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

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-QSB

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

                For the quarterly period ended December 31, 2000

                                       OR

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

           For the transition period from ____________ to ____________

                        Commission file number: 000-23291

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

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

                         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

                                 Not Applicable
         (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)

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

The number of outstanding  shares of the  Registrant's  Common Stock,  par value
$.001 per share (the "Common Stock") as of December 29, 2000 was 7,058,998.

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



<PAGE>
<TABLE>
<CAPTION>
                                      DigiTEC 2000, INC.
                                     INDEX TO FORM 10-QSB




                                                                                        Page(s)
                                                                                        -------



PART I -- FINANCIAL INFORMATION


ITEM 1 -- Financial Statements
<S>                                                                                      <C>
Condensed Consolidated Balance Sheet as of December 31, 2000 (Unaudited)..............       3

Condensed Consolidated Statements of Loss for the Three Months and Six
Months Ended December 31, 2000 and December 31, 1999 (Unaudited)......................       4

Condensed  Consolidated  Statement of  Stockholders'  Deficit for the Six Months
Ended December 31, 2000  (Unaudited)..................................................       5

Condensed Consolidated Statements of Cash Flows for the Six Months Ended
December 31, 2000 and the Six Months Ended December 31, 1999 (Unaudited)..............       6

Notes to Condensed Consolidated Financial Statements (Unaudited)......................   7 - 8


ITEM 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations...................................................   9 - 14


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


PART II -- OTHER INFORMATION


ITEM 1 - Legal Proceedings............................................................       14


ITEM 4 - Submission of Matters to a Vote of Security Holders..........................       15


ITEM 6 - Exhibits and Reports on Form 8-K.............................................       15


Signatures............................................................................       15
</TABLE>


                                      -2-
<PAGE>
<TABLE>
<CAPTION>
                                                                              DigiTEC 2000, Inc.
                                                                                  and Subsidiary

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

                                                                               December 31, 2000
------------------------------------------------------------------------------------------------
<S>                                                                            <C>
Assets:
Current:
 Cash and cash equivalents                                                     $         240,343
 Accounts receivable, net of allowance for bad
  debts of $1,897,605                                                                  5,651,187
 Inventory                                                                               818,463
 Prepaid expenses and other                                                              224,733
------------------------------------------------------------------------------------------------

Total Current Assets                                                                   6,934,726

Property and equipment, net of accumulated
 depreciation of $ 208,481                                                               123,137
Customer lists, net of accumulated amortization
 of $166,145                                                                             118,675
Other assets                                                                              82,923
------------------------------------------------------------------------------------------------

Total Assets                                                                   $       7,259,461
================================================================================================

Liabilities and Stockholders' Deficit
Current:
 Notes and accounts payable to TecNet, Inc.                                    $      18,627,628
 Accounts payable - trade                                                              2,045,751
 Accrued taxes and penalties                                                           2,458,962
 Accounts payable and accrued expenses                                                   581,946
 Payable to Premiere Communications, Inc.                                                583,152
 Accrued legal                                                                           643,082
 Convertible Debt                                                                        300,000
 -----------------------------------------------------------------------------------------------

Total Current Liabilities                                                             25,240,521

Deferred rent                                                                              2,436
------------------------------------------------------------------------------------------------

Total Liabilities                                                                     25,242,957
------------------------------------------------------------------------------------------------

Commitments and Contingencies                                                                  -
------------------------------------------------------------------------------------------------

Stockholders' Deficit
 Series A Convertible Preferred Stock, $.001 par value, 1,000,000
   shares authorized; 61,050 shares issued and outstanding                                    61
 Common Stock, $.001 par value, 100,000,000 shares
   authorized; 7,058,998 shares issued and outstanding                                     7,059
 Additional paid-in-capital                                                           17,061,318
 Accumulated deficit                                                                 (35,051,934)
------------------------------------------------------------------------------------------------

Total Stockholders' Deficit                                                          (17,983,496)
------------------------------------------------------------------------------------------------

Total Liabilities and Stockholders' Deficit                                    $       7,259,461
================================================================================================


           See accompanying notes to Condensed Consolidated Financial Statements.
</TABLE>

                                            -3-
<PAGE>
<TABLE>
<CAPTION>
                                                                                           DigiTEC 2000, Inc.
                                                                                               and Subsidiary

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

                                          Three Months Ended December 31,       Six Months Ended December 31,

                                                 2000           1999                 2000           1999

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

<S>                                         <C>             <C>                 <C>              <C>
Net sales                                   $  14,496,022   $   3,331,102       $   23,370,675   $  6,218,606
Cost of sales                                  12,480,798       2,885,572           20,279,294      5,057,552
-----------------------------------------------------------------------------------------------------------

