UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark one)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2001
For the quarterly period ended: September 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number: 33-17679
North American DataCom, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware	84-1067694
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
751 County Road 989, Building 1000, Iuka, MS	38852
(Address of principal executive offices)	(Zip Code)
662-424-5050
(Issuer’s telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such report (s)), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
Common Stock, $.0001 par value, 98,656,448 shares outstanding as of May 10, 2001.
Common Stock, $.0001 par value, 100,547,074 shares outstanding as of November 19, 2001.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION	Page
Item 1. Financial Statements (Unaudited).	2
Item 2. Management’s Discussion and Analysis.	11
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.	19
Item 2. Changes in Securities and Use of Proceeds.	19
Item 3. Default Upon Senior Securities.	20
Item 4. Submission of Matters to a Vote of Security Holders.	20
Item 5. Other Information.	20
Item 6. Exhibits and Reports on Form 8-K	21

PART I. FINANCIAL INFORMATION	Page

Item 1. Financial Statements (Unaudited).	3
Item 2. Management’s Discussion and Analysis of Financial Condition and	12
Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	18

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.	18
Item 2. Changes in Securities and Use of Proceeds.	20
Item 3. Default Upon Senior Securities.	20
Item 4. Submission of Matters to a Vote of Security Holders.	20
Item 5. Other Information.	20
Item 6. Exhibits and Reports on Form 8-K.	20

PART I FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Unaudited Condensed Financial Information	Page
Condensed Financial Information (Unaudited)	Page
Condensed Consolidated Balance Sheets as of March 31, 20001 (Unaudited)	2
Condensed Consolidated Balance Sheets	2
Condensed Consolidated Statements of Operation (Unaudited)	4
Condensed Consolidated Statements of Operations	3
Condensed Consolidated Statements of Comprehensive Operations (Unaudited)	4
Condensed Consolidated Statements of Comprehensive Loss	4
Condensed Consolidated Statements of Changes in Stockholders' Equity	4
Condensed Consolidated Statements of Cash Flows (Unaudited)	5
Condensed Consolidated Statements of Cash Flows	4
Notes to Condensed Consolidated Financial Statements	65

NORTH AMERICAN DATACOM, INC. Consolidated Balance Sheets as of ~~March~~September 3130, 2001 (Unaudited) and June 30, ~~2000~~2001

ASSETS		~~March~~Sept. 3130, 2001		June 30, ~~2000~~2001
Current Assets	$		$
		(Unaudited)
Cash and Cash Equivalents		78,868		20,948
Current Assets
Accounts Receivable, Net of Allowance of $2,400 for March 31
Cash and Cash Equivalents	$	30,783	$	18,484
and June 30, 2000		134,916		37,848
Accounts Receivable, Net of Allowance of $2,400 for September 30, 2001
Notes Receivable, Net of Long-term Maturities		-		2,920
and June 30, 2001		69,513		76,230
Inventories		57,~~728~~541		~~438~~5,978
Employee Advances		2,555		~~102~~2,555
Total Current Assets		222,066		164,709
Other		8,000		-
Investments (Note 3)		-		90,000
Total Current Assets	$	118,392	$	103,247
Investments (Note 3)		-		-
Property and Equipment
Conduit and Optic Fiber		14,524,203		14,396,891
Conduit and Optic Fiber (Note 4)		14,525,905		14,525,905
Computers and Equipment		~~727~~728,~~233~~102		~~717~~728,~~416~~032
Communications Equipment and Wireless Towers		~~626~~638,~~169~~568		~~371~~627,~~688~~507
Software		~~351~~352,~~124~~374		-351,184
Other Equipment		65,215		77,278
Other		96,520		123,763
Vehicle		34,201		-
Total Property and Equipment		16,341,469		16,356,391
Leasehold Property and Improvements		15,960		15,880
Less Accumulated Depreciation and Amortization		(134,371)		(107,992)
Office Furniture		3,681		3,231
Net Property and Equipment		16,207,098		16,248,399
Total Property and Equipment		16,347,786		15,582,384
Other Assets (Note 5)		702,924		651,794
Less Accumulated Depreciation and Amortization		(87,287)		(35,945)
TOTAL ASSETS	$	17,028,414	$	17,003,440
Net Property and Equipment		16,260,499		15,546,439
Advance to Affiliate (Note 5)		200,000		-
Other Assets (Note 6)		470,480		449,832
TOTAL ASSETS	$	17,153,046	$	16,250,980
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade Note Payable, Net of Unamortized Discount (Note 4)	$	15,118,000	$	15,~~152~~118,~~173~~000
Accounts Payable		1993,~~104,249~~358		241,~~034~~044,558
Accrued Expenses and Other Liabilities (Note 8)		364,288		275,552
Accrued Expenses		719,292		692,103
Convertible Notes Payable		33,541		-
Dividends Payable		-		55,950
Total Current Liabilities		16,620,078		15,451,759
Notes Payable (Note 10)		140,000		-
Payable to Director		-		23,917
Convertible Notes Payable		33,541		33,541
TOTAL LIABILITIES	$	16,620,078	$	15,475,676
Total Current Liabilities		17,004,191		16,944,152
Commitments and Contingencies		-		-
Payable to Officer		-		25,662
Stockholders' Equity
TOTAL LIABILITIES	$	17,004,191	$	16,969,814
Convertible Preferred Stock, No Par Value; 400,000 Shares
Commitments and Contingencies (Notes 4, 5, 6 and 8)		-		-
Authorized		-		-
Stockholders' Equity (Note 9)
Convertible Preferred Stock, No Par Value; 400,000 Shares Authorized		-		-
Series B Convertible Preferred Stock, $.0001 Par Value;
6% Cumulative; 500,000 Shares Authorized; 1,504 and 300 Shares
6% Cumulative; 5,000 Shares Authorized; 2,003 and 1,756 Shares
Issued and Outstanding as of March 31, 2001 and June 30, 2000.		1,503,641		300,000
Issued and Outstanding as of September 30, 2001 and June 30, 2001		2,002,432		1,755,492
Common Stock, $.0001 Par Value 150,000,000 Shares Authorized, 98,656,448 shares issued and outstanding as March 31, 2001and 97,992,758 Shares Issued and Outstanding at June 30, 2000		9,865		9,798
Common Stock, $.0001 Par Value 150,000,000 Shares Authorized,
Additional Paid-In Capital		3,880,963		2,667,567
100,547,074 and 100,167,074 Shares Issued and Outstanding
Other Accumulated Comprehensive Income		(189,200)		(99,200)
as September 30, 2001and June 30, 2000, respectively		10,054		10,016
Retained Earnings (Accumulated Deficit)		(4,672,301)		(2,102,861)
Additional Paid-In Capital		4,585,656		4,585,655
Total Stockholders' Equity		532,968		775,304
Other Accumulated Comprehensive Income		(250,000)		(250,000)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,153,046	$	16,250,980
Accumulated Deficit		(6,380,106)		(6,067,538)
See Accompanying Notes to Condensed Consolidated Financial Statements
TOTAL STOCKHOLDERS' EQUITY		24,223		33,626
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,028,414	$	17,003,440
See Accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

NORTH AMERICAN DATACOM, INC.
Condensed Consolidated Statements of Operation
(Unaudited)
		For the Three Months Ended March 31, 2001		For the Three Months Ended March 31, 2000		For the Nine Months Ended March 31, 2001		For the Nine Months Ended March 31, 2000
		For the Three Months Ended September 31, 2001		For the Three Months Ended September 31, 2000
Net Service Revenues	$	~~201~~138,~~911~~923	$	69,~~787~~432	$	~~358,284~~	$	~~167,997~~
Cost of Services		6030,~~345~~335		2248,~~420~~014		~~157,071~~		~~29,742~~
Gross Profit		~~141~~108,~~566~~588		4721,~~367~~418		~~201,213~~		~~138,255~~
Expenses:
Selling, General and Administrative		421,198		715,864
Selling, General and Administrative		731,727		326,568		2,245,174		1,009,792
Operating Loss		(312,610)		(694,446)
Operating Loss		(590,161)		0		(2,043,961)		(871,537)
Other Income (Expense):
Other Income (Expense), Net		(176,410		876,263		(525,473)		6,233
Interest Expense		-		(182,416)
Loss Before Income Tax Expense (Benefit)		(766,571)		(279,201)		(2,569,433)		(865,304)
Other		42		7,776
Income Tax Expense (Benefit)		-		-		-		-
Total Other Income (Expense)		42		(174,640)
Net Loss	$	(766,571)	$	(279,271)	$	(2,569,433)	$	(865,304)
Loss Before Income Tax Expense (Benefit)	$	(312,568)	$	(869,086)
Basic and Diluted Loss Per
Income Tax Expense (Benefit)		-		-
Common Share (Note 1)	$	(0.01)	$	(0.003)	$	(0.03)	$	(0.01)
Net Loss	$	(312,568)	$	(869,086)
Weighted Average Number of Common
Net Loss Applicable to Common Shareholder		(312,568)		(869,086)
Shares Outstanding
Basic and Diluted Loss per Common Share (Note 1)	$	(0.003)	$	(0.01)
Basic and Diluted (Note 1)		98,656,448		4,106,655		98,546,362		41,837,863
Weighted Average Number of Common Shares Outstanding
See Accompanying Notes to Condensed Consolidated Financial Statements
Basic and Diluted (Note 1)		100,420,407		91,393,141
See Accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

NORTH AMERICAN DATACOM, INC.
Condensed Consolidated Statements of Comprehensive Income
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
		For the Three Months Ended March 31, 2001		For the Three Months Ended March 31, 2000		For the Nine Months Ended March 31, 2001		For the Nine Months Ended March 31, 2000
		For the Three Months Ended September 31, 2001		For the Three Months Ended September 31, 2000
Net loss	$	(~~766~~312,~~571~~568)	$	(~~279~~869,~~271~~086)	$	~~(2,2569,433)~~	$	~~(865,304)~~
Net change in unrealized loss on
Net change in unrealized loss on investments (Note 3)		-		(30,000)
investments (Note 3)		-		(41,650)		(90,000)		(41,650)
Comprehensive loss	$	(312,568)	$	(899,086)
Comprehensive loss	$	(766,571)	$	(320,921)	$	(2,659,433)	$	(906,954)
See Accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
See Accompanying Notes to Condensed Consolidated Financial Statements

NORTH AMERICAN DATACOM, INC.

Condensed Consolidated Statements of Changes in Stockholders Equity

(Unaudited)

												Net
	Series B Preferred			Common Stock				Additional				Unrealized
	Stock					Par		Paid-In		Accumulated		Loss on		Stockholders'
	Shares		Amount	Shares		Value		Capital		Deficit		Investments		Equity
Balance, June 30, 2000	300		$300,000	97,992,758		$9,798		$2,667,567		$(2,102,861)		$(99,200)		$775,304
Balance, June 30, 2001	1,756	$	1,755,492	100,167,074	$	10,016	$	4,585,656	$	(6,067,538)	$	(250,000)	$	33,626
Issuance of Series B
preferred stock	~~500~~191		~~500~~190,~~000~~990	-		-		-		-		-		~~500~~190,~~000~~990
Sale of common Stock	-		-	317,500		32		634,968		-		-		635,000
Preferred Stock Issuance
Sale of common Stock	-		-	150,000		15		442,110		-		-		442,125
of additional Series B
Exercise of stock
Preferred Stock (Note 7)	56		55,950	-		-		-		-		-		55,950
options to acquire
common stock	-		-	11,542		1		9,999		-		-		10,000
Exercise of stock
options to acquire
common stock	-		-	115,423		12		9,988		-		-		10,000
Issuance of shares
for services	-		-	1,000		-		2,000		-		-		2,000
for services rendered	-		-	90,000		9		12,591		-		-		12,600
Net unrealized loss
from investments	-		-	-		-		-		-		(30,000)		(30,000)
Net loss for the period
ended September 30, 2000	-		-	-		-		-		(869,086)		-		(869,086)
Balance, September 30, 2000	800		$800,000	98,588,223		$9,858		$3,766,632		$(2,971,947)		$(129,200)		$(1,475,343)
Issuance of shares for services	-		-	20,225		2		44,188		-		-		44,190
Issuance of shares for
financial services rendered	-		-	30,000		3		59,997		-		-		60,000
equipment	-		-	40,000		4		9,996		-		-		10,000
Issuance of shares for
financial services rendered	-		-	3,000		1		8,842		-		-		8,843
settlement of claims (Note 7)	-		-	250,000		25		25,600		-		-		25,625
Exercise of stock
Stock options (Note 10)	-		-	-		-		8,000		-		-		8,000
options to acquire
common stock	-		-	15,000		1		1,304		-		-		1,305
Issuance of Series B
preferred stock	326		325,904	-		-		-		-		-		325,904
Net change in unrealized loss
from investments	-		-	-		-		-		-		(60,000)		(60,000)
Net loss for the period
ended December 31, 2000	-		-	-		-		-		(933,784)		-		(933,784)
ended September 30, 2001	-		-	-		-		-		(312,568)		-		(312,568)
Balance, December 31, 2000	1,126		$1,125,904	98,656,448		$9,865		$3,880,963		$(3,905,731)		$(189,200)		$(921,801)
Balance, September 30, 2001	2,003	$	2,002,432	100,547,074	$	10,054	$	4,641,843	$	(6,380,106)	$	(250,000)	$	24,223
Issuance of Series B
See Accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
preferred stock	378		$377,738	-		-		-		-		-		377,738
Net change in unrealized loss
from investments	-		-	-		-		-		-		(60,000)		(60,000)
Net loss for the period
ended March 31, 2001	-		-	-		-		-		(766,571)		-		(766,571)
Balance, March 31, 2001	1,504		$1,503,641	98,656,448		$9,865		$3,880,963		$(4,672,301)		$(189,200)		$532,968
See Accompanying Notes to Condensed Consolidated Financial Statements

