FORM 10-KSB/A3

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



   [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                       Commission File Number:  33-12029-D

                      for the year ended December 31, 2000


                              IDIAL NETWORKS, INC.

                                    formerly
                        Desert Springs Acquisitions, Inc.

                Nevada                                 75-2863583
(Jurisdiction  of  Incorporation)        (I.R.S.  Employer  Identification  No.)

            19009 Preston Road, Suite 215 PMB# 236, Dallas, TX 75252 (Address of
              principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (954) 578-5333

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

Yes[X] No[] (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.)

Not[] (Indicate by check mark whether if disclosure of delinquent filers
(229,405) is not and will not to the best of Registrant's knowledge be
contained herein, in definitive proxy or information statements incorporated
herein by reference or any amendment hereto.)

As of December 31, 2000, Due to the limited market for the Company securities,
no estimate is being supplied herewith of the market value for such securities.

As of December 31, 2000:

the  number  of  shares  outstanding  of  the  Registrant's  Common  Stock  was
87,144,454.

the  aggregate  number  of  shares  held  by  non-affiliates  was  approximately
50,966,652.

                       Exhibit Index is found on page 35.

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<CAPTION>
<S>                                                                            <C>
Introduction                                                                   3

PART  I                                                                        3

Item  1.  Description of Business.                                             3

Item  2.  Description  of  Property                                           15

Item  3.  Legal  Proceedings                                                  15

Item  4.  Submission  of  Matters  to  a  Vote  of  Security  Holders         16

Item  5.  Market  for  Common  Equity  and  Stockholder  Matters              16
      (a)  Market  Information                                                16
      (b)  Holders                                                            16
      (c)  Dividends                                                          16
      (d)  Sales  of  Unregistered  Common  Stock  2000                       16

Item  6.  Managements  Discussion  and  Analysis  or  Plan of Operation       17

Item  7.  Financial  Statements                                               27

Item  8.  Changes  in  and  Disagreements  with  Accountants
          on  Accounting  and  Financial  Disclosure                          28

Item  9.  Directors  and  Executive  Officers,  Promoters  and Control
          Persons; Compliance with Section 16(a) of the Exchange Act.         29

Item  10.  Executive  Compensation                                            30

Item  11. Security  Ownership  of  Officers and Directors and 5% Owners       31

Item  12.  Certain  Relationships  and  Related  Transactions                 32

Item  13.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
                                                                              32
      (a)  Financial  Statements                                              32
      (b)  Form  8-K  Reports                                                 32

</TABLE>
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                                  INTRODUCTION

     This Form 10-KSB contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the Securities
Act ), and Section 21E of the Securities Exchange Act of 1934, as amended (the
Exchange Act ). Specifically, all statements other than statements of historical
facts included in this report regarding the Company s financial position,
business strategy and plans and objectives of management of the Company for
future operations are forward-looking statements. These forward-looking
statements are based on the beliefs of the Company s management, as well as
assumptions made by and information currently available to the Company's
management. When used in this report, the words anticipate, believe, estimate,
expect, intent, and words or phrases of similar import, as they relate to the
Company or Company management, are intended to identify forward-looking
statements. Such statements (the cautionary statements) reflects the current
view of the Company with respect to future events and are subject to risks,
uncertainties and assumptions related to various factors including, without
limitations, competitive factors, general economic conditions, customer
relations, relationships with vendors, the interest rate environment,
governmental regulation and supervision, seasonality, product introductions and
acceptance, technological change, changes in industry practices and one-time
events. Although the Company believes that expectations are reasonable, it can
give no assurance that such expectations will prove to be correct. Based upon
changing conditions, should any one or more of these risks or uncertainties
materialize, or should may underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on
behalf are expressly qualified in their entirety by the applicable cautionary
statements.
<PAGE>
                                     PART I


                                    BUSINESS

History

         We provide telecommunication services to customers around the world.
These services include pre-paid telephone calling cards and reduced rate
telephone calls using the Internet. Telephone calls that are initiated over the
Internet combine user-friendly account tracking (i.e. monitoring on-line billing
and call records) with the low tariffs of Unites States based telecommunications
carriers, via calling centers accessed directly from home to anywhere in the
world. During 2000, we decided to change our business model from being a
telephony service provider, which provides the ability to send voice data (as
opposed to digital data) over the Internet, to a more diversified company.

         As part of our change in business model, in August 2000, we acquired
100% of the stock of Whoofnet.com, Inc. in exchange for the issuance of
10,000,000 shares of our common stock.

         Whoofnet.com is an Internet company designed for direct selling
utilizing the latest advances available on the Internet. In particular,
Whoofnet.com's major product is an Internet portal for use by the general
public, where users can search the web through the use of search engines and
links to other sites. Whoofnet.com was formed under the laws of Florida on March
6, 2000. Whoofnet.com also develops, tests and markets other products, such as
the iDial Gold Advantage card, a reloadable debit card, which it has recently
completed field-testing and plans to begin sales within the next several months.
All costs associated with the startup phase of the organization have been
expensed in the current period.

      Whoofnet.com also formed six subsidiary Delaware Corporations between the
months of March and May 2000, and two foreign subsidiary corporations for the
operations of various aspects of its business. As of the dated of this
prospectus, none of the subsidiaries have been active or funded.

      In November 2000, we acquired 100% of the stock of 2sendit.com, Inc. in
exchange for the issuance of 4,199,998 shares of our common stock.

      2sendit.com provides a marketing service by advertising products and
services through a variety of media with a primary focus on the use of fax, mail
and email. With fax and email distribution servers located in Dallas, TX and
Denver CO, 2sendit.com is able to offer high capacity, low cost services. In
addition, we maintain a small company attitude, allowing us to assist other
small companies in need of our services.

Overview

         iDial Networks develops applications that are delivered to its
customers over the internet, providing internet and wireless services. The
Internet is an increasingly significant interactive global medium for
communication, information and commerce. International Data Corporation, a
market research firm, estimates that the number of users who make purchases over
the Internet worldwide will grow from 31 million in 1998 to more than 183
million in 2003.

         The Company has two material lines of business, providing
Internet-based voice telecommunications to customers around the world, and
providing marketing services for various businesses. Revenue attributable to the
Internet based voice communications was approximately $1,729,000 and $1,576,000
for the years ended December 31, 2000 and 1999, respectively. Revenue
attributable to marketing services was approximately $67,000 an $0.00 for the
years ended December 31, 2000 and 1999, respectively.

         Emergence of Internet Telephony. Internet telephony, the ability to
make voice-based telephone calls over the internet, has emerged as a low cost
alternative to traditional long distance telephone services. Internet telephone
calls are less expensive than traditional international long distance calls
primarily because these calls are routed over the Internet or through data

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networks. The use of the Internet bypasses a significant portion of
international long distance networks and the relevant tariffs. Also, routing
calls over the Internet is more cost-effective than routing calls over
traditional telephone lines because the packet-switching technology that enables
Internet telephony is more efficient than traditional telephone technology.
Packet-switching, unlike traditional telephone networks, do not require a fixed
amount of bandwidth to be reserved for each call. This allows voice and data
calls to be pooled, which means that packet networks can carry more calls with
the same amount of bandwidth. This greater efficiency creates cost savings that
can be passed on to the consumer in the form of lower long distance rates.

         Prepaid Calling Card Industry. The market for prepaid calling cards has
grown significantly since 1993. This growth is attributed to three trends
according to industry sources. First, the larger telecommunications companies
have come to understand the strategic and financial benefits of prepaid calling
cards. Second, consumers are becoming more aware of various advantages of
prepaid cards. Third, businesses are beginning to purchase prepaid calling cards
as a means of controlling telephony costs and simplifying record keeping. We
believe that the affordable pricing, convenience and enhanced features of
prepaid calling cards has attracted price sensitive customers, business
travelers, international callers and other users of long distance service. Also,
while prepaid calling cards are relatively new in the United States, they have
been widely used and accepted method of making telephone calls in Europe and
Asia since the 1970's.

Our Telephone Service Products

         Calling Cards

         We sell virtual prepaid calling cards over the Internet and physical
prepaid cards through traditional retail outlets. We consider our Internet Phone
Cards "virtual" because we do not issue a physical card. Once sold, the calling
card can be used immediately to make international and domestic long distance
calls.

         Our web system functions as follows: 1) A potential customer accesses
our website; 2) the customer follows the prompt to enter the credit card
information to purchase the virtual calling card; 3 we verify the credit card
within seconds and the confidential PIN and display a toll free number customer
to record; and 4) the virtual calling card can be used immediately to place a
call via the Internet or traditional phones. We then store the customer
information on our database for future reference.

         Our Internet calling cards give us the flexibility of promptly changing
the rates and features to respond to changing consumer demand, rather than
having an inventory of physical cards with set features that cannot be changed
until all are recalled or used. This also allows us to offer and test several
different types of virtual calling cards with varying pricing features, thus
providing a greater selection to our customers.

         Our website is accessible 24 hours per day, seven days a week, so we
are not constrained by the hours that a traditional retail store would be open
for business. Our website may also be reached from the customer's home or
office. This means the customer is not required to physically travel to another
location to make a purchase and receive delivery. Our online purchasing and
delivery also allows us to deliver a broad selection of products to customers
worldwide in rural or other locations that do not have convenient access to
physical stores.

         U.S. Access. Our U.S. Access calling cards provide access to our
network from the United States to more than 241 countries and territories. When
using the U.S. Access calling card for a call from the United States to another
country, the customer uses a touch tone telephone to dial a toll free number and
enters the PIN and the telephone number the customer seeks to reach. Our
enhanced services platform determines the calling card is valid and the number
of call minutes remaining on it, based on the rate for the country being called.
The platform then completes the call and reduces the available credit balance on
the calling card at the conclusion of the call.


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         World Access. When using the World Access calling card for a call from
another country to the United States or from country to country outside the
United States, the customer initiates the call through the Internet by accessing
our website. On our web page, a form is displayed and the customer enters the
telephone number where he or she is, the telephone number he or she wants to
call and his or her PIN and then "clicks" on the call button. This information
is transmitted over the Internet to our platform. The platform determines the
virtual calling card is valid and has a sufficient balance and then routes a
call to the customer at the number where he or she is. When the customer
answers, the platform completes the call by connecting to the number the
customer wanted to call. From our website, these features allow customers to
make calls from anywhere in the world at our international United States long
distance rates using the virtual calling card and Internet access to our website
and platform.

         We have integrated the economics of Voice-Over-Internet-Protocol
technology, the conversion of voice data into digital data for transmission over
the Internet, with the convenience of conventional telephone services to enable
Internet initiated telephone services. With this iDial technology, we are able
to offer consumers and businesses telephone services at costs approaching the
wholesale rates of carriers. Unlike some competitors who offer personal computer
to phone services, iDial's web based services are provisioned via the Internet
but all calls are currently made phone to phone. The majority of PC owners do
not have microphones and telephony services. iDial delivers high-quality
traditional and Voice-Over-Internet-Protocol telephony services to consumers and
businesses, with the following benefits:

         Low Cost. Telephone calls are a fraction of the cost of traditional
long distance service.

         High Quality Voice Transmissions. We offer high quality voice
transmissions by integrating traditional telephone services and packet-switching
technologies.

         Ease of Use and Access. Designed for convenience and ease of access
from anywhere in the world, an Internet connection and a standard Internet
browser such as Netscape or Microsoft Internet Explorer is all that is required.
Lacking an Internet connection, the customer may dial a toll free or local
access number from any telephone or fax machine in the US to access our network
as well.

         One-Click Online Calling. iDial services enable users to speak with
anyone worldwide with a single click of a button. On-line retailers could use
this technology to connect customers to sales representatives when browsing
their web sites and increase the likelihood of consummating the on-line sale.

         Reliable/Flexible Service. The technologically advanced design allows
for the expansion of the network capacity by the simple addition of switches,
and the ability to seamlessly reroute traffic if problems arise.

         Ease of Payment and Online Account Access. iDial customers are able to
make calls by opening a prepaid account using credit cards, wire transfers or
checks, and can access their accounts via the Internet to view their call
history, account balances, or to increase their prepaid amounts.

         Customer Support. We offer real-time customer support in multiple
languages, and the integrated billing and call management system provides
service representatives with immediate access to customer accounts.

         Product Description. iDial has integrated the economics of
Voice-Over-Internet-Protocol and Wireless Application Protocol technology with
the convenience of conventional telephony to enable web initiated telephone
services. With this iDial technology, were able to offer consumers and
businesses telephone services at costs approaching the wholesale rates of
carriers.

         Our Wireless Services

         Wireless Application Protocol is an industry term for the standard
technology used to provide Internet communications and advanced telephony
services on digital mobile phones, pagers, personal digital assistants, and
other wireless terminals. The wireless market is embracing Wireless Application
Protocol technology, with a predicted 600 million phones using Wireless
Application Protocol by the end of 2003. Europe is leading the way in Wireless
Application Protocol, and Forrester Research predicts that 219 million Europeans
will be accessing the Internet on a daily basis by 2003. iDial, through its

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marketing arm of Whoofnet.com, will enter the European market with its own
Voice-Over-Internet-Protocol and Wireless Application Protocol applications. In
a joint venture with a Swedish government agency, we are in the process of
building a customer services center in Bracke Kommun in Sweden.

         We have developed a plan to be "first to market" with Wireless
Application Protocol connectivity to our iDial services. We believe that a
tremendous opportunity exists to:

o                          Immediately provide low cost international long
                           distance services to Wireless Application Protocol
                           enabled phones through our technology; and
o                          Incorporate Wireless Application Protocol access into
                           the our portal, giving them the same carrier choices
                           as our traditional users.

         iDial has developed and applied for patents for applications to enable
Personal Digital Assistants such as the Palm Pilot VII to instantly connect with
the iDial site and avail themselves of our long distance services. A similar
application for the new Microsoft Pocket PC has also been completed. iDial will
continue to develop Wireless Application Protocol enabled products and services
to insure that its core products will always be easily accessible by wireless
devices.

         Additional Services

         Additionally we are currently offer traditional prepaid phone cards and
Voice-Over-Internet-Protocol services based on iDial technology under the
following brand names for which various trade and service marks are registered.

         NetPhoneCard - www.netphonecard.com Web initiated worldwide phone calls
with US dial tone and low tariffs.

         iDialDirect - www.iDialdirect.com A complete communications portal
offering flat-rate US products and worldwide access products.

         Phone-Me-Now - www.phonemenow.com An iDial e-commerce tool. A
Phone-Me-Now button is places on a website that allows a customer to initiate a
call to his phone from a representative of the company that is hosting the site.

         SendaCall - www.sendacall.com Prepaid calls sent within a virtual
greeting card by-mail to recipients anywhere in the world, allowing recipient to
place free call to sender.

         Wireless Services - We will continue to expand wireless development to
include areas such as Wireless Access Protocol.

Our International Networks

         Our Enhanced Services Platform. Our enhanced services platform is a
specialized telephone switch based on technologies from Cisco, Microsoft and
Dialogic (a wholly owned subsidiary of Intel Corp.). It is connected to our
website, data base, and to our network of outgoing and incoming telephone lines
and Internet lines. It sets up all customer account and PIN information when a
calling card is purchased and immediately activates the calling card so it can
be used at the time of purchase. The platform also accepts and evaluates all
calls from calling card holders over the toll free number and over the Internet
and confirms the validity of the calling card and remaining balance. We have
also programmed into the platform a lowest cost routing matrix, which is simply
a program that selects the lowest priced route from our multiple carriers. This
means our platform will select the cheapest route to send a call based upon
where we have established gateways, which are central locations housing the
equipment necessary to send and receive calls internationally. We believe our
platform can currently support approximately 288 simultaneous calls and process
over 4 million minutes of traffic per month. Our platform is expandable to carry
more traffic by adding additional telephone lines and equipment. Focusing on the
international market, the use of our platform is spread throughout the day as a
result of the different world time zones.

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         We plan to develop and offer new products and services, which may
require modifications and enhancements to our platform. For any modifications or
enhancements, we will either contract with the manufacturer to develop new
software or we may develop the software, or a combination of both. In the past,
we have experienced delays when we have tried to upgrade our platform. If the
software cannot be developed cost effectively, or there will be significant
delays, we may elect to abandon a potential product or service in favor of one
that can be timely developed on a cost effective basis. There can be no
assurances that we can successfully develop the software to enable us to offer
new products or services.

         Our Internet Gateway Network. As of December 31, 2000, we had
international gateways operational in Sri Lanka, Laos, Thailand and Holland. As
of such date, we also had domestic gateways operational in Dallas and in Los
Angeles and Denver. We intend to place Internet gateways in various other
countries. Before we place a gateway in another country, we enter into
contractual relationships with local persons or entities to operate them. We
typically own or lease the gateway or have the right to purchase it and the
local person or entity is responsible for procuring local Internet provider
connection and local telephone lines and complying with local law. Our contracts
with the local person or entity are generally for a one-year term and are
renewable unless either party declines to renew. We pay the local person or
entity a negotiated rate per minute for terminating or originating calls through
the gateway.