      Gross profit                              2,015,224         445,530            3,091,381      1,161,054

Selling, general and administrative
    expenses                                    2,442,173       1,777,186            4,355,988      3,034,806
-----------------------------------------------------------------------------------------------------------

      Loss before other income
        (expenses)                               (426,949)     (1,331,656)          (1,264,607)    (1,873,752)
-----------------------------------------------------------------------------------------------------------
Other income (expenses):
    Interest expense                             (233,924)       (104,049)            (425,043)      (198,552)
    Other income                                  352,730         (28,600)             379,717        (17,508)
-----------------------------------------------------------------------------------------------------------

         Other income (expenses)                  118,806        (132,649)            ( 45,326)      (216,060)
-----------------------------------------------------------------------------------------------------------

Net loss                                     $   (308,143)  $  (1,464,305)      $   (1,309,933)  $ (2,089,812)
===========================================================================================================
Net loss per common share-basic
    and diluted                              $      (0.04)  $       (0.21)      $        (0.19)  $      (0.30)
===========================================================================================================
Weighted average number of common and
    common equivalent shares outstanding
    used in basic and diluted computations      7,058,998       7,058,998             7,058,998     7,058,998
===========================================================================================================

                 See accompanying notes to Condensed Consolidated Financial Statements.
</TABLE>

                                                 -4-
<PAGE>
<TABLE>
<CAPTION>
                                                                                                   DigiTEC 2000, Inc.
                                                                                                       and Subsidiary

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


                                                          Six Months Ended December 31, 2000
---------------------------------------------------------------------------------------------------------------------
                               Preferred Stock      Common Stock                                            Total
                               ---------------   -----------------        Additional     Accumulated    stockholders'
                               Shares   Amount   Shares      Amount     paid-in capital    deficit         deficit
---------------------------------------------------------------------------------------------------------------------
<S>                            <C>      <C>     <C>         <C>        <C>               <C>            <C>
Balance, June 30, 2000         61,050   $ 61    7,058,998   $ 7,059    $ 17,031,318      $(33,742,001)  $(16,703,563)

   Contributed Capital                                                       30,000                           30,000

   Net loss                                           --         --              --        (1,309,933)    (1,309,933)
--------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000    61,050   $ 61    7,058,998    $ 7,059    $ 17,061,318      $(35,051,934)  $(17,983,496)
====================================================================================================================

                     See accompanying notes to Condensed Consolidated Financial Statements.
</TABLE>

                                                    -5-


<PAGE>
<TABLE>
<CAPTION>
                                                                         DigiTEC 2000, Inc.
                                                                             and Subsidiary

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

                                                             Six Months Ended December 31,
                                                                 2000              1999
-------------------------------------------------------------------------------------------
<S>                                                        <C>                <C>
Cash flows from operating activities:
  Net loss                                                 $ (1,309,933)      $ (2,089,812)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
      Provision for bad debts - net                             104,948                  -
      Depreciation                                               37,191             25,794
      Amortization of customer lists                             47,470             47,944
      Deferred rent                                              (3,570)            (8,207)
      Services provided by shareholder                           30,000             82,195
      (Increase) decrease in:
        Accounts receivable                                  (4,157,971)        (1,328,781)
        Inventory                                              (395,175)           (49,559)
        Prepaid expenses and other                             (212,017)           (73,004)
      Increase (decrease) in:
        Accounts payable and accrued expenses                 2,947,504          1,540,506
------------------------------------------------------------------------------------------
           Net cash used in operating activities             (2,911,553)        (1,852,924)
------------------------------------------------------------------------------------------

Cash flows from investing activities:
  Capital expenditures                                          (36,958)           (38,819)
------------------------------------------------------------------------------------------
           Net cash used in investing activities                (36,958)           (38,819)
------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Proceeds from issuance of TecNet notes                      2,640,000          2,885,727
  Repayment of notes payable                                   (617,000)           (10,000)
------------------------------------------------------------------------------------------
           Net cash provided by financing activities          2,023,000          2,875,727
------------------------------------------------------------------------------------------

           Net increase (decrease) in
             cash and cash equivalents                         (925,511)           983,984

Cash and cash equivalents beginning of period                 1,165,854            156,756
------------------------------------------------------------------------------------------
Cash and cash equivalents end of period                    $    240,343       $  1,140,740
==========================================================================================
</TABLE>

          See accompanying notes to Condensed Consolidated Financial Statements.