NORTH AMERICAN DATACOM, INC.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
		For the Nine Months Ended March 31, 2001		For the Nine Months ended March 31, 2000
		For the Three Months Ended Sept. 30, 2001		For the Three Months Ended Sept. 30, 2000
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss	$	(2312,~~569,433~~568)	$	(~~865~~869,~~304~~086)
Adjustment to reconcile net loss to net cash used for Operating Activities:
Adjustment to reconcile net loss to cash used in operations:
Depreciation and amortization (Note 4)		~~649~~40,~~786~~949		3018,~~374~~545
Changes in operating assets and liabilities, net of acquisitions::
Noncash interest charge (Note 4)		-		182,545
Increase (Decrease) in accounts receivable		(97,068)		(16,001)
Changes in operating assets and liabilities:
Increase (Decrease) in notes receivable		2,920		(129,105)
Decrease in accounts receivable		6,717		99,943
Increase (Decrease) in inventory		(5,290)		-
Increase in inventory		(1,563)		(1,550)
Increase (Decrease) in other assets and employee advances		57,680		(38,037)
(Increase) Decrease in other assets and employee advances		34,158		(135,489)
Increase (Decrease) in accounts payable and accrued expenses		1,283,984		(146,448)
Increase in accounts payable and accrued expenses		24,215		183,101
NET CASH USED BY OPERATING ACTIVITIES		(677,421)		(1,165,521)
NET CASH USED IN OPERATING ACTIVITIES		(208,092)		(522,273)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(801,347)		(179,529)
Purchases of property and equipment		(18,953)		(143,977)
Purchase of investments		-		(52,851)
Proceeds from the sale of property and equipment		27,017		-
Advance to affiliate (Note 5)		(200,000)		-
Other advance (Note 5)		-		(200,000)
NET CASH USED FOR INVESTING ACTIVITIES		(1,001,347)		(232,380)
NET CASH PROVIDE BY (USED IN) INVESTING ACTIVITIES		8,064		(343,977)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock (Note 7)		1,098,431		979,971
Proceeds from sale of common stock (Note 9)		-		1,097,125
Payments on trade note payable		~~(575,000)~~-		-(575,000)
Proceeds from sale of preferred stock (Note 7)		1,203,641		-
Proceeds from sale of preferred stock (Note 9)		165,327		500,000
Increase notes payable		(23,917)		(54,112)
Increase in notes payable (Note 7)		47,000		-
Proceeds from issuance of convertible notes payable		33,541		81,915
NET CASH PROVIDED BY FINANCING ACTIVITIES		212,327		1,022,125
NET CASH PROVIDED BY FINANCING ACTIVITIES		1,736,696		1,007,774
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:		12,299		155,875
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:		57,928		(389,127)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		18,484		20,948
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		20,940		722,353
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	30,783	$	176,823
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	78,868	$	333,226
See Accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
Supplemental schedule of non-cash operating activities:
Issuance of common stock for payment of accounts payable	$	115,032	$	-
See Accompanying Notes to Condensed Consolidated Financial Statements

NORTH AMERICAN DATACOM, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~The accompanying~~Basis unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2001 and the results of its operations and cash flows for the three-and nine-month periods ended March 31, 2001 and 2000. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of June 30, 2000 including notes thereto, included in the Company’s 1999 Annual Report on Form 10-K for fiscal year ended June 30, 2000.Presentation

The accompanying ~~Company~~unaudited ~~intends~~condensed toconsolidated ~~provide~~financial ~~communications~~statements ~~and~~of North American ~~information~~DataCom, ~~technology~~Inc. ~~services~~(the “Company”) have been prepared in accordance with anaccounting principles ~~emphasis~~generally onaccepted ~~broadband~~in ~~fiber~~the ~~optic~~United ~~and~~States ~~wireless~~of America for interim financial ~~telecommunications~~information ~~services~~and ~~that~~with ~~support~~the ~~enterprise~~instructions ~~data~~for ~~storage~~Form ~~solutions~~10-Q and Article 10 of Regulation S-X. Accordingly, ~~primary~~they ~~for~~do not include all of the information and footnotes required by ~~customers~~accounting principles generally accepted in ~~southern~~the United States of America for complete financial statements.

~~The~~In the opinion of management, the accompanying unaudited condensed consolidated financial statements include ~~the~~all adjustments, consisting only of normal recurring adjustments, ~~accounts~~necessary for the fair presentation of the Company’s financial position as of September 30, 2001 and its ~~wholly~~results ~~owned~~of ~~subsidiaries.~~operations ~~All~~and ~~material~~cash ~~intercompany~~flows for the three-month ~~accounts~~periods ~~and~~ended ~~transactions~~September ~~are~~30, ~~eliminated~~2001 and 2000. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of June 30, 2001 including the notes thereto

~~The~~Nature ~~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. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Business

~~Certain~~The ~~estimates~~Company ~~used~~intends ~~by management are particularly susceptible~~ to ~~significant~~provide ~~changes~~communications inand ~~the~~information ~~economic environment. These include~~technology ~~estimates~~services ofwith ~~the~~an ~~realization~~emphasis ofon ~~long-lived~~broadband ~~assets~~fiber optic and ~~deferred~~wireless ~~tax assets. Each of these~~telecommunications ~~estimates,~~services asthat ~~well~~support asenterprise ~~the~~data ~~related~~storage ~~amounts reported in the financial statements~~solutions, ~~are sensitive~~primarily tofor ~~near~~customers ~~term changes~~ in ~~the factors used to determine them. A significant change~~ insouthern ~~any~~United ~~one of those factors could result in the determination of amounts different from those reported in the consolidated financial statements and the effect of such differences could be material~~States.

~~Investments~~Principles ~~are classified as available-for-sale and are reported at estimated fair value, with unrealized gains and losses, net~~ of taxes, reported as a separate component of stockholders' equity. Realized gains and losses, and declines in value judged to be other than temporary, are included in other income. The cost of securities sold is based on the specific identification method and interest earned is included in other income.Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain estimates used by management are particularly susceptible to significant changes in the economic environment. These include estimates of the realization of investments, long-lived assets and deferred tax assets. Each of these estimates, as well as the related amounts reported in the financial statements, are sensitive to near term changes in the factors used to determine them. A significant change in any one of those factors could result in the determination of amounts different from those reported in the consolidated financial statements and the effect of such difference could be material.

Investments

Investments are classified as available-for-sale and are reported at fair value, with unrealized gains and losses, net of taxes, reported as a separate component of stockholders’ equity.

Realized gains and losses, and declines in value judged to be other then temporary, are included in other income. The cost of securities sold is based on the specific identification method and interest earned is included in other income.

Revenue Recognition

Revenue is recognized when services are rendered.

~~Income taxes are calculated using the liability method specified by Statement of Financial Accounting Standards No. 109, Accounting for Income~~ Taxes ~~("SFAS 109"). Under SFAS 109, the Company provides for estimated income taxes payable or refundable~~ on current year income tax returns as well as the estimated future tax effects attributable to temporary differences and carry forwards. Measurement of deferred income taxes is based upon enacted tax laws and tax rates, with the measurement of deferred income tax assets reduced by estimated amounts of tax benefits not likely to be realized.Income

~~Basic~~Income taxes ~~and~~are ~~diluted~~calculated ~~loss~~using ~~per~~the ~~share~~liability ofmethod ~~common~~specified ~~stock~~by Statement of Financial ~~have~~Accounting ~~been~~Standards ~~computed~~No. ~~based~~109, ~~upon~~Accounting for Income Taxes (“SFAS 109”). Under SFAS 109, the ~~weighted~~Company ~~average~~provides ~~number~~for ofestimated ~~shares~~income ~~outstanding~~taxes ~~during~~payable ~~the quarter~~or ~~ending~~refundable ~~March~~on ~~31,~~current year ~~2001~~income ~~and,~~tax ~~after~~returns ~~giving~~as ~~effect~~well toas the ~~merger~~estimated ~~stock~~future ~~split,~~tax ~~the~~effects attributable to ~~quarter~~temporary ~~ending~~differences ~~March~~and ~~31,~~carry ~~2000~~forwards. ~~Common~~Measurement ~~stock~~of ~~equivalents~~deferred ~~consisting~~income oftaxes ~~stock~~is ~~options,~~based ~~convertible~~upon ~~notes,~~enacted ~~convertible~~tax ~~preferred~~laws ~~stock~~ and ~~warrants~~tax ~~were~~rates, ~~not~~with ~~considered~~the inmeasurement ~~either~~of deferred income tax assets ~~period,~~reduced asby ~~their~~estimated ~~effect~~amounts ~~would~~of tax benefits not likely to be ~~anti-dilutive~~realized.

~~The~~Loss ~~following~~per ~~details the Company's actual common stock equivalents (in post-merger shares):~~Share

	March 31, 2001	March 31, 2000
Stock Options	14,104,216	15,116,301
Convertible Notes	47,208	1,903,130
Warrants	-	80,000
Convertible Preferred Stock	1,808,000	23,318,779
	15,959,424	41,418,210

Basic and diluted loss per common share have been computed based upon the weighted average number of shares outstanding during the three-month periods ending September 30, 2001 and 2000. Common stock equivalents consisting of stock options, convertible notes, convertible preferred stock and warrants were not considered in either period, as their effect would be anti-dilutive. The maximum number of shares assuming full conversion from the Company’s per share computations is as follows:

PROPERTY, PLANT AND EQUIPMENT

	September 30, 2001	September 30, 2000
Stock Options	13,751,916	14,611,178
Convertible Notes	47,208	-
Convertible Preferred Stock	5,453,851	400,000
	19,252,975	15,011,178

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Major renewals and improvements are capitalized, while maintenance and repairs are expensed when incurred. Depreciation is computed over the estimated useful lives of depreciable assets using the straight-line method. Useful lives for property and equipment are as follows:

	Years
Conduit and optic fiber	25
Communications equipment and wireless towers 3-10	3-10
Communications equipment and wireless towers	3-10
Computers	5
Other Equipment	3-10
Leasehold improvements	Term of lease
Software	3

The carrying values of long-lived assets are periodically reviewed by the Company and impairments would be recognized if the expected future operating non-discounted cash flows derived from an asset were less than its carrying value.

Licenses

Licenses relate to the Company’s FCC License to provide personal communications and paging services. Generally, amortization begins with the commencement of service to customers and is computed using the straight-line method over an estimated useful life of 15 years.

Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments, consisting of cash and cash equivalents, notes and accounts receivable, accounts payable and payable to director approximate their respective fair values.

