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

                       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 March 31, 2001

                                       OR

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

           For the transition period from ____________ to ____________

                        Commission file number: 000-23291

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

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

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


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

                         8 West 38th Street, Fifth Floor
                            New York, New York 10018
         (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 March 31, 2001 was 7,058,998.

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



<PAGE>
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<CAPTION>

                               DigiTEC 2000, INC.
                               INDEX TO FORM 10-QSB




                                                                                    Page(s)
                                                                                    -------


<S>                                                                                  <C>
PART I -- FINANCIAL INFORMATION


ITEM 1 -- Financial Statements

Condensed Consolidated Balance Sheet as of March 31, 2001 (Unaudited)..............      3

Condensed Consolidated Statements of Loss for the Three Months and Nine
Months Ended March 31, 2001 and March 31, 2000 (Unaudited).........................      4

Condensed Consolidated Statement of Stockholders' Deficit for the Nine Months
Ended March 31, 2001 (Unaudited)...................................................      5

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
March 31, 2001 and the Nine Months Ended March 31, 2000 (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 - 13


ITEM 3--Quantitative and Qualitative Disclosures About Market Risk.................      13


Signatures.........................................................................      14


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                                       -2-
<PAGE>



                                                              DigiTEC 2000, Inc.
                                                                  and Subsidiary

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

                                                                  March 31, 2001
--------------------------------------------------------------------------------

Assets:
Current:
 Cash and cash equivalents                                         $    943,417
 Accounts receivable, net of allowance for bad
  debts of $1,754,546                                                 6,297,392
 Inventory                                                              900,341
 Prepaid expenses and other                                              59,266
--------------------------------------------------------------------------------

Total Current Assets                                                  8,200,416

Property and equipment, net of accumulated
 depreciation of $ 226,668                                              184,547
Customer lists, net of accumulated amortization
 Of $ 189,880                                                            94,940
Other assets                                                            271,430
--------------------------------------------------------------------------------

Total Assets                                                       $  8,751,333
================================================================================

Liabilities and Stockholders' Deficit
Current:
 Notes and accounts payable to TecNet, Inc.                        $ 21,256,675
 Accounts payable - trade                                             1,062,394
 Accrued taxes and penalties                                          3,143,393
 Accounts payable and accrued expenses                                  650,404
 Accrued legal expenses                                                 720,112
--------------------------------------------------------------------------------

Total Liabilities                                                    26,832,978
--------------------------------------------------------------------------------

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                                          17,121,318
 Accumulated deficit                                                (35,210,083)
--------------------------------------------------------------------------------

Total Stockholders' Deficit                                         (18,081,645)
--------------------------------------------------------------------------------

Total Liabilities and Stockholders' Deficit                        $  8,751,333
================================================================================


     See accompanying notes to Condensed Consolidated Financial Statements.


                                      -3-
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<CAPTION>


                                                                                              DigiTEC 2000, Inc.
                                                                                                  and Subsidiary

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

                                            Three Months Ended March 31,           Nine Months Ended March 31,

                                              2001              2000                  2001            2000

----------------------------------------------------------------------------------------------------------------
<S>                                        <C>              <C>                    <C>              <C>
Net sales                                  $14,980,322      $ 3,314,592            $38,350,997      $ 9,533,198
Cost of sales                               13,043,487        3,162,377             33,322,781        8,219,929
----------------------------------------------------------------------------------------------------------------

      Gross profit                           1,936,835          152,215              5,028,216        1,313,269

Selling, general and administrative
    expenses                                 2,168,566        1,339,850              6,524,554        4,374,656
----------------------------------------------------------------------------------------------------------------

      Loss before other income
        (expenses)                            (231,731)      (1,187,635)            (1,496,338)      (3,061,387)
----------------------------------------------------------------------------------------------------------------
Other income (expenses):
    Interest expense                          (323,953)        (161,631)              (748,996)        (360,183)
    Other income (expense)                     397,535          (10,342)               777,252          (27,850)
----------------------------------------------------------------------------------------------------------------

         Other income (expenses)                73,582         (171,973)                28,256         (388,033)
----------------------------------------------------------------------------------------------------------------

Net loss                                   $  (158,149)     $(1,359,608)           $(1,468,082)     $(3,449,420)
================================================================================================================
Net loss per common share-basic
    and diluted                            $     (0.02)     $     (0.19)           $     (0.21)     $     (0.49)
================================================================================================================
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.