                                           -6-

<PAGE>

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



1.   The Company and Significant Accounting Policies:

     (a) Basis of Presentation

     The accompanying  unaudited Condensed  Consolidated  Financial  Statements,
     which includes the accounts of DigiTEC 2000,  Inc. (the  "Company") for the
     entire presented period and those of its wholly owned  subsidiary,  POS TEC
     Systems, LLC ("POS TEC") from the date of acquisition have been prepared in
     accordance  with  accounting  principles  generally  accepted in the United
     States  of  America  for  interim   financial   information  and  with  the
     instructions to Form 10-QSB and Article 10 of Regulation S-X.  Accordingly,
     they  do  not  include  all  the  information  and  footnotes  required  by
     accounting  principles  generally  accepted in the United States of America
     for complete financial  statements.  Although the Company believes that the
     disclosures  included  on the face of the  interim  consolidated  financial
     statements  and in the  accompanying  footnotes are adequate to ensure that
     the information  presented is not  misleading,  certain key information and
     disclosures  have been condensed or otherwise  omitted  pursuant to the SEC
     rules and regulations noted above. The financial  information presented for
     the three  months  and six  months  ended  December  31,  2000 has not been
     audited by independent auditors; however, in the opinion of management, all
     adjustments  (consisting of normal recurring accruals) considered necessary
     for a fair presentation have been included in operating results for the six
     month period ended December 31, 2000 and are not necessarily  indicative of
     the results that may be expected for a full fiscal  year.  All  significant
     intercompany   transactions   and   balances   have  been   eliminated   in
     consolidation.

     The information  outlined in this Form 10-QSB should be read in conjunction
     with the audited  consolidated  financial  statements and footnotes thereto
     included in the  Company's  Annual  Report on Form 10-K for the fiscal year
     ended June 30, 2000.

     The accompanying unaudited Condensed Consolidated Financial Statements have
     been  prepared  on the basis  that the  Company is a going  concern,  which
     contemplates  the realization of assets and the satisfaction of liabilities
     in the  normal  course  of  business.  However,  because  of the  Company's
     recurring losses from  operations,  accumulated  deficit,  negative working
     capital and significant  arrearages on trade payables,  such realization of
     assets  and   satisfaction   of  liabilities  are  subject  to  significant
     uncertainty.  The financial  statements do not include any adjustments that
     might  result  from  the  outcome  of this  uncertainty.  Furthermore,  the
     Company's ability to continue as a going concern is highly dependent in the
     near term on both the willingness and ability of TecNet, Inc. ("TecNet") to
     finance the Company's  telecommunications products and services and working
     capital  short-falls  and the  ability of the Company and TecNet to provide
     reliable and competitive  prepaid telephone cards. TecNet is a wholly owned
     subsidiary of Telephone Electronics  Corporation ("TEC") and is a holder of
     approximately 21% of the Company's outstanding common stock.  Additionally,
     the Company's  overall  stability is highly  dependent  upon its ability to
     raise working capital,  to increase market share while developing  existing
     markets and improving  overall customer  retention,  to achieve  profitable
     operations  and to  generate  sufficient  cash  flows  from  operating  and
     financing activities to meet its obligations as they become due.

     (b)  Revenue Recognition

     Sales of bundled prepaid calling cards from third-party providers for which
     the Company acts solely as a distributor are recorded at the sales price of
     the card and are  recognized  as revenue  upon  delivery  to the  Company's
     customers.  The  related  costs are  simultaneously  charged to the cost of
     sales accounts upon such delivery.

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


                                      -7-
<PAGE>

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


     (c)  Deferred Income Taxes

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

     (d)  Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
     "Accounting for Derivative Instruments and Hedging Activities",  as amended
     by SFAS  Nos.  137 and 138,  which  requires  companies  to  recognize  all
     derivatives  contracts as either assets or liabilities in the balance sheet
     and to  measure  them at fair  value.  Historically,  the  Company  has not
     entered into  derivative  contracts  either to hedge  existing risks or for
     speculative  purposes.  The adoption of the  statement,  effective  July 1,
     2000,  by the  Company  did not have a  material  effect  on the  Company's
     consolidated results of operations or financial position.

     In December  1999,  Staff  Accounting  Bulletin  ("SAB") No. 101,  "Revenue
     Recognition in Financial  Statements",  was issued.  SAB No. 101 summarizes
     the  Securities  and Exchange  Commission's  ("SEC") staff view on applying
     accounting principles generally accepted in the United States of America to
     revenue  recognition.  The Company will  implement SAB No. 101 prior to the
     fourth quarter of fiscal year 2001. The Company  believes that the adoption
     of SAB No. 101 will not have a material impact on its revenue recognition.