~~Fiber~~Business Optic and Broadband Wireless Network: The Company is building a fiber optic and broadband wireless communications network, which will allow for the high-speed transmission of large amounts of data. It is expected that businesses, government agencies and institutions will use the Company's network as a preferred alternative to existing telephone and satellite data transmission systems. The Company installed a wireless network connecting Iuka, MS to Atlanta, GA and Memphis, TN. This wireless network currently operates at a DS-3 bandwidth level.Lines

~~Internet~~Fiber ~~Access~~Optic and Broadband Wireless Network: AsThe ofCompany ~~March~~is ~~31,~~building ~~2001~~a fiber optic and broadband wireless communications network, which will allow for the high-speed transmission of large ~~Company~~amounts ~~provides~~of ~~Internet~~data. ~~service~~It inis ~~Mississippi~~expected that businesses, ~~Tennessee~~government agencies and ~~Alabama.~~institutions ~~Internet services~~will ~~provided~~use by the Company’s ~~include~~network ~~basic~~as ~~dial-up~~a ~~access~~preferred alternative to ~~the~~existing ~~Internet~~telephone ~~through standard~~and ~~computer~~satellite ~~modems,~~data ~~high~~transmission ~~speed~~systems. ~~Internet~~The ~~access~~Company installed a wireless network connecting Iuka, ~~and~~MS ~~the~~to ~~design~~Atlanta, GA and ~~hosting~~Memphis, ofTN ~~websites~~during ~~for~~fiscal 2001. This wireless network ~~customers~~currently operates at a DS-3 bandwidth level.

~~Remote~~The ~~Data~~Company ~~Storage:~~plans ~~During~~to assist ~~fiscal 2000~~corporations, ~~the Company~~government ~~took~~agencies ~~delivery~~and ofinstitutions ~~equipment~~in ~~that~~the ~~will~~design ~~allow third parties to store~~ and ~~access data~~installation ~~stored~~of intheir ~~digital~~own ~~form~~internal ontelecommunications ~~computer~~networks. ~~systems~~The ~~maintained and operated by the~~ Company inplans ~~its facility~~to ~~in Iuka, MS. As~~ use state-of-the-art ~~March 31~~technology, ~~2001,~~which ~~the~~will ~~Company~~enable ~~has started~~ its ~~operation~~clients ~~with~~to ~~an initial~~transfer ~~agreement.~~and ~~This~~receive ~~agreement~~large amounts ~~provided~~of ~~$62,884~~data inat ~~revenues~~high ~~for~~speed ~~the~~between ~~EDS~~both ~~line~~internal inand ~~this quarter~~external sources.

~~Telecommunication~~In ~~Projects~~March ~~and~~2000, ~~Consulting: The~~the Company ~~plans~~entered tointo ~~assist~~an ~~corporations,~~agreement ~~government~~with ~~agencies~~Qwest ~~and~~Communications ~~institutions~~ in which the ~~design~~Company purchased ~~and~~504 ~~installation~~miles of ~~their~~conduit ~~own~~installed ~~internal~~along ~~telecommunications~~the ~~networks.~~CSX ~~The~~railroad ~~Company~~track ~~plans~~from New Orleans, Louisiana to ~~use~~Mobile, ~~state-~~Alabama, and from Pensacola, Florida to Jacksonville, Florida. Fiber optic cable has not yet been installed within such conduit purchased from Qwest Communications. The agreement with Qwest calls for payments of- approximately $15 million over the~~-art~~ ~~technology~~course of the agreement, all which ~~will~~is ~~enable~~currently ~~its~~past ~~clients~~due toby ~~transfer~~the ~~and~~Company. ~~receive~~Qwest has declared a ~~large~~default, ~~amounts~~but ofhas ~~data~~not atinitiated ~~high~~arbitration ~~speed~~or ~~between~~other ~~both~~proceedings ~~internal~~to ~~and~~recover ~~external~~the ~~sources~~conduit.

AtIn ~~present~~August 2000, the Company ~~operates~~entered ~~two~~into ~~segments,~~an agreement with a third-party contractor to lay fiber conduit ~~Internet~~between ~~access~~Atlanta, ~~including~~Georgia ~~paging~~and Chattanooga, Tennessee and ~~remote~~from ~~data~~Chattanooga ~~and~~to ~~storage~~Memphis, Tennessee. The contractor did not complete the conduit installation. The Company has not made any payments under this agreement. This agreement was terminated due to ~~consumers~~changes ~~and~~in the ~~small~~schedule of installations. The Company plans to amend certain terms of the agreement ~~businesses~~based upon new schedules. The Company has installed 24 miles of conduit, of which approximately 8 miles was sold to Bell South in fiscal 2001, providing access to the Company’s enterprise data center in Iuka, Mississippi.

2While the Company is building its fiber network, the Company has installed a communications tower to provide wireless connectivity, initially at 500 MBPS, from the Company’s facility in Iuka, Mississippi into the nationwide Internet and telecommunications system through Atlanta and Memphis. This ~~RECENT~~provides ~~ACCOUNTING~~the ~~PRONOUNCEMENTS~~Company with an interim capability to test market its enterprise data storage services, web-hosting services, and competitive local exchange carrier (CLEC) and interstate exchange carrier (IXC) telephone services to select markets.

InInternet ~~June 1998, the Financial Accounting Standards~~Access: ~~Board~~As ~~issued~~of ~~SFAS~~September ~~No.~~30, ~~133~~2001, ~~Accounting~~the ~~for~~Company ~~Derivative~~provides ~~Instruments~~Internet ~~and~~access ~~Hedging~~services ~~Activities ("SFAS 133"). SFAS 133 requires companies~~ to ~~recognize~~1,455 ~~all derivatives contracts~~customers ~~as either assets or liabilities~~ in ~~the~~Mississippi, ~~balance~~Tennessee ~~sheet~~ and ~~to measure them at fair value~~Alabama. ~~If certain~~Internet ~~conditions~~services ~~are~~provided ~~met,~~by athe ~~derivative~~Company ~~may be specifically designated as a hedge, the~~include ~~objective~~basic ofdial-up ~~which~~access is to ~~match~~ the ~~timing~~Internet ofthrough ~~gain~~standard orcomputer ~~loss~~modems, ~~recognition~~high onspeed ~~the hedging~~Internet ~~derivative~~access, ~~with~~and the ~~recognition~~design ofand ~~(i)~~hosting ~~the~~of ~~changes~~websites infor ~~the~~customers. ~~fair~~As ~~value of~~ the ~~hedged~~Company’s ~~asset~~fiber oroptic ~~liability~~and ~~that~~broadband ~~are~~wireless ~~attributable~~network toexpands, the ~~hedged~~Company ~~risk~~will orattempt ~~(ii)~~to ~~the~~market ~~earnings effect of the~~its ~~hedged~~Internet ~~forecasted~~access ~~transaction.~~provider ~~For~~services ato ~~derivative~~businesses ~~not~~and ~~designated~~retail ascustomers aalong ~~hedging instrument,~~ the ~~gain~~route ~~or loss is recognized in income in~~ of the ~~period of change~~network.

InDigital ~~June~~and ~~2000,~~Alpha Paging ~~the~~Services: ~~FASB~~Through ~~issued~~its ~~Statement~~wholly-owned ~~of Financial~~subsidiary, ~~Accounting~~Action ~~Standards~~Communications, NoInc. ~~138~~ (“Action”), ~~"Accounting~~the ~~for~~Company ~~Derivative~~provides ~~Instruments~~digital and ~~Certain~~ ~~Hedging~~alpha ~~Activities~~numeric ~~(an~~paging ~~amendment~~services ~~of FASB Statement No. 133)." The adoption of~~to ~~SFAS~~nine ~~138~~southeastern ~~did~~states ~~not~~and ~~have~~is aexpanding ~~material~~its ~~impact~~coverage onarea ~~the~~to ~~results~~include portions of ~~operations, financial position~~the eastern and ~~liquidity~~southwestern ofUnited ~~the Company~~States. ~~SFAS~~As ~~133,~~a asspecialized ~~amended~~mobile byradio ~~138~~carrier, ~~was~~Action ~~effective for all fiscal~~also ~~quarters~~provides ofdispatch, ~~all~~telephone ~~fiscal~~and ~~years~~global ~~beginning~~position ~~after~~system ~~June 15, 2000~~services.

~~The~~Remote ~~Financial Accounting Standards Board issued~~Data ~~Interpretation~~Storage: ~~("Interpretation")~~During ~~No.~~fiscal 442000, ~~"Accounting~~the ~~for~~Company ~~Certain Transactions~~took ~~involving~~delivery ~~Stock Compensation, an Interpretation~~ of ~~APB Opinion No. 25" which is effective July 1~~$575,000 ~~2000. Interpretation No. 44 clarifies (a) the definition~~ of ~~employee~~ ~~for~~equipment ~~purposes of applying Opinion 25, (b) the criteria for determining whether a~~that ~~stock~~will ~~compensation~~allow ~~plan~~third ~~qualifies~~parties ~~as a non-compensatory plan, (c) the accounting consequence of various modifications~~ to ~~the~~store ~~terms of a previously fixed stock option or award,~~ and ~~(d)~~access ~~the~~data ~~accounting~~stored ~~for~~in andigital ~~exchange~~form ofon ~~stock compensation awards in a business~~computer ~~combination.~~systems ~~Adoption~~maintained ofand ~~the~~operated ~~provisions~~by of the ~~Interpretation~~Company ~~has~~in ~~not~~its ~~had~~facility ain ~~significant impact~~Iuka, ~~on our financial statements~~Mississippi.

In ~~December~~November ~~1999~~2000, the Company ~~SEC~~was ~~issued~~awarded ~~Staff~~a ~~Accounting~~$300,000 research contract to demonstrate commercial applications of ~~Bulletin~~statewide ~~("SAB")~~remote Nosensing data. ~~101~~The Company worked with PixSell, --Inc., ~~Revenue~~a ~~Recognition~~Mississippi information technology company, and the University of Mississippi’s Department of Computer and Information Science. Under the six-month contract, which ~~outlines~~was completed in September 2001, the ~~basic~~Company expanded and enhanced the existing “Mississippi ~~criteria~~View” ~~that~~data ~~must~~management besystem. ~~met~~The View System was developed by PixSell to ~~recognize~~provide greater ~~revenue~~access to Mississippi statewide remote sensing satellite and ~~provides~~imagery. ~~guidance~~The enhanced archived View System makes it a Real Time asset for ~~presentation~~education, ~~of revenue~~state agencies, and ~~for~~MSCI commercial ~~disclosure~~users. ~~related~~MSCI tois ~~revenue~~a ~~recognition~~partnership ~~policies~~between inthe ~~financial~~National ~~statements~~Aeronautics and Space ~~filed~~Administration ~~with~~(NASA), the ~~Securities~~University ~~and~~of ~~Exchange~~Mississippi, ~~Commission.~~and Wehigh ~~believe~~technology ~~that~~businesses. ~~adopting~~NASA and the ~~provisions~~ State of ~~SAB~~Mississippi Nofund MSCI projects. ~~101~~The ~~will~~mission ~~not~~of ~~have~~MSCI is to develop a remote ~~material~~sensing ~~impact~~industry onin ~~our~~Mississippi ~~financial~~by ~~position~~commercializing orthe ~~results~~technologies ofdeveloped by ~~operations~~NASA at the Stennis Space Center in Hancock County, Mississippi.

Application Service Provider: In ~~September~~August ~~2000~~2001, the ~~Financial~~Company ~~Accounting~~reached an agreement with Infusion Software ~~Standards~~Group, ~~Board~~LLC ~~issued~~(Infusion) ~~SFAS~~to ~~No.~~form ~~140~~Global PTX, ~~Accounting~~LLC. ~~for~~The ~~Transfers~~Company and ~~Servicing~~Infusion ofhave ~~Financial~~established ~~Assets~~an ~~and~~Application ~~Extinguishment~~Service ofProvider ~~Liabilities~~business ~~("SFAS~~to ~~140").~~design, ~~SFAS~~develop ~~140~~and ~~revises~~implement ~~the~~data warehousing ~~standards~~and ~~for~~data ~~accounting~~mining ~~for~~applications. ~~securitizations~~Global ~~and~~PTX ~~other~~will ~~transfers~~establish ofPrivate ~~financial~~Trade ~~assets~~Exchanges ~~and~~focusing ~~collateral~~on ~~and~~providing iscustomers ~~effective~~with an “end-to-end” solution for ~~fiscal~~their ~~years~~business strategies. ~~beginning~~Initial ~~after~~development ~~December~~activities ~~15,~~will ~~2000.~~be Wedesigned ~~believe~~to target the Manufacturing ~~that~~and ~~adopting~~Retail ~~SFAS~~Business ~~140~~Industry ~~will~~Sectors, ~~not~~specifically ~~have~~focused on vendor/customer supply chain management. Infusion is a ~~material~~specialized ~~impact~~software onand ~~our~~marketing ~~financial~~service ~~position~~provider orto ~~results~~enterprises ofthroughout ~~operations~~the United States.

