<PAGE>






                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

(X )     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
         JULY 31, 1998.
         -------------

                                       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

                                     0-18288
                                     -------

                        DIRECT CONNECT INTERNATIONAL INC.
                        ---------------------------------
             (Exact name of registrant as specified in its charter)


         Delaware                                                22-2705223
         --------                                                ----------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                             Identification No.)

P.O. Box 14
Hawthorne, New Jersey                                             07507
---------------------                                             -----
(Address of principal executive                                 (Zip Code)
offices)

Registrant's telephone number, including area code - (201) 445-2101
                                                     --------------

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
                                       ---        ---

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of July 31, 1998: 9,062,066
                                   ---------






<PAGE>



                DIRECT CONNECT INTERNATIONAL INC. AND SUBSIDIARY
                -------------------------------------------------

                                      INDEX
                                      -----

PART I.           FINANCIAL INFORMATION                               PAGE NO
-------           ---------------------                               -------

                  Item 1.           Financial Statements

                                    Condensed Consolidated
                                    Balance Sheets -
                                    July 31, 1998 and
                                    April 30, 1998                       3

                                    Condensed Statements
                                    Of Consolidated
                                    Operations - Three
                                    Months Ended July 31,
                                    1998 and July 31, 1997               4

                                    Condensed Statements
                                    Of Consolidated Cash
                                    Flows - Three Months
                                    Ended July  31, 1998
                                    and July 31, 1997                    5

                                    Notes to Financial Statements        6

                  Item 2.           Management's Discussion
                                    and Analysis of Results
                                    of Operations and
                                    Financial Condition               7 - 12

PART II.          OTHER INFORMATION
                  -----------------


                  Item 5.           Other Information                   13


                  Item 6.           Exhibits and Reports
                                    on Form 8-K                         13

                  Signatures                                            14









                                        2



<PAGE>


PART 1.     FINANCIAL INFORMATION


            ITEM 1. FINANCIAL STATEMENTS

<TABLE>
                Direct Connect International Inc. and Subsidiary

                           Consolidated Balance Sheets

                                     ASSETS
                              
<CAPTION>
                                                          July 31, 1998        April 30, 1998
                                                          -------------        --------------
                                                            (Unaudited)
<S>                                                        <C>                   <C> 
Current assets
    Cash and cash equivalents                                 $50,289              $437,869
    Investment in Datatec, at cost                          1,075,724             1,548,107
    Prepaid expenses and other current assets                  29,233                50,265
                                                               ------                ------
                    Total current assets                    1,155,246             2,036,241
                                                            ---------             ---------

Property and equipment , at cost
    Furniture and fixtures                                      7,568                 7,568
                                                                -----                 -----
                                                                7,568                 7,568
    Less: accumulated depreciation                              7,568                 7,568
                                                                -----                 -----
                                                                    0                     0
                                                                -----                 -----
  
Notes receivable - officers                                   103,970                99,195
                                                              -------                ------
                                                              103,970                99,195
                                                              -------                ------

                            Total assets                   $1,259,216            $2,135,436
                                                           ==========            ==========


                 LIABILITIES and STOCKHOLDERS' EQUITY (DEFICIT)


Current liabilities
    Accounts payable                                        $295,205               $355,647
    Accrued expenses and taxes payable                       175,718                229,573
    Notes payable-other                                      966,900              2,241,362
                                                             -------              ---------
              Total current liabilities                    1,437,823              2,826,582
                                                           ---------              ---------

Stockholders' equity (deficit)

    Convertible preferred stock:
         Authorized 5,000,000 shares, $.001
         par value; issued and outstanding-
         5,000,000 shares                                    5,000                   5,000

    Common stock:
         Authorized 15,000,000 shares, $.001
         par value; issued and outstanding-
         9,062,066 shares                                    9,062                   9,062

    Capital in excess of par value                       5,163,949               5,160,949

    Accumulated deficit                                 (5,356,618)             (5,866,157)
                                                        ----------              ---------- 
         Total stockholders' equity (deficit)             (178,607)              (691,146)
                                                          --------               -------- 

         Total liabilities and stockholders'
              equity  (deficit)                         $1,259,216             $2,135,436
                                                        ==========             ==========

