a result of cash refunds that the Company had given to its
customers on account of returned debit cards. An answer asserting numerous
defenses, including that the Company never received the "refund" in question,
has been filed on behalf of the Company.

On June 9, 1998, the Company was served with a Summons and Motion for Summary
Judgment by Frontier in a case entitled Frontier Communications International,
Inc. v. Digitec 2000, Inc. in the Supreme Court of the State of New York, County
of Monroe 5390196 seeking judgment on a promissory note (the "Frontier Note")
issued by the Company for $893,061 in connection with Frontier's termination of
its Card division. The outstanding amount on the Frontier Note at that time was
approximately $558,000, which was reflected in the accounts payable of the
Company. On June 19, 1998, the Company paid approximately $56,000 on the
Frontier Note, reducing the balance to approximately $502,000. On August 6,
1998, the Company negotiated a settlement with Frontier for $200,000. The
Company satisfied the settlement in September 1998, and as a result, a security
interest held by Frontier against certain assets of the Company was removed.

The Company was served on March 30, 1999 in an action by Qwest Communications
Corporation ("Qwest") entitled Qwest Communications Corporation v Digitec 2000,
Inc., in the United States District Court for the Southern District of New York,
seeking payment for approximately $1.36 million of telecommuncation services
provided to the Company by Qwest. The parties have exchanged draft settlement
agreements pursuant to which the Company would pay in nine monthly installments
commencing October 1, 1999 a total of $887,174 and TecNet, Inc would satisfy the
remaining $489,874. There are no assurances that the proposed settlement will be
consummated. If the proposed settlement is not consummated, the Company will
vigorously defend the action.

On March 10, 1999, the Company was served with a Motion for Summary Judgement by
Prime Communications (NY) Inc. ("Prime") in a case entitled Prime Communications
(NY), Inc v Digitec 2000, Inc. in the Supreme Court of the State of New York,
County of Suffolk seeking judgement on a promissory note issued by the Company
for $147,000, which note was issued in connection with the acquisition of
certain assets from Prime. The outstanding amount on the note is approximately
$121,425. The Company has countermoved against Prime alleging failure of Prime
to deliver the contemplated consideration and seeks damages against Prime. The
Company and Prime are currently negotiating a settlement of the matter.

ITEM 2.     CHANGES IN SECURITIES

As of March 1999, the Company exchanged its 10% Six Month Notes and accompanying
warrants providing for the purchase of 600,000 shares of its Common Stock at
$2.37 a share for two year promissory notes and accompanying Warrants to
purchase 1,800,000 shares of Common Stock at a purchase price of $1.10 per
share. The new notes bear interest at 10% per annum and are payable interest
only for the first four calendar quarters and interest and 25% of principal for
the second four calendar quarters. The Warrants are exercisable in whole or in
part prior to March, 2003. The exchange was carried pursuant to an exemption
from registration under the Securities Act of 1933, as amended, provided by
Regulation D.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

The Company's 10% Six Month Notes in the principal amount of $1,200,000 were not
paid at maturity. Accrued interest was paid on such notes soon after maturity.
The Notes with the accompanying Warrants were exchanged for new notes and
warrants thereby curing the default (See Note 10 to the accompanying
Consolidated Financial Statements).

                                                                              23
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                     Part II - Other Information
================================================================================

ITEM 5.     OTHER INFORMATION

            None.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            (a)   Exhibits

                  Exhibit 2.1  Asset Purchase Agreement, dated as of February 
                               24, 1999, among DigiTEC 2000, Inc., Pos Tec 
                               Systems, LLC and Total POS Solutions, LLC.
                          10.1-10% Promissory Note (Tec Net, Inc.)
                          10.2 Note and Warrant Exchange Letter
                  Exhibit 27-Financial Data Schedule.

            (b)   Reports on Form 8-K

                  None.

                                                                              24
<PAGE>

                                                              DigiTEC 2000, Inc.
                                                                and Subsidiaries
                                                      (formerly Promo Tel, Inc.)

                                                     Part II - Other Information
================================================================================

                                   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:  May 21, 1999                    DigiTEC 2000, Inc.
                                       -----------------------------------------
                                       (Registrant)

                                       By: /s/ Frank C. Magliato
                                           -------------------------------------
                                           Frank C. Magliato
                                           Chief Executive Officer, President
                                           and Director

       May 21, 1999                    By: /s/ Diego E. Roca
                                           -------------------------------------
                                           Diego E. Roca
                                           Senior Vice President, Chief
                                           Operating Officer, Treasurer, Chief
                                           Financial Officer and Secretary

                                                                              25