     (e)  Segment Disclosures

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

     (f)  TecNet Borrowings

     TecNet   continues   to  provide   consulting   services,   financing   and
     telecommunications  support. During the six months ended December 31, 2000,
     the Company borrowed  $2,640,000 from TecNet and subsequent to December 31,
     2000 and through  February 12, 2001,  the  Company  borrowed an  additional
     $152,000  from TecNet  pursuant to 10% demand  promissory  notes bearing an
     annual rate of interest of ten percent. As there is no formalized agreement
     between the parties, there can be no assurance that TecNet will continue to
     provide such services,  to finance the current operations or to provide the
     Company with bundled  prepaid  calling cards at comparable  rates in future
     periods.

                                      -8-

<PAGE>


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

General

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

The Company commenced  operations under present management in 1995 to capitalize
upon  opportunities  in the  prepaid  phone  card  sector  of the long  distance
telecommunications  market.  The Company's prepaid phone cards provide consumers
with a competitive  alternative to traditional  calling cards and  presubscribed
long distance  telecommunications  services.  The Company's  total revenues were
$13,733,119,  $10,394,558 and  $35,032,533,  and its net losses were $4,499,526,
$13,566,927,  and $11,996,759 for the fiscal years ended June 30, 2000, 1999 and
1998,  respectively,  after losses from  discontinued  operations  of $0, $0 and
$813,178, respectively.

The  Company's  target  markets  include  ethnic  communities  with  substantial
international   long  distance  calling   requirements.   Retail  rates  in  the
international  long  distance  market  have  declined  in recent  years and,  as
competition  in this  segment of the  telecommunications  industry  continues to
intensify,  the Company  believes that this downward trend in rates is likely to
continue.  Although  there can be no  assurance,  the Company  believes that any
reduction  in  rates  will  be  offset  in  whole  or in  part  by  efficiencies
attributable  to the planned  expansion of the Company's  services as well as by
lower  transmission  costs per minute  resulting  from the  Company's  increased
volume of minutes.

In November  of 1998 the Company  initiated a strategy of focusing on the sales,
marketing and  distribution  of prepaid  telephone  calling cards. In connection
with the  initiation  of such  strategy,  TecNet  began to  provide  significant
telecommunications   services   to  the  Company  and  to  finance  its  current
operations.  In February  of 1999,  the  Company  began to receive  semi-monthly
operating cash inflows from TecNet through the issuance of 10% demand promissory
notes.  Although TecNet has not made any formal demands for the repayment of the
advances,  no formal written  agreement exists between the Company and TecNet to
support TecNet's  continuing  deferral of such amounts.  As of December 31, 2000
(and through the issuance date of this filing), the Company is totally dependent
on TecNet to  provide  consulting  services,  financing  and  telecommunications
support until it has achieved profitable  operations.  However,  there can be no
assurance that TecNet can or will continue to provide such services,  to finance
the current  operations or to provide the Company with bundled  prepaid  calling
cards at comparable rates in future periods.

The unaudited Condensed  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 and significant  arrearages on trade payables,
such  realization  of assets  and  satisfaction  of  liabilities  is  subject to
significant  uncertainties.   The  unaudited  Condensed  Consolidated  Financial
Statements do not include any adjustments  that might result from the outcome of
these uncertainties.  Furthermore,  the Company's ability to continue as a going
concern is highly dependent in the near term on both the willingness and ability
of TecNet to finance the Company's  telecommunications products and services and
working  capital  short-falls,  and the  ability  of the  Company  and TecNet to
provide  reliable and competitive  prepaid  telephone cards.  Additionally,  the
Company's  stability is dependent upon its ability to raise capital,  to develop
market share, to achieve profitable  operations and to generate  sufficient cash
flow from operations and financing sources to meet obligations.

The Company believes that future growth is dependent on the continued receipt of
operational and financial support from TecNet,  providing  customers with a high
quality prepaid product at a competitive price, and the ability to terminate the

                                      -9-

<PAGE>

related minutes on TecNet's network  facilities at favorable rates. In addition,
the  Company  expects to produce  favorable  operating  results in the future by
increasing its existing retail distribution market, to introduce new products to
its  target  market  which are cost  competitive  on a per  minute  basis and to
capitalize  upon  economies of scale within  existing  markets.  There can be no
assurance  that the Company will continue to receive the support of TecNet or be
able to achieve favorable operating results in future periods.