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                                                           -4-
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<CAPTION>


                                                                                                              DigiTEC 2000, Inc.
                                                                                                                  and Subsidiary

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


                                                              Nine Months Ended March 31, 2001
--------------------------------------------------------------------------------------------------------------------------------
                                   Preferred Stock        Common Stock                                                 Total
                                   ---------------     ------------------        Additional        Accumulated     stockholders'
                                   Shares   Amount     Shares      Amount      paid-in capital       deficit          deficit
--------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>       <C>      <C>          <C>           <C>              <C>             <C>
Balance, June 30, 2000             61,050    $61      7,058,998    $7,059        $17,031,318      $(33,742,001)   $(16,703,563)

   Contributed Capital                                                                90,000                            90,000

   Net loss                                                  --        --                 --        (1,468,082)     (1,468,082)
--------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2001            61,050    $61      7,058,998    $7,059        $17,121,318      $(35,210,083)   $(18,081,645)
================================================================================================================================

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




                                                                 -5-
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<CAPTION>


                                                                               DigiTEC 2000, Inc.
                                                                                   and Subsidiary

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

                                                                     Nine Months Ended March 31,
                                                                       2001             2000
--------------------------------------------------------------------------------------------------
<S>                                                                <C>                <C>

Cash flows from operating activities:
  Net loss                                                         $(1,468,082)       $(3,449,420)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
      Provision for bad debts - net                                    118,900            400,000
      Depreciation                                                      60,928             39,671
      Amortization of customer lists                                    71,205             71,679
      Deferred rent                                                     (6,006)           (24,621)
      Services provided by shareholder                                  90,000            132,195
      (Increase) decrease in:
         Accounts receivable                                        (4,818,128)        (1,597,796)
         Inventory                                                    (477,053)           (80,258)
         Prepaid expenses and other                                   (235,057)           348,451
      Increase (decrease) in:
         Accrued taxes and penalties                                 2,671,240            505,606
         Accounts payable and accrued expenses                         944,234          2,138,415
--------------------------------------------------------------------------------------------------
             Net cash used in operating activities                  (3,047,819)        (1,516,078)
--------------------------------------------------------------------------------------------------

Cash flows from investing activities:
  Capital expenditures                                                (122,105)           (39,544)
--------------------------------------------------------------------------------------------------
             Net cash used in investing activities                    (122,105)           (39,544)
--------------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Proceeds from issuance of TecNet notes                             3,864,487          2,721,321
  Repayment of notes payable                                          (917,000)          (173,300)
--------------------------------------------------------------------------------------------------
             Net cash provided by financing activities               2,947,487          2,548,021
--------------------------------------------------------------------------------------------------

             Net increase (decrease) in
              cash and cash equivalents                               (222,437)           992,399

Cash and cash equivalents beginning of period                        1,165,854            156,756
--------------------------------------------------------------------------------------------------
Cash and cash equivalents end of period                            $   943,417        $ 1,149,155
==================================================================================================

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

                                                -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") and those
     of its wholly owned subsidiary,  POS TEC Systems, LLC ("POS TEC") 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 nine months ended March 31, 2001 has not been audited
     by  independent  auditors;  however,  in the  opinion  of  management,  all
     adjustments  (consisting of normal recurring accruals) considered necessary
     for a fair  presentation  have been  included in operating  results for the
     nine month period ended March 31, 2001 and are not  necessarily  indicative
     of the results that may be expected for a full fiscal year. All significant
     intercompany   transactions   and   balances   have  been   eliminated   in
     consolidation.

     The information  outlined in this Form 10-QSB should be read in conjunction
     with the audited  consolidated  financial  statements and footnotes thereto
     included in the  Company's  Annual  Report on Form 10-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  consolidated  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 consolidated
     financial statement carrying amounts of existing assets and liabilities and
     their   respective   tax  bases  and  any  operating  loss  or  tax  credit
     carryforwards.  Deferred  tax assets and  liabilities  are  measured  using
     enacted tax rates expected to apply to taxable income in the years in which
     those temporary  differences  are expected to be recovered or settled.  The
     effect on deferred tax assets and  liabilities  of a change in tax rates is
     recognized in income in the period that includes the enactment date of such
     change. The Company has established a full valuation  allowance against its
     entire net deferred tax asset due to uncertainty  of realizing  certain tax
     credits and loss carryforwards.