</TABLE>



                                        3



<PAGE>

                Direct Connect International Inc. and Subsidiary
                            
<TABLE>
                      Consolidated Statements of Operations

                                                         For the
                                                   Three Months Ended
                                                  ------------------
<CAPTION>
                                              July 31,1998      July 31,1997
                                              ------------      ------------
                                                         (uaudited)
<S>                                            <C>                <C>    

Revenues:
      Sales                                        -                   -
                                                ------              ------   

Costs and expenses
      Depreciation                                 -                   6,551
      General and administrative expenses       246,058              235,484
      Less:  management fees                       -                  (6,676)
                                                -------              --------
                                                246,058              235,359
                                                -------              -------

Operating income (loss)                        (246,058)            (235,359)

Gain on sale of securities                      813,280            1,522,614

Interest income                                   1,862                  774

Interest expense                                (59,545)             (59,551)
                                                -------              ------- 

Net income                                     $509,539           $1,228,478
                                               ========           ==========

Earnings  per common share                        $0.03                $0.08
                                                  =====                =====


</TABLE>




                                        4


<PAGE>

                Direct Connect International Inc. and Subsidiary

<TABLE>
                      Consolidated Statements of Cash Flows

                                                                                      For Three Months Ended
                                                                                      ----------------------
<CAPTION>
                                                                                 July 31, 1998      July 31, 1997
                                                                                 -------------      -------------
                                                                                           (Unaudited)
<S>                                                                                <C>                 <C>    
                                                                                                                            
Cash flows from operating activities
          Net income                                                               $509,539            $1,228,478
                                                                                   --------            ----------
          Adjustments to reconcile net income (loss)
             to net cash provided by (used in) operating activities:
                 Depreciation                                                          -                    6,551
                 Gain on sale of Datatec stock                                     (813,280)           (1,522,614)
          (Increase) decrease  in assets
                 Accounts receivable                                                   -                    4,240
                 Prepaid expenses and other current assets                           21,032               (15,210)
          Increase (decrease) in liabilities
                 Accounts payable                                                   (60,442)               13,995
                 Accrued expenses and taxes payable                                 (53,855)               52,655
                                                                                    -------                ------

          Total adjustments                                                        (906,545)           (1,460,383)
                                                                                   --------            ---------- 
          Net cash (used in) operating activities                                  (397,006)             (231,905)
                                                                                   --------              -------- 

Cash flows from investing activities
          Notes receivable-officers, increases                                       (4,775)                 (701)
          Proceeds from sale of Datatec stock                                     1,285,663             1,999,547
          Acquisition of Datatec stock                                                 -               (1,856,325)
                                                                                  ---------            -----------
          Net cash provided by investing activities                               1,280,888               142,521
                                                                                  ---------               -------

Cash flows from financing activities
          Decrease in notes payable-officers and stockholders                          -                 (253,680)
          Increase in notes payable-other                                              -                  391,229
          Decrease in notes payable-other                                        (1,274,462)                 -
          Increase in paid in capital                                                 3,000                20,000
                                                                                      -----                ------
          Net cash (used in) provided by financing activities                    (1,271,462)              157,549
                                                                                 ----------               -------

Net increase  (decrease) in cash and cash equivalents                              (387,580)               68,165

Cash and cash equivalents at beginning of period                                    437,869                32,939
                                                                                    -------                ------
Cash and cash equivalents at end of period                                          $50,289              $101,104
                                                                                    =======              ========

Supplemental disclosure of cash flows information
          Cash paid during the three months for interest                              -                   $59,551
                                                                                    ------                -------


</TABLE>





                                        5




<PAGE>





                        DIRECT CONNECT INTERNATIONAL INC.
                                 AND SUBSIDIARY

                          Notes to Financial Statements
                          -----------------------------

1.       In the opinion of  management,  the  accompanying  unaudited  financial
         statements contain all adjustments, consisting only of normal recurring
         adjustments,  necessary to present fairly (a) the financial position as
         of July 31, 1998,  (b) the results of  operations  for the three months
         ended July 31, 1998 and July 31, 1997 and (c) changes in cash flows for
         the three months ended July 31, 1998 and July 31, 1997.

2.       Refer to the  audited  financial  statements  for the fiscal year ended
         April 30, 1998 for details of accounting policies and accounts, none of
         which have changed significantly in composition since that date.

3.       Financial results for the interim period ended July 31, 1998 may not be
         indicative  of the  financial  results for the fiscal year ending April
         30, 1999.