Operations

Three Months Ended December 31, 2000 Compared to Three Months Ended December 31,
1999

Net Sales:

Sales, net of discount and returns, increased approximately $11.2 million (339%)
to  approximately  $14.5  million for the three month period ended  December 31,
2000 as compared to approximately  $3.3 million for the three month period ended
December 31, 1999. The overall increase is attributed to the Company's  strategy
of  focusing  on the sales,  marketing  and  distribution  of prepaid  telephone
calling cards within its target market and the  termination of its  unprofitable
proprietary branded facilities-based cards. By abandoning its prior strategy and
through the infusion of operating  capital by TecNet,  the Company has been able
to increase overall sales by focusing on the specific needs of its target market
and utilizing  its cash flows for the  development  of existing and  prospective
markets. The Company's revenues are based on both the dollar value and the total
number of cards sold,  and the Company was able to  significantly  increase  the
total number of prepaid cards sold during the three month period ended  December
31, 2000 through its master  distributor  network.  The Company has been able to
realize  market  growth by  offering  cost  competitive  prepaid  calling  cards
utilizing the favorable pricing obtained from TecNet on bundled products.

Cost of Sales:

The  Company's  cost of sales  increased  approximately  $9.6 million  (331%) to
approximately  $12.5 million for the three month period ended  December 31, 2000
as compared to  approximately  $2.9  million  for the three month  period  ended
December 31, 1999. The overall cost of sales increase is directly related to the
increased volume of minutes associated with the increased sales of prepaid cards
discussed above,  offset by the Company's ability to realize cost savings by not
paying  facilities-based  carrier charges, fixed cost circuit charges or private
line charges to route the customers' calls by reselling bundled prepaid products
obtained from TecNet (which are terminated on TecNet's network).

Gross Profit:

The Company realized a gross profit of approximately  $2.0 million for the three
month  period  ended  December  31,  2000  as  compared  to a  gross  profit  of
approximately  $446,000 for the three month period ended  December 31, 1999. The
gross  profit  realized  is  directly  related to the  Company's  use of bundled
prepaid  cards  purchased  from  TecNet  which did not have the higher  costs of
facilities-based cards, as well as the cost savings from not having to pay fixed
circuit  costs and  private  line  charges  on  activated  cards,  offset by the
increase in cost of sales due to factors noted above.  In addition,  the Company
was able to obtain  more  favorable  short-term  financing  rates from TecNet in
connection  with the  purchase of the bundled  prepaid  cards,  which  helped to
facilitate the increase in overall net sales.

Selling, General and Administrative Expenses:

The  Company's   selling,   general  and   administrative   expenses   increased
approximately  $665,000 (33%) to approximately  $2.4 million for the three month
period ended December 31, 2000 as compared to approximately $1.8 million for the
three month period ended December 31, 1999.  The overall  increase is related to
the combined effect of several factors.  Factors include  increased  payroll and
employee  benefit costs of approximately  $115,000 and increased  contract labor
costs of approximately $85,000 from the prior presented period, due primarily to

                                      -10-
<PAGE>

the  commencement of POS TEC's  operations in August of 1999, and an increase in
the total  number of  employees  of the Company due to the  increased  volume of
sales  realized  during the  current  fiscal  year.  Additionally,  the  Company
experienced  an  increase in federal  excise  taxes of  approximately  $295,000,
increased  shipping  charges  of  approximately  $90,000,  and  an  increase  of
approximately  $80,000 in advertising  and promotional  expenses  related to the
significant  increase in overall sales of the Company's prepaid cards during the
quarter ended December 31, 2000.

Loss before other Income (Expenses):

The Company's loss before other income (expenses) of approximately  $427,000 for
the three month period ended December 31, 2000 decreased  approximately $905,000
(68%) as compared to the loss before  other income  (expense)  of  approximately
$1,332,000  for the three month  period ended  December  31,  1999.  The overall
increase is directly  related to the  combination of factors noted above for net
sales, cost of sales and selling, general and administrative expenses.

Other Income (Expenses):

The Company's other income (expenses) changed  approximately  $251,000 (189%) to
approximately  $119,000  income,  net, for the three month period ended December
31, 2000 as compared to approximately $133,000 expense, net, for the three month
period ended December 31, 1999.  The overall change is primarily  related to the
increase in current period interest expense of approximately $130,000 related to
both the 10% demand  promissory  notes  payable  to TecNet  and the  outstanding
Convertible  Debt, an increase in penalties  and interest  attributed to accrued
federal excise tax obligations of approximately  $33,000,  offset by an increase
in interest  and other  miscellaneous  income of  approximately  $14,000,  and a
one-time non-recurring credit to income of approximately $408,000 related to the
settlement of outstanding  trade payables with a vendor during the quarter ended
December 31, 2000.

Net Loss:

The  Company's  net loss of  approximately  $308,000  for the three month period
ended  December  31, 2000  decreased  by  approximately  $1.2  million  (81%) as
compared to the net loss of approximately  $1,464,000 for the three month period
ended December 31, 1999. The overall increase is directly related to the factors
noted above for gross profit and other income (expenses).