         Our gateways allow for high quality transmission through the Internet.
The historical poor sound quality of voice transmission through the Internet is
due to the fact that the Internet was not created for simultaneous voice
traffic. Unlike conventional telephone communication lines, in which the entire
line is reserved for a call, Internet telephony, the transmission of voice data
over the Internet, uses packet-switching technology, which translates and
divides voice data into discrete packets of digital data that are transmitted
individually over the Internet and then retranslated into voice data at their
destination. These packets of data travel through several separate routes in
order to reach their destination, which may increase the chances of misrouting,
and delays in transmission and reception. The software in our gateways connect
the packet switched data transmitted over the Internet to traditional public
telephone networks in such a manner that virtually eliminates the delay in
transmission normally involved in Internet voice transmission and the resulting
pause and echo effect.

         Our Internet gateways enable us to route voice quality calls through
our enhanced services platform to and from the country via the public Internet
or private intranet networks such as a frame relay network. The cost of these
calls is based on the local telephone rates for the country where the gateway is
located. They are not based on internationally or local long distance rates.

         Our Leased Lines Network. We also lease international telephone lines
to transmit calls. Our lease agreements obligate the carriers to complete the
transmission of calls routed by us to them at different rates for different
countries and territories.

         With these agreements, we have access to more than 241 countries and
territories. Leased capacity is typically obtained on a per-minute basis or
point-to-point basis. Our agreements are typically one-year agreements with
30-day cancellation rights by either party. Rates are based on volume and
adjusted approximately every 30 days. Our rates generally decline as volume
increases. We are dependent on these carriers to complete the transmission of
our calls, and the loss of one or more of them as a source for completion of our
calls could have a material adverse affect on us. However, we believe there are
numerous international long distance carriers that transport calls to the
countries we desire to target and we believe we could replace a carriers if
lost. If the rates of any replacement carrier are higher, or our existing
carriers raise their rates, our profit margins would decrease. We may sell to
other long distance carriers any excess line capacity we have. Excess line
capacity is the remaining capacity on our telephone lines not used by us to
transmit our own calls during any given month.


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         Our Third Party Contracts. Our success depends, in part, on our ability
to continue to lease long distance telephone capacity from third parties at
economic rates to serve the foreign countries we target. It also depends, in
part, on our ability to maintain our contractual relationships with local
parties completing the transmission of our calls in those countries where we
have Internet gateways. If we lose these relationships, we believe we could
replace them. However, it would cause a disruption of our business until they
are replaced, and the replacement leases or contracts may not be at favorable
rates or on terms.

Growth Strategy

         While a large number of companies specializing in the conversion of
voice data to digital data for transmission over the internet, or
Voice-Over-Internet-Protocol, have been formed in recent years, most focus on
the build out and development of international networks in the effort to capture
a high margin revenue base. We believe that in this very competitive landscape,
offering many voice and data transmission options, leasing time (or purchasing
minutes) on Voice-Over-Internet-Protocol networks will quickly become a
commodity business, as the various competitors whittle margins to gain growth
and market share.

         We intend to leverage our position in the Internet telephone
communications market to make communications services readily available
worldwide. Our strategy includes the following key elements:

o                 Promote our services through direct sales and marketing and,
                  through relationships with resellers and leading Internet
                  hardware, software and content companies.

o                 In addition to minutes-based revenue, we intend to pursue new
                  web-based revenue opportunities from banner and audio
                  advertising.

o                 Strengthen and enhance our brand recognition by cooperatively
                  marketing our Internet telephone communications services with
                  leading companies in other market segments.

         Many e-commerce sites have discovered the necessity of having a
customer service representative talk with potential buyers. However, traditional
800 numbers are still relatively expensive, and require some effort on the part
of the customer to initiate the call. With our "Phone-me-now" technology, a
simple click of a button will connect the customer with the seller's
representative at very low rates. To further lower operating costs, we are
exploring joint ventures with customer service centers in English speaking
countries where wages are lower to make customer service more affordable for
e-commerce companies.

Sales and Marketing

         We have developed a marketing strategy based on increasing customer
traffic to our website and strengthening our brand name.

         Internet Advertising. We have taken a selective approach in our
advertising strategy. We attempt to maximize the return from promotional
expenditures by choosing advertising media based on the cost relative to the
likely audience and ability to generate increased traffic for our website. We
identify a country and customer group to whom we desire to market our virtual
calling cards.

         We place advertisements on various websites and Internet portals
frequently visited by this customer group in the United States and abroad. These
advertisements usually take the form of banner ads that encourage readers to
click through directly to our website. We believe that placing banner
advertising on these websites and portals may significantly increase our
targeted exposure to prospective customers and increase our name identity.

         Customer Electronic Mail Broadcasts. We actively market to our base of
customers through e-mail broadcasts, which is an electronic form of mass
mailing. All new virtual calling card purchasers are automatically added to our
electronic mailing list. We e-mail messages on a periodic basis to our customers
announcing new rates, new countries, new products and new features.

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         Electronic Mail to Select Mailing Lists. We also deliver e-mail
broadcasts to certain select mailing lists from time to time announcing
pertinent information, including the addition of a new country, new products and
rates.

         Other Methods. We will continually review other potential
cost-effective methods of advertising and marketing our products and services
through the Internet. Such methods may include the use of an affiliate program,
chat rooms, video e-mail and other methods.

Customer Support and Service

         We believe that our ability to establish and maintain long-term
relationships with our customers and encourage repeat purchases is dependent, in
part, on the strength of our customer support and service operations and staff.
Our customer support and service personnel are available Monday through Friday
from 8:00 a.m. to 9:00 p.m. Pacific Standard Time and Saturday from 10:00 a.m.
to 6:00 p.m. Pacific Standard Time, via telephone. In addition, we provide
e-mail support staff 24 hours a day, seven days a week. These services include
pre and post-sales support for orders and usage of our products and our customer
service department responds immediately.

         Our website has been designed around industry standard architectures to
reduce downtime in the event of outages or catastrophic occurrences. Our website
provides 24 hour a day, seven days a week availability. Our website operations
staff consists of systems administrators who manage, monitor and operate our
website. The continued uninterrupted operation of our website is essential to
our business, and it is the job of the site operations staff to ensure, to the
greatest extent possible, the reliability of our website. We provide our own
connection to the Internet through voice and data network services provided by a
company named Global Crossing. We believe that these telecommunications and
Internet service facilities are essential to our operation and we anticipate
upgrading these facilities as volume and demand for our service grow.

Technology

         We use a combination of our own proprietary software applications and
commercially available licensed technology to conduct our Internet and telephone
routing operations.

         Proprietary Technology. We have developed proprietary customer software
which permits a customer to purchase and receive our virtual calling cards on
our website by using a credit card. We have also developed proprietary customer
software to allow our world access virtual calling cards and phone collect PINs
to initiate calls through regular telephone lines using our website and enhanced
services platform. We have also developed various proprietary credit and fraud
management applications, which aid us in checking credit and limiting fraudulent
transactions.

         Our engineering staff consists of software development engineers and
consultants based on our wholly owned subsidiary in Sri Lanka. We historically
have developed and expect to continue to develop proprietary software
internally. Our engineering strategy focuses on the development of our website,
which includes the enhancement of features and functionally of our existing
software components, the development of additional new software components, and
the integration of off-the-shelf components into our systems.

     Commercially Available Licensed Technology. Our strategy has also been to
license commercially available technology whenever possible rather than seek a
custom-made or internally-developed solution. We believe that this strategy
enables us to reduce our operating costs and to respond to changing demands due
to growth and technological shifts. This strategy also allows us to focus our
development efforts on creating and enhancing the specialized, proprietary
software applications that are unique to our business. Listed below are some of
our key architectural components:

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o        High speed links to the Internet through Global Crossing's network
         services;

o        Dell clustered Servers for web and data base applications running
         Windows NT, Linux and Microsoft SQL Server 7.0; o Microsoft Internet
         Information Server 4.0 has been chosen for its ability to secure
         sensitive customer information through SSL encryption; and

o        Microsoft SQL Server 7.0 is a relational database. All customer names
         and addresses, PINs, number of purchases and call records are stored
         within this database.

         We depend on a Internet service provider to provide Internet access to
us and our customers. The parties responsible for completing the transmission of
our calls in foreign countries also rely on local Internet service providers for
access to the Internet in their countries. If we lost our connection with our
Internet service providers, we could not sell our virtual calling cards through
our website, and web initiated calls could not be made by our customers, until
the connection was reestablished. If a local party responsible for completing
the transmission of our calls in a foreign country loses its Internet
connection, we could not route calls over the Internet to that destination until
the connection was reestablished. These failures could cause us to lose
customers and our ability to sell virtual calling cards and telephone services
would be affected.

         Our customers also rely on Internet service providers for access to the
Internet. If our customers cannot access Internet, they cannot access our
website to purchase virtual calling cards or make web initiated calls.

Government Regulation

         Regulation of the Internet. The United States Congress and the Federal
courts have taken actions that, in some cases impose some forms of regulation on
the Internet, and in other cases protect the Internet from regulation. This
includes restrictions on some forms of content placed on the Internet. These
regulations have had mixed success in the Federal courts. Conversely, Congress
passed legislation in 1998 that imposed a three-year moratorium on the
imposition of new taxes on Internet transactions. At the same time, numerous new
bills have been proposed that would further regulate various aspects of Internet
commerce, and ensure the continued deregulation of others. It is impossible to
say at this time whether and to what extent the Internet may ultimately be
regulated by the United States government.

         The European Union has also enacted several directives relating to the
Internet, including one permitting European consumers to sue in their own
country persons from another country retailing goods over the Internet. On the
other hand, the G8 countries have recommended that digital products (such as our
virtual calling cards) should be exempt from all import taxes and custom duties.
As with the United States Congress, the European Union, and the governments of
individual foreign countries, are actively considering propose legislation that
could result in new regulations on the Internet. Increased regulation of the
Internet may decrease its growth, which may negatively impact the cost of doing
business via the Internet or otherwise materially adversely affect our business,
results of operations and financial condition. In addition, applicability to the
Internet of existing laws governing issues such as property ownership,
copyrights and other intellectual property issues, taxation, jurisdiction to
sue, libel, obscenity and personal privacy is uncertain. The vast majority of
such laws were adopted prior to the advent of Internet and related technologies.
As a result, these laws do not contemplate or address the unique issues of the
Internet and related technologies.

         Potential Regulation of Internet Telephony. To our knowledge, there are
currently no domestic and few international laws or regulations that prohibit
the transmission of voice communications over the Internet. If Congress, the
FCC, state regulatory agencies or governments of other countries impose
substantial regulations relating to Internet telephony, the growth of our
business could be adversely affected. In the United States, several efforts have
been made to enact federal legislation that would either regulate or exempt from
regulation telecommunication services provided over the Internet. State public
utility commissions may also attempt to regulate the provision of intrastate
Internet telephony services. In late 1998 and early 1999, however, the FCC
issued two decisions that suggest that all transmissions over the Internet may

                                       10
<PAGE>
be jurisdictionally interstate, and these decisions may restrict the ability of
state public utility commissions to regulate Internet telephony. Recently,
however, a Colorado court ruled that Internet telephone service companies would
be subject to payment of originating and terminating access charges to the
incumbent provider. Imposition of such charges on our services would increase
our costs. Internationally, a number of countries that currently prohibit
competition in the provision of voice telephony have also prohibited Internet
telephony. Other countries permit but regulate Internet telephony.

         On April 10, 1998, the FCC issued a Report to Congress concerning its
implementation of the universal service provisions of the Telecommunications
Act. In the Report, the FCC indicated that it would examine the question of
whether any forms of "phone-to-phone" Internet Protocol telephony are
information services, which are unregulated, or telecommunications services,
which are fully regulated. The Report noted that the FCC did not have, as of the
date of the Report, an adequate record on which to make any definitive
pronouncements. The FCC did, however, note that the record before it suggested
that some forms of phone-to-phone Internet telephony appear to have the same
functionally as non- Internet Protocol telecommunications services.

         While the FCC found that it needed a more complete record to establish
new rules, it tentatively concluded that providers of phone-to-phone Internet
telephony services should be treated like other providers of telephone service.
This means that they should be required to make payments into Federal universal
service subsidy programs. To date, the FCC has taken no further action, and has
not imposed this obligation on Internet telephony providers. It may do so at
some time in the future, however, and such a decision could have a material
adverse effect on our business, increasing our costs, and the price at which we
can offer our Internet telephony services.

         Regulation of Leased Lines and Carriers. When we lease long distance
telephone capacity from third-party carrier, we rely on them to comply with
local laws and regulations. We have no control over the manner in which these
companies operate in these countries. Foreign regulatory, judicial, legislative
or political entities may raise issues regarding the compliance of these
companies with local laws or regulations, or limit their ability to carry our
calls.

         State Laws. Several states have also proposed legislation that would
limit the uses of personal user information gathered online or require online
services to establish privacy policies. Changes to existing laws or the passage
of new laws intended to address these issues could reduce demand for our
services or increase the cost of doing business. In addition, because our
services are accessible worldwide, and we facilitate the sale of goods to users
worldwide, other jurisdictions may claim that we are required to comply with
their laws. We are qualified to do business in Nevada, Florida, Colorado,
California and Texas only, the failure by us to qualify as a foreign corporation
in a jurisdiction where we are required to do so could subject us to taxes and
penalties for the failure to qualify and could result in our inability to
enforce contracts in such jurisdictions. Any such new legislation or regulation,
or the application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a material adverse effect on our
business, financial condition and operating results.

         Sales Taxes. We do not currently collect sales or other similar taxes
for virtual calling cards or other services sold through our website, other than
for virtual calling sold to Texas residents. However, one or more states may
seek to impose sales tax or similar collection obligations on out-of-state
companies, such as ours, which engage in Internet commerce. A number of
proposals have been made at the state and local level that would impose
additional taxes on the sale of goods and services through the Internet. Such
proposals, if adopted, could substantially impair the growth of online commerce,
and could adversely affect our opportunity to derive financial benefit from such
activities. Moreover, a successful assertion by one or more states or any
foreign country that we should collect sales or other taxes on the sale of
virtual calling cards or services on our system could have a material adverse
effect on our operations.

         Legislation imposing a moratorium on the ability of states to impose
new taxes on Internet-based transactions was passed by the United States
Congress in 1998. The tax moratorium will be in effort only until October 2001
but moratorium expires at the end of its three-year term, there can be no
assurance that the moratorium could allow various states to impose new taxes on
Internet-based commerce. The imposition of such taxes could have a material
adverse effect on our business, financial condition and operating results. The
same legislation that imposed the moratorium also established an Advisory
Commission to consider methods by which states could impose sales taxes on
Internet transactions.

                                       11
<PAGE>
Competition

         With respect to prepaid calling cards, we compete with many of the
largest telecommunications providers, including AT&T, MCI WorldCom, Cable &
Wireless and Sprint. These companies are substantially larger and have greater
financial, technical, engineering, personnel and marketing resources, longer
operating histories, greater name recognition and larger customer bases than we
do. We also compete with smaller, emerging carriers in the prepaid calling card
market, including Ursus Telecom Corporation, RSL Communications, IDT Corp. and
ValuComm Communications Corp. We may also compete with large operators in other
countries. These companies may have larger, more established customer bases and
other competitive advantages. Deregulation in other countries could also result
in significant rate reductions. We believe that additional competitors will be
attracted to the prepaid card market. These competitors include Internet-based
service providers and other telecommunications companies. Competition from
existing or new competitors could substantially reduce our revenues from the
sale of these cards. A general decrease in telecommunication rates charged by
international long distance carriers could also have a negative effect on our
operations.

         An increasing number of large, well-capitalized companies are entering
the market for Internet telephony products and services. As a result, we may not
be able to compete effectively with our competitors in this market, or to
increase our customer base. Various major long distance providers, including
AT&T, Bell Atlantic Corporation and Deutsche Telekom AG, as well as other major
companies, including Motorola, Inc., Intel Corporation and AOL-Time Warner,
Inc., have all entered or plan to enter the Internet telephony market, in some
cases by investing in companies engaged in the development of Internet telephony
products. Our competitors also include a number of companies that have
introduced services that make Internet telephony solutions available to
businesses and consumers. Net2Phone, Delta Three, ITXC Corp., iBasis, Inc., and
MCI WorldCom provide a range of Internet telephony services to consumers and
businesses that are similar to the ones we offer. Several other companies,
including AT&T, Sprint and Qwest Communications, have announced their intention
to offer these services on a wider bases in both the United States and
internationally.

         In addition, we compete in the market for Internet telephone services
with companies that produce software and other computer equipment that may be
installed on a user's computer to permit voice communications over the Internet.
Current Internet telephony products include VocalTec Communications, Ltd.'s
Internet Phone, QuarterDeck Corporation's WebPhone and Microsoft's NetMeeting.
Also, a number of large companies, including Cisco Systems, Inc., Lucent
Technologies, Inc., Northern Telecom Limited, Neura Communications, Clarent
Communications and Dialogic Corp. offer or plan to offer server-based Internet
telephony products. These products are expected to allow communications over the
Internet between parties using a multimedia PC and a telephone and between two
parties using telephones.