4.       The  Company has  available  carry  forward  losses  applicable  to the
         reduction  of future  Federal  income taxes  aggregating  approximately
         $4,760,000 at December 31, 1997 and which expire  during  various years
         through 2011.

5.       As reported,  the  Company  holds  shares  of  common  stock of Glasgal
         Communications, Inc., now Datatec Systems, Inc. (Datatec).


















                                        6


<PAGE>



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


RESULTS OF OPERATIONS


General
-------

The Company had no revenues from  operations for the three months ended July 31,
1998,  and unless the Company  develops  business  opportunities  or enters into
management  arrangements  with other companies,  as it has done in the past, the
Company will have to sell assets to pay its obligations as they become due.

Net Sales
---------

Net sales for the three months ended July 31, 1998 and July 31, 1997 were $0.

The Company will have to develop business  opportunities;  however, there can be
no assurance that it will be able to do so on a commercially viable basis.

At July  31,  1998,  the  Company  did not have a  backlog  of  orders  from its
customers.

Gross Profit
------------

Gross  Profit  percentage  for the three months ended July 31, 1998 and July 31,
1997 was 0%.




















                                        7


<PAGE>



Other Income
------------

Other income amounted to approximately  $800,000 for the three months ended July
31, 1998 as compared to approximately $1,500,000 for the three months ended July
31, 1997. The decrease for the three month period ended July 31, 1998 was due to
the difference in the number of shares and selling price in connection  with the
sale of Datatec shares held by the Company.

General and Administrative Expenses
-----------------------------------

For the  three  months  ended  July 31,  1998,  the  Company  received  from its
management arrangement with Evolutions, Inc. (EVO) $ 0 as compared to $6,676 for
the three months ended July 31, 1997, which covers the monthly  reimbursement of
the back office costs incurred by the Company in connection  with its operations
as it relates to supporting the product lines which were sold to EVO. The reason
for the decrease was the reduction in activity in connection  with the Company's
management arrangements on behalf of EVO, which terminated during April 1997.

General and  administrative  expenses  for the three  months ended July 31, 1998
were  $246,058 as compared to $235,484 for the three months ended July 31, 1997.
Professional  fees were  $31,745  for the three  months  ended July 31,  1998 as
compared to $37,524 for the three months ended July 31, 1997.

For the three months ended July 31, 1998,  salaries  were $64,036 as compared to
$82,807 for the three months ended July 31, 1997.  Such  decrease  resulted from
reductions in payroll.

Travel and entertainment expenses amounted to $19,224 for the three months ended
July 31, 1998 as compared to $37,200 for the three  months  ended July 31, 1997.
Such decrease resulted from the reduction in business activity.



















                                        8


<PAGE>



LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

During the next twelve months,  in addition to meeting its operating  needs, the
Company will have notes  payable in the amount of  approximately  $967,000.  The
Company  does not believe that it will be able to pay these  obligations  out of
operating revenues, and, accordingly,  it will have to seek additional financing
or sell assets to do so. The Company owns approximately 434,000 shares of common
stock of Datatec  and may,  from time to time,  sell a portion  of such  shares.
There can be no assurance that the Company will be able to obtain such financing
or sell assets,  in which event such  obligations  will have a material  adverse
effect upon the Company's operations.

To continue its business, the Company will have to seek additional financing and
there can be no  assurance  that it will be able to obtain  such  financing.  No
assurance can be given as to the number of outstanding warrants, which represent
a potential  source of funds,  that will be exercised.  The Company is exploring
alternatives  to utilizing its equity  investments in connection  with financing
its operations and  developing new business  opportunities.  In August 1998, the
Company entered into a merger  agreement with Omnet  Technology Corp. Under such
agreement  Omnet will merge into a merger-sub  of the  Company,  and the Company
will change its name to Omnet  Technology  Holding Corp. Each Omnet  shareholder
will receive for each of its Omnet shares a combination  of cash,  notes and the
pro-rata share of 60% of the Company's issued and outstanding  common stock on a
fully diluted basis.  The agreement is subject to receipt by the Company's Board
of Directors of a fairness  opinion by an  independent  financial  consultant or
investment   banking  firm,   adequate  financing  to  be  raised  (expected  to
approximate $8,000,000) and regulatory and shareholder approval. The Company has
determined that it was not in the best interests of its shareholders to continue
negotiations  with Medical  Device  Alliance,  Inc.  (MDA)  regarding a proposed
merger  between  them,  and,  accordingly,   the  Company  has  terminated  such
negotiations under a non-binding letter of intent with MDA.