Six Months  Ended  December 31, 2000  Compared to Six Months Ended  December 31,
1999

Net Sales:

Sales, net of discount and returns, increased approximately $17.2 million (277%)
to approximately  $23.4 million for the six month period ended December 31, 2000
as  compared  to  approximately  $6.2  million  for the six month  period  ended
December 31, 1999. The overall increase is attributed to the Company's  strategy
of  focusing  on the sales,  marketing  and  distribution  of prepaid  telephone
calling cards within its target market and the  termination of its  unprofitable
proprietary branded facilities-based cards. By abandoning its prior strategy and
through the infusion of operating  capital by TecNet,  the Company has been able
to increase overall sales by focusing on the specific needs of its target market
and utilizing  its cash flows for the  development  of existing and  prospective
markets  instead of  purchasing  costly  network  infrastructure.  The Company's
revenues  are now based on both the dollar  value and the total  number of cards
sold,  and the Company was able to  significantly  increase  the total number of
prepaid  cards sold during the six month period ended  December 31, 2000 through
its master  distributor  network.  The Company  has been able to realize  market
growth  by  offering  cost  competitive  prepaid  calling  cards  utilizing  the
favorable pricing obtained from TecNet on bundled products.

Cost of Sales:

The Company's  cost of sales  increased  approximately  $15.2 million  (298%) to
approximately  $20.3 million for the six month period ended December 31, 2000 as

                                      -11-
<PAGE>

compared to  approximately  $5.1 million for the six month period ended December
31,  1999.  The  overall  cost of sales  increase  is  directly  related  to the
increased volume of minutes associated with the increased sales of prepaid cards
discussed above,  offset by the Company's ability to realize cost savings by not
paying  facilities-based  carrier charges, fixed cost circuit charges or private
line charges to route the customers' calls by reselling bundled prepaid products
obtained from TecNet (which are terminated on TecNet's network).

Gross Profit:

The Company  realized a gross profit of  approximately  $3.1 million for the six
month  period  ended  December  31,  2000  as  compared  to a  gross  profit  of
approximately $1.2 million for the six month period ended December 31, 1999. The
gross  profit  realized  is  directly  related to the  Company's  use of bundled
prepaid  cards  purchased  from  TecNet  which did not have the higher  costs of
facilities-based cards, as well as the cost savings from not having to pay fixed
circuit  costs and  private  line  charges  on  activated  cards,  offset by the
increase  in cost of sales noted  above.  In  addition,  the Company was able to
obtain more favorable  short-term financing rates from TecNet in connection with
the  purchase of the bundled  prepaid  cards,  which  helped to  facilitate  the
increase in overall net sales.

Selling, General and Administrative Expenses:

The  Company's   selling,   general  and   administrative   expenses   increased
approximately $1.3 million (43%) to approximately $4.4 million for the six month
period ended December 31, 2000 as compared to approximately $3.0 million for the
six month period ended December 31, 1999. The overall increase is related to the
combined effect of several factors. Factors include an increase of approximately
$27,000 in rent expense from the prior presented period due to the relocation of
POS TEC's  operations  in December  1999 and the  termination  of the  Company's
subleasing  arrangements  with third parties during the current fiscal year. The
Company  experienced  an  increase  in payroll  and  employee  benefit  costs of
approximately  $315,000 and an increase in contract labor costs of approximately
$140,000 due primarily to the  commencement of POS TEC's operations in August of
1999, and an increase in the total number of employees of the Company due to the
increased volume of sales realized during the current fiscal year. Additionally,
the overall  increase in federal  excise  taxes of  approximately  $678,000  and
increased  shipping  charges  of  approximately   $145,000  is  related  to  the
significant  increase  in the total  number of  prepaid  cards  sold  during the
quarter ended December 31, 2000.

Loss before other Income (Expenses):

The Company's loss before other income (expenses) of approximately  $1.3 million
for the six  month  period  ended  December  31,  2000  decreased  approximately
$609,000  (32%) as  compared  to the  loss  before  other  income  (expense)  of
approximately $1.9 million for the six month period ended December 31, 1999. The
overall  increase is directly  related to the combination of factors noted above
for net sales, cost of sales and selling, general and administrative expenses.