     (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 during 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 nine months  ended March 31, 2001,
     the Company  borrowed  approximately  $3.9 million from TecNet  pursuant to
     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 repayment on such notes. As of March 31,
2001 (and  through the  issuance  date of this  filing),  the Company is totally
dependent   on  TecNet   to   provide   consulting   services,   financing   and
telecommunications support until it has achieved profitable operations. However,
there can be no  assurance  that  TecNet can or will  continue  to provide  such
services,  to finance the  current  operations  or to provide  the Company  with
bundled prepaid calling cards at comparable rates in future periods.

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 obtain
competitive  bundled prepaid cards from TecNet on favorable  terms. In addition,
the  Company  expects to produce  favorable  operating  results in the future by

                                      -9-
<PAGE>


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 March 31, 2001 Compared to Three Months Ended March 31, 2000

Net Sales:

Sales, net of discount and returns, increased approximately $11.7 million (352%)
to  approximately  $15.0 million for the three month period ended March 31, 2001
as compared to approximately $3.3 million for the three month period ended March
31,  2000.  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, less discounts,  and the Company was able to significantly
increase  the total  number of prepaid  cards sold during the three month period
ended  March  31,  2001  through  its  master  distributor   network  and  other
distribution  channels.  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  $9.8 million  (312%) to
approximately  $13.0  million for the three month period ended March 31, 2001 as
compared to  approximately  $3.2  million for the three month period ended March
31,  2000.  The  overall  cost of sales  increase  is  directly  related  to the
increased volume of prepaid cards sales discussed above.

Gross Profit:

The Company realized a gross profit of approximately  $1.9 million for the three
month period ended March 31, 2001 as compared to a gross profit of approximately
$152,000  for the three month  period  ended March 31,  2000.  The gross  profit
realized is  directly  related to the  Company's  use of bundled  prepaid  cards
purchased  from  TecNet and to the  increased  volume of sales of prepaid  cards
noted above. In addition,  the Company was able to obtain more favorable  credit
terms 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  $829,000 (62%) to approximately  $2.2 million for the three month
period  ended March 31, 2001 as compared to  approximately  $1.3 million for the
three month period ended March 31, 2000. The overall  increase is related to the
combined  effect of several  factors.  The  Company  experienced  an increase in
federal excise taxes of approximately  $550,000,  increased  shipping charges of
approximately  $129,000, and an increase of approximately $35,000 in advertising
and promotional expenses related to the significant increase in overall sales of
the  Company's  prepaid  cards  during the  quarter  ended  March 31,  2001.  In
addition, the Company's  professional services expenses increased  approximately
$115,000 from the prior presented period.

Loss before other Income (Expenses):

The Company's loss before other income (expenses) of approximately  $232,000 for
the three month period  ended March 31, 2001  decreased  approximately  $956,000
(80%) as compared to the loss before other income  (expenses)  of  approximately
$1.2  million  for the three month  period  ended  March 31,  2000.  The overall
decrease is directly  related to the  combination of factors noted above for net
sales, cost of sales and selling, general and administrative expenses.

                                      -10-
<PAGE>

Other Income (Expenses):

The Company's other income (expenses) changed  approximately  $246,000 (143%) to
approximately $74,000 (income,  net), for the three month period ended March 31,
2001 as compared to approximately  $172,000 (expense,  net), for the three month
period  ended March 31,  2000.  The  overall  change is  primarily  related to a
one-time  non-recurring  credit to income of  approximately  $583,000 during the
quarter ended March 31, 2001. The  non-recurring  item related  primarily to the
settlement of  outstanding  trade  payables with a vendor who  previously  was a
holder of the Company's  outstanding  preferred stock.  Other offsetting factors
include an increase in current period interest expense of approximately $162,000
related to the 10% demand  promissory  notes  payable to TecNet,  an increase in
penalties and interest  attributed to accrued  federal excise tax obligations of
approximately  $71,000,  and an  increase  in other  miscellaneous  expenses  of
approximately $104,000.