         We believe that the principal competitive factors affecting our market
in no particular order are;

o        price and rates;
o        quality of transmission;
o        product accessibility and ease of use;
o        customer service;
o        brand recognition;
o        website convenience and accessibility;
o        targeted marketing directly to probable users of the services;
o        quality of search tools; and
o        system reliability.

                                       12
<PAGE>
         Increased competition may result in reduced operation margins, loss of
market share and diminished value in our brand. We cannot assure you that we
will be able to compete successfully against current and future competitors. As
a strategic response to changes in the competitive environment, we may, from
time to time, make certain prices, service or marketing decisions that could
have a material adverse effect on our business, financial condition and
operating results.

         New technologies and the expansion of existing technologies may
increase competitive pressures by enabling our competitors to offer lower-cost
services. Certain web based applications that direct Internet traffic to other
websites may channel users to services that compete with us. In addition,
companies that control access to transactions through network access or web
browsers could promote our competitors or charge us substantial fees for
inclusion. The occurrence of any of these events could have a material adverse
effect on our business, financial condition and operating results.

Our New Product Lines

         Whoofnet.com

         iDial Networks wholly owned subsidiary, Whoofnet.com, holds offices in
Florida, London and Sweden. Whoofnet.Com, Inc. is a network of interactive
services, web brands, e-commerce services and marketing services. Similar to
web-sites such as Yahoo, Whoofnet.Com provides a central site where a customer
can access third party content by using Whoofnet.Com's Web search and directory
services, community and personalization features, personal Web publishing, and
online shopping. Whoofnet.Com seeks to draw a large number of viewers to its web
sites by providing a one-stop destination for information, communication and
shopping services on the Web. The company will generate revenue through a
variety of sources including, but not limited to, selling advertising and
sponsorships, electronic commerce and by licensing its products and technology.
Whoofnet.Com is also an Application Service Provider, which is a company that
develops software application that are delivered to customers over the Internet,
and has several Internet brands including Whoofnet.Com portal, WhoofBiz,
WhoofTelCo and WhoofMail. Through its strategic alliances, Whoofnet will develop
and offer easy to deploy, end-to-end e-commerce solutions for companies
operating in the Internet market.

         In addition to Whoofnet.com's internet site, it also provides marketing
services to test and market products to customers, such as the iDial Gold
Advantage Card. Our strategy is to use Whoofnet.com to market goods and services
for itself and others with emphasis on the European market. This strategy will
produce income from actual sales made by Whoofnet or those with whom we are
allied.

         iDial Gold Advantage Card

         The iDial Gold Advantage Card is an ATM/Debit Card that offers an
extensive Consumer Benefits Package. It is an inexpensive, fast and secure way
to transfer funds domestically and internationally. It is a reloadable debit
card that can be used at ATM's all around the world. It can be used to buy gas,
groceries or other items from merchants with debit card capability and has an
extensive Consumer Benefits Package offering savings on pharmacy, vision,
dental, hearing, travel, gifts, vitamins, and more. iDial Gold Advantage Card
comes with a primary card and a family card enabling them to save up to 75% on
National and International money transfers. The customer receives two (2)
identical cards when they join the program. The second card can be used to
transfer money domestically or internationally, just by forwarding the second
card to a family member or friend anywhere in the world. This enables the second
cardholder to withdraw funds from any ATM machine worldwide.

         Fax Messaging

         2Sendit.com Inc. is an established fax-messaging provider for the
information dissemination market. Fax messaging is simply the process of
delivering mass mailings via facsimile. Due to today's desire for immediate
delivery of information, fax messaging has become a popular means to deliver
information quickly.

         Fax Messaging has emerged as a low cost source of communication for
companies to get a message out, where messages range from newsletters to
restaurant menus. Fax messaging has proven to a less expensive than traditional
mail. Traditional mail remains as a popular choice for getting a message out,

                                       13
<PAGE>
however, with costs of postage, envelope and printed material all necessary
pieces, today's budget constraints find that these expenses limit the number of
recipients. Fax messaging provides a low cost, high volume method of getting the
same material out of the recipients. An underlying benefit is that the results
are almost immediate. While a traditional mail piece may take up to a week to
deliver, fax messaging usually takes less than an hour to reach the same
audience. Fax messaging also has a cost related only to completed messages. With
traditional mail, the cost is paid up front and there are no refunds for lost
mail, unused postage, or damaged material.

         Products

         Fax messaging is simply the ability to send a message via facsimile to
an intended recipient. Customer normally provide a recipient list, however, we
do provide lists for some customers. We do offer additional services such as
database management, fax removal, and limited email messaging.

         Growth Strategy

         While several fax messaging companies have emerged in the recent years,
many others have been unable to sustain volume and have subsequently merged with
competitors. We have chosen to maintain a slow growth cycle by adding customers
through new advertising and marketing. We offer highly competitive rates along
with the capacity to complete jobs in a timely manner.

     We use the following websites as a primary method of advertising:

a)       www.2sendit.com
b)       www.2faxit.net
c)       www.2faxitnow.com
d)       www.mailing-solutions.com

     2sendit.com is also researching the possibility of merging with competitors
as a method of growing the business.

     Technology

     2sendit.com uses licensed software along with both Dialogic and Brooktrout
fax cards. These cards are connected to third party high capacity digital lines.
This technology allows the mass transmission of faxes through each fax server.

     Governing Laws

         While the laws of each state are changing daily, most of the governing
laws are federal. 2sendit.com works with each municipality to make sure that it
is in full compliance with these changing laws. 2sendit.com makes sure that each
transmission has the required pieces of information on it before sending. The
federal laws require that each fax have the sender information as well a method
for removal.

                                       14
<PAGE>
Employees

As of June 30, 2001, we had 20 full-time and 6 part-time employees. None of our
employees are represented by a labor union. We have not experienced any work
stoppages and consider our employees relations to be good.

         Our future performance depends in significant part upon the continued
service of our key technical and senior management personnel, none of whom are
bound by an employee agreement requiring service for any defined period of time.
The loss of services of one or more of our key employees could have a material
adverse effect on our business, financial condition and operating results. Our
future success also depends in part upon our continued ability to attract, hire,
train and retain highly qualified technical and managerial personnel.
Competition for such personnel is intense and there can be no assurance that we
can retain our key personnel in the future.

                        ITEM 2. DESCRIPTION OF PROPERTY.

         We maintain a facility of approximately 1,300 square feet at 5825
Sunset Blvd., Suite 202, Hollywood, CA 90028. The rent for this facility is
approximately $1,625 per month and is leased on a month-by-month basis.

         We maintain our administrative offices at 10800 E. Bethany Drive,
Aurora, CO 80014 for use by our wholly owned subsidiary 2sendit.com. The
facility is approximately 1,038 square feet. The rent is approximately $1,340
per month.

         We maintain a facility in Colombo, Sri Lanka of approximately 2,500
square feet. The rent is approximately $1,500 per month and is used as a
customer service and R&D staff facility.

         We believe that our space is adequate for our current needs. As we
expand, we expect that suitable additional space will be available on
commercially reasonable terms, although no assurance can be made in this regard.
We also believe our property is adequately covered by insurance.

                            ITEM 3. LEGAL PROCEEDINGS

     We occasionally become involve in litigation arising out of the normal
course of business. There are no legal proceedings against us at this time.

                                       15
<PAGE>

          ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.

           ITEM 5.  MARKET FOR COMMON EQUITY AND STOCKHOLDER MATTERS.


 (A) MARKET INFORMATION. The Company has one class of securities, Common Voting
Equity Shares ( Common Stock ). As of the date of this Annual Report, the
securities of the Company may be traded over the counter, but the market is
young and sporadic. Quotations for, and transactions in the Securities so traded
are capable of rapid fluctuations, resulting from the influence of supply and
demand on relatively thin volume. There may be buyers at a time when there are
no sellers, and sellers when there are no buyers, resulting in significant
variations of bid and ask quotations by market-making dealers, attempting to
adjust changes in demand and supply. A young market is also particularly
vulnerable to short selling , sell orders by persons owning no shares of stock,
but intending to drive down the market price so as to purchase the shares to be
delivered at a price below the price at which the shares were sold short .

     Of the Company's issued and outstanding 87,144,454 shares of Common Stock
as of December 31, 1999 2000, all shares, subject to an exception for the
28,186,994 shares owned by affiliates of the Company, might be presently sold in
compliance with Rule 144, in brokerage transactions, at such time as there may
be trading in the common stock of this Company. Rule 144 provides among other
things and subject to certain limitations that a person holding Restricted
Securities for a period of two years, who is not an affiliate of the Company,
may sell those securities, free of restriction in brokerage transactions.
Further, shares issued pursuant to 1933 Act Registration, again subject to
exceptions for affiliate ownership, are not Restricted Securities and are freely
tradable in brokerage transaction. Affiliates are permitted by Rule 144 to sell
affiliate-owned securities (Restricted Securities held for more than on year and
Registered Affiliate Control Securities however long held) in limited amounts.
Possible or actual sales of the Company s Common Stock under Rule 144 or
otherwise might have a depressive effect upon the price of the Company s Common
Stock, at such time, if and when the common stock of this Company might be
tradable in brokerage transactions.

    Our Common Stock is quoted Over-The-Counter on the Bulletin Board ( OTCBB) .
 The Company s trading symbol is IDNW.

     Period     High  bid     Low  bid
     ------     ---------     --------
     1st  2000     3.50          0.76
     2nd  2000     2.03          0.53
     3rd  2000     0.94          0.34
     4th  2000     0.44          0.05

The foregoing price information is based upon inter-dealer prices without retail
mark-up, markdown or commissions and may not reflect actual transactions and is
adjusted for 2-to-1 split effective in November 2000.

 (B)  HOLDERS.  Management calculates that the approximate number of holders the
Company  s  Common  Stock,  as  of  December  31,  2000  was  2,723.

 (C)  DIVIDENDS.  No  cash dividends have been paid by the Company on its Common
Stock  and  no  such  payment  is  anticipated  in  the  foreseeable  future.

 (D)  SALES  OF  UNREGISTERED  COMMON  STOCK  2000.  None.

                                       16
<PAGE>
       ITEM 6.  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

     We were incorporated in May 1997 as a Nevada Limited Liability Corporation
as WoodComm LLC. In April 1999 WoodComm LLC was reorganized from an LLC to a
Nevada Corporation WoodComm International, Inc. (WCI).

     In December 1999, Desert Springs Acquisition Corporation (Desert Springs)
acquired all of the issued and outstanding common shares of WCI in exchange for
30,930,000 shares of common stock of Desert Springs. For financial reporting
purposes, the business combination was accounted for as an additional
capitalization of the Company (a reverse acquisition with WCI as the acquirer).
WCI is considered the surviving entity. The historical financial statements
prior to the merger are those of WCI. Desert Springs only assets and liabilities
consisted of a liability for $80,346. The liabilities were not assumed in the
merger.

     In January 2000, Desert Springs Acquisition Corp moved its state of
incorporation to Nevada by merger of the Colorado Corporation with and into
iDial Networks, Inc. (a Nevada corporation).

     We developed an international Voice-Over-Internet-Protocol (VoIP)
telecommunications service business. In August 2000 we began to expand and
change over business model. In August 2000, the company purchased an Internet
portal and marketing company Whoofnet.com. In November 2000 the company
purchased 2sentit.com, an enhanced service provider providing enhanced
communications services. The Company owns 100% interest in both acquisitions and
has consolidated the financial position and results of operations in the
accompanying financial statements.

     GENERATION OF REVENUES: We derive our revenues from two different sources,
through the direct sales of our products over the Internet and through our own
direct sales force and secondly through the wholesale of our products and
services through independent retail and wholesale channels of distribution.
Revenues from the sale of our phone card products, whether sold directly by us
or through our independent retail and wholesale channel, are deferred and
recognized as calling services are used. All other products revenues are
recognized as the product upon shipment and invoicing of the product to the
customer.

All Internet sales of our products are made over the Internet primarily through
credit card purchases. We use credit card processing companies to verify credit
cards.

     Accounts receivable consists of amounts owed by our retail and wholesale
channel relating to product sales. At December 31, 2000 and 1999, three
companies accounted for 46% and less than 1% of total accounts receivable. At
December 31, 2000, two companies accounted for 36% of total accounts receivable,
while one receivable accounted for 72% of accounts receivable on December 31,
1999. Customers purchase our Internet products primarily using major credit
cards, which are reimbursed by credit card processing companies. Accordingly, we
do not routinely perform on-going credit evaluations of our Internet customers,
but do perform evaluations of our credit card processors. Our receivables are
generally unsecured. During 1999, one customer accounted for more than 50% of
total sales. During 2000, no one customer accounted for more than 10% of total
sales.

                                       17
<PAGE>
Expenses

     Selling,  general and  administrative  expenses  consist of advertising and
promotional  expenditures,  payroll  and  related  expenses  for  executive  and
administrative personnel,  facilities expenses,  professional services expenses,
travel and other general corporate expenses. Selling, general and administrative
expenses increased to $8,686,191 for 2000 from $543,896 for 1999. These expenses
for 2000 included a non-cash  charge of $6,293,205 for the value of stock issued
at fair market value to officers and  directors for  compensation  ($1,754,884 )
and to various  consultants  for services  ($4,538,321 ) (see Note 8 to Notes To
Consolidated  Financial  Statements).  During 2000, our capital expenditures and
payments on capital leases totaled $200,074.  These expenditures and payments on
expenditures  were  $26,561  during 1999.  As we continue to grow,  we expect to
expand our infrastructure by increasing our capital  expenditures and leases. We
expect these  expenditures  will represent a smaller  percentage of sales as our
sales volume grows.

     Since inception, we have incurred significant losses and, as of December
31, 2000, had an accumulated deficit of 8,422,736.$9,970,307. We expect
operating losses and negative cash flow to continue through at least the second
quarter of 2001. We expect to incur additional costs and expenses related to:

     -     marketing  and  advertising  related  to  product  sales  and  brand
           development;
     -     purchases of equipment for our operations and network infrastructure;
     -     the expansion of our telecommunications network into other countries;
     -     the  continued  development of our website transaction processing and
           network  infrastructure;
     -     development  and  improvement  of  additional  products and services;
     -     the  hiring  of  additional  personnel;  and
     -     the  payment  of  commissions  to  various  Internet  companies  for
           marketing  products  to  their  customers.

     We have a limited operating history on which to base an evaluation of our
business and prospects. You must also consider our prospects in light of the
risks, expense and difficulties frequently encountered by companies in their
early stage of development, particularly companies in new and rapidly evolving
markets such as e-commerce. Such risks for us include, but are not limited to,
an evolving and unpredictable business model and management of growth. To
address these risks, we must, among other things, maintain and expand our
customer case, implement and successfully execute our business and marketing
strategy, continue to develop and upgrade our technology and systems that we use
to process customers' orders and payments, improve our Web site, provide
superior customer service, respond to competitive developments and attract,
retain and motivate qualified personnel. We cannot assure stockholders that we
will be successful in addressing such risks, and our failure to do so could have
a material adverse effect on our business, prospects, financial condition and
results of operations.

                                       18
<PAGE>
     RESULTS  OF  OPERATIONS.  The  following  table  sets  forth  statement  of
operations  data  as  a  percentage  of  revenues  for  the  periods  indicated:
<TABLE>
<CAPTION>

                                            Year ended
                                            December  31,
                                          -------------
                                         2000      1999
                                        -----     -----
<S>                                     <C>       <C>
Total revenue ......................    100.0%    100.0%
Cost of sales ......................    115.2      95.3
                                        -----     -----
Gross margin .......................    (15.2)      4.7
Selling, general and administrative     483.4      34.5
                                        -----     -----
Operating loss .....................   (498.6)    (29.8)
Interest income (expense)  .........     (8.7)     (5.8)
                                        -----     -----
Net loss before extraordinary loss .   (507.3)    (35.6)
Other Comprehensive Loss ...........     (2.6)      --
                                        -----     -----
Comprehensive Loss .................   (509.9)%   (35.6)%
                                        =====     =====
</TABLE>


Year Ended December 31, 2000 Compared to Year Ended December 31, 1999.

     REVENUE. Revenue increased to $1,796,897 for the year ended December 31,
2000 from $1,575,826 million for 1999 as a result of the growth of our network
and retail customer base. This represents a 38% 14% increase over 1999 as a
result of this growth.