Other Income (Expenses):

The Company's other expenses,  net,  decreased  approximately  $171,000 (79%) to
approximately  $45,000  for the six month  period  ended  December  31,  2000 as
compared to  approximately  $216,000 for the six month period ended December 31,
1999.  The overall  decrease  is  primarily  related to the  increase in current
period interest expense of approximately $227,000 related to both the 10% demand
promissory notes payable to TecNet and the outstanding  Convertible Debt, and an
increase in penalties  and interest  attributed  to accrued  federal  excise tax
obligations  of  approximately  $96,000,  offset by an increase in interest  and
other   miscellaneous   income  of   approximately   $94,000,   and  a  one-time
non-recurring  credit  to  income  of  approximately  $408,000  related  to  the
settlement of outstanding  trade payables with a vendor during the quarter ended
December 31, 2000.

Net Loss:

The  Company's net loss of  approximately  $1.3 million for the six month period
ended December 31, 2000 decreased by approximately $780,000 (37%) as compared to
the net loss of  approximately  $2.1  million  for the six  month  period  ended
December 31, 1999. The overall increase is directly related to the factors noted
above for gross profit and other income (expenses).

                                      -12-

<PAGE>

Liquidity and Capital Resources

Financing Requirements

To date, the Company has funded its operations through: (i) two offerings, which
aggregated  $1,000,000  of  proceeds  to  the  Company;  (ii)  the  exercise  of
approximately  2,280,000  warrants to purchase shares of the Common Stock of the
Company  at  $1.50  per  share  (the   "$1.50   Warrants"),   which   aggregated
approximately $3,400,000 of proceeds to the Company; (iii) sale of 61,050 shares
of the Company's Series A Preferred Stock,  which resulted in the elimination of
an accounts payable balance to Premiere totaling approximately $6,105,000;  (iv)
sale of  $1,200,000  principal  amount of the  Company's  Notes  with the $2.375
Warrants  (as  subsequently  exchanged,  the "10%  Notes");  (v)  issuance  of a
$100,000 10% promissory note to an officer/director  family member; and (vi) the
infusion of approximately  $20 million of operating capital through the issuance
of 10% demand promissory notes and the extension of trade credit by TecNet.  All
of the above  offerings  were  exempt  from  registration  under the  applicable
Securities Act and have been utilized to fund the Company's current operations.

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

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

                                                 SIX MONTHS ENDED DECEMBER 31,
                                                 -----------------------------
                                                     2000               1999
                                                 -----------         ---------
Net cash used in operating activities.......     $(2,911,553)       $(1,852,924)

Net cash used in investing activities.......         (36,958)           (38,819)

Net cash provided by financing activities..        2,023,000          2,875,727
                                                 -----------         ----------
Net change in cash and cash equivalents.....     $  (925,511)        $  983,984
                                                 ===========         ==========

The Company's net cash used in operating activities increased approximately $1.0
million  (57%) to  $(2,911,553)  for the six months  ended  December 31, 2000 as
compared to $(1,852,924) for the six months ended December 31, 1999. The overall
increase  in net cash used in  operating  activities  for the six  months  ended
December  31,  2000 is related to the  combined  effect of a decrease in the net
loss of approximately  $780,000,  a decrease in the cash flow effect of accounts
receivable of approximately $2.7 million, an increase in the cash flow effect of
accounts payable and accrued expenses of approximately  $1.4 million, a decrease
in the cash flow effect of inventory of approximately  $346,000,  and a decrease
in cash flow  effect of  prepaid  expenses  and  other  assets of  approximately
$139,000.

To date,  capital  expenditures  have not been material.  Cash used in investing
activities  for both the six months  ended  December  31, 2000 and 1999  related
solely to capital expenditures of approximately $37,000 for the six months ended
December 31, 2000 and  approximately  $39,000 for the six months ended  December
31, 1999.

During the six months ended  December 31, 2000,  cash  provided  from  financing
activities  related  primarily to the issuance of approximately  $2.6 million in
promissory notes to TecNet, the repayment of approximately $600,000 in principal
to the  holders of the $1.2  million  promissory  notes,  and the  repayment  of
approximately  $17,000 in principal on an outstanding  loan with a family member
of an officer/director of the Company.  During the six months ended December 31,
1999, cash provided from financing  activities related primarily to the issuance
of $2.9 million of 10% demand  promissory  note to TecNet,  and the repayment of
approximately  $10,000 in principal on an outstanding  loan with a family member
of an officer/director of the Company.

Since June 30, 1999, the Company has raised cash primarily  through the issuance
of 10% demand  promissory  notes payable to TecNet.  Since November of 1999, the
Company has been dependent on TecNet  financing its shortfalls in cash flows and
current operations and the provisioning of telecommunication services by TecNet.
In  addition,  the  Company  has  imposed a  fifty-percent  deferral  of its two
executives'  salaries. As the Company increases the sales of its bundled prepaid
products,  its  capital  requirements  are  expected to  progressively  decline.
Although the Company has achieved  significant  improvements  in cash flows from
operations,  it does not expect to achieve  positive cash flows from  operations
until any earlier than the end of fiscal year 2001.