For the three months  ended July 31, 1998 the Company used cash from  operations
in the amount of $397,006 as compared to using $231,905 from  operations for the
three months ended July 31, 1997. The Company used $1,271,467 from its financing
activities  for the three  months  ended July 31, 1998 as compared to  obtaining
approximately  $157,549 from its financing activities for the three months ended
July 31, 1997.  These  amounts also reflect a reduction of the  Company's  notes
payable.

For the three months ended July 31, 1998, the Company  provided  $1,280,888 from
its investing  activities as compared to providing $142,521 for the three months
ended July 31, 1997.  Included in the amount for the three months ended July 31,
1998 were proceeds in the amount of $1,285,663  from the sale of 294,318  shares
of Datatec  stock.  Cash flows for the three months ended July 31, 1997 included
$1,999,547 from the sale of 493,300 shares of Datatec stock held by the Company.
The Company also used  $1,856,325 of such proceeds to acquire  480,000 shares of
Datatec stock. In connection with the transactions  involving the Datatec stock,
Datatec  relinquished  certain options  regarding the purchase of shares of such
stock  from the  Company,  and the option  granted to the  Company by Datatec to
purchase additional shares of Datatec stock was increased.



                                        9


<PAGE>



During 1998 in  consideration of providing an open line of credit of $225,000 to
the Company,  the Company issued to the wife of one of its officers  warrants to
purchase  100,000  shares of the Company's  common stock at an exercise price of
$.20 per share.  The time for exercise of such warrants expires in 2002. At July
31,  1998,  the  Company's  obligation  under  this line of credit  amounted  to
approximately  $116,100.  This obligation is included under notes payable other,
and is secured by 40,000 shares of Datatec common stock owned by the Company.

In  September  1997,  the Company  entered  into a lending  arrangement  with an
individual  lender whereby the Company issued  secured  promissory  notes in the
aggregate  principal  amount of  $250,000.  Such notes are secured by a total of
62,000  shares of Datatec  common stock and bear interest at the rate of 10% per
annum and became due in November 1997, as extended.  As an inducement for making
the loans,  the Company agreed to pay such lender $30,000 as an inducement  fee.
Such notes have not been paid.

Of the proceeds received from such lending arrangements,  $118,000 were used for
the  Company's  operational  expenses and an aggregate of $287,000 was loaned to
two  companies,  evidenced  by 15% and  10%  promissory  notes  and  secured  by
inventory and receivables. Such lending arrangements provide for an aggregate of
$14,500 to be paid to the Company as an inducement  fee. The notes became due in
December  1997, as extended,  and have not been paid.  The purpose of such loans
was to develop  potential  business  opportunities  with such companies.  Messrs
Peter  Schneider and Y.S. Ling, the President and an Executive Vice President of
the Company,  respectively have an interest in one of such companies.  Y.S. Ling
is a creditor and Peter Schneider is both a creditor and a  shareholder, holding
less than 5% of the equity of such company. In October 1997 the Company received
advances aggregating $15,600 from a company controlled by Peter Schneider.

In October 1995 the Company issued to two individual lenders promissory notes in
the aggregate principal amount of $350,000. Such notes are secured by a total of
200,000  shares of Datatec common stock held by the Company and bear interest at
the rate of 10% per annum and became due on October 15, 1996.  As an  inducement
for the noteholders to make the $350,000 loan to the Company, the Company agreed
to deliver to such holders an aggregate of 19,444 shares of Datatec common stock
held by the Company and to deliver to such  holders (a) warrants to purchase for
a period of  twenty-four  months an aggregate of 19,444 shares of Datatec common
stock held by the Company at an exercise price of $2.00 per share,  as adjusted,
which were  exercised  and (b) warrants to purchase for a period of  twenty-four
months  an  aggregate  of  38,880  shares of the  Company's  common  stock at an
exercise  price of $ .20 per share.  The time for exercise of such  warrants has
been extended for an indefinite period. The Company in 1998 recognized a gain of
approximately $100,000 as a result of these transactions.