COST OF SALES. Cost of Sales. Cost of sales consists primarily of the costs of
termination of long distance traffic over our networks and the wholesale cost of
products purchased for resale by us. Cost of sales increased to $2,069,574
(including $461,743 of depreciation) for the year ended December 31, 2000 from
$1,502,036 (including $113,333 of depreciation) for 1999. This $567,538 increase
was primarily attributable to our increased sales volume in both retail and
wholesale. Gross profit was (15%) in 2000 compared to a gross profit of 5% in
1999. This 20% decrease was primarily attributable to an increase of
depreciation due to the expansion of our VoIP network. We expect the dollar
amount of cost of sales to increase in future periods to the extent that our
sales volume increases.

Selling, General and Administrative. Selling, general and administrative
expenses consist of advertising and promotional expenditures, payroll and
related expenses for executive and administrative personnel, facilities
expenses, professional services expenses, travel and other general corporate
expenses. Selling, general and administrative expenses increased to $ 8,686,191
for 2000 from $543,896 for 1999. These expenses for 2000 included a non-cash
charge of $ 6,293,205 for the value of stock issued at fair market value to
officers and directors for compensation ($ 1,754,884) and to various consultants
for services ($4,538,321) (see Note 8 to Notes To Consolidated Financial
Statements). Non-cash depreciation and amortization expense increased to
$1,212,867 from $113,333in 1999 as a result of the Whoofnet.com and 2Sendit.com
acquisitions. Excluding these non-cash items, selling, general and
administrative expenses increased to $1,180,119 in 2000, from $543,896 in 1999.
This increase is attributable to including Whoofnet.com and 2Sendit.com's
selling, general and administrative expenses from the date of acquisition.
Selling, general and administrative expenses are expected to decrease as a
percentage of revenue in future periods because our existing company
infrastructure will allow increases in revenues without having to incrementally
add overhead. However, we expect these expenses to increase in absolute dollars
as we continue to pursue advertising and marketing efforts, expand our network
termination locations worldwide, expand our staff and incur additional costs
related to the growth of our business and being a public company.

                                       19
<PAGE>
     Other Expenses. Other expenses consist of a $156,630 of interest expense in
2000 from $90,654 in 1999.  The increase is primarily due to additional  capital
lease obligations.

    Net Loss. We incurred a net loss of $9,115,498 for the year ended December
31, 2000 as compared to $560,760 for 1999. The net loss for 2000 was affected by
non-cash charges of $ 6,293,205, non-cash depreciation and amortization charges
of $1,212,867 and interest expense of $156,630, as described above.

     Income Taxes. As of December 31, 2000, we had approximately $9,970,000 of
net operating loss carry forwards for federal income tax purposes, which expire
beginning in 2011. We have provided a full valuation allowance on the deferred
tax asset, consisting primarily of net operating loss carry forwards, because of
uncertainty regarding its future reliability. Limitations on the utilization of
these carry forwards may result if we experience a change of control, as defined
in the Internal Revenue Code of 1986, as amended, as a result of changes in the
ownership or our common stock.

     RECENT  DEVELOPMENTS.  As part of an ongoing Company restructuring program,
the  Company  has merged its Dallas operations with its operation in Denver, Los
Angeles  and  Ft. Lauderdale.  The Company expects to save $250,000 in 2001 from
this  merger.  The  Dallas  facility  was  closed  on  February  28,  2001.

The Company has a dispute with one of its telecommunication carriers. During the
third quarter, the Company entered into an initial promissory note of
$436,920.00 and through December 31, 2000 had paid $109,230 against the note.
The carrier was notified of a discrepancy in billed rates and that they were
overcharging the company. In an effort to fixed this problem , payments
continued through December 2000, but with no rate remedy in the near future, the
company discontinued payments in January 2001 and has since received a Letter of
Default for the remaining balance due. The Company is seeking legal advice on
filing for a legal remedy against the carrier to honor contracted rates. The
Company believes the rates were between 20% and 30% too high. The Company has
taken a conservative approach and has recorded the full liability in the books.

Liquidity and Financial Position

As of December 31, 2000, we had approximately $67,410 of cash and cash
equivalents. As of that date, our principal commitments consisted of obligations
under leases and contracts for long distance transmissions.

Net cash used in operating activities was $723,441 for the year ended December
31, 2000 and $31,246 in 1999. Net cash used in operating activities for 2000 and
1999 primarily consisted of net operating losses as well as increases in other
assets, offset by depreciation and amortization, non-cash charges for stock
issued for services and compensation, increases in accounts payable, accrued
expenses and accrued interest.

Net cash from (used in) investing activities consists of additions to property
and equipment, including computer equipment, cash from acquisitions, fax
equipment and internet gateways for voice over the Internet transmission. Net
cash from (used in) investing activities was $103,002 for the year ended
December 31, 2000 and $(26,651) in 1999.

Net cash provided by (used in) financing activities was $676,368 for the year
ended December 31, 2000 and $(49,115) for 1999. Net cash used in financing
activities for 2000 was impacted by an increase in stockholder loans and
proceeds from the issuance of common stock.

iDial currently is in the process of raising the necessary capital for
continuing its growth through the following activities:

                                       20
<PAGE>
     1. Bank Loan - we expect to close on a facility that provides the necessary
capital for continuing operations. Negotiations are currently taking place to
secure the loan.

     2. Acquisition - We will pursue acquisition opportunities to rapidly expand
its revenue and profits. This will also strengthen our cash flow and operating
position.

     3.  Financing - We continue to seek  additional  debt or equity  sales from
time to time.

In July 2001, we issued an 8% convertible note in the principal amount of
$750,000 to an unrelated investor, Laurus Master Fund, Ltd. Net proceeds of
$610,750 (after legal fees of $61,500, a fund managers fee of $75,000 and other
expenses of $3250) is being used to fund working capital and expansion.

The company commenced a review of its operations in January 2001 and instituted
a program to consolidate the operations and reduce or eliminate redundant and
certain other costs. Included in such costs are the expenses related to office
facilities (approximately $14,000 per month), internet charges and telephone
line expenses (approximately $4,000 per month), and the elimination of outsource
mail server costs (approximately $25,000 per month). In addition, the company
reduced payroll and related fringe benefits costs (approximately $12,000 per
month) and renegotiated its carrier agreement in June 2001 to reduce the related
costs 14%.

 The company believes that the current cash on hand is sufficient to allow the
company to sustain its current operations. However, without additional funding
of $1,000,000, the company believes that it will not generate net income during
fiscal year 2002. As described above, the company is discussing the possibility
of additional financing. The company also anticipates quarterly revenue of
$1,300,000 or more on a going forward basis, which will allow the company's cash
flow to improve.

We do not have existing capital resources or credit lines available that are
sufficient to fund our operations and capital requirements as presently planned
over the next twelve months. We are actively pursuing additional funds through
the issuance of debt and/or equity instruments. Currently, we are discussing
with Laurus Master Fund, Ltd. the possibilities of additional financing.
However, no formal agreements have been reached and no assurances can be given
that such financing will be forthcoming.

Recently Issued Accounting Pronouncements

The Company does not believe that any recently issued but not yet effective
accounting standards, have a material effect on the Company's consolidated
financial position, results of operations or cash flows except for the effect of
adoption of SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No.
142") which effect has not yet been determined. SFAS No. 142 addresses the
financial accounting and reporting for acquired goodwill and other intangible
assets. It addresses how intangible assets that are acquired individually or
with a group of other assets (but not those acquired in a business combination)
should be accounted for in financial statements upon their acquisition. SFAS 142
also addresses how goodwill and other intangible assets should be accounted for
after they have been initially recognized in the financial statements. The
Company will be adopting the provisions of this new standard beginning with the
first quarter of 2002.

                                       21
<PAGE>
During June 2001 SFAS No. 141, "Business Combinations" ("SFAS No. 141") was
released. This standard addresses financial accounting and reporting for
business combinations. All b,usiness combinations within the scope of SFAS 141
are to be accounted for using one method - the purchase method. The provisions
of SFAS 141 apply to all business combinations initiated after June 30, 2001.
Use of the pooling - of - interests method for those business combinations is
prohibited. It also applies to all business combinations accounted for using the
purchase method for which the date of acquisition is July 1, 2001 or later.


   RISK FACTORS THAT MAY EFFECT RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     You should carefully consider the risks and uncertainties described below
and the other information in this Form 10-KSB. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may
also impair our business, financial condition and operating results.

     We have a limited operating history with which to judge our performance.

     We were incorporated in May 1997. We began selling prepaid calling cards in
June 1998. We began routing calls over our enhanced services platform in August
1998. Accordingly, we have a limited operating history. We may also encounter
risks and difficulties frequently encountered by early stage companies in new
and rapidly evolving markets. We cannot assure stockholders that our business
strategy will be successful or that we will successfully address these risks.
Our failure to do so could materially adversely affect our business, financial
condition and operating results.

     We have a history of losses and we anticipate future losses and negative
cash flow.

     Since inception, we have incurred operating losses, and as of December 31,
2000, we had an accumulated deficit of $9,970,307. We incurred net losses from
operations of $9,115,498 and $560,760 for the fiscal years ended December 31,
2000 and 1999, respectively.

     We expect operating losses and negative cash flow to continue through at
least the second quarter of 2001. However, there can be no assurance that we
will be profitable beginning in the third quarter of 2001, because we expect to
incur additional costs and expenses related to:

     marketing and advertising related to traffic generation and brand
     development; purchases of equipment for our operations and network
     infrastructure; the expansion of our telecommunications network into other
     countries; the continued development of our Web site transaction processing
     and network infrastructure; development and improvement of additional
     products and services; the hiring of additional personnel; and evaluating
     and completing potential acquisitions of other companies.

     Our future profitability depends on our ability to generate and sustain
substantially higher net sales while maintaining reasonable expense levels. If
we do achieve profitability, we cannot assure stockholders that we will be able
to sustain it or improve upon it on a quarterly or annual basis for future
periods.

     Our quarterly operating results are subject to significant fluctuations and
our future operating results are unpredictable.

     Our operating results are unpredictable and have fluctuated significantly
on a quarterly basis. We expect to continue to experience significant
fluctuations in our quarterly results of operations due to a variety of factors,
many of which are outside of our control. As a result, period-to-period
comparisons of our results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance.

                                       22
<PAGE>
     Because of our limited operating history, we cannot accurately forecast our
net sales. We rely upon limited historical financial data to predict our future
operating results. Sales and operating results are difficult to forecast because
they generally depend on the volume of traffic on our network and the volume and
timing of sales of our virtual calling cards. Because of these factors, we may
be unable to adjust our spending in a timely manner to adjust for any unexpected
revenue shortfall.

     Our telecom operations will be negatively affected if our enhanced services
platform fails to operate properly.

     All our calls are routed through our enhanced services platform. Our
success is dependent on our platform working properly. If our platform fails for
any reason, we could not route calls until the failure is corrected. From time
to time, we have experienced short-term failures or malfunctions in our
platform. We cannot assure stockholders that future failures will not occur.

     The telecommunications and Internet telephony markets are highly
competitive and our failure to compete effectively could adversely affect us.

     With respect to prepaid calling cards, we compete with the largest
telecommunications providers in the United States, as well as smaller, emerging
carriers. We may also compete with large operators in other countries. An
increasing number of large, well-capitalized companies are entering the market
for Internet telephony products and services. These competitors include a number
of companies that have introduced services that make Internet telephony
solutions available to businesses and consumers, and that permit voice
communications over the Internet. Many of our competitors are substantially
larger and have greater financial, technical, engineering, personnel and
marketing resources, longer operating histories, greater name recognition and
larger customer bases than we do. Competition from existing or new competitors
could reduce our revenues from the sale of our virtual prepaid calling cards and
other services. A general decrease in telecommunication rates charged by
international long distance carriers could also have a negative effect on our
operations. Our ability to compete also depends on our ability to anticipate and
adapt to rapid technological and other changes occurring in the
telecommunications industry.

     We may not be able to compete with providers that can bundle long distance
services with other offerings.

     Our competitors may be able to bundle services and products that we do not
offer together with long distance or Internet telephony services. These services
could include wireless communications, voice and data services, Internet access
and cable television. This form of bundling would put us at a competitive
disadvantage if these providers can combine a variety of service offerings at a
single attractive price. In addition, some of the telecommunications and other
companies that compete with us may be able to provide customers with lower
communications costs or other incentives with their services reducing the
overall cost of their communications packages, and significantly increasing
pricing pressures on our services. This form of competition could significantly
reduce our revenues.

     We may be vulnerable to technical malfunctions, which could adversely
affect our operations.

     We depend upon our software systems, communications hardware and enhanced
services platform to conduct our virtual calling card sales and telephone
routing, manage our network, track virtual calling card balances and perform
other vital functions. Our systems, communications hardware and platform are
vulnerable to damage or interruption from:

                                       23
<PAGE>
     -     natural  disasters;
     -     power  loss;
     -     telecommunication  failures;
     -     loss  of  Internet  access;
     -     physical  and  electronic  break-ins;
     -     hardware  defects;
     -     computer  viruses;  and
     -     intentional  acts  of  vandalism  and  similar  events.

     If we experience substantial technical difficulties with our hardware or
software, we may not succeed in routing traffic effectively, or in tracking
virtual calling card balances accurately, which could adversely affect our
operations. We have experienced periodic system interruptions, which we believe
will continue to occur from time-to-time. Since our operations depend on our
ability to successfully expand our network and to integrate new technologies and
equipment into our network, there is an increased risk of system failure as well
as a natural strain on the system.

     Our systems may not accommodate significant growth in the number of users,
which could have a negative effect on our operations.

     Our success depends on our ability to handle a large number of simultaneous
calls. We expect that the volume of simultaneous calls will increase
significantly as we expand our operations. If this occurs, additional stress

will be placed upon the network hardware and software that manages our traffic.
We cannot assure stockholders of our ability to efficiently manage a large
number of simultaneous calls. If we are not able to maintain an appropriate
level of operating performance, or if our service is disrupted, then we may
develop a negative reputation and our business, results of operations and
financial condition would be materially adversely affected.

     If the Internet telephony and prepaid calling card markets do not gain
market acceptance by potential customers our business will be adversely
affected.

     We cannot be certain that Internet telephone service will gain market
acceptance or prove to be a viable alternative to traditional telephone service.
If the Internet telephony market fails to develop or develops more slowly than
we expect, then our future revenues would be adversely affected.

     The market for prepaid calling cards is an emerging business with a large
number of market entrants. Therefore, it is difficult to accurately determine
what the demand will be for our products and services in this area. Substantial
markets may not continue to develop for prepaid calling cards, and we may not be
able to sustain or increase our sales of these products and services.

     If the e-commerce market does not continue to develop and gain market
acceptance our revenues may be negatively affected.

     We anticipate that e-commerce will continue to account for substantially
all of our future revenues. Our business will suffer if e-commerce does not grow
or grows more slowly than expected. A number of factors could prevent acceptance
of e-commerce, including:

     -     e-commerce  is at an early stage and buyers may be unwilling to shift
           their  purchasing  from  traditional  vendors  to  online  vendors;
     -     increased  government  regulation or taxation may limit the growth of
           e-commerce;  and
     -     adverse  publicity  and  consumer  concern  about  the  security  of
           e-commerce transactions may discourage its  acceptance  and  growth.

     These factors could impair our ability to generate revenues from our online
sales of virtual calling cards, online transmission of telephone calls and other
e-commerce activities.

                                       24
<PAGE>
     If the Internet and Internet infrastructure do not continue to develop as
anticipated our operations will be negatively affected.

     For the Internet to be commercially viable in the long-term, the size of
the network infrastructure, enabling technologies, necessary performance
improvements and user security will need to be continually addressed. To the
extent that the Internet continues to experience an increased number of users,
frequency of use or increased bandwidth requirements, we cannot assure
stockholders that the performance or reliability of the Internet will not be
adversely affected. Furthermore, the Internet has experienced a variety of
outages and other delays as a result of damage to portions of its
infrastructure, and could face such outages and delays in the future. These
outages and delays could adversely affect the level of Internet usage and affect
the level of traffic, the processing of orders and the transmission of calls on
our Web site.

     We cannot assure stockholders that the infrastructure or complementary
products or services necessary to make the Internet a viable commercial
marketplace for the long term will be developed. Even if these products and
services are developed, we cannot assure stockholders that the Internet will
become a viable commercial marketplace for our virtual calling cards and
services. If not, our business, financial condition and operating results will
be materially adversely affected. Also, we may be required to incur substantial
expenditures in order to adapt our products and services to changing Internet
technologies, which could have a material adverse effect on our business,
financial condition and operating results.

     The failure to manage our growth in operations and hire additional
qualified employees could have a material adverse effect on us.

     The expected growth of our operations place a significant strain on our
current management resources. To manage this expected growth, we will need to
improve our:

     -     transaction  processing  methods;
     -     operations  and  financial  systems;
     -     procedures  and  controls;  and
     -     training  and  management  of  our  employees.

     Competition for personnel is intense, and we cannot assure stockholders
that we will be able to successfully attract, integrate or retain sufficiently
qualified personnel. Our failure to attract and retain the necessary personnel
or to effectively manage our employee and operations growth could have a
material adverse effect on our business, financial condition and operating
results.