                                      -13-
<PAGE>

The Company  expects capital  requirement  needs of  approximately  $1.5 million
during the latter half fiscal 2001,  before it begins to generate  positive cash
flow by the end of fiscal  year 2001.  The  foregoing  amount  includes  further
expansion of the Company's prepaid products into additional cities and expanding
the Company's existing master  distribution  network.  If cash needs prove to be
greater than  contemplated,  the Company will need to slow the  expansion of its
prepaid product  offerings to additional  cities during fiscal year 2001.  Also,
the Company  expects to consider other financing  opportunities  during the 2001
fiscal year.  The Company  believes that with the  continued  support of TecNet,
internally  generated cash from  operations in fiscal 2001 will be sufficient to
fund its operations  throughout the 2001 fiscal year.  There can be no assurance
that the  foregoing  external  sources of  financing  will be  available  to the
Company,  or  that  the  Company's  projections  for  positive  cash  generation
commencing at the end of fiscal year 2001 will be realized.

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

For the six months ended December 31, 2000, the Company experienced an operating
loss of approximately  $1.3 million and used  approximately $2.9 million of cash
in  operating  activities.  The  Company's  cash  position at December  31, 2000
approximated  $240,000  and  its  working  capital  deficit  approximated  $18.3
million.  The Company remains  undercapitalized and to date has not been able to
finance its expansion as quickly as opportunities have arisen.

Inflation

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not hold any  derivatives  or  investments  that are subject to
material  market risk. The carrying values of financial  instruments,  including
cash and notes payable at December 31, 2000  approximates  fair value as of such
date, due to the short-term  maturity of such  instruments and the fact that the
underlying interest rates approximates current market rates of interest.

                            PART II--OTHER INFORMATION

Item 1. Legal Proceedings

On June 28, 2000,  Innovative Telecom  Corporation  ("Innovative")  commenced an
arbitration  proceeding before the American  Arbitration  Association in Boston,
Massachusetts  asserting claims in the amount of $604,979 related to unpaid fees
and charges for services  rendered in connection with the platform and switching
services  performed on behalf of the Company until  approximately  July of 1999.
The Company  asserted  counterclaims  against  Innovative  in the amount of $3.9
million based on lost profits and additional  expenses incurred as the result of
the poor quality of  Innovative's  software and network  switching  services.  A
settlement  agreement  was  executed on November  21,  2000.  As a result of the
agreement,  the Company was not required to pay Innovative for any of the claims
asserted  against the Company,  and both parties agreed to discharge any and all
liabilities  presently existing (as of the date of the settlement)  arising from
such business association.  Under the terms of the agreement,  the Company wrote
off approximately $408,000 of trade payables due to Innovative to income for the
quarter ended December 31, 2000.

                                      -14-
<PAGE>

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

(a)  An Annual Meeting of the  shareholders of the Company was held November 28,
     2000 pursuant to proxy  material filed pursuant to regulation 14A under the
     Securities Exchange Act of 1934.

(b)  The directors of the Company who were elected at the meeting are: (i) Frank
     C. Magliato; (ii) Francis J. Calcagno; (iii) Cloyce C. Clark, Jr.; and (iv)
     Lori Ann Perri.

(c)  The matters voted on at the meeting and the balloting results are:

     (1)  Election of directors:

            Name                        Votes For      Votes Against or Withheld
            ----                        ---------      -------------------------

     Frank C. Magliato                  5,795,988                 9,290

     Francis J. Calcagno                5,795,988                 9,290

     Cloyce C. Clark, Jr.               5,795,988                 9,290

     Lori Ann Perri                     5,795,988                 9,290


     (2)  Approval  of  the  appointment  of  Deloitte  &  Touche,  LLP  as  the
          independent  auditors of the Company was  ratified  and  approved by a
          vote of 5,799,978 for and 5,300 against or withheld.


(d)  Not applicable.


Item 6. Exhibits and Reports on Form 8-K

(b)  Reports on Form 8-K

     Current Report on Form 8-K filed October 30, 2000  reporting  under Item 5,
Other Events.


                                   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: February 12, 2001          DigiTEC 2000, Inc.
                                 (Registrant)


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


      February 12, 2001          By: /s/ Diego E. Roca
                                     -------------------------------------------
                                     Diego E. Roca
                                     Senior Vice President, Chief
                                     Accounting Officer, Treasurer and
                                     Secretary



                                      -15-