In order to supplement  its cash flow,  the Company,  on March 6, 1991,  entered
into loan  agreements  with several  investors  whereby the Company  borrowed an
aggregate of $282,000  for six months with  interest at the  semiannual  rate of
14.5%. As part of such transaction,  the Company issued to such investors,  in a
private  placement,  an aggregate  of 17,000  shares of its common  stock,  on a
restricted basis, for an aggregate  consideration of approximately  $22,000.  In
October 1991, the Company paid off $32,000 (plus accrued  interest) with respect
to such loans.




                                       10


<PAGE>



At such time the Company  renegotiated  the balance of such loans (plus  accrued
interest) and issued new notes, maturing in one year, amounting to approximately
$290,000  including  interest  thereon at the annual rate of 10%. The Company is
obligated  to pay such  investor the value of the note,  plus accrued  interest.
Such obligation was acquired by MDA, as set forth below.

The Company  intends  either to pay off its note  obligations  or to convert the
notes (including  accrued interest  thereon) into Common Stock at a rate of five
shares of Common Stock in connection  with a proposed  meeting of  stockholders.
There can be no  assurance  that the  Company  will be able to  effectuate  such
payment or  conversion.  Litigation  by  noteholders  to enforce the notes would
materially  adversely  affect the Company's  operations.  In connection with the
acquisition of certain outstanding notes of the Company by MDA, all of which are
past due,  aggregating  approximately  $1,600,000 at April 30, 1998, the Company
delivered 228,571 shares of its Datatec stock in May 1998, in transferable form,
as collateral for such  obligations.  The Company has been advised that all such
shares were  subsequently  sold  resulting  in proceeds to MDA of  approximately
$976,000 in  reduction  of such  obligations.  The Company  recognized a gain of
approximately $750,000 in connection with the sale of these shares.

In 1992, the Company, in order to regain listing on the NASDAQ Small Cap System,
to provide for operating  requirements and in contemplation of a possible change
in the  nature of the  Company's  business,  completed  a private  placement  of
securities in October 1992, in which  investors  subscribed for 100 Units,  each
Unit consisting of 50,000 shares of Convertible  Preferred Stock and 25,000 1992
Warrants to purchase  shares of Common  Stock,  for a total of  $3,000,000.  The
warrants  expired on June 30,  1997.  Such private  placement  was closed in two
stages,  the first of which  involved the purchase of 52-1/2 Units and closed in
July 1992,  with the balance of the Units offered (47-1/2 Units) being purchased
in October 1992. At July 31, 1997  approximately 53% of such Preferred Stock was
acquired by MDA. As a result of the consummation of such private placement,  (a)
the Redeemable  Class A Warrant  exercise price has been adjusted from $1.00 per
share to $.53 per share and the number of shares of Common Stock  issuable  upon
exercise of Redeemable Class A Warrants has been increased from 3,438,900 shares
to 6,488,517  shares of Common Stock so that each holder of a Redeemable Class A
Warrant  will be able to purchase  1.8868  shares of Common Stock for $1.00 upon
exercise of each Warrant and (b) the Redeemable  Class B Warrant  exercise price
has been  adjusted  from  $1.50 per  share to $ .75 per share and the  number of
shares of Common Stock issuable upon exercise of Redeemable Class B Warrants has
been increased from 1,719,450 shares to 3,438,900 shares of Common Stock so that
each holder of a  Redeemable  Class B Warrant will be able to purchase one share
of Common Stock per warrant upon exercise of such  Warrant.  It is expected that
as a result of the proposed merger with Omnet,  referred to above, there will be
a further  adjustment  in the exercise  price and the number of shares  issuable
upon such exercise.

The Company  entered into a common stock purchase  agreement  (the  "Agreement")
with Datatec  governing  certain equity  investments which the Company has made,
and in the future  intends to make,  in Datatec  common  stock.  Pursuant to the
Agreement,  in January 1994 the Company  converted  outstanding  indebtedness of
Datatec owed to the Company into equity of Datatec which, upon  consummation  of