Net Loss:

The  Company's  net loss of  approximately  $158,000  for the three month period
ended March 31, 2001 decreased by  approximately  $1.2 million (88%) as compared
to the net loss of  approximately  $1.4 million for the three month period ended
March 31, 2000.  The overall  increase is directly  related to the factors noted
above for gross profit and other income (expenses).


Nine Months Ended March 31, 2001 Compared to Nine Months Ended March 31, 2000

Net Sales:

Sales, net of discount and returns, increased approximately $28.8 million (302%)
to approximately $38.4 million for the nine month period ended March 31, 2001 as
compared to approximately $9.5 million for the nine month period ended March 31,
2000. 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,  less
discounts,  and the Company was able to significantly  increase the total number
of prepaid  cards sold during the nine month period ended March 31, 2001 through
its master distributor network and other distribution  channels. 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  $25.1 million  (305%) to
approximately  $33.3  million for the nine month  period ended March 31, 2001 as
compared to approximately $8.2 million for the nine month period ended March 31,
2000.  The overall cost of sales  increase is directly  related to the increased
volume of prepaid cards sales discussed above.

Gross Profit:

The Company realized a gross profit of  approximately  $5.0 million for the nine
month period ended March 31, 2001 as compared to a gross profit of approximately
$1.3 million for the nine month  period  ended March 31, 2000.  The gross profit
realized is  directly  related to the  Company's  use of bundled  prepaid  cards
purchased  from  TecNet and to the  increased  volume of sales of prepaid  cards
noted above. In addition,  the Company was able to obtain more favorable  credit
terms 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  $2.1  million  (49%) to  approximately  $6.5 million for the nine
month period ended March 31, 2001 as compared to approximately  $4.4 million for
the nine month period ended March 31, 2000.  The overall  increase is related to
the combined effect of several factors.  The Company  experienced an increase in
payroll and employee benefit costs of approximately $460,000 due primarily to an
increase  in the total  number  of  employees  of the  Company  attributable  to
increased sales volume during the current fiscal year.  Other factors include an
overall  increase  in  federal  excise  taxes  of  approximately  $1.2  million,
increased  shipping  charges  of  approximately  $206,000  and  an  increase  of
approximately  $133,000 in advertising and promotional  expenses  related to the
significant  increase in overall sales of the Company's prepaid cards during the
nine months  ended March 31,  2001.  In  addition,  the  Company's  professional
services  expenses  increased  approximately  $147,000 from the prior  presented
period.

                                      -11-
<PAGE>


Loss before other Income (Expenses):

The Company's loss before other income (expenses) of approximately  $1.5 million
for the nine month  period  ended March 31, 2001  decreased  approximately  $1.6
million  (51%)  as  compared  to the  loss  before  other  income  (expense)  of
approximately  $3.1 million for the nine month period ended March 31, 2000.  The
overall  increase is directly  related to the combination of factors noted above
for net sales, cost of sales and selling, general and administrative expenses.

Other Income (Expenses):

The Company's  other income,  net,  increased  approximately  $416,000 (107%) to
approximately  $28,000 (income,  net), for the nine month period ended March 31,
2001 as compared to  approximately  $388,000  (expense,  net) for the nine month
period ended March 31, 2000.  The overall  increase is primarily  related to the
recognition  of two separate  non-recurring  credits to income of  approximately
$583,000 and $408,000  related to the settlement of  outstanding  trade payables
with  vendors  during the nine months  ended March 31,  2001.  Other  offsetting
factors include an increase in current period interest  expense of approximately
$389,000  related  to the 10% demand  promissory  notes  payable  to TecNet,  an
increase in penalties  and interest  attributed  to accrued  federal  excise tax
obligations  of  approximately  $167,000,  and an increase in interest and other
miscellaneous expenses of approximately $19,000.

Net Loss:

The Company's net loss of  approximately  $1.5 million for the nine month period
ended March 31, 2001 decreased by  approximately  $1.9 million (57%) as compared
to the net loss of  approximately  $3.4  million for the nine month period ended
March 31, 2000.  The overall  increase is directly  related to the factors noted
above for gross profit and other income (expenses).