3.At present, ~~INVESTMENTS~~the Company provides four distinct services to consumers and small businesses: Internet access, digital and alpha paging services, remote data storage and application services.

~~The Company's investments are classified as available-for-sale~~2. ~~The~~Recent ~~amortized~~Accounting cost, gross unrealized gains (losses) and estimated fair value, less the option price of $.12 per share, for these investments were as follows at March 31, 2001 and June 30, 2000. The Company has exercised its option rights, but has not yet been issued stock by NYRR, as legal issues are being worked out by Company counsel.Pronouncements:

March 31, 2001	Cost Basis	Gross Unrealized Gains	Estimated
		(Losses)	Fair Value
New York Regional Rail Corporation
Stock Options	$250,000	$(250,000)	$0
June 30, 2000
New York Regional Rail Corporation
Stock Options	$250,000	$(160,000)	$90,000

In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, Business Combinations (“SFAS 141”) and No. 142, Goodwill and Other Intangible Assets (“SFAS 142”), which collectively address business combinations and intangible assets acquired individually, with a group of other assets, or in a business combination. SFAS 141 and 142 will become effective July 1, 2002 and are not expected to have a material impact on the Company’s financial position or results of operations.

43. ~~PROPERTY, PLANT AND EQUIPMENT~~Investments:

InThe ~~March 2000, the~~ Company’s ~~acquired~~investments ~~504~~are ~~miles~~classified ~~of fiber~~as ~~optic conduit~~ available-for ~~$15~~-sale.1 ~~million from Qwest.~~ The ~~purchase price was to be paid over a~~ ~~12-month~~amortized ~~period ending March 31~~cost, ~~2001.~~gross ~~Accordingly,~~unrealized ~~imputed~~losses ~~interest~~and ofestimated ~~$723,109~~fair ~~was recorded as a discount~~value, ~~which~~less ~~is being amortized as an interest charge over~~ the ~~term~~option price of ~~the payable~~$0.12 ~~For~~per ~~the three and nine-month quarterly periods ended March 31~~share, ~~2001~~for ~~the interest~~these ~~charge~~investments ~~associated~~were ~~with~~as ~~this~~follows ~~payable~~at ~~was~~September ~~$176~~30,~~301~~ 2001 and ~~$540,827,~~June ~~respectively. The~~30, ~~Company is not current under the payment schedule provided in the bill of sale~~2001. The Company is currently renegotiating with the vendor for modifications of the payment terms under the bill of sale. Management believes it will be successful in its renegotiations with Qwest to modify the terms under the bill of sale.

On August 15, 2000, the Company entered into an agreement with a subsidiary of Norfolk Southern Company to lay fiber optic conduit between Atlanta, GA and Chattanooga, TN and from Chattanooga to Memphis, TN. The cost of this project is approximately $29 million. While approximately $2.9 million was due in October 2000, the third party contractor is five months late on its installation as of the date of this Quarterly Report. Therefore, we have not made any payments under this agreement. The Company and the contractor are currently discussing issues related to the delays in the installation and the timing of payments.

September 30, 2001	Cost Basis	Gross Unrealized Losses	Estimated Fair Value
New York Regional Rail Corporation
Stock Options	$250,000	$(250,000)	$0

June 30, 2001
New York Regional Rail Corporation
Stock Options	$250,000	$(250,000)	$0

54. ~~ADVANCE~~Property, TOPlant ~~AFFILIATE~~and Equipment:

In ~~July~~March 2000, the Company ~~and~~entered ~~Global~~into ~~Fiber~~an ~~Optic and~~agreement ~~Wireless~~with Qwest Communications, ~~Ltd.~~in ~~("Global")~~which ~~each~~the ~~advanced~~Company ~~$200~~purchased 504 miles of conduit installed along the CSX railroad track from New Orleans,~~000~~ ~~for~~Louisiana to ~~developing~~Mobile, aAlabama, ~~joint~~and ~~venture~~from toPensacola, ~~provide~~Florida ato 4Jacksonville,~~000~~ ~~mile~~Florida. ~~fiber~~Fiber optic ~~communications~~cable has ~~and~~not ~~Internet network~~yet inbeen ~~Turkey.~~installed ~~The~~within ~~Company~~such ~~and~~conduit ~~Global~~purchased ~~will~~from ~~each~~Qwest ~~have~~Communications. aThe agreement ~~fifty~~with ~~(50%)~~Qwest ~~percent~~calls ~~interest~~for ~~in the~~payments ~~joint~~by ~~venture. The~~the Company ~~will~~of beapproximately ~~required~~$15 tomillion ~~provide~~over the ~~electronic~~course ~~and communications~~of ~~technologies~~the agreement, ~~while~~all ~~Global~~of ~~will~~which ~~provide~~is ~~rights-of-way~~currently ~~and~~past ~~other~~due. ~~real~~Qwest ~~estate~~has declared a asdefault, ~~needed~~but inhas ~~Turkey.~~not ~~Currently~~initiated ~~the~~arbitration ~~advances~~or ~~are~~other ~~being~~proceedings ~~used~~to byrecover the ~~proposed~~conduit. The ~~joint~~$15 ~~venture to~~million ~~purchase~~became ~~rights-of-way~~due and ~~other~~payable ~~assets~~on toMarch be31, ~~utilized~~2001. inPreviously, the ~~future~~Company ~~operations~~had recorded ofa discount on the note payable of $723,109, which was fully amortized into ~~joint~~expense ~~venture~~at March 31, 2001.

6.The ~~OTHER~~Company ~~ASSETS~~has installed 24 miles of conduit, of which approximately 8 miles was sold to Bell South in February 2001, providing access to the Company’s enterprise data center in Iuka, Mississippi.

5. Other Assets:

Other assets consist of the following items as of:

	March 31, 2001	March 31, 2000
	For the period ended
FCC License, net of amortization of $32,890
	September 30, 2001	September 30, 2000
and $14,389, respectively	$337,110	$355,611
FCC License, net of amortization of
Deposits	37,000	0
$45,224 and $20,556, respectively	$324,776	$349,444
Prepaid expenses	34,580	32,431
Advance to Affiliates	200,000	-
Deferred income tax asset	61,790	61,790
Investment in Global PTX, LLC	93,000	-
Total	$470,480	$449,832
Other	85,148	229,710
	$702,924	$579,154

7In July 2000, the Company and Global Fiber Optic and Wireless Communications, Ltd. ~~STOCKHOLDERS'~~(“Global”) ~~EQUITY:~~each advanced $200,000 for developing a joint venture to provide a 4,000 mile fiber optic communications and Internet network in Turkey. The Company and Global will each have a fifty (50%) percent interest in the joint venture. The Company will be required to provide electronic and communications technologies, while Global will provide rights-of-way and other real estate as needed in Turkey. Currently, the advances are being used by the proposed joint venture to purchase rights-of-way and other assets to be utilized in the future operations of the joint venture. The advance is guaranteed by the majority shareholder and repayment is secured by certain Company payables to the majority shareholder.

In ~~May~~August ~~2000~~2001, the ~~Board authorized 500,000 shares~~ ofCompany ~~Series~~reached Ban ~~Convertible~~agreement ~~Preferred~~with ~~Stock,~~Infusion ~~par~~Software ~~value $.0001~~Group, ~~having~~LLC a(Infusion) ~~6% cumulative dividend. In June 2000, the Company authorized the sale of up~~ to ~~5,000~~form ~~shares of its~~Global ~~Series B Convertible Preferred Stock for $1~~PTX,~~000~~ ~~per share to a principal shareholder~~LLC. ~~Each share~~The ofCompany ~~the~~and ~~Series~~Infusion Bhave ~~Convertible~~established ~~Preferred~~an ~~Stock~~Application isService ~~convertible into 500 shares of Rule~~Provider ~~144~~business ~~restricted~~to ~~common~~design, ~~stock~~develop ofand ~~the~~implement ~~Company.~~data ~~The~~warehousing ~~$60~~and ~~cumulative~~data ~~annual~~mining ~~dividend for each~~applications. ~~share~~Global ofPTX ~~the~~will ~~Series~~establish BPrivate ~~Convertible~~Trade ~~Preferred~~Exchanges ~~Stock~~focusing ison ~~payable~~providing incustomers ~~July~~with ~~annually and if not~~an ~~paid~~“end-to-end” ~~the~~solution ~~dividend~~for istheir ~~accumulating~~business strategies. ~~The~~Initial ~~Series B Convertible Preferred Stock is senior to~~development ~~and~~activities ~~has~~will ~~a right upon liquidation to~~ be ~~redeemed~~designed ~~before any distribution~~ to ~~any~~target ~~common shareholders. If dividends payable on~~ the ~~Series~~Manufacturing Band ~~Convertible~~Retail ~~Preferred~~Business ~~Stock are not~~Industry ~~current~~Sectors, ~~the~~specifically ~~holders~~focused ofon ~~our~~vendor/customer ~~Series~~supply Bchain ~~Convertible Preferred Stock will have 500 votes per each share of Series B Convertible Preferred Stock held~~management. ~~There~~Infusion ~~are~~is ~~no redemption~~a ~~rights~~specialized ~~applicable~~software ~~to the issued~~ and ~~outstanding~~marketing ~~Series~~service Bprovider ~~Convertible~~to ~~Preferred~~enterprises ~~Stock.~~throughout ~~In September 2000,~~ the ~~Company sold 500 shares of Series B Convertible Preferred Stock to a~~United ~~principal shareholder for $500,000~~States. During ~~December 2000,~~ the ~~Company~~quarter ~~sold~~ended ~~326~~September ~~shares of Series B Convertible Preferred Stock to a principal shareholder for $325~~30,~~904.~~ ~~In March~~ 2001, the Company ~~sold~~invested ~~378 shares of Series B Convertible Preferred Stock to a principal shareholder for~~ $~~377~~93,~~738.~~000 The conversion ratio was amended by action of the Board of Directors from 500 shares of restricted common stock for each share of Series B Convertible Preferred Stock to 2000 restricted shares of common stock, to reflect recent changes in ~~the price of our shares of common stock on the OTC:BB. The conversion~~this ~~ratio~~venture ~~was~~(See ~~adjusted~~Note ~~on December 28, 2000~~7).

~~In July 2000, stock options were exercised to purchase 11,542 shares of common stock for $10,000~~6. Commitments:

In ~~July~~March ~~2000~~2001, the Company ~~awarded~~agreed to a new 20-year lease, effective January 1,~~000~~ ~~shares~~1999, with the State of Mississippi for its ~~common~~main ~~stock~~facilities toin ~~three~~Iuka, ~~unaffiliated~~Mississippi. ~~individuals~~This ~~for~~lease ~~non-cash~~provides ~~prize~~the ~~from~~Company with a25,000 ~~logo~~square ~~contest~~feet of office and equipment space at the former National Aeronautics ~~held~~and ~~for~~Space ~~local~~Administration facility. The State, acting through the Mississippi Development Authority (MDA), has also granted the Company a 10-~~area~~year ~~students~~right of first refusal to lease an additional 75,000 square feet at the Iuka facility, to accommodate the Company's expansive business plan.

InThe ~~August~~Company ~~2000~~also leases approximately 3,000 ~~stock~~square ~~options~~feet ~~were~~of ~~exercised~~office ~~for 115~~space in Denver,~~423~~ ~~shares~~Colorado ofat ~~common~~an ~~stock~~annual ~~for~~rent of approximately $1036,000, which is used primarily for sales and marketing purposes. The lease expires November 30, 2003.

InThe ~~August 2000, the~~ Company ~~sold~~has ~~317,500 restricted~~agreed ~~shares~~to ofsell ~~common~~to ~~stock~~the majority ~~for~~shareholder aup ~~total~~to ~~purchase price of $635~~5,000 toshares aof ~~private investor~~Series ~~pursuant~~B anPreferred ~~agreement. In~~Stock ~~October~~at ~~2000~~$1,000 ~~the~~per ~~Company issued to a third party~~share. ~~pursuant~~As toof aSeptember ~~financial~~30, ~~service~~2001, ~~agreement 30~~2,~~000~~003 ~~restricted~~such shares ofwere ~~common~~sold ~~stock~~to ~~valued at~~the ~~$59,997~~shareholder.