                                       11



<PAGE>



the Datatec merger with Sellectek  Incorporated,  resulted in the Company owning
approximately  28% of the  outstanding  shares  of  Datatec  or 18.5% on a fully
diluted basis. In addition, the Agreement gives Datatec the right to require the
Company to purchase an  additional  number of shares of common  stock of Datatec
equal to 13.5% of the then outstanding shares (the "Additional  Shares"), or 10%
on a fully diluted basis, for an aggregate of  approximately  $8.4 million after
giving effect to certain fees (the  "Additional  DCI  Investment").  Datatec may
require this purchase if, and then only to the extent that, the Company receives
proceeds  from the  exercise  of  existing  Company  warrants.  There  can be no
assurance  that any or all of such warrants  will be exercised.  The Company has
issued  warrants to the public to purchase  6,448,517  shares of Common Stock at
$.53 per share and  warrants to  purchase  3,438,900  shares of  Common Stock at
$.75 per share.  Such warrants will expire on March 31, 1999,  as extended.  The
Company has the right to retain the first $500,000 of warrant exercise proceeds;
however,  such amount  must be used by the Company to purchase  shares of Common
Stock of Datatec if the aggregate amount of warrant exercise proceeds applied to
the purchase of Datatec  common  stock,  after the earlier of the  expiration of
exercise  of  all  warrants  or  24  months  after  the   effectiveness  of  the
registration  statement  covering the Common Stock  underlying the warrants,  is
less  than $8.4  million.  In view of the fact  that,  at the  present  time and
throughout 1997, the price of the Common Stock has been below the exercise price
of the  warrants,  it is  impossible to predict the timing of exercise of any of
the  outstanding  warrants,  or if such  warrants  will ever be  exercised.  The
Company  anticipates  such an event  will not  arise  for at least two years and
that,  should such  eventuality  arise,  the Company  will  attempt to meet such
obligation either through loans (which may be secured by all or a portion of its
Datatec equity),  equity financings or some combination thereof. If Datatec does
not require the Additional DCI Investment,  the Company may still  purchase,  on
the same terms, the Additional Shares.

In November  1993, the Company issued to several  investors  secured  promissory
notes aggregating  $500,000 with interest thereon at the annual rate of 8%. Such
notes were secured by all the assets of the Company and matured on September 30,
1994, as extended,  and were paid off on October 6, 1994.  As an inducement  for
such investors to make such loan, the Company issued to such investors warrants,
which expire on November 23, 1998, to purchase an aggregate of 750,000 shares of
Common  Stock  at an  exercise  price of $ .05 per  share,  as  adjusted  ("1993
Warrants"). The proceeds from such transaction were loaned to Datatec to fulfill
certain  commitments to Datatec. As an inducement to extend the maturity date of
such notes to  September  30, 1994,  the Company  issued an aggregate of 500,000
additional  warrants ("1994  Warrants") to the holders of such notes on the same
terms and conditions as the 1993 Warrants  except that the exercise price of the
1994 Warrants is $ .20 per share.

DEFERRED INCOME TAX ASSETS
--------------------------

Deferred  income  tax assets as of April 30,  1997 and April 30,  1998 have been
reduced to zero due to uncertainties concerning their realization.





                                       12





<PAGE>


PART II.          OTHER INFORMATION



Item 5.           Other Information

                  In June 1998,  the Company's  subsidiary,  Amerawell  Products
                  Limited (Amerawell), commenced a lawsuit in the Superior Court
                  of New Jersey  against Toys "R" Us (TRU) for products  shipped
                  and  delivered  to TRU  amounting to  approximately  $185,000,
                  which  has not been  paid.  TRU has  answered  the  complaint,
                  denying  liability.  TRU,  in the same  proceeding,  named the
                  Company  as a third  party  defendant  alleging,  among  other
                  things,  that  the  Company  breached  its  contract  with TRU
                  regarding  advertising  such  products  and that  the  Company
                  because of its relationship to Amerawell or as a result of its
                  own conduct  was liable for all the  damages  suffered by TRU,
                  which were not specified.  The Company's  management  believes
                  that the Company has a meritorious defense.

Item 6.           Exhibits and Reports on Form 8-K

                  Exhibits:

                           Financial Data Schedule

                  Reports on Form 8-K:

                           None























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<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.

                                          DIRECT CONNECT INTERNATIONAL INC.
                                                     (Registrant)



Date:    September 14, 1998                 By /s/Peter L. Schneider
         ------------------                    ---------------------
                                               Peter L. Schneider
                                               President and Chief
                                               Operating Officer

Date:    September 14, 1998                By  /s/Barry A. Rosner
         ------------------                    ------------------
                                               Barry A. Rosner
                                               Treasurer and Chief
                                               Financial Officer

















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