Liquidity and Capital Resources

Financing Requirements

To date, the Company has funded its operations through: (i) two offerings, which
aggregated  $1,000,000  of  proceeds  to  the  Company;  (ii)  the  exercise  of
approximately  2,280,000  warrants to purchase shares of the Common Stock of the
Company  at  $1.50  per  share  (the   "$1.50   Warrants"),   which   aggregated
approximately $3,400,000 of proceeds to the Company; (iii) sale of 61,050 shares
of the Company's Series A Preferred Stock,  which resulted in the elimination of
an accounts payable balance to Premiere totaling approximately $6,105,000;  (iv)
sale of  $1,200,000  principal  amount of the  Company's  Notes  with the $2.375
Warrants  (as  subsequently  exchanged,  the "10%  Notes");  (v)  issuance  of a
$100,000 10% promissory note to an officer/director  family member; and (vi) the
infusion of approximately  $21 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:

                                                    NINE MONTHS ENDED MARCH 31,
                                                  -----------------------------
                                                      2001              2000
                                                  ------------      ------------
Net cash used in operating activities.........    $(3,047,819)      $(1,516,078)

Net cash used in investing activities.........       (122,106)          (39,544)

Net cash provided by financing activities.....      2,947,487         2,548,021
                                                  -----------        ----------
Net change in cash and cash equivalents.......    $  (222,438)       $  992,399
                                                  ===========        ==========

The Company's net cash used in operating activities increased approximately $1.5
million  (101%) to  $(3,047,819)  for the nine  months  ended  March 31, 2001 as
compared to  $(1,516,078)  for the nine months ended March 31, 2000. The overall
increase in net cash used in  operating  activities  for the nine  months  ended
March 31, 2001 is related to the combined  effect of a decrease in the cash flow


                                      -12-
<PAGE>


effect of accounts  receivable of approximately  $3.1 million, a decrease in the
net loss of approximately  $1.9 million,  an increase in the cash flow effect of
accounts  payable and other  accrued  expenses  of  approximately  $971,000,  an
increase  in the cash  flow  effect of  prepaid  expenses  and  other  assets of
approximately  $584,000,  and a decrease in the cash flow effect of inventory of
approximately $397,000.

Cash used in investing  activities for both the nine months ended March 31, 2001
and 2000 related solely to capital  expenditures of  approximately  $122,000 for
the nine  months  ended March 31,  2001 and  approximately  $40,000 for the nine
months ended March 31, 2000.

During the nine months  ended  March 31,  2001,  cash  provided  from  financing
activities  related  primarily to the issuance of approximately  $3.9 million in
promissory  notes to TecNet,  the  repayment  of  $900,000 in  principal  to the
holders of the $1.2 million  promissory  notes,  and the repayment of $17,000 in
principal on an outstanding loan with a family member of an  officer/director of
the Company.  During the nine months ended March 31, 2000,  cash  provided  from
financing  activities  related  primarily to the issuance of $2.7 million of 10%
demand  promissory  note to TecNet,  the repayment of  approximately  $52,000 in
principal on an outstanding loan with a family member of an  officer/director of
the Company, and the payment of approximately $121,000 related to the settlement
of disputed trade payables with a vendor.

Since June 30, 1999, the Company has raised cash primarily  through the issuance
of 10% demand  promissory  notes payable to TecNet.  Since February of 1999, the
Company has been dependent on TecNet  financing its shortfalls in cash flows and
current operations and the provisioning of telecommunication services by TecNet.
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.

The Company expects capital  requirement needs of approximately  $250,000 during
the remaining three months of 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 nine months ended March 31, 2001,  the Company  experienced an operating
loss of approximately  $1.5 million and used  approximately $3.0 million of cash
in  operating  activities.  The  Company's  cash  position  at  March  31,  2001
approximated  $943,000  and  its  working  capital  deficit  approximated  $18.1
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 March 31,  2001  approximates  fair value as of such
date, due to the short-term  maturity of such  instruments and the fact that the
underlying interest rates approximates current market rates of interest.


                                      -13-
<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


Date: May 14, 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


      May 14, 2001                  By: /s/ Diego E. Roca
                                        ----------------------------------------
                                        Diego E. Roca
                                        Senior Vice President, Chief
                                        Accounting Officer, Treasurer and
                                        Secretary
























                                      -14-