     Our potential customers may have concerns about Internet commerce security,
which could inhibit our growth, and we may incur losses resulting from credit
card fraud.

     Consumer concerns over the security of transactions conducted on the
Internet or the privacy of users may inhibit the growth of the Internet and
online commerce. To securely transmit confidential information, such as customer
credit card numbers, we rely on encryption and authentication technology that we
license from third parties. We cannot predict whether events or developments
will compromise or breach the technology that protects our customer transaction
data. If our security measures do not prevent security breaches, this could have
a material adverse effect on our business, financial condition and operating
results.

     To date, we have suffered minimal losses as a result of orders placed with
fraudulent credit card data even though the associated financial institution
approved payment of the orders. Under current credit card practices, a merchant
is liable for fraudulent credit card transactions where the merchant does not
obtain a cardholder's signature. We do not obtain the signature of the
cardholder when we process orders. Although we have implemented mechanisms to
try to detect credit card fraud, we cannot assure you that our efforts will be
successful. Our inability to adequately detect credit card fraud could
materially adversely affect our business, financial condition and operating
results.

                                       25
<PAGE>
     To the extent that our activities involve the storage and transmission of
proprietary information, such as credit card numbers, security breaches could
expose us to a risk of loss or litigation and possible liability. We do not
presently carry insurance policies to reimburse us for losses caused by security
breaches. We cannot assure stockholders that our security measures will prevent
security breaches. Our failure to prevent security breaches could have a
material adverse effect on our business, financial condition and operating
results.

     The market price for our common stock may be volatile, which could cause
stockholders to lose substantial portions of their investment.

     The market prices of the securities of Internet-related and online commerce
companies have been especially volatile. The trading prices of many Internet
companies' stocks fell dramatically during 2000 any may still reflect valuations
substantially above historical levels. We cannot assure stockholders that these
trading prices will not continue to be volatile or that valuations will be
sustained. Broad market and industry factors may materially and adversely affect
the market price of our common stock, regardless of our operating performance.

     Our business may be adversely affected if we are not able to protect our
intellectual property and other proprietary rights from infringement.

     The Internet industry may become subject to increased government
regulation, which could have a negative effect on our operations.

     Various actions have been taken by the United States Congress and the
Federal courts that, in some cases impose some forms of regulation on the
Internet, and in other cases protect the Internet from regulation. Domestic and
international authorities regularly consider proposed legislation that could
result in new regulations on the Internet. It is impossible to say at this time
whether and to what extent the Internet may ultimately be regulated domestically
or internationally. Increased regulation of the Internet may decrease its
growth, which may negatively impact the cost of doing business via the Internet
or otherwise materially adversely affect our business, results of operations and
financial condition.

     In addition, because our services are accessible worldwide, and we
facilitate the sale of goods to users worldwide, other jurisdictions may claim
that we are required to comply with their laws. We are qualified to do business
in Nevada and Texas only, and failure by us to qualify as a foreign corporation
in a jurisdiction where we are required to do so could subject us to taxes and
penalties for the failure to qualify.

     Sales tax collection by states may adversely affect our growth.

     We do not currently collect sales or other similar taxes for calling cards
or services sold through our Web site, other than for calling cards sold to
Texas residents. However, one or more states may seek to impose sales tax or
similar collection obligations on out-of-state companies, such as ours, which
engage in Internet commerce. A successful assertion by one or more states or any
other country that we should collect sales or other taxes on the sale of cards
or services on our system could have a material adverse effect on our
operations.

     The loss of key personnel could adversely affect our business.

     We believe that our success will depend on the continued services of our
senior management team, especially Mark T. Wood and Carl K. Battie. We do not
have employment agreements with any of our key personnel. The loss of the
services of any of our senior management team or other key employees could
adversely affect our business, financial condition and operating results.

     We may not be able to raise needed additional capital in the future.

                                       26
<PAGE>
     We require substantial working capital to fund our business. Our working
capital requirements and cash flow provided by operating activities can vary
from quarter to quarter depending on revenues, operating expenses, capital
expenditures and other factors.

     We may also need to raise additional funds sooner than anticipated to:

     -     fund  more  rapid  expansion;
     -     fund  additional  acquisitions;  and
     -     respond  to  competitive  pressures.

     If additional funds are raised through the issuance of equity or
convertible debt securities the rights and ownership in our company by existing
stockholders may be reduced.

     We cannot assure stockholders that additional financing will be available
on terms favorable to us or at all. If adequate funds are not available, or are
not available on acceptable terms, we may not be able to fund planned expansion,
take advantage of available opportunities, develop or enhance services or
products or respond to competitive pressures. Such inabilities could have a
material adverse effect on our business, financial condition and operating
results.

FORWARD LOOKING STATEMENTS. Certain statements in this Form 10-KSB, including
statements of our and management's expectations, intentions, plans, objectives
and beliefs, including those contained in or implied by "Management's Discussion
and Analysis or Plan of Operation", are "forward-looking statements", within the
meaning of Section 21E of the Securities Exchange Act of 1934, that are subject
to certain events, risks and uncertainties that may be outside our control.
These forward-looking statements may be identified by the use of words such as
"expects," "anticipates," "intends," "plans" and similar expressions. They
include statements of our future plans and objectives for our future operations
and statements of future economic performance, information regarding our
expansion and possible results from expansion, our expected growth, our capital
budget and future capital requirements, the availability of funds and our
ability to meet future capital needs, the realization of our deferred tax
assets, and the assumptions described in this report underlying such
forward-looking statements. Actual results and developments could differ
materially from those expressed in or implied by such statements due to a number
of factors, including without limitation, those described in the context of such
forward-looking statements, our expansion and acquisition strategy, our ability
to achieve operating efficiencies, our dependence on network infrastructure,
capacity, telecommunications carriers and other suppliers, industry pricing an
technology trends, evolving industry standards, domestic and international
regulatory matters, general economic and business conditions, the strength and
financial resources of our competitors, our ability to find and retain skilled
personnel, the political and economic climate in which we conduct operations,
the risks discussed above under "Risk Factors That May Effect Results of
Operations and Financial Condition," and other risk factors described from time
to time in our other documents and reports filed with the Securities and
Exchange Commission (the "Commission"). We do not assume any responsibility to
publicly update any of our forward-looking statements regardless whether factors
change as a result of new information, future events or for any other reason. We
advise you to review any additional disclosures we make in our 10-QSB, 8-K and
10-KSB reports filed with the Commission.


                         ITEM 7.  FINANCIAL STATEMENTS.

     Reference is made to Auditors Report of December 31, 2000 filed herewith.
Those financial statements, attached thereto are incorporated herein by this
reference as though fully set forth herein.

                                       27
<PAGE>
              ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE.

     In February 2001, we terminated our relationship with Ehrhardt Keefe
Steiner & Hottman, P.C. as our principal accountant. See our Form 8-K dated
August 2, 2001. The decision to change accountants was approved by our Board of
Directors.

     Neither of the reports of Ehrhardt Keefe Steiner & Hottman, P.C. on our
financial statements for each of the past two fiscal years ended December 31,
1998 and 1999, contained an adverse opinion or disclaimer of opinion. Their
reports were modified for going concern uncertainty. There were no modifications
to these reports as a result of audit scope or accounting principles. There were
no disagreements with Ehrhardt Keefe Steiner & Hottman, P.C. on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, during the subsequent interim period through February 2001,
which, if not resolved to Ehrhardt Keefe Steiner & Hottman, P.C.'s satisfaction,
would have caused Ehrhardt Keefe Steiner & Hottman, P.C. to make reference to
the subject matter of the disagreement(s) in connection with its reports.

     We have appointed Kenneth Lieberman C.P.A. PA, 9690 West Sample Road, Suite
202, Coral Springs, Florida 33065.


                                       28
<PAGE>
    ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     We have assembled a team of seasoned senior management, and is currently
recruiting other industry veterans to fill key leadership roles. Additionally,
the Company is augmenting its Board of Directors and Board of Advisors with
skilled executives that can aid the growth of the Company through high-level
access to potential customers and strategic alliance partners. The following
table sets forth certain information as of December 31, 2000 concerning our
executive officers.
<TABLE>
<CAPTION>



                                                                                   Month and Year
                                                                                   First Elected
            Name                 Age           Position With the Company            or Appointed

<S>                              <C>                                                          <C>
Mark T. Wood                     40     Chairman of the Board, Chief Executive        January 2000
                                        Officer, President & Secretary
Carl K. Battie                   44     Vice Chairman                                  August 2000
Klaus Scholz                     50     Chief Operating Officer, Treasurer  and       January 2000
                                        Director
Edward J. Janusz                 52     Director                                      January 2000
Gerald Lesher                    62     Director                                       August 2000
Thomas G. Seifert, CFO           29     Chief Financial Officer                         March 2001
</TABLE>


     Mark T. Wood,  Chairman  of the Board.  From  1996-1997,  Mr. Wood was Vice
President and General Manager of Loxcomm America, Inc. From 1995-1996,  Mr. Wood
was the Chief Operating Officer of WorldQuest Networks. From 1992-1995, Mr. Wood
was the Vice President of International Sales at Intellical, Inc.

     Carl K. Battie, Vice Chairman. Mr. Battie's skills as an
achievement-oriented business professional experienced in strategic traditional
marketing, sales and public relations encompass the past 24 years. Mr. Battie
consistently identifies and capitalizes upon new product/business opportunities
resulting in increased revenue, expanded market penetration and dominant market
share. Mr. Battie also specializes in developing cross promotion platforms
integrating current business relationship models as well as bringing in new
partners for maximizing expansion and exposure. Through entrepreneurial
initiative, Mr. Battie has developed and executed many large comprehensive sales
and marketing programs. Most of his clients include large national and
multi-national companies in the United Kingdom such as British Gas, London
Electricity, Easter Electricity, ACC Telecom (part of AT&T) and BUPA, the
largest private healthcare provider in the United Kingdom.

     Klaus Scholz, Chief Operating Officer and Director. Mr. Scholz joined iDial
in 1999 and has been responsible for the network operations of company. A native
of Germany, Mr. Scholz has held several senior management positions in
international technology companies. He served for 10 years as Country Manager,
Southeast Europe for Hewlett Packard before moving to Asia in 1987. In Thailand,
he became Managing Director of Semiconductor Ventures International LTD, a
publicly traded company. In that capacity, he worked with the Chinese government
to improve quality and safety standards for the Taiwanese semiconductor
industry. Mr. Scholz also served as Vice President, Business Development for
Loxley Public Companies, Ltd., a publicly traded international conglomerate
based in Bangkok, Thailand.

     Edward J. Janusz,  Director.  Mr. Janusz is a seasoned sales and operations
executive serving the Company as a Director. Since 1997, Mr. Janusz has been the
Vice  President of Cap Gemini,  a leading  worldwide IT consulting  firm serving
Fortune 500 companies.

                                       29
<PAGE>
     Gerald Lesher,  Director.  Mr. Lesher is a practicing  licensed attorney in
Pennsylvania  and  Florida.   He was the  Senior  Partner,  for  Baskin  & Sears
(Pittsburgh),  for bankruptcy,  corporate  reorganization and banking litigation
and the manager for the Palm Beach  Office of Lesher,  Allen & Macmillan in Palm
Beach (Florida).  Mr. Lesher was also the founder and Chairman of Sterling Bank,
Florida.  Mr. Lesher has  developed  numerous  business  plans for clients and a
variety of industries.  He  concentrates on commercial  litigation,  bankruptcy,
banking,  real estate, real estate broker,  corporate,  and entertainment areas;
Mr. Lesher was lead counsel for 17 banks in Western Pennsylvania and specializes
in  business  plans  for  domestic  and  international  clients.  He has  strong
negotiating skills and substantial negotiating experience.

     Thomas G.  Seifert,  CFO.  Mr.  Seifert is a  graduate  of  Colorado  State
University and graduated with a Bachelor's of Science in Finance with a minor in
Accounting.  Mr. Seifert has worked as the  controller for Integrated  Telephony
Products, Inc., as well as controller for Mountain Vacations,  Inc. and assisted
with the sale of each  company  to a  publicly  trading  company.  He was also a
cofounder of 2Sendit.com, Inc.

     Directors are elected and serve for a term of two years or until a
successor is duly elected, unless the office is vacated in accordance with our
Articles of Incorporation. The directors have served in their respective
capacities since their election or appointment and will serve until the next
election of directors. The executive officers are appointed by the Board of
Directors to serve until the earlier of their resignation or removal with or
without cause by the directors.

     There are no family relationships between any directors or executive
officers.

CHANGE  OF COMPANY'S CFO: RECENT EVENT. We received and accepted the resignation
of  our  Chief  Financial  Officer,  Louis  Sopov,  effective March 21, 2001. We
promoted  our  controller,  Thomas  G. Seifert, to the position of CFO effective
March  26,  2001.

                         ITEM 10. EXECUTIVE COMPENSATION

     The following table is a summary of the compensation paid to our Chief
Executive Officer and each executive officer that earned over $100,000 in total
salary and bonus for each of our three most recently completed fiscal years.


                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                                          Long Term
                                             Annual Compensation                     Compensation Awards
                                                                                       Securities Under
                                                                                           Options
  Name and Principal                                               Other Annual          Granted/SARs           All Other
                    -
        Position          Year       Salary($)  Bonus($)         Compensation ($)        Granted (#)         Compensation ($)
        --------          ----       ---------  --------         ----------------        -----------         ----------------

<S>                        <C>
Mark T. Wood,* Chief       2000        Nil           Nil                Nil                  Nil                   Nil
Executive Officer          1999        Nil           Nil                Nil                  Nil                   Nil
                           1998        Nil           Nil                Nil                  Nil                   Nil

</TABLE>

     We have never issued stock appreciation rights.

     We did not issue options in the last fiscal year.

     None of our officers exercised any options in the last fiscal year.

     * We have not had the resources to compensate Mark T. Wood for his services
as our Chief Executive Officer.

                                       30
<PAGE>
      ITEM 11.  SECURITY OWNERSHIP OF OFFICERS AND DIRECTORS AND 5% OWNERS.

     Common Stock: To the best of Company s knowledge and belief the following
disclosure presents, as of the date of this report, December 31, 2000, the total
beneficial security ownership of all Directors and Nominees, naming them, and by
all Officers and Directors as a group, without naming them, of the Company,
known to or discoverable by the Company, and the total security ownership of all
persons, entities and groups, known to or discoverable by Company, to be the
beneficial owner or owners of more than five percent of any voting class of
Company s stock. More than one person, entity or group could be beneficiary
interested in the same securities, so that the total of all percentages may
accordingly exceed one hundred percent. The Company has only one class of stock,
namely Common Voting Equity Shares.


NAME AND ADDRESS OF BENEFICIAL OWNER. .  AMOUNT      PERCENTAGE OF
                                         OWNERSHIP
-------------------------------------------------------------------
Mark T. Wood, Chairman of the Board . .  18,100,000           20.7%
19009 Preston Road, Suite 215 PMB #236
Dallas, TX  75252
-------------------------------------------------------------------
Carl K. Battie, Vice Chairman
7771 W. Oakland Park Blvd, Suite 217
Sunrise, FL  33351. . . . . . . . . . .  13,100,000             15%
-------------------------------------------------------------------
Klaus Scholz, Director and COO. . . . .   3,040,000            3.5%
19019 Preston Road, Suite 616
Dallas, TX  75252
-------------------------------------------------------------------
Thomas G. Seifert . . . . . . . . . . .   1,463,204            1.7%
1211 S. Parker Road, Suite 201
Denver, CO  80231
-------------------------------------------------------------------
Edward J. Janusz, Director. . . . . . .     100,000            .01%
7 Lacewing Place
The Woodlands, TX
-------------------------------------------------------------------
Gerald Lesher . . . . . . . . . . . . .   1,200,000            1.4%
1555 Palm Beach Lakes Blvd., Suite 1510
West Palm Beach, FL  33404
-------------------------------------------------------------------
All Directors and Officers Total. . . .  37,003,204           42.5%
-------------------------------------------------------------------
George V. Stein . . . . . . . . . . . .   5,000,000            5.7%
1640 E. Layton
Englewood, CO  80110
-------------------------------------------------------------------
Lynn Lasarow. . . . . . . . . . . . . .   4,000,000            4.6%
18 Tobacco Road
Weston, CT  06883
-------------------------------------------------------------------
David Lifson. . . . . . . . . . . . . .   7,054,710            8.1%
1930 Young Street, Box 1182
Toronto, Ontario
CANADA
-------------------------------------------------------------------
Total Shares Issued and Outstanding . .  87,144,454            100%
-------------------------------------------------------------------

                                       31
<PAGE>
             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     We have entered into the following related transactions with our directors,
officers, or affiliates:

     Mauricio Vega, a shareholder of the Company, loaned the Company $100,000 on
June 22, 2000.

     Mark Wood, the Company's Chairman of the Board, loaned the Company a total
of $1,232,797 in various loans from December 31, 1999 through December 2000.