~~In September 2000, the Company completed a private placement of 150,000 restricted shares of common stock for a total purchase price of approximately $442,125.~~ The Company ~~agreed~~has toone ~~pay~~employment ~~certain fees associated with the private placement in the form of 3,000 restricted shares of common stock and $13,700 in cash. The~~ agreement ~~provided that the Company prepare and file a registration statement~~ with the ~~SEC~~Vice ~~for~~President ~~the resale~~ of ~~the 150~~Operations,~~000~~ ~~restricted~~which ~~shares~~expires byDecember ~~October 5~~31, ~~2000~~2001. ~~For~~In ~~each fifteen-day~~addition ~~delay following the October 5, 2000 date that the registration statement was not filed with the SEC, the Company was required~~ to ~~make~~ a ~~payment to the private~~ ~~investor~~base ~~in cash or common stock equal to $8~~salary,~~842. The~~ ~~Company filed a registration statement for~~ the ~~resale~~agreement ofprovides ~~such shares on December 13, 2000, and issued~~ the ~~private~~ ~~investor~~employee ~~20,225 additional~~options ~~shares of common stock~~ to ~~satisfy~~acquire ~~this agreement. The registration statement was declared effective by~~ the ~~SEC~~Company's ~~on January 31, 2001. The value of the 20,225 shares of common~~ stock ~~issued during the period from October through December 2000 was $44,188~~.

In7. ~~December 2000, stock options were exercised~~Supplemental ~~for~~Cash ~~15,000~~Flow ~~shares of common stock for $1,305.~~ Information:

8.For ~~LIQUIDITY~~purposes of the consolidated statements of cash flows, cash and cash equivalents consists of cash on hand, demand deposit accounts and short-term investments in certificates of deposit with maturities of three months or less.

OnNoncash ~~February~~investing ~~21,~~and ~~2001, the Company announced that it had entered into a binding Letter of Agreement with IFG Private Equity, LLC, an Atlanta-based institutional investor, for a minimum of $25 million in equity~~ financing, ~~with an option for an additional $25 million.~~ activities

~~The~~September ~~accompanying financial statements have been prepared on a going concern basis~~30, ~~which~~2001 ~~contemplates~~Noncash ~~continuity~~investment ~~of operations and realization of assets and satisfaction of liabilities~~ in ~~the~~Global ~~normal course of business. At March 31~~PTX, ~~2001,~~LLC ~~the Company has negative working capital with obligations totaling $16,620,078 due within one year, of which approximately $15 million is related to equipment purchased~~ from ~~Qwest~~notes ~~(See~~payable ~~Note 4 above). The Company is currently renegotiating with Qwest for modifications of the payment terms under the bill of sale. In addition, losses totaling~~ $493,~~672,301 have been generated since inception. The Company has an arrearage of certain federal tax liabilities of approximately $300,~~000, including payroll liabilities. The continuing losses and the amount of current liabilities raise substantial doubt about the Company's ability to continue on as a going concern. The continuation of the Company as a going concern is dependent upon the Company's ability to raise additional capital, and attaining and maintaining profitable operations, of which there can be no assurance. The Company has identified potential sources of capital and potential joint venture and/or strategic partners and believes that the Company will be able to secure the necessary capital at satisfactory terms and conditions to continue its business plan.

9.Noncash ~~LITIGATION~~equity transactions during the period ended September 30, 2001:

David Cray, the Company's former vice president and treasurer, resigned his positions effective March 5, 2001, which resignation followed a leave of absence. The Company disagrees with Mr. Cray regarding the terms and circumstances of Mr. Cray’s departure and has received a Notice of Arbitration from Mr. Cray pursuant to his employment agreement. The Company is exploring avenues to resolve the matter with Mr. Cray, and believes that it has strong meritorious to Mr. Cray's claims. We do not believe that any claims by Mr. Cray, even if successful, will have a material adverse effect upon the Company or its financial condition.

September 30, 2001	No. of Shares	Dollar Amount
Payable to officer converted to preferred stock	26	$25,662
Conversion of preferred dividends payable to preferred stock	56	$55,950
Issuance of stock for services	90,000	$12,600
Issuance of stock for equipment	40,000	$10,000
Issuance of stock for settlement of claims (Note 9)	250,000	$25,625
Issuance of stock options	-	$8,000

~~On March 26, 2001, the Company was served with a summons and complaint in an action, Tom Epperson, Freddie Wilson and Omega Shelters, Inc~~8. v. ~~North American DataCom, Inc. and North American Infotech, LLC, (U.S.D.C. Northern District of Mississippi, Case No. 1~~Litigation:02CV105-D-D). The Company has been granted an extension, until May 30, 2001, to answer, appear, move or otherwise respond to the lawsuit. The action relates to alleged damages resulting from an agreement to build a prototype composite fiber shelter by Omega Shelters, which prototype was subject to the Company's receipt and acceptance. The agreement at issue also contains an arbitration provision. In the complaint plaintiff's state that Omega Shelters' immediate predecessor, Yellow Creek Lodges, Inc., was forced into bankruptcy in the United States Bankruptcy Court for the Northern District of Mississippi. The Company believes that it has meritorious defenses to the action, disputes the allegations, and intends to vigorously defend the lawsuit. While the action seeks damages of $2.2 million, we believe that the claim for damages is wholly without merit and that the Company will not be materially adversely effected by the outcome of the proceeding. Neither can we determine at the date of this Quarterly Report what impact the bankruptcy proceeding involving plaintiff corporation's predecessor will have on this action.

On March 26, 2001, the Company was served with a summons and complaint entitled Tom Epperson, Freddie Wilson and Omega Shelters, Inc. v. North American DataCom, Inc. and North American Infotech, LLC, (U.S.D.C. Northern District of Mississippi, Case No. 1:02CV105-D-D). The action relates to alleged damages resulting from an agreement to build a prototype composite fiber shelter by Omega Shelters, which prototype was subject to the Company’s receipt and acceptance. The agreement at issue also contains an arbitration provision. In the complaint plaintiff states that Omega Shelters’ immediate predecessor, Yellow Creek Lodges, Inc., was forced into bankruptcy in the United States Bankruptcy Court for the Northern District of Mississippi. While the dismissed action sought damages of $2.2 million, the Company believes that the claim for damages is wholly without merit and that the Company will not be materially adversely affected by the outcome of any future proceedings, if filed. By decision of the Court dated June 28, 2001, the matter was dismissed without prejudice for lack of subject matter jurisdiction. No further action has been filed.

David Cray, former Vice President and Corporate Treasurer, departed the Company effective March 5, 2001, upon his return from a leave of absence. Mr. Cray and the Company disagree about the terms and circumstances of Mr. Cray’s departure, and will attempt to reach an agreement, and, if necessary, resolve the matter through the arbitration process.

On June 13, 2001, the Company was served with a summons and complaint in the matter known as OptiCom v. North American DataCom, Inc., (County Court of Tishomingo, State of Mississippi, Cause No. CV01-0077(G)T). Plaintiff OptiCom has alleged that the Company has failed to pay $28,000 for optical conduit provided for the last mile access along the Tishomingo Railroad. The Company is defending the lawsuit and has engaged OptiCom in settlement negotiations.

The Company does not believe the ultimate outcome of the aforementioned matters will have a significant impact on the Company’s financial position and results of operations or liquidity.

9. Stockholders' Equity:

In September 2001, the Company sold 191 shares of Series B Convertible Preferred Stock to a principal shareholder for $190,990. In July 2001, the cumulative dividends payable on the Series B Convertible Preferred Stock totaling $55,950 from fiscal 2001 were exchanged for 56 additional shares of Series B Convertible Preferred Stock. The conversion ratio was amended by action of the Board of Directors to 8,333 shares of restricted common stock for each share of Series B Convertible Preferred Stock that was issued after June 30, 2001, to reflect recent changes in the price of its shares of common stock on the OTC:BB.

In August 2001, the Company issued 90,000 shares of common stock totaling $12,600 for electrical services rendered.

In August 2001, the Company issued 40,000 shares of common stock totaling $10,000 in exchange for equipment.

In August 2001, the Company issued 250,000 shares of common stock totaling $25,625 to a former employee in full and fair settlement of claims and in exchange for reciprocal general releases related to his termination in July 2001.

10. Notes Payable:

In September 2001, a note was issued to Citrus Springs Trust, a significant shareholder, in the amount of $100,000 due on or before December 31, 2001. Interest will accrue at a rate of one and one half percent (1.50%) per month on the unpaid balance of this note after the maturity date. The note holder was granted an option to acquire a block of 100,000 shares of non-restricted common stock for ten cents ($0.10) a share, which is exercisable until December 31, 2003.

In September 2001, a note was issued to Jack Freeman, President, in the amount of $40,000 due on or before December 31, 2001. Interest will accrue from September 1, 2001 at a rate of three quarters of a percent per month until maturity and at one and one half percent (1.50%) per month on the unpaid balance of this note after the maturity date. The note holder was granted an option to acquire a block of 100,000 shares of non-restricted common stock for sixteen cents ($0.16) a share, which is exercisable until December 31, 2003.

Collectively, the stock options were valued at $8,000 and deferred as financing costs.

11. Liquidity:

The accompanying financial statements have been prepared on a going concern basis, which contemplates continuity of operations and realization of assets and satisfaction of liabilities in the normal course of business. At September 30, 2001, the Company has negative working capital totaling $16,900,000. The Qwest obligation, discussed earlier under in Note 4, accounts for $15.1 million of this amount. The Company has an arrearage of certain federal tax liabilities of approximately $600,000, including payroll liabilities. In addition, the Company incurred losses totaling $5,986,455 since inception (September 1, 1998). These matters raise substantial doubt about the Company's ability to continue on as a going concern. The continuation of the Company as a going concern is dependent upon the Company raising additional capital, and attaining and maintaining profitable operations.

The Company has identified potential sources of capital and potential joint venture and/or strategic partners and believes that they will be able to secure the necessary capital to put their business plan into operation. The capital requirements for the Global PTX are included in the earlier announced capital planning. This is part of the EDS Center investment of Segment 1 of the bandwidth network. In March 2001, the Company entered into an agreement with IFG Private Equity LLC. Under this agreement IFG will purchase up to $50 million of the Company's common stock through February 2003. The agreement is planned to operate in a manner similar to a line of credit, allowing the Company to draw upon funds periodically, when and if desired. The funding is planned to provide the underlying support to proceed with the business plan. The funding is subject to SEC approval of a registration filing regarding the equity financing. The Company intends to use the financing to immediately expand its fiber optic and related data storage operations. As of September 30, 2001, the registration filing has not been submitted to the SEC for review, and the Company can make no assurances that such registration statement will be become effective when filed.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

As used in this Quarterly Report on Form 10-Q, the ~~terms~~term ~~"we", "us", "our" or~~ the "Company" ~~mean~~means North American DataCom, Inc. and its subsidiaries.

Forward-Looking Statements

The discussion in this report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. The statements contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Act"), and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), including statements regarding ~~our~~its expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this document are based on information available to usthe Company on the date hereof. ~~Our~~The Company’s actual results could differ materially from those described in ~~our~~ its forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, ~~our~~its negative working capital, ~~our~~its ability to raise additional capital at terms and conditions satisfactory to usthe Company, ~~our~~its limited operating history in a new and rapidly evolving industry; ~~our~~its ability to implement ~~our~~ its business plan; and ~~our~~its ability to successfully market ~~our~~its products and services. See the discussion under "Risks Affecting Future Results" below. Reference is made to Exhibit 99.1, "Private Securities Litigation Reform Act of 1995, Safe Harbor Compliance Statement for Forward-Looking Statements".

WeThe ~~make~~ Company makes forward-looking statements in the "Management’s Discussion and Analysis of Financial Condition and, Results of Operations" in this Quarterly Report. These forward-looking statements include, but are not limited to, statements about ~~our~~its plans, objectives, expectations, intentions and assumptions and other statements that are not historical facts. WeThe Company generally intend the, words "expect", anticipate", "intend", "plan", "believe", "seek", "estimate" and similar expressions to identify forward-looking statements.

Acquisitions

The Company was organized in September 1998 as North American Software Associates, Limited, a Delaware corporation. WeIt ~~were~~ was organized to provide a variety of telecommunications services. On April 1, 1999, wethe Company acquired all of the assets of Freedom 2000, a local Internet Service Provider (ISP), in exchange for 577,123 restricted shares of ~~our~~its common stock. On December 3, 1999, the weCompany acquired all of the common stock of Action Communications, Inc. ("Action"), a provider of digital and alpha numeric paging services, in exchange for 1,731,339 restricted shares of ~~our~~its common stock. The Action transaction has been treated for accounting purposes as a purchase of assets and liabilities, and revenues and expenses of Action prior to December 3, 1999 have not been consolidated. Effective December 21, 1999, North American Software Associates, Limited ("NAS") was acquired by Pierce International, Inc. in a share exchange transaction and in March 2000, the weCompany changed ~~our~~its name to North American DataCom, Inc. The transaction with Pierce International, Inc. has been accounted for as a reverse acquisition since the former shareholders of NAS owned controlling interest in the Company immediately following the transaction and management of Pierce International, Inc. was replaced by management of NAS.

We are in the process of deploying a 3,000 mile fiber optic network in the states of Tennessee, Mississippi, Louisiana, Alabama, Georgia and Florida, to provide broad-based communications and information technology services with an emphasis on wideband fiber optic and wireless telecommunications services that support Enterprise Data Storage (EDS) solutions. We utilize advanced, state-of-the-art technology for its network to provide a wide range of services to telecommunication companies, ISPs and large organizations, including government agencies and departments. Our plan is to provide superior quality and secure broadband communications in connection with our data storage services. Our Enterprise Data Storage business (EDS) enables us archive data, using two highly secure "Major Center" at our headquarters in Iuka, MS. In addition, the we plan to operate five co-location data storage "Satellite Centers" to provide mirroring and archiving services that are directly connected by our fiber optic network at our Major Center in Iuka, MS.Overview

InThe ~~addition~~Company is in the process of deploying a 3,000 wemile ~~also~~broadband ~~provide~~network ~~Internet~~in ~~access~~the states of Tennessee, Mississippi, Louisiana, Alabama, Georgia and Florida, to provide application services, communications and ~~digital~~information technology services with an emphasis on wideband fiber optic and wireless telecommunications services that support Enterprise Data Storage (EDS) ~~alpha~~and Application Service solutions. The Company utilizes advanced, state-~~numeric~~of-the-art technology ~~paging~~for its network to provide a wide range of services to telecommunication companies, ISPs and large organizations, including government agencies and departments. Its Toplan ~~date~~is to provide superior quality and secure broadband communications in connection with its data storage services. The Company’s Enterprise Data Storage business (EDS) enables it to archive data, ~~our~~using ~~start-up~~two ~~revenues~~highly ~~have~~secure ~~been~~"Major ~~derived~~Center" ~~from~~at ~~our~~its ~~Internet~~headquarters ~~access~~in Iuka, MS. In addition, the Company plans to initially operate five co-location data storage "Satellite Centers" to provide mirroring and archiving services that are directly connected by its fiber optic network at its Major Center in Iuka, MS.

InThe ~~September~~Company ~~2000~~also weprovides ~~retained~~Internet ~~Cap Gemini/Ernst~~access ~~and~~services ~~Young to revise our existing Business Plan~~ and ~~Model.~~digital ~~The revised business plan~~ and ~~model~~ ~~were~~alphanumeric ~~completed~~paging ~~in December 2000~~services. ~~The~~To ~~revised~~date, 5the ~~year plan calls for a $725 million~~Company’s ~~capital~~revenues ~~investment~~have ~~for~~been ~~the~~derived ~~seven~~from ~~EDS~~its ~~Centers~~Internet ~~and~~access ~~the 3~~services,~~000~~ ~~route~~paging ~~mile~~services ~~Fiber~~and ~~optic network.~~data ~~Revenues~~storage ~~at the end of 5 years are projected~~ to beconsumers ~~over~~and ~~$500~~small ~~million~~businesses.

~~Current~~In ~~capital~~August ~~market~~2001, ~~conditions~~the ~~have~~Company ~~prompted~~reached an usagreement towith ~~divide~~Infusion ~~the~~Software ~~Business~~Group, ~~Plan~~LLC ~~and~~(Infusion) ~~Model~~to ~~into~~form ~~six~~Global ~~independent~~PTX, ~~network segments~~LLC. WeThe ~~determined~~Company ~~that~~and ~~Segment~~Infusion 1,have ~~the~~established ~~fiber~~an ~~optic~~Application ~~route~~Service ~~connecting~~Provider ~~Memphis,~~business TN to ~~Iuka~~design, develop MSand implement data warehousing and to ~~Atlanta,~~data GAmining ~~was~~applications. ~~strategically~~Global ~~the~~PTX ~~most~~will establish ~~important~~Private ~~and~~Trade ~~therefore~~Exchanges ~~would~~focusing beon providing customers with an ~~constructed~~“end-to-end” ~~first~~solution for their business strategies. ~~The~~Initial ~~capital~~development activities ~~budget~~will tobe ~~develop~~designed ~~and~~to ~~operate~~target the ~~Segment~~Manufacturing 1and ~~network~~Retail ~~and~~Business ~~EDS~~Industry ~~business~~Sectors, specifically focused on vendor/customer supply chain management. Infusion is ~~estimated~~a specialized atsoftware ~~approximately~~and ~~$75,000,000~~marketing ~~during~~service ~~its~~provider ~~first~~to 18enterprises ~~months~~throughout ofthe ~~operation~~United ~~through~~States. ~~approximately~~During the quarter ended September ~~2002.~~30, 2001, the Company invested $93,000 in this venture.

~~Segment~~Revised ~~1 of our~~ Business Plan consists of approximately 550 miles of the network from Atlanta, GA to Memphis, TN. This segment 1 will serve: 12 of the 49 smaller cities within the region having populations of up to100,000 people; 3 of 13 medium sized cities having populations between 100,000 and 500,000 people; and 3 of the largest 7 cities in the region. We have identified Tier Two markets consisting of those population centers that are not in the primary 100 largest areas but are uniquely located along our railroad rights-of-way where we can install and easily maintain on a cost-efficient basis our fiber optic transmission facilities. We also intend to provide such services to Tier Two markets in the southeast, initially from Atlanta, GA to Memphis, TN. The present fiber optic infrastructure in this rural region is deemed inadequate for such market compared to other parts of the country. It is our firm belief that by developing our network to serve an underserved area, we will be well-positioned to benefit in the future from expected traffic growth. The Major Center and two of the five Satellite Centers are expected to be operational in Segment 1. The first two Satellite centers are planned to be in Chattanooga and Memphis, TN. We project that we will begin to generate revenues from Segment 1 in September 2001, to have a positive cash flow from operations in mid-2002, and to be profitable by year-end 2002. These projected dates are subject to our ability to raise necessary capital to meet our capital requirements at terms satisfactory to us.Information

~~For~~On October 24, 2001, the ~~Nine-Month~~Company ~~Period~~announced ~~Ended~~its ~~March~~approved 31revised Business Plan. The revised plan is focusing on immediate revenue growth and immediate reduction of investment and expenses associated with delayed broadband infrastructure development. This Plan that had been formulated last year with Cap Gemini Ernst and Young, ~~2001~~calls for the construction of a ~~Compared~~3,000-mile fiber optic network throughout the Southeast United States. The Company has divided the proposed fiber optic network construction into six discreet segments. The Company now plans to complete the ~~Nine~~first segment (roughly 550 route miles, extending from Atlanta to Memphis) by late 2002. The original 5-~~Month~~year ~~Period~~Plan ~~Ended~~identified ~~March~~a 31$700 million capital investment for seven EDS centers, ~~2000~~plus the 3,000-route-mile broadband network. The current market pricing has reduced the estimated capital investment to under $400 million. Revenues at the end of 5 years were projected to be over $500 million.

~~Our~~The Company’s ~~fiscal~~revised ~~year~~business ~~ends~~plan ~~June~~continues ~~30th.~~to ~~We started~~project ~~business~~operating incash ~~February~~flow ~~1999~~to ~~and~~be breakeven ~~our~~by ~~first~~the ~~full~~end of this fiscal year, ~~ended on~~ June 30, ~~2000~~2002. The revenues and net income in ~~This~~the ~~Quarterly~~next ~~Report~~fiscal ~~provides~~year are estimated at approximately $60 million and $10 million, respectively. Under the ~~first~~revised ~~nine-month~~plan, ~~period~~the Company still expects to ~~period~~have ~~comparison.~~a positive cash flow by June 2002, and profits in August 2002.

InResults ~~April 1999, we acquired Freedom 2000, its Internet service provider. In December 1999, we acquired Action Communications, Inc., a digital and alpha numeric paging provider. Only four months~~ of ~~the revenues and expenses~~ from Action is reflected in our results of operations for the period ended March 31, 2000. As a result, we do not believe that our results of operations for the period ended March 31, 2000 are directly comparable to results of operations for the period ended March 31, 2001, nor do we believe the results are necessarily indicative of possible results in the future.Operations

~~Our~~For current net service revenues consist primarily of monthly fees from customers subscribing to our Internet access services and our digital and alphanumeric paging services. Net service revenues increased to $358,284 in the ~~nine~~Three-~~month~~Month ~~period~~Period ~~ended~~Ended September ~~March 31~~30, 2001 ~~from~~Compared ~~$167,997 for the nine month period ended March 31, 2000, an increase of approximately 113%. This increase was primarily due~~ to the ~~fact that our paging service revenues during the nine~~Three-~~month~~Month ~~period~~Period ~~ended March~~Ended ~~31,~~September ~~2001 was from nine months of operations while we were only in operation for four months at March 31~~30, 2000. In addition, we increased our customer base for our Internet access service to approximately 1500 customers at March 31, 2001 compared with approximately 1000 customers at March 31, 2000 or an increase of 50%. During the period ended March 31, 2001, we received $43,534 from the sale of one conduit and $62,884 under an initial agreement for our EDS service.

~~Our~~For ~~cost~~the ofthree-month ~~providing~~period ~~our Internet and paging~~ended ~~services~~September ~~consist~~30, ~~primarily of paging airtime~~2001, ~~postage~~the ~~and~~Company ~~delivery~~had ~~expenses~~net ~~and~~service ~~allocated overhead~~revenues ~~costs. Cost~~ of ~~services~~$92,946 ~~increased~~compared to $~~157~~69,~~071~~ 432 for the ~~nine-month~~comparable period ~~ended March~~of 31the prior year, ~~2001~~excluding ~~from~~Pixsell revenue of $2945,~~742~~977 for the ~~nine~~ three-month period ofended ~~the~~September ~~prior~~30, ~~fiscal year~~2001. This ~~increase~~ inrepresents ~~cost of services was primarily due to~~ an increase inof ~~customers~~$23,514 ~~net services~~or ~~provided,~~34%. ~~increasing~~Cost ~~cost~~of ~~concerning telecommunications~~ services ~~generally~~was $30,335 ~~and~~during ~~costs directly related to~~ the ~~sale~~three-month ofperiod ~~one~~ended ~~conduit.~~September ~~Cost of service~~30, as2001 compared ato ~~percent of net service revenue~~$48,014 ~~increased from 17.7%~~ for the ~~nine~~three-month period ended ~~March~~September 3130, 2000. toThe ~~43.8%~~decrease ~~for~~in ~~the~~cost ~~same~~of ~~period~~services ~~during~~is ~~our~~a ~~2001~~reflection ~~fiscal~~of ~~year.~~control Asof aincremental ~~result,~~costs ~~gross~~and ~~profit~~results ~~for~~of ~~the nine- month~~cost ~~period~~reduction ~~ended~~efforts ~~March~~further ~~31,~~described ~~2001~~below. ~~was~~The ~~$201,213~~Company’s asgross ~~compared~~profit ~~with~~margins ~~$138~~were,~~255~~ excluding ~~for~~Pixsell, ~~the~~were ~~nine-month period~~67% ~~ended~~and ~~March~~ 31%, ~~2000~~respectively.