     Karl Rodriguez, a shareholder of the Company, loaned the Company $44,820.50
on May 27, 2000.

     Charmon Malhotra, a shareholder of the Company, loaned the Company $7,500
on July 18, 2000.

     Carl Battie, the Company's Vice Chairman of the Board, loaned the Company
$242,043.10 in various loans from September 14, 2000 through December 13, 2000.


   ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.


 (A)  FINANCIAL  STATEMENTS.  Audited  Financial Statements: for the years ended
December  31,  2000  and  1999.  See  Exhibit  FK-00.

 (B)  FORM  8-K  REPORTS.

CHANGE OF COMPANY S AUDITOR. The Company changed it s independent auditors
from Enrhardt, Keefe, Steiner & Hottman, 7079 E. Tufs Ave., Suite 400, Denver,
Colorado 80237-24843 to Kenneth Lieberman C.P.A. PA, 9690 West Sample Road,
Suite 202, Coral Springs, Florida 33065. There has been no disagreement with any
auditor about any item.

CHANGE  OF COMPANY S CFO: RECENT EVENT. We received and accepted the resignation
of  our  Chief  Financial  Officer,  Louis  Sopov,  effective March 21, 2001. We
promoted  our  controller,  Thomas  G. Seifert, to the position of CFO effective
March  26,  2001.

                                       32

<PAGE>
                 SUPPLEMENTARY INFORMATION TO BE FURNISHED WITH
              REPORTS FILED PURSUANT TO SECTION 15(D) OF THE ACT BY
                REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
                       PURSUANT TO SECTION 12 OF THE ACT.

     No annual report or proxy material has been sent to security holders.



                                   SIGNATURES

     In accordance  Section 13 or 15(d) of the Securities  Exchange Act of 1934,
the  Registrant  has  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

Date: November 28, 2001

IDIAL NETWORKS, INC.


By /s/ Mark T. Wood
----------------------------------------
       Mark T. Wood, President,
       Chief Executive Officer and Chairman

     In accordance with the requirements of the Securities Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Company in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

<S>                                               <C>                                        <C>
By /s/ Mark T. Wood                               Chairman of the Board and CEO              Date: November 28, 2001
Mark T. Wood

By /s/  Carl K. Battie                            Vice Chairman of the Board                 Date: November 28, 2001
Carl K. Battie

By /s/ Klaus Scholz                               Chief Operating Officer and Director       Date: November 28, 2001
Klaus Scholz

By /s/ Edward Janusz                              Director                                   Date: November 28, 2001
Edward Janusz

By /s/ Gerald Lesher                              Director                                   Date: November 28, 2001
Gerald Lesherz

/s/ Thomas G. Seifert                             Principal Accounting Officer and Chief     Date: November 28, 2001
Thomas G. Seifert                                 Financial Officer

</TABLE>




                                       33

<PAGE>
--------------------------------------------------------------------------------
                                  EXHIBIT FK-00

                          AUDITED FINANCIAL STATEMENTS:

                               FOR THE YEARS ENDED

                           DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------

























<PAGE>
                              IDIAL NETWORKS, INC.
                                AND SUBSIDIARIES

                              FINANCIAL STATEMENTS

                           DECEMBER 31, 2000 AND 1999






























<PAGE>
                               IDIAL NETWORKS, INC

                                TABLE OF CONTENTS



          PAGE  2     -     AUDITORS  LETTER

          PAGE  3     -     BALANCE  SHEET

          PAGE  4     -     INCOME  STATEMENT

          PAGE  5     -     STATEMENT  OF  CHANGES  IN  CASH  FLOW

          PAGE  7     -     STOCKHOLDER'S  EQUITY

          PAGE  8     -     NOTES  TO  FINANCIAL  STATEMENTS





<PAGE>
Kenneth Lieberman C.P.A., P.A.                                    (954) 971-8020
4400 W. Sample Road, Suite 216                                Fax (954) 971-1623
Coconut Creek,  FL. 33077




To the Board of Directors and Stockholders
IDial Networks, Inc.
The Woodlands, Texas


     We have audited the accompanying consolidated balance sheet of IDial
Networks, Inc. and Subsidiaries as of December 31, 2000 and the related
consolidated statements of operations, stockholders equity and cash flows for
the period then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles' used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of IDial Networks,
Inc and Subsidiaries as of December 31, 2000 and the results of their
operations, and their cash flows for the period then ended, in conformity with
generally accepted accounting principles.

     The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in Note 11 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has a working capital deficiency that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 11. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

     As discussed in Note 13 to the consolidated financial statements, the
consolidated financial statements have been restated to reflect the Company's
change in its method of accounting for business combinations and to correct an
error in the value assigned to common stock issued to consultants, officers and
directors.

/s/ Kenneth Lieberman CPA<
Kenneth Lieberman CPA, PA.
Coconut Creek, Florida
July 19, 2001, except for Note 13, as to which the date is November 6, 2001

<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders iDial Networks, Inc.
Dallas, Texas

     We have audited the accompanying balance sheet of iDial Networks, Inc as of
December 31, 1999, and the related statements of operations, accumulated deficit
and cash  flows for the year then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

     We conducted  our audit in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provide a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material respects,  the financial position of iDial Networks,  Inc. as of
December 31, 1999 and the results of its  operations  and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

     Those  financial  statements  have been prepared  assuming that the Company
will  continue  as a going  concern.  As  discussed  in Note 1 to the  financial
statements,  the Company's  history of operating losses raise  substantial doubt
about its ability to continue as a going concern.  Management's  plans in regard
to these matters are also  described in Note 1. The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.


                                /s/ Ehrhardt Keefe Steiner & Hottman PC
                                    Ehrhardt Keefe Steiner & Hottman PC
March 6, 2000
Denver, Colorado


<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     December 31
                                                                    2000 (restated)         1999

                             Assets
Current assets
<S>                                                                     <C>                  <C>
  Cash and cash equivalents                                             $ 67,410             $ 11,481
  Accounts receivable - trade                                             51,531               26,614
  Marketable securities                                                   31,200
  Other receivables                                                      105,000              100,000
  Inventory                                                               10,000
------------------------------------------------------------------------------------------------------
    Total current assets                                                 265,141              138,095
------------------------------------------------------------------------------------------------------
Fixed assets (net)                                                     2,576,928              255,587
------------------------------------------------------------------------------------------------------
  Notes Receivable
  Intangibles, net                                                     7,254,636              215,000
  Deposits                                                                52,618                8,855
------------------------------------------------------------------------------------------------------
    Total other assets                                                 7,307,254              223,855
------------------------------------------------------------------------------------------------------

Total assets                                                         $10,149,323            $ 617,537
======================================================================================================

        Liabilities and Stockholder's Equity (Deficiency)

Current liabilities
  Accounts payable                                                   $ 1,186,824            $ 347,445
  Advances from stockholder's                                                                 119,100
  Accrued consulting fees                                                                      55,000
  Accrued wages                                                                                25,000
  Accrued interest                                                        49,786
  Deferred revenue                                                        31,256
  Current portion of long-term debt                                      111,623               96,416
------------------------------------------------------------------------------------------------------
Total current liabilities                                              1,379,489              642,961
------------------------------------------------------------------------------------------------------

Long-term liabilities
  Advances from stockholder's & related parties                        1,624,103
  Notes Payable                                                           16,435               26,741
  Capital Leases Payable                                                  98,439              121,644
------------------------------------------------------------------------------------------------------
Total long-term liabilities                                            1,738,977              148,385
------------------------------------------------------------------------------------------------------
Total liabilities                                                      3,118,466              791,346
------------------------------------------------------------------------------------------------------

Commitments
Common stock, $.001 par value, 100,000,000 shares authorized,
87,144,454 shares issued and outstanding in 2001 and 2000,
37,085,000 shares issued and outstanding in 1999.                         87,144               37,085
Preferred Stock, no par value, 30,000,000 shares
authorized, no shares issued and outstanding.
Additional paid in capital                                            16,956,020              643,915
Accumulated deficit                                                   (9,970,307)            (854,809)
Accumulated other comprehensive income (loss)                            (42,000)
------------------------------------------------------------------------------------------------------
Stockholder's equity (deficiency)                                      7,030,857             (173,809)
------------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity (deficiency)              $10,149,323            $ 617,537
======================================================================================================
</TABLE>
     The  accompanying  notes and independent  auditor's report should be red in
conjunction with the consolidated financial statements

                                       3
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                        For the Years Ended December 31,
                                                                       2000 (restated)            1999

<S>                                                                      <C>                      <C>
Sales                                                                    $ 1,796,897              $ 1,575,826
Cost of Sales (exclusive of depreciation)                                  1,607,831                1,388,703
Depreciation                                                                 461,743                  113,333
-------------------------------------------------------------------------------------------------------------
Gross Profit (Loss)                                                         (272,677)                  73,790

Selling, general and administrative expenses                               8,686,191                  543,896
-------------------------------------------------------------------------------------------------------------

Net operating loss                                                        (8,958,868)                (470,106)

Other expenses
  Interest expense                                                          (156,630)                 (90,654)
-------------------------------------------------------------------------------------------------------------

Net loss                                                                  (9,115,498)                (560,760)

Other comprehensive loss
  Unrealized loss on available-for-sale securities                           (42,000)

-------------------------------------------------------------------------------------------------------------
Comprehensive loss                                                      $ (9,157,498)              $ (560,760)
==============================================================================================================

Net Loss Per Share                                                      $      (0.19)              $    (0.07)

Weighted Average per Common Share                                         48,479,304                7,744,452

Pro Forma Net Loss Per Share                                                 $ (0.19)                 $ (0.08)
==============================================================================================================

Pro Forma weighted average common and common potential shares             49,393,938               10,088,202
==============================================================================================================
</TABLE>

     The  accompanying  notes and independent  auditor's report should be red in
conjunction with the consolidated financial statements

                                       4

<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
                                                                 For the Years Ended December 31
                                                                  2000 (restated)        1999

Cash flow from operating activities
<S>                                                               <C>                   <C>
   Net loss                                                       $ (9,115,498)         $ (560,760)
Adjustments to reconcile net loss to net cash used
   in operating activities
    Writeoff of accrued interest                                                            60,000
    Stock issued for services                                        4,538,321              69,600
    Stock issued for compensation                                    1,754,884
    Write off of loan acquisition costs                                                     16,765
    Depreciation                                                       596,220             113,333
    Amortization                                                       616,647
Changes in assets and liabilities
    Accounts receivable                                                 (3,661)           (109,562)
    Other receivables                                                 (105,000)
    Inventory                                                           (8,000)
    Deposits                                                           (27,596)              2,154
    Accounts payable                                                 1,029,200             317,224
    Accrued expenses                                                   (30,214)             60,000
    Deferred revenue                                                    31,256
---------------------------------------------------------------------------------------------------
         Net cash used in operating activities                        (723,441)            (31,246)
---------------------------------------------------------------------------------------------------
Cash flow from investing activities:
    Purchase of property and equipment                                 (26,700)            (26,651)
    Acquisition of subsidiaries, net of cash acquired                  129,702
    Notes receivable                                                         -
---------------------------------------------------------------------------------------------------
       Net cash from (used in) investing activities                    103,002             (26,651)
---------------------------------------------------------------------------------------------------
Cash flows from financing activities
    Proceeds from issuance of long term debt                                                35,000
    Payment of long term debt                                           (7,920)            (16,371)
    Stockholder loans                                                  757,662
    Proceeds from issuance of common stock                             100,000
    Net(repayment to) advances from members                                  -             (67,744)
    Payments of long term capital lease                               (173,374)
---------------------------------------------------------------------------------------------------
      Net cash provided from (used in) financing activities            676,368             (49,115)
---------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                    55,929            (107,012)
Cash and cash equivalents beginning of period                           11,481             118,493
---------------------------------------------------------------------------------------------------
Cash and cash equivalents end of period                               $ 67,410            $ 11,481
===================================================================================================
</TABLE>
     The  accompanying  notes and independent  auditor's report should be red in
conjunction with the consolidated financial statements

                                       5

<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

Supplemental Disclosures of Cash Flow Information:
<TABLE>
<CAPTION>

                                                                    December 31
                                                                   2000 (restated)         1999

Cash paid during the year for:
<S>                                                                    <C>               <C>
  Interest                                                          $    156,630        $  30,654
  Income Taxes                                                                 -                -

Supplemental Schedule of noncash investing and
financing activities:

Property and equipment acquired under capital lease obligations     $    117,544        $ 169,601

Issuance of common stock in connection with acquisition of
subsidiaries                                                        $ 10,068,959        $       -

Issuance of common stock by a stockholder for satisifaction of
property and equipment obligations incurred by the Company
recorded as advances from stockholders and related parties          $    190,265        $       -

Issuance of common stock by a stockholder for satisifaction of
obligations incurred by the Company in connection with services
rendered to the Company recorded as advances from stockholders
and related parties                                                 $    557,076

During the year ended December 31, 1999, the Company transferred common stock
effecting assets and liabilities as follows:

                           Description                               Fair Value

Acquisition of intangible assets in the form of a trade mark           $ 215,000

Issuance of  common stock in connection with the acquisition
of telephony equipment                                                   125,000

Issuance of common stock to settle the balance due of notes payable
related to the acquisition of computers and telephony equipment.         404,474

Forgiveness of accounts receivable in connection with stock
transactions                                                            (170,097)

Issuance of common stock in settlement of accrued interest related
to the notes listed above                                                 77,969

Issuance of common stock in connection with stock subscription
receivable                                                               100,000

</TABLE>

     The  accompanying  notes and independent  auditor's report should be red in
conjunction with the consolidated financial statements

                                       6

<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>


                                                Woodcom International, Inc.
                                                  (prior to merger)                             Idial Networks,Inc.
                                                                                     (formerly Desert Springs Acquisition Corp.)

                                        Common stock                 Common Stock
                                        $.01 par value               $.001 par value                           Accumu-     Total
                                                       Additional                      Additional  Accumu-     lated       Stock-
                                                        paid-in                         paid-in    lated       Compre-     Holder's
                                        Shares  Amount   Capital    Shares     Amount   Capital    Deficit     hensive     Equity
                                                                                                               Income   (Deficiency)
                                                                                                               (Loss)

<S>                                     <C>    <C>     <C>        <C>          <C>         <C>     <C>          <C>      <C>
Balance, December 31, 1998              2,000  $ 20    $ 280                                       $  (294,049)          $ (293,749)
Exchange of all the outstanding
common stock of Woodcom
International, Inc.for common
stock of Idial Networks, Inc.
(formerly known as Desert
Acquisition Corp.) and the
related charge to retained
earnings to effect the
merger of the companies                (2,000)  (20)    (280)     36,015,000   $36,015     292,285                          328,000
Stock issued for retirement debt                                     170,000       170      55,930                           56,100
Stock issued for fixed assets                                        380,000       380     124,620                          125,000
Stock issued for intangible assets                                   500,000       500     164,500                          165,000
Stock issued for consulting services                                  20,000        20       6,580                            6,600
Net Loss                                                                                              (560,760)            (560,760)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                                        37,085,000    37,085     643,915    (854,809)            (173,809)
Stock issued with acquistion
- Whoofnet.com, Inc.                                              19,787,000    19,787   8,080,213                        8,100,000
Stock issued with acquistion
- 2 Sendit.com, Inc.                                               8,399,994     8,400   1,960,559                        1,968,959
Stock issued to officers & directors                               5,908,460     5,908   1,748,976                        1,754,884
Stock issued for consulting services                              15,964,000    15,964   4,522,357                        4,538,321
Other comprehensive losses                                                                                      (42,000)    (42,000)
Net loss from operations                                                                            (9,115,498)          (9,115,498)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000 (restated)                             87,144,454    87,144  16,956,020  (9,970,307) (42,000)  7,030,857
====================================================================================================================================
</TABLE>

     * Woodcom  International,  Inc.  stockholders received 30,930,000 shares of
Idial Networks, Inc. (formerly Desert Springs Acquisition Corp.) upon the merger
of the  Companies;  5,085,000  shares (as  adjusted  for the stock  split)  were
previously issued to Idial Networks,  Inc. (formerly Desert Springs  Acquisition
Corp.) stockholders.

     The  accompanying  notes and independent  auditor's report should be red in
conjunction with the consolidated financial statements

                                       7

<PAGE>

                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organization, Summary of Significant Accounting Policies and Principal
         Business Activity

Organization, Principal Business Activity and Principles of Consolidation

The consolidated financial statements include the accounts of Idial Networks,
Inc., (Idial) and it's wholly owned subsidiaries, Whoofnet.com, Inc, (Whoofnet)
and 2Sendit.Com, Inc. (2Sendit) (collectively the Company). All significant
inter-company transactions and balances have been eliminated. (See note 8 for
stock split).

The Company provides Internet-based services including voice telecommunication
to customers around the world. The Company operates selected communication
services, including phone cards and Internet enabled telephony. The Internet
triggered calls combine the flexibility of a computer (on-line billing and call
records) with the low tariffs of USA based carriers via calling centers or
direct from home anywhere in the world.