WeThe Company incurred selling, general and ~~administrative~~ administrative expenses of ~~approximately~~ $2421,~~245,174~~198 ~~for~~during the ~~nine~~three-month period ended ~~March~~September 3130, 2001 compared ~~with~~ to $1715,~~009,792~~864 for the ~~nine-month~~same period ~~ended~~of ~~March~~the ~~31,~~prior ~~2000, an increase of approximately 122%~~year. ~~These~~This ~~expenses~~decrease ~~consisted~~was primarily attributed ofto the ~~addition~~expense ofreduction ~~management~~program ~~and~~put ~~technical~~in ~~staff for~~place ~~our~~in ~~fiber~~June ~~optic business~~2001, which ~~resulted~~decreased labor inexpense ~~increased~~by ~~payroll~~$46, ~~insurance~~000, ~~office~~ ~~and~~travel ~~related~~expense ~~expenses~~by $27,000, asand ~~well as increased~~ legal ~~and~~expenses ~~professional~~by ~~fees~~$87,000. ~~associated~~In toaddition, ~~being~~during athe ~~public~~three-month ~~reporting~~period ~~company~~ended ~~and~~September ~~filing~~30, ~~registration~~2001 ~~statements~~no ~~under~~employee ~~the Act . We~~relocation ~~increased~~expense ~~our~~was ~~staff~~incurred bycompared ~~six~~to ~~employees~~$45,000 aincurred ~~total~~during ofthe 30same ~~employees~~period atof ~~March~~the ~~31, 2001 compared~~prior toyear. ~~March~~In 31effect, ~~2000.~~its Aoperating ~~significant~~loss ~~portion~~decreased offrom ~~our~~$694,446 ~~general~~during ~~and administrative expenses for~~ the ~~nine~~three-month period ended ~~March~~September 3130, ~~2001~~2000 ~~was~~to ~~incurred~~$312,610 infor ~~connection with~~ the ~~development of~~three-month ~~our~~period ~~broadband~~ended ~~telecommunications~~September ~~network~~30, ~~and~~2001 or ~~enterprise~~a ~~data~~decrease ~~center~~of 55%.

WeThe ~~incurred~~Company ~~$525,473~~had in other ~~expense~~income ~~for~~of ~~the~~$42 for ~~nine~~the three-month period ended ~~March~~September 3130, 2001 as compared ~~with~~to other ~~income~~expense of $6174,~~233~~640 for ~~the~~ ~~nine~~the three-month period ended ~~March~~September 3130, 2000. ~~Other~~The ~~income~~other (expense) ~~consisted primarily of investment income, interest expense and various miscellaneous expenses~~ during the three-month ~~respective~~period ~~periods.~~ended ~~Imputed~~September ~~interest~~30, ~~of approximately $540~~2000,~~827~~ was ~~recorded~~largely inattributable to the ~~nine-month~~ ~~period~~imputed ~~ended~~interest ~~March 31, 2001~~ expense relating to a contract to acquire rights-of-way and fiber conduit ~~which provided for payments over a period of months without stated interest~~.

~~For the Three-Month Period Ended March 31, 2001 Compared to the Three-Month Period Ended March 31, 2000~~Liquidity

~~For~~Total ~~the~~current ~~three-month~~assets ~~period~~at ~~ended~~September ~~March 31~~30, ~~2001,~~ we2001 ~~had~~were ~~net service revenues of~~ $~~201~~110,~~911~~392 compared to $69103,~~787~~247 ~~for~~at ~~the~~its ~~comparable~~fiscal ~~period~~year ~~of the~~ended ~~prior~~June ~~year.~~30, ~~The~~2001, ~~represents~~or ~~and~~ an increase of ~~$132,124 or 189~~7%. ~~Our~~The ~~cost~~Company’s ofaccounts ~~services~~receivable ~~was~~ decreased by $606,~~345~~717 ~~during~~from ~~the~~$76,230 ~~three-month~~at June ~~period ended March 31~~30, 2001 ~~compared~~ to $2269,~~420~~513 ~~for~~at ~~the three-month~~September ~~period ended March 31~~30, ~~2000~~2001. ~~Our gross profit margins were 70% and 68%, respectively, which is an insignificant change.~~

WeFixed ~~incurred selling~~assets, ~~general~~consisting ~~and~~principally ~~administrative~~of ~~expenses~~property ofand ~~$731~~equipment,~~272~~ ~~during~~was ~~the~~$16,207,098 ~~three-month~~at ~~period~~September ~~ended March 31~~30, 2001 compared to $~~326~~16,~~568~~248,399 ~~for~~at June ~~the~~30, ~~same period of the prior year~~2001. This ~~increase~~decrease was primarily due to ~~increased~~ ~~number~~the sale of ~~employees~~a ~~and~~vehicle ~~costs~~of ~~associated with our business expansion~~$27,017. ~~Our~~Other ~~operating~~assets ~~loss~~ increased from $~~279~~651,~~201~~794 ~~during~~at ~~the~~June ~~three-month~~30, ~~period~~2001 ~~ended~~to ~~March~~$702,924 31at September 30, ~~2000~~2001. This increase was primarily attributable to ~~$590~~an investment in Global PTX,~~161~~ ~~for~~LLC ~~the~~of ~~three-month~~$93,000. ~~period~~Total assets ~~ended~~at ~~March~~September 3130, 2001 orwere an$17,020,414 ~~increase~~compared ofto ~~110%~~$17,003,440 at June 30, 2001.

WeThe ~~incurred other~~current ~~expense~~liabilities ofwere $~~176~~17,~~410~~004,191 at ~~for~~September 30, 2001 compared to $16,944,152 at June 30, 2001. The Qwest obligation, discussed in Note 4 of the ~~three-month~~Condensed ~~period~~Consolidated ~~ended~~Notes ~~March~~to 31Financial Statements, accounts for $15.1 million of these amounts. At September 30, 2001, asthe Company had accounts payable of $993,358 compared to ~~other~~$1,044,558 at June 30, 2001. This decrease is primarily due to the expense reduction program put in place in June 2001, which decreased travel expense and legal expenses, conversion of ~~$70~~accounts ~~for~~payable to common stock and payment of accounts payable by notes payable. At September 30, 2001, the Company had accrued expenses ~~three-month~~and ~~period~~other ~~ended~~liabilities ~~March~~of 31$892,833 ~~2000~~compared to $781,594 at June 30, 2001. ~~Other~~The ~~expenses~~increase ~~during~~in accrued expense and other liabilities is attributable to the ~~three-month~~increase ~~period~~in notes payable of ~~ended~~$140,000, ~~March~~which 31was used to fund the Company’s working capital, ~~2001~~and ~~consisted~~is ~~primarily~~partially offset by conversion of ~~interest~~ ~~expense.~~dividends payable and payable to officer to preferred stock.

~~Our~~For ~~total~~the ~~current~~three-month ~~assets~~period atended September ~~March 31~~30, 2001, ~~were~~ the Company used $~~222~~208,~~066~~092 ~~compared~~for toits operating activities, of which $~~164~~34,~~709~~158 atwas ~~our~~attributable ~~fiscal~~to ~~year~~a ~~ended~~decrease ~~June~~in ~~30,~~other ~~2000,~~assets orand an$24,215 increase ~~of 35%.~~in ~~Our~~ accounts payable, ~~receivable~~compared ~~increased~~to by $97522,~~068~~273 ~~from~~cash ~~$37~~used for operating activities,~~848~~ atof ~~June~~which 30$135,489 ~~2000~~was attributable to an increase in other assets and $~~134~~183,~~916~~101 atincrease ~~March~~in 31accounts payable, during ~~2001~~the same three-month period of the prior year. This isimprovement ain ~~result~~cash offlow ~~our~~from operating ~~increased~~activities ~~customer~~was ~~base~~principally ~~for~~the ~~our Internet~~result ~~access~~of ~~service~~an ~~and~~increase ~~our~~in ~~billing~~current ~~cycle~~liabilities. InFor the ~~addition,~~three-month ~~our~~period ~~advances~~ended toSeptember ~~employees~~30, ~~were $2~~2001,~~555~~ atthe ~~March~~Company’s ~~31,~~cash ~~2001~~flow ~~compared~~provided toby investing activities was $~~102~~8,~~555~~064, atfrom ~~June~~the ~~30,~~purchase ~~2000~~and sale of some property and equipment. AtThe ~~March~~negative ~~31,~~cash ~~2001~~flow ~~the~~from ~~fair~~operating activities was financed with proceeds ~~market~~from ~~value~~the sale of ~~our~~Series ~~available-for-sale~~B ~~securities~~Convertible ~~was~~Preferred 0Stock ~~compared~~and toproceeds from the issuance of convertible notes. The Company had $9030,~~000~~783 of cash at ~~June~~September 30, ~~2000.~~ ~~Reference~~2001 iscompared ~~made~~ to ~~Note~~cash of 3$176,823 toat ~~the~~fiscal ~~Notes~~year toend ~~Condensed~~June ~~Consolidated~~30, ~~Financial Statements~~2001.

~~Our~~The ~~non-current~~Company ~~assets,~~has ~~consisting~~modified ~~principally~~its ofbusiness ~~property~~plan ~~and~~to ~~equipment,~~accommodate ~~were~~prevailing ~~$16,260,499~~capital atmarket ~~March~~conditions ~~31,~~and ~~2001~~the ~~compared~~difficulty toin ~~$15,546,439~~securing financing at ~~June 30,~~acceptable ~~2000~~terms. orThe anCompany ~~increase~~estimates ofthat ~~$714,060.~~its ~~This~~capital ~~increase~~needs ~~was primarily due~~ to ~~investment in~~be ~~software~~approximately of $~~351~~18,~~124~~000,000 ~~and~~during ~~communications~~the ~~equipment~~next oftwelve ~~$254,481~~months. AtThis ~~March~~will ~~31,~~fund ~~2001~~approximately $5,000,000 ~~our balance~~for ~~sheet~~network ~~also~~assets; ~~reflects~~$8,000,000 ~~advances~~for todata ~~affiliates~~storage incenter ~~the~~construction ~~amount~~and improvements; ofand $~~200~~5,000,000 ~~which advance~~for isworking ~~related~~capital torequirements. ~~our~~Actual ~~joint~~costs ~~venture~~and inestimates may ~~Turkey.~~vary ~~Our~~from ~~total~~its ~~assets~~current atexpectations, ~~March~~which ~~31,~~could ~~2001~~materially ~~were~~adversely affect its ~~$17,153,046~~business ~~compared~~and tofinancial ~~$16,250,980~~conditions. atThese ~~June~~are ~~30,~~included ~~2000~~in the five-year capital plan discussed herein.

WeIn ~~had current liabilities of $16~~addition,~~620,078~~ ~~at March~~the ~~31,~~Company’s ~~2001 compared to $15,451,759 at June 30, 2000. The principal component of our~~liquidity ~~current liabilities~~ is aadversely ~~liability~~affected ~~due~~by ~~under~~accounts apayable ~~bill~~from ofthe ~~sale~~purchase from Qwest, ~~the terms~~ of ~~which~~approximately we500 ~~are~~miles ~~currently~~of ~~renegotiating.~~fiber Atconduit ~~March~~from ~~31,~~New ~~2001 we had accounts payable of $1~~Orleans,~~104,249 compared~~ LA to ~~$24~~Mobile,~~034~~ atAL ~~June~~and 30from Pensacola, ~~2000.~~FL ~~This increase is primarily due~~ to ~~delays in~~ ~~completing~~Jacksonville, ~~equity financing due to current capital market conditions~~FL. AtThe ~~March~~total ~~31,~~purchase ~~2001~~price ~~we had~~under ~~accrued~~the ~~expenses~~bill ~~and other liabilities~~ of ~~$364,288~~sale ~~compared~~is to approximately $~~275~~15,~~552 at June 30~~120, ~~2000~~000. ~~Our~~This ~~accrued~~is ~~expenses~~being ~~and~~renegotiated ~~other~~to ~~liabilities~~revise atthe ~~March~~payment ~~31,~~schedule ~~2001~~with ~~includes~~Qwest. ~~approximately~~The ~~$300,000~~Company inplans ~~certain~~to ~~federal~~achieve ~~tax~~a ~~liabilities.~~revised ~~Reference~~payment isschedule, ~~made~~of towhich ~~Note~~there 8can tobe ~~the~~no ~~Notes to Condensed Consolidated Financial Statements~~assurance.