Woodcomm, LLC was established in May 1997 in the state of Nevada and began
commercial operations in June 1998 as a facilities-based wholesale provider of
international long-distance telephone services into South East Asia from the
United States. In April 1999, Woodcomm, LLC was reorganized changing from an LLC
to a Nevada Corporation, Woodcomm International, Inc. (WCI).

In December 1999, Desert Springs Acquisition Corporation (Desert Springs), a
Colorado corporation acquired all of the issued and outstanding common shares of
WCI in exchange for 30,930,000 shares of common stock of Desert Springs. For
financial reporting purposes, the business combination was accounted for as an
additional capitalization of WCI (a reverse acquisition with WCI as the
acquirer). WCI is considered the surviving entity. The historical financial
statements prior to the merger are those of WCI. Desert Springs' only assets and
liabilities consisted of a liability for $80,346, which was not assumed in the
merger. The former shareholders of Desert Springs owned approximately 14% of the
common stock after the merger.

In January 2000, Desert Springs moved its state of incorporation from Colorado
(with 500,000,000 shares of common stock authorized, $.0001 par value) to Nevada
(with 100,000,000 shares of common stock authorized, $.001 par value) and
changed its name to Idial Networks, Inc. (a Nevada corporation).

On August 7, 2000, Idial acquired 100% of the stock of Whoofnet in exchange for
the issuance of approximately 19.8 million shares of Idial common stock with a
fair market value of $8,100,000. The acquisition was accounted for using the
purchase method and accordingly the purchase price has been allocated to the
assets acquired aggregating $2,479,365 and the liabilities assumed aggregating $
104,353 based on their estimated fair values at the date of acquisition. The
excess of purchase price over the estimated fair value of the net assets
acquired, totaling approximately $5.7 million, has been recorded as goodwill and
is being amortized using the straight-line method over 5 years. The operating
results of this acquisition are included in the Company's consolidated results
of operations from the date of acquisition.

                                       8
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Whoofnet is a next generation Internet Company designed for direct selling. The
company was formed under the laws of Florida on March 6, 2000. The major product
is an Internet portal for use by the general public. The Company has recently
completed its field-testing and management plans to begin sales within the next
several months. All costs associated with the startup phase of the organization
has been expensed in the current period as per Statement of Position 98-5.

Whoofnet also formed 6 subsidiary Delaware Corporations between the months of
March and May 2000, and 2 foreign subsidiary corporations for the operations of
various aspects of its business.

     1) Whoofbiz, Inc. organized in March 2000 is planned to provide small
business services, which includes a 24-hour customer service center, product
fulfillment, merchant account fulfillment, and low cost high quality
telecommunications services.

     2) Whoofhealth,  Inc. sells its own homeopathic  herbal branded products to
the general public.  The product is marketed through various media including TV,
Direct Sales and the Internet. The Company was organized April 28, 2000.

     3)  Whoofmail,  Inc.  was  organized  to provide  free  multilingual  email
services to be offered to the  general  public,  in order to build the  customer
base. The Company was organized April 28, 2000.

     4) Whoofmall,  Inc.  will provide a shopping mall on the Internet,  whereby
other vendors can advertise and sell their products to the general  public.  The
Company will receive its revenue through various services offered to the vendors
who are participating in the mall. The Company was organized May 2000.

     5)  Whoofmusic.com,  Inc. was created to sell its own label specializing in
music from the 60's, 70's, 80's and 90's and related products. Marketing will be
done  through TV Press media and the  Internet.  The Company was  organized  May
2000.

     6)  Whooftelco,  Inc.  will be a low cost high  quality  telecommunications
provider  to the  European  and  Asian  wireless  community  and to the low cost
domestic and international  calls customer in the United States. The Company was
organized March 2000.

     7) Whoofnet.Com AC is a Swedish corporation that was formed on January 16,
2001 subsequent to the year-end. The purpose is to act as the European call
center for Whoofnet.Com. The Company received a $10,000,000 grant from the
Swedish Government to provide the development and expansion of a telephone
customer call center for the Swedish government..

                                       9
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     8) Whoofstore.Com AB was formed on January 16, 2000 is also a Swedish
corporation as a duty free sales center. Management estimates that the licenser
granting the Company a tax-free status has a market value between $5 to 10
million US dollars.

As of the date of these financial statements none of the subsidiaries were
active or funded.

On October 12, 2000 Idial acquired 100% of the stock of 2sendit in exchange for
the issuance of approximately 8.4 million shares of Idial common stock with a
fair market value of $1,968,959. The acquisition was accounted for using the
purchase method and accordingly the purchase price has been allocated to the
assets acquired aggregating $204,132 and the liabilities assumed aggregating
$166,468 based on their estimated fair values at the date of acquisition. The
excess of purchase price over their estimated fair value of the net assets
acquired, totaling approximately $1.9 million, has been recorded as goodwill and
is being amortized using the straight-line method over 5 years. The operating
results of this acquisition are included in the Company's consolidated results
of operations from the date of acquisition.

2sendit provides a marketing service by advertising the products and services
through a variety of media with a primary focus on the use of fax mail, direct
mail and email. In addition the company provides ancillary services, which
include the sales of mailing lists, and consultation services.

The primary customer has been the investment market but the company has recently
expanded its integration into the general business market.

The following summary, pro forma, unaudited data of the Company reflects the
acquisitions of Whoofnet and 2Sendit as if they had occurred on January 1, 2000
and 1999, respectively:
<TABLE>
<CAPTION>

                                                                  Pro forma (Unaudited)
                                                                  ---------------------
                                                                Fiscal                Fiscal
                                                                ------                ------
                                                                2000                  1999

<S>                                                           <C>                 <C>
Sales                                                         $2,173,583          $1,827,301

Net Loss                                                    ($11,035,991)        ($2,330,478)

Net Loss Per Common Share                                          ($.30)              ($.23)
</TABLE>

Concentration of Credit Risk

                                       10
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's financial instruments that are exposed to concentration of credit
risk consist primarily of cash and accounts receivable. Additionally, the
Company maintains cash balances in bank deposit accounts, which, at times, may
exceed federally insured limits. During the year ended December 31, 1999,
predominantly all of the Company's sales were generated from one company whose
accounts receivable balance at December 31, 1999 aggregated $20,611 or 77% of
total trade accounts receivable.

Cash and cash equivalents
             -

The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.

Marketable Securities

Marketable securities consist of common stock. Marketable securities are stated
at market value as determined by the most recently traded price of each security
at the balance sheet date. By policy, the Company invests primarily in
high-grade marketable securities. All marketable securities are defined as
trading securities or available-for-sale securities under the provisions of the
Statement of Financial Accounting Standards No. ("SFAS") 115, "Accounting for
Certain Investments in Debt and Equity Securities."

Management determines the appropriate classification of its investment in
marketable securities at the time of purchase and reevaluates such determination
at each balance sheet date. Securities that are bought and held principally for
the purpose of selling them in the near term are classified as trading
securities and unrealized holding gains and losses are included in earnings.
Available-for-sale securities are carried at fair value with the unrealized gain
and losses, net of tax, reported as a separate component of other comprehensive
loss. The cost of investments sold is determined on the specific identification
or the first-in-first-out method.

Advertising Costs

The Company expenses advertising costs as incurred.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

                                       11
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and Equipment

Property and equipment are stated at cost, equipment under capital leases are
stated at the lower of fair market value or net present value of minimum lease
payments at inception of the leases. Depreciation is computed using the
straight-line method over the estimated useful lives or lease terms of the
related assets.

Goodwill and Other Intangible Assets

Goodwill and other Intangible assets are amortized over 5 years using the
straight line method and consist of trademarks aggregating $215,000 as of
December 31, 1999 and net of accumulated amortization of $43,000 as of December
31, 2000. In addition, goodwill aggregating $7,656,283 as of December 31, 2000
arising from business acquisitions during the year ended December 31, 2000,
accounted for under the purchase method, net of accumulated amortization of
$1,339,275.

Revenue Recognition

The Company has adopted the SEC Staff Accounting Bulletin (SAB) No. 101 -
Revenue Recognition in Financial Statements in January 2000 as its formal
guidelines for the recognition of revenue. The effect of this adoption has had
no effect on the financial statements because past revenue recognition practices
followed the precepts of SAB 101.

The Company sells long distance service through a network of various
distributors. The consumer of the product receives a credit card representing a
prepaid set of minutes allowing them access to long distance telephone services.
In addition to a fixed amount of time allotted to each prepaid calling card,
each card has a three (3) month life before the unused minutes expire. Revenue
is initially recognized in the fiscal period when the individual cards are used
for their intended purpose. As cards expire, based on their 3-month life, the
balances of the remaining unused funds are recognized as revenue in the period
of expiration. Un-expired cards with balances are recorded as deferred revenue.

The Company recognizes revenue from its marketing services, when the services
contracted for are completed. In some circumstances, contracts will require
services to be performed over a period of two months In those cases, fees are
specifically identified with the various services to be provided and revenue is
recognized as each of the individual tasks are completed. Funds received as
deposits from future services are recorded as deferred revenues.

Revenue from product sales are recognized when the products are shipped. Due to
the nature of the product, customers are not given the right to return product.
Therefore, management has elected not to allow for a reserve for future returns.

                                       12
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Financial Instruments

The carrying amounts of financial instruments including cash, accounts
receivable, accounts payable and accrued expenses approximate fair value as of
December 31, 2000, as a result of the relatively short maturity of these
instruments.

The fair value of the notes payable approximate the carrying value as both the
stated rate and discount rate on the notes approximates the estimated current
market rate.

Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not
be recovered. The Company looks primarily to the undiscounted future cash flows
in its assessment of whether or not long-lived assets have been impaired. At
December 31, 1999 and 2000 the Company determined there was no impairment.

Income Taxes

The Company employs the liability method of accounting for income taxes pursuant
to SFAS No. 109 "Accounting for Income Taxes," under which method the Company
recognizes deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax basis
of assets and liabilities using the enacted tax rates in effect for the year in
which the differences are expected to reverse. The measurement of deferred tax
assets is reduced, if necessary, by the amount of any tax benefits that, based
on available evidence, are not expected to be realized. The Company provides a
valuation allowance that reduces deferred tax assets to their net realizable
value.

Net Loss Per Share and Pro forma Net Loss Per Share

The Company computes net loss per share in accordance with the provisions of
SFAS No. 128, "Earnings Per Share" ("SFAS 128"). Under the provisions of SFAS
128, basic earnings per share (EPS) is computed by dividing the net loss from
operations for the period by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur from common stock issuable through stock based compensation
including stock options, restricted stock awards, warrants and other convertible
securities. Diluted EPS is not presented since the effect is antidilutive.


                                       13
<PAGE>

                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pro forma net loss per share is calculated by dividing the pro forma net loss by
the weighted average number of common shares outstanding. During July 2001, the
Company issued a convertible note and warrants to acquire shares of the
Company's common stock to the note holder (see Note 12). In accordance with SAB
No. 98, the pro forma net loss per share has been presented to reflect the
dilutive effect of the convertible note and related warrants. Pro forma net loss
has been adjusted for interest expense on the convertible debt. For purposes of
this computation shares of common stock and shares of common stock issuable upon
the exercise of warrants to purchase common stock and conversion of debt to
common stock have been included in the weighted average number of shares
outstanding for all periods presented utilizing the treasury stock or if
converted method, as appropriate.

In December 2000 the company issued a two-for-one stock split effected in the
form of a 100% stock dividend. Previously reported shares have been
retroactively restated (See note 8).

Reclassification

The consolidated statement of operations for the year ended December 31, 1999
has been reclassified to conform to the presentation for the year ended December
31, 2000.

Recently Issued Accounting Pronouncements

The Company does not believe that any recently issued but not yet effective
accounting standards, have a material effect on the Company's consolidated
financial position, results of operations or cash flows except for the effect of
adoption of SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No.
142") which effect has not yet been determined. SFAS No. 142 addresses the
financial accounting and reporting for acquired goodwill and other intangible
assets. It addresses how intangible assets that are acquired individually or
with a group of other assets (but not those acquired in a business combination)
should be accounted for in financial statements upon their acquisition. SFAS 142
also addresses how goodwill and other intangible assets should be accounted for
after they have been initially recognized in the financial statements. The
Company will be adopting the provisions of this new standard beginning with the
first quarter of 2002.

During June 2001 SFAS No. 141, "Business Combinations" ("SFAS No. 141") was
released. This standard addresses financial accounting and reporting for
business combinations. All business combinations within the scope of SFAS 141
are to be accounted for using one method - the purchase method. The provisions
of SFAS 141 apply to all business combinations initiated after June 30, 2001.
Use of the pooling - of - interests method for those business combinations is
prohibited. It also applies to all business combinations accounted for using the
purchase method for which the date of acquisition is July 1, 2001 or later.

                                       14
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Property and Equipment

Property and equipment consists of the following:
<TABLE>
<CAPTION>
                                                   December 31,        Estimated
                                               2000        1999          Useful
                                                                         Life or
                                                                     term of lease
<S>                                        <C>          <C>             <C>
Telephony equipment .........              $  440,158   $  137,158      2 to 5 years
Computers and equipment .....                 729,714      277,893      5 years
Software ....................               1,996,614            -      3 years
Furniture & Fixtures ........                 159,876            -      5 years
                                           ----------   ------------
                                            3,326,362      415,051
Less accumulated depreciation              (  749,434)    (159,464)
                                           ----------   ------------
                                           $2,576,928  $   255,587
                                           ==========   ============
</TABLE>

Property and equipment includes assets acquired under capital leases in the
aggregate amount of $161,139 as of December 31, 1999 and $278,683 as of December
31, 2000 net of accumulated depreciation of $ 71,955, $164,849, respectively.

Note 3 - Marketable Securities

The following is a summary of available-for-sale securities:

                                       December 31, 2000

                            Cost           Fair          Gross
                                          Market        Unrealized
                                          Value          Loss
                           -------       -------        -------
Equity Securities          $73,200       $31,200        $42,000
                           =======       =======        =======

The Company's marketable securities were acquired in connection with the
Whoofnet acquisition. There were no investments in marketable securities during
the year ended December 31, 1999. The Company did not have any trading
securities at December 31, 2000. There were no sales of available-for-sale
securities during the year ended December 31, 2000. Accumulated other
comprehensive income (loss) included in stockholder's equity (deficiency)
includes an unrealized holding loss, net of related tax effect, on
available-or-sale securities of $42,000.

                                       15
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Long-Term Debt
<TABLE>
<CAPTION>

Long-term debt consists of the following:                     December 31,
                                                           2000          1999
                                                           ----          ----
<S>                             <C>                    <C>           <C>
Capital leases with monthly installments
   totaling $3,295 at December 31, 2000
   and December 31, 1999, including
   interest at 23% per annum and expiring at
   various dates through August 2003.                  $   202,641   $213,025
Equipment note payable in monthly
   installments of $ 795 including
   interest at   12.9 % expiring May
   2003.                                                    23,856     31,776
Stockholder loans payable issued with
interest payable annually at 7% per annum.
(see note 5)                                             1,624,103
                                                       -----------   ---------
                                                         1,850,600     244,801
Less current portion                                       111,623      96,416
                                                       -----------   ---------
Long Term Debt                                          $1,738,977   $ 148,385
                                                        ==========   =========

</TABLE>

Maturities of long-term debt as of December 31, 2000 are as follows:
<TABLE>
<CAPTION>

                                               Long-Term         Capital
         Year Ending December 31,                 Debt           Leases           Total
         --------------------------------   --------------    -----------       --------------
<S>               <C>                       <C>                 <C>               <C>
                  2001                      $    7,421          $ 147,401         $ 154,822
                  2002                          12,588             63,606            76,194
                  2003                           3,847             44,194            48,041
                                            --------------    -----------       ------------
                                                23,856            255,201           279,057
         Less amount
         representing interest                                    (52,560)          (52,560)
                                            --------------    -----------       ------------
                                                23,856            202,641           226,497
         Less current portion                 (  7,421)          (104,202)         (111,623)
                                            --------------    -----------       ------------
                                               $16,435           $ 98,439         $ 114,874
                                            ==============    ===========       ============
</TABLE>

Note 5 - Stockholder Loans Payable

The Company received loans from stockholders to fund operations. The loans are
interest bearing at 7% per annum and are convertible at the option of the
stockholders into restricted common stock at the current market price less 20%
at the time of conversion. As of December 31, 1999 the loans from stockholders
totaled $186,844 and as of December 31, 2000 totaled $1,624,103. The debt has
been reclassified as long-term at December 31, 2000 since the stockholders had
entered into an agreement during October, 2000 that requires the Company to
convert the obligation into equity securities or to repay such obligation on
January 15th 2002.

                                       16
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 6 - Income Taxes

The tax effect of loss carry forwards and the valuation allowance that gives
rise to deferred tax assets are as follows:
<TABLE>
<CAPTION>

                                                    December 31,               December 31,
                                                       2000                       1999
                                                       ----                       -----

<S>                                              <C>                            <C>
Net operating loss carry forwards                $1,501,846                     $128,221
Less valuation allowance                        ($1,501,846)                   ($128,221)
                                           -----------------------------------------------------
Deferred tax assets                              $    -0-                       $    -0-
                                           =====================================================
</TABLE>

As of December 31, 2000, the Company had net operating loss carry forwards
available to offset future taxable income of approximately $9,970,000, which
expire in various years through 2015. Between December 1999 and December 2000
the Company completed a reverse merger and two acquisitions in exchange for
common stock. Under section 382 of the Internal Revenue Code (the "Code") these
activities effected an ownership change and thus may severely limit, on an
accrual basis, the Company's ability to utilize its net operating loss carry
forwards. The Company uses the lowest marginal U.S. corporate tax rate of 15% to
determine deferred tax amounts and the related valuation allowance because the
Company has had no taxable earnings through December 31, 2000.

The reconciliation of income tax benefit resulting from applying US federal
statutory tax rates to pretax loss and the reported amount of income tax benefit
is as follows:
<TABLE>
<CAPTION>


                                                                          For the year ended
                                                                              December 31,
                                                                       2000                1999
----------------------------------------------------------------------------------------------------

<S>                                      <C>                           <C>                  <C>
Tax benefit at federal statutory rate of 15%                          $ 1,373,625             $84,114
Increases in valuation allowance                                      $(1,373,625)           ( 84,114)
                                                                      ---------            ----------
                                                                        $-0-                $ -0-
=====================================================================================================

For the year ended December 31, 2000, the Company and each of its' subsidiaries
had losses. Idial, Whoofnet and 2Sendit each file their own tax return.
</TABLE>

                                       17
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 Commitments

         The Company leases office space and furniture and equipment under
non-cancelable operating leases, which expire at various dates through July
2003.

         Rent expense charged to operation under the operating leases was
$149,146 and $41,954 for the years ended December 31, 2000 and 1999,
respectively

Future minimum obligations under the non-cancelable operating leases at December
31, 2000 are as follows:

December 31,  2001              -       $ 55,700
              2002              -         29,960
                                        ---------
              Total             -       $ 85,660
                                        =========

Note  8- Common Stock

As of January 1, 1999 the financial statements have been restated to reflect the
recapitalization pursuant to the Desert Springs reverse merger transaction.

Effective December 15, 2000, the Company's Board of Directors approved a 2 for 1
stock split whereby the number of shares of outstanding common stock increased
from 43,572,225 to 87,144,454. A total of $435,722 was reclassified from the
Company's additional paid in capital account to the Company's common stock
account. All share and per share amounts have been restated to retroactively
reflect the stock split.

During December 1999, the stockholders of WCI were issued 22,770,000 shares of
common stock in exchange for $165,000 of accrued wages. Additionally, various
consultants were issued common stock in the amount of 7,860,000 shares in
exchange for services of $63,000.00. The fair market value of the common stock
on the date of these issuances was determined based on the consideration
received, as that amount was more readily determinable and reliably measurable
than the fair market value of the common stock transferred.

The following schedule details the stock issuances during the year ended
December 31, 2000:

<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                             Common Stock
------------------------------------------------------------------------------------------------------------------------------------
Transaction Date    Recipent                  Description                 Shares      Amount  Additional                    Price
                                                                                               Paid-in       Total        per share
------------------------------------------------------------------------------------------------------------------------------------
<S>           <C>                   <C>                                   <C>         <C>      <C>            <C>            <C>
  08/07/00    Whoofnet.Com (4)      Corporate acquistion                  19,787,000  19,787   8,080,213      8,100,000      0.4094
  10/12/00    2Sendit (3)           Corporate acquistion                   8,399,994   8,400   1,960,559      1,968,959      0.2344
------------------------------------------------------------------------------------------------------------------------------------
                                                                          28,186,994  28,187  10,040,772     10,068,959
------------------------------------------------------------------------------------------------------------------------------------
  08/30/00    Carl Battie (2)       Director Compensation                    800,000     800     415,200        416,000      0.5200
  08/30/00    Supree Wanapun (2)    Director Compensation                     20,000      20      10,380         10,400      0.5200
  08/30/00    Klaus Scholz (2)      Employee Compensation                     40,000      40      20,760         20,800      0.5200
  08/30/00    Mark T Wood  (1)      Employee Compensation                    800,000     800     415,200        416,000      0.5200
  10/16/00    Mark T Wood  (1)      Employee Compensation                  4,000,000   4,000     756,000        760,000      0.1900
  09/25/00    Gerald Lesher (1)     Stock issued for consulting services      80,460      80      42,564         42,644      0.5300
  09/25/00    Kevin Wright (1)      Stock issued for consulting services      40,000      40      21,160         21,200      0.5300
  09/25/00    Supree Wanapun (1)    Stock issued for consulting services     128,000     128      67,712         67,840      0.5300
------------------------------------------------------------------------------------------------------------------------------------
                                                                           5,908,460   5,908   1,748,976      1,754,884
------------------------------------------------------------------------------------------------------------------------------------
  08/30/00    Charlie Macari        Stock issued for consulting services     836,734     837     434,265        435,102      0.5200
  08/30/00    Frank Katana          Stock issued for consulting services       5,160       5       2,678          2,683      0.5200
  08/30/00    Gary Hanson           Stock issued for consulting services       6,664       7       3,458          3,465      0.5200
  08/30/00    Ivana Servalle        Stock issued for consulting services         932       1         484            485      0.5200
  08/30/00    Jeannette Callahan    Stock issued for consulting services       1,904       2         988            990      0.5200
  08/30/00    Joe Spence            Stock issued for consulting services       2,704       3       1,403          1,406      0.5200
  09/25/00    Joseph Alloca         Stock issued for consulting services     128,000     128      67,712         67,840      0.5300
  09/25/00    Julie Crosby          Stock issued for consulting services     128,000     128      67,712         67,840      0.5300
  08/30/00    Karl E. Rodriguez     Stock issued for consulting services     120,000     120      62,280         62,400      0.5200
  09/25/00    Karl E. Rodriguez     Stock issued for consulting services     410,000     410     216,890        217,300      0.5300
  10/16/00    Karl E. Rodriguez     Stock issued for consulting services     500,000     500      94,500         95,000      0.1900
  09/25/00    Kenneth Lieberman     Stock issued for consulting services      80,000      80      42,320         42,400      0.5300
  10/16/00    Lanette J Seifert     Stock issued for consulting services     200,000     200      37,800         38,000      0.1900
  08/30/00    Lazo Sopov            Stock issued for consulting services      13,332      13       6,920          6,933      0.5200
  09/25/00    Louie Sopov           Stock issued for consulting services     120,000     120      63,480         63,600      0.5300
  08/30/00    Maribeth Callahan     Stock issued for consulting services       3,808       4       1,976          1,980      0.5200
  08/30/00    Mark Berman           Stock issued for consulting services       1,332       1         692            693      0.5200
  08/30/00    Mary Callahan         Stock issued for consulting services       1,904       2         988            990      0.5200
  09/25/00    Pamela Zelman         Stock issued for consulting services     800,000     800     423,200        424,000      0.5300
  10/16/00    Pamela Zelman         Stock issued for consulting services     800,000     800     151,200        152,000      0.1900
  09/25/00    Paulina Gidziela      Stock issued for consulting services      40,000      40      21,160         21,200      0.5300
  08/30/00    Richard Borrow        Stock issued for consulting services         664       1         344            345      0.5200
  10/16/00    Richard Borrow        Stock issued for consulting services   2,000,000   2,000     378,000        380,000      0.1900
  08/30/00    Ron Ardt              Stock issued for consulting services     140,000     140      72,660         72,800      0.5200
  09/25/00    Ron Ardt              Stock issued for consulting services     760,000     760     402,040        402,800      0.5300
  08/30/00    Sheba Berkovits       Stock issued for consulting services      13,332      13       6,920          6,933      0.5200
  08/30/00    Stan Majorum          Stock issued for consulting services     105,258     105      54,629         54,734      0.5200
  08/30/00    Tom Callahan          Stock issued for consulting services       1,904       2         988            990      0.5200
  08/30/00    Tom Schutte           Stock issued for consulting services       2,704       3       1,403          1,406      0.5200
  08/30/00    Valeria Servalle      Stock issued for consulting services       1,332       1         692            693      0.5200
  09/25/00    William Stocker       Stock issued for consulting services     410,000     410     216,890        217,300      0.5300
  09/25/00    Ziyon Shaky           Stock issued for consulting services     128,000     128      67,712         67,840      0.5300
  10/16/00    Charlie Macari        Stock issued for consulting services   4,000,000   4,000     756,000        760,000      0.1900
  09/25/00    Daffney Austin        Stock issued for consulting services     200,000     200     105,800        106,000      0.5300
  10/16/00    Daffney Austin        Stock issued for consulting services   2,000,000   2,000     378,000        380,000      0.1900
  08/30/00    David Schild          Stock issued for consulting services         332       0         173            173      0.5200
  10/16/00    David Schild          Stock issued for consulting services   2,000,000   2,000     378,000        380,000      0.1900
------------------------------------------------------------------------------------------------------------------------------------
                                                                          15,964,000  15,964   4,522,357      4,538,321
------------------------------------------------------------------------------------------------------------------------------------
              Total                                                       50,059,454  50,059  16,312,105     16,362,164
====================================================================================================================================

              (1) - Officers  and directors of  Idial.
              (2) - Directors of Idial
              (3) - Conversion ratio of Idial Stock for 2Sendit stock was 32.68:1
              (4) - Conversion ratio of Idial Stock for Whoofnet stock was 1:1
              (5) - All share and market value per share amount have been retroactively
                    restated to reflect the stock split.
</TABLE>
                                       18
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 1999, subsequent to the reverse acquisition, the Company issued
common shares in exchanged for debt to acquire various assets and in payment of
consulting services. In December 1999, the fair market value of the common stock
on the date of these issuances was determined to be $.33 based on the issuance
of 300,000 common shares of stock for $100,000 in December 1999. The various
stock transactions which occurred in December 1999 are as follows:

The Company issued 170,000 shares of common stock to an equipment vendor and
customer in exchange for satisfaction of a note payable and related accrued
interest totaling $482,443. This amount was netted with an accounts receivable
balance due the Company which totaled $120,097. The related equipment's
acquisition cost was reduced by approximately $306,000 as a result of this
transaction.

The Company issued 500,000 shares of common stock in exchange for an intangible
asset in connection with this transaction, the Company also settled an accounts
receivable balance of $50,000. The fair value of the intangible assets was
determined to be $215,000 and is reflected in the accompanying financial
statements.

A consultant was granted 400,000 shares of common stock in exchange for
equipment with a fair value of $125,000 and consulting services. The
accompanying financial statements reflect $6,600 of consulting expense and the
fair value of the equipment as a result of this transaction.

In December 1999, prior to the reverse merger, Idial agreed to transfer 300,000
share of common stock in exchange for $100,000. This amount was received in full
in January 2000.

Note 9 - Segment information

The Company has three principal operating segments which are (1) providing
Internet-based voice telecommunication to customers around the world, (2)
providing a marketing service for various businesses and (3) marketing a next
generation Internet Company designed for direct selling to the general public
through an internet portal. These operating segments were based on the nature of
the product and the services offered. Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision-maker in
deciding how to allocate resources and in assessing performance. The Companies
chief executive officer and chief financial officer have been identified as the
chief decision-makers. The Company's chief operating decision makers direct the
allocation of resources to operating segments based on the profitability and
cash flow of the respective segments.

                                       19
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has determined that there are two reportable segments (1) providing
Internet-based voice telecommunication to customers around the world and (2)
providing a marketing service for various businesses. The other segment was not
reported because it does not meet any of the quantitative thresholds under SFAS
No. 131 "Disclosures about Segments of an Enterprise and Related Information".

The accounting policies of the segments are the same as those described in the
Summary of significant accounting policies.

     The following table summarizes the Company's different reportable segments:
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                                                              Internet-Based
                                                        Voice Telecommunications  Marketing
                                                                                   Services       Other (a)     Total
------------------------------------------------------------------------------------------------------------------------------------
                                                            December 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>              <C>            <C>       <C>
Net sales from external customers ...............................    1,728,562        66,965         1,370     1,796,897
Intersegment net sales ..........................................                                                   --
Gross profit (loss) .............................................     (323,408)       50,731                    (272,677)

Net operating loss ..............................................   (8,812,036)     (146,832)                 (8,958,868)
Interest expense ................................................      152,523           771         3,336       156,630
Depreciation and amortization ...................................      617,698        11,089       584,080     1,212,867
Total assets ....................................................      665,847       232,238     9,251,238    10,149,323
Capital expenditures ............................................      104,052        40,192       144,244
------------------------------------------------------------------------------------------------------------------------------------
                                                December 31, 1999
------------------------------------------------------------------------------------------------------------------------------------
Net sales from external customers ...............................    1,575,826                                1,575,826
Intersegment net sales ..........................................                                                  --
Gross profit (loss) .............................................       73,790                                   73,790
Net operating loss ..............................................     (470,106)                                (470,106)
Interest expense ................................................       90,654                                   90,654
Depreciation and amortization ...................................      113,333                                  113,333
Total assets ....................................................      617,537                                  617,537
Capital expenditures ............................................      196,252                                  196,252
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     (a) Segment information below the quantitative  thresholds are attributable
to  one  business  unit  next   generation   internet   services  and  corporate
headquarters.  Corporate  headquarters  include goodwill recorded as a result of
the Whoofnet and 2Sendit acquisitions. (See note 1)

Note 10 - Other Comprehensive Income (Loss)

The pretax and after-tax effects of the components of other comprehensive income
(loss) for 2000 are as follows:
<TABLE>
<CAPTION>

                                                     Pretax            Tax         After Tax
Unrealized holding loss on
<S>                                                  <C>                <C>          <C>
   Available-for-sale securities                     $(42,000)         -0-           $(42,000)
</TABLE>

                                       20
<PAGE>
                              IDIAL NETWORKS, INC.
                                and SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11 - Going Concern

The Company has suffered recurring losses from operations and has a working
capital deficiency at December 31, 2000. The Company's financial statements have
been prepared on the assumption that the Company will continue as a going
concern. Management has instituted a cost reduction program that includes a
reduction of labor and fringe benefit costs. In addition the Company has
consolidated several of its operations, increased marketing efforts on its
product lines, adjusted sales prices of certain products to bring them in line
with costs and negotiated more favorable contracts to provide services at more
efficient costs. As a result of these efforts management believes that
profitability will be achieved in the near future. In addition, during July 2001
the Company issued a convertible note in the aggregate amount of $750,000 and
warrants to acquire common stock to the convertible note holder (see note 12),
to fund working capital and expansion. If the actions described above are not
successful in achieving profitability or additional financing cannot be
obtained, the Company would be materially and adversely affected and there is
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments necessary if the Company
becomes unable to continue operations for any reason.

Note 12 - Subsequent Event

On July 6, 2001, the Company issued an 8% convertible note in the principal
amount of $750,000. Net proceeds aggregating $610,250 will be used to fund
working capital and expansion. The note is convertible into shares of the
Company's common stock, as described in the Convertible Note Purchase Agreement
("the Agreement"). In addition the Company issued warrants to the purchaser of
the convertible note to acquire shares of the Company's common stock, as
described in the Agreement. The Agreement also provides the purchaser demand and
piggyback registration rights.

Note 13 - Restatement of Consolidated Financial Statements

         The consolidated financial statements for the year ended December 31,
2000 have been restated to reflect the company's change in its method of
accounting for business combinations in accordance with Accounting Principles
Board Opinion No. 16 ("APB 16"). Pursuant to APB 16, the purchase method
requires the reported income of an acquiring corporation include the operations
of the acquired company after acquisition, based on the cost to the acquiring
corporation. The consolidated financial statements have been restated to reflect
the operating results of the Whoofnet and 2Sendit acquisitions from the
respective dates of acquisition. The previously issued consolidated financial
statements included in the company's registration statement on Form SB-2/A filed
on August 2, 2001 included the operating results of Whoofnet for the period from
March 6, 2000 (date of inception) to December 31, 2000 and 2 Sendit for the
period from January 1, 2000 to December 31, 2000 in error. The effect of the
correction on net loss for the year ended December 31, 2000 was a decrease in
net loss of $930,732 or $.02 per share. In addition, the consolidated financial
statements for the year ended Decemebr 31, 2000 included in the company's
registration statement on Form SB-2 Amendment No. 2 filed on October 12, 2001
have been restated to reflect a correction in the computation of goodwill in the
amount of $276,476, a correction of the computation of amortization of goodwill
of ($165,488) and a correction in the value assigned to common stock issued to
consultants, officers and directors (see Note 8) to recognize approxitmate fair
market value. The effect of such corrections on net loss for the year ended
December 31, 2000 was an increase in net loss pf $2,579,102 or $.05 per share.


                                       21