~~For~~In ~~the~~August ~~nine-month period ended March 31~~2000, ~~2001, we used $677,421 for our operating activities compared to $1,164,521 cash used for operating activities during~~ the ~~same~~Company ~~nine-month~~entered ~~period of the prior year. This decrease in~~into ~~negative cash flow from operating activities was principally the result of~~ an ~~increase~~agreement ~~in accounts~~with ~~payable~~a ~~and~~third-party ~~accrued~~contractor ~~expenses.~~to ~~For~~lay ~~the~~fiber ~~nine-month~~conduit ~~period~~between ~~ended March 31~~Atlanta, ~~2001, we~~Georgia ~~used~~and ~~cash flow for investing activities of $1~~Chattanooga,~~001,347~~ ~~principally~~Tennessee ~~for the purchase for $801,347 of property~~ and ~~equipment~~from ~~and~~Chattanooga weto ~~advanced cash of $200~~Memphis,~~000~~ ~~to our joint venture in Turkey~~Tennessee. WeThe ~~financed~~contractor ~~our negative cash flow from operating activities and our investing~~did ~~activities~~not bycomplete ~~raising~~the ~~funds~~conduit ~~from~~installation. ~~the~~The ~~issuance~~Company ~~and~~has ~~sale~~not ofmade ~~restricted~~any ~~shares,~~payments ~~proceeds~~under ~~from~~this ~~the~~agreement. ~~sale~~This ofagreement ~~Series~~was Bterminated ~~Convertible~~due ~~Preferred~~to ~~Stock~~changing ~~and~~in ~~proceeds from~~ the ~~issuance~~schedule of ~~convertible~~ ~~notes~~installations. ~~Negative working capital has also been partially funded by an increase~~ inThe ~~accounts~~Company ~~payable.~~plans Weto ~~had~~amend ~~$78,868~~certain ofterms ~~cash at March 31, 2001 compared to cash~~ of ~~$333,226 at~~the ~~fiscal~~agreement ~~year~~based ~~end~~upon ~~June~~new ~~30, 2000~~schedules.

WeIn ~~have~~order ~~modified~~to ~~our~~fund ~~business~~working ~~plan~~capital ~~for initial~~needs, ~~segment~~the ~~(Segment~~Company 1)sold ofrestricted ~~our~~securities ~~fiber~~(See ~~option~~Note ~~line~~9, asStockholders' aEquity, ~~result~~to ofthe ~~prevailing~~Notes ~~capital market~~to ~~conditions~~Condensed ~~and~~Consolidated ~~the~~Financial ~~difficulty~~Statements) into ~~securing~~Robert ~~adequate~~Crawford, ~~financing~~chairman atof ~~acceptable~~the ~~terms. We~~Board, ~~estimate~~Chief ~~that~~Executive ~~we will require approximately $65~~Officer,~~000,000~~ ~~during~~director ~~the~~and ~~next~~principal ~~twelve~~shareholder ~~months to fund our Segment 1 development~~ as follows: ~~approximately~~ ~~$37,000,000~~in toSeptember ~~acquire~~2001, ~~network~~the ~~rights-of-way~~Company ~~plus~~sold ~~the~~191 ~~installation~~shares of ~~conduit~~Series ~~and~~B ~~fiber~~Convertible ~~optic~~Preferred ~~cable;~~Stock ~~$5,000,000~~ for ~~optical electronics and software;~~ $5190,~~000,000~~990. ~~for~~In ~~operation support systems and network~~July ~~operation center software; $7~~2001,~~000,000~~ ~~for~~the ~~Tier~~cumulative IVdividends ~~enterprise~~payable ~~data~~on ~~storage~~the ~~center construction~~Series ~~and~~B ~~improvements;~~Convertible ~~and~~Preferred Stock totaling $1155,~~000,000~~950 infor ~~operating~~fiscal ~~expenses.~~2001 ~~Actual~~were ~~costs~~exchanged ~~and estimates~~for ~~may~~56 ~~vary~~additional ~~from~~shares ~~our~~of ~~current~~Series ~~expectations, which could materially adversely effect~~B ~~our~~Convertible ~~business~~Preferred ~~and financial conditions~~Stock.

InContinuing ~~addition~~capital requirements are substantial, ~~our~~and ~~liquidity~~the Company is ~~adversely~~planning ~~effected by~~to ~~our~~fund ~~current~~those ~~liabilities~~needs. ~~which~~As ~~arose~~reflected in ~~connection~~the Company’s ~~with~~financial ~~our~~statements ~~purchase~~for ~~from~~its ~~Qwest~~fiscal ~~of approximately~~year ~~500~~ended ~~miles~~June of30, ~~fiber~~2001, ~~conduit~~which ~~from~~were filed ~~New~~with ~~Orleans,~~its LAAnnual toReport ~~Mobile~~on Form 10-K, ALthe ~~and~~accountant's ~~from~~opinion included a ~~Pensacola,~~going-concern FLqualification. Reference is made to ~~Jacksonville~~Note 10, ~~FL.~~Liquidity, ~~The~~to ~~total~~the Company’s ~~purchase~~Notes ~~price~~to ~~under~~Condensed ~~our~~Consolidated ~~bill~~Financial Statements and the disclosure that as of ~~sale~~September is30, 2001, the Company had negative working capital totaling approximately $1516,~~120~~900,000. WeThe ~~are~~Qwest obligation accounts for $15.1 million of this amount (See Note 4 in the ~~process~~Condensed ofConsolidated ~~renegotiating~~Notes ato ~~revised~~financial ~~payment~~statements). The Company has ~~schedule~~an ~~with~~arrearage ~~Qwest~~of ~~and~~certain wefederal ~~are~~tax ~~dependent~~liabilities ~~upon~~of ~~our~~approximately ~~ability~~$600,000, toincluding payroll ~~achieve~~liabilities. anIn ~~revised~~addition, ~~payment~~the Company has sustained start-up losses of $5,986,455, ~~schedule~~since inception (September 1, 1998). The continuation of ~~which~~the ~~there~~Company ~~can~~as bea nogoing ~~assurance.~~concern is dependent upon the Company raising additional capital, and attaining and maintaining profitable operations.

WeThe ~~have~~Company ~~also~~has ~~entered~~identified ~~into an an agreement with~~potential ~~Norfolk~~sources ~~Southern~~of ~~Railroad's~~capital ~~affiliate,~~and ~~Thoroughbred~~potential ~~Technology~~joint &venture ~~Communications (T-CUBED),~~and/or tostrategic ~~lay~~partners ~~fiber conduit from Atlanta, GA to Chattanooga, TN~~ and ~~from~~believes ~~Chattanooga~~that toit ~~Memphis,~~will ~~TN.~~be ~~Under~~able ~~this~~to ~~agreement,~~secure wethe ~~have~~necessary ~~agreed~~capital to ~~pay~~implement ~~approximately~~its ~~$29,000,000~~revised ~~but~~business plan. ~~have~~The ~~not~~capital ~~yet~~requirements ~~commenced~~for ~~payments~~the toGlobal ~~T-CUBED.~~PTX We are ~~presently~~included ~~reviewing~~in ~~this~~the ~~agreement~~earlier ~~with~~announced capital ~~T-CUBED~~planning. ~~for~~This ~~the~~is ~~purpose~~part of ~~amending~~the ~~certain~~EDS ~~terms~~Center investment of ~~the~~Segment ~~agreement~~1 ~~based~~of ~~upon~~ the ~~current capital~~bandwidth ~~market conditions and our limited liquidity~~network.

ItIn isMarch ~~our~~2001, ~~present~~the ~~intention~~Company toentered ~~fund~~into an ~~our~~agreement ~~capital requirements~~with ofIFG Private Equity, LLC. Under this agreement IFG will purchase up to $6550 million ~~during~~of the ~~next~~Company’s ~~twelve~~common ~~months~~stock through ~~the~~February ~~private~~2003. ~~placement~~The ofagreement is ~~approximately~~planned ~~$25~~to ~~million~~operate ofin ~~new~~a ~~equity,~~manner ~~approximately~~similar ~~$15~~to ~~million~~a line of ~~equipment~~credit, ~~lease~~allowing the Company to draw ~~financing~~upon ~~and~~funds ~~the~~periodically, ~~balance~~when ofand ~~approximately~~if ~~$25~~desired. ~~million~~The ~~through~~funding ~~real~~is ~~estate~~planned ~~financing~~to ofprovide the ~~data~~underlying ~~centers~~support ~~and~~to ~~certain~~proceed ~~fiber~~with ~~optic~~the ~~real~~business ~~properties~~plan. WeThe ~~are~~funding ~~currently~~is ~~negotiating~~subject ato SEC ~~construction~~approval ~~loan~~of ~~for~~a ~~certain~~registration ~~interim~~filing regarding the equity financing. ~~and~~The ~~may~~Company ~~also~~intends ~~seek~~to use the financing to ~~fund~~immediately ~~certain~~expand ofits ~~our~~fiber optic and related data storage ~~capital~~operations. ~~needs~~As ~~through~~of ~~joint~~November ~~venture~~2001, ~~arrangements~~the ~~with~~registration ~~strategic~~filing ~~business~~has ~~partners~~not ~~and vendor~~been ~~financing.~~submitted ~~However~~to the SEC for review, ~~there~~and the Company can bemake no assurance that wesuch ~~will~~registration bestatement ~~successful in~~will ~~negotiating~~become ~~any~~effective ~~such~~when ~~financing at terms satisfactory to us~~filed.

In order to fund working capital needs, we sold restricted securities (See Note 7, Stockholders' Equity, to the Notes to Condensed Consolidated Financial Statements) to Robert Crawford, our president, director and principal shareholder as follows: in September 2000 we sold 500 shares of our Series B Cumulative Convertible Preferred Stock for a purchase price of $1,000 per share. Each share of the Series B Cumulative Convertible Preferred Stock was convertible into 500 restricted shares of our common stock commencing July 1, 2001, and provides for a cumulative dividend of $60. In December 2000, we sold an additional 326 shares of Series B Cumulative Convertible Preferred Stock to a principal shareholder for $325,904. Effective December 28, 2000, as a result of the change in the market price of our common stock, the conversion ratio applicable to each of our Series B Cumulative Convertible Preferred Stock was amended from 500 restricted shares of common stock to 2000 restricted shares. In March 2001, we sold 378 shares of Series B Series B Cumulative Convertible Preferred Stock to a principal shareholder for $377,738.

To provide further funding for our operations, in August 2000 we concluded the sale to a third party private investor of 317,500 restricted shares of common stock for a total purchase price of $635,000. We incurred costs related to this transaction or $59,997, which were satisfied by the issuance of 30,000 restricted shares of common stock. In addition, in September 2000, we sold to another private investor 150,000 restricted shares of common stock for a total purchase price of $442,125 and agreed to pay certain fees associated with this transaction by the issuance of an additional 3,000 restricted shares and to pay $13,700 in cash. The terms of the these transactions required that we prepare and file a registration statement under the Act on Form S-1 with the SEC for the resale of these restricted shares within by a certain date. We were required to issue additional of 20,225 restricted shares as payment due to the delay in our filing of this registrant statement, which was declared effective by the SEC on January 31, 2001. A total of 2,302,624 shares of common stock were registered for selling shareholders in our Form S-1 registration statement under the Act. Reference is made to Note 7 to our Notes to Condensed Consolidated Financial Statements.

Our continuing capital requirements are substantial and we have no firm commitments at present to fund these needs. As reflected in our financial statements for our fiscal year ended June 30, 2000 which were filed with our Annual Report on Form 10-K, the accountant's opinion included a going-concern qualification. Reference is made to Note 8, Liquidity, to our Notes to Condensed Consolidated Financial Statements and the disclosure that as of March 31, 2001 we had negative working capital with current liabilities of $16,620,078. In addition, we have sustained start-up losses of $4,672,301 since inception. The inability of the Company to secure additional financing at terms acceptable to us shall have a material adverse effect on whether we can continue as a going-concern and be successful in implementing our proposed business plan.

Risks Affecting Future Results

A number of risk factors exist that may impair or prevent usthe Company from accomplishing ~~our~~the its proposed business plan in some or all respects. Those risk factors include the following matters among others:

The Company is a Start Up with Historical Losses.

Substantially all of ~~our~~the Company’s historical revenues have been derived from ~~our~~its Internet access provider services and ~~our~~ digital and alpha paging services. WeThe ~~now~~Company ~~have~~has ~~customers and project that we will have revenues from our fiber optic and wireless broadband network during the last quarter of our fiscal year. We have~~ experienced operating losses in each fiscal quarter since weinception ~~were founded~~ and will likely continue to experience such losses. Because the ~~our~~Company’s operating history is extremely limited, and ~~have~~has just ~~begun to commence~~ commenced operations on ~~our~~its fiber optic and wireless broadband network and ~~our~~ enterprise data storage (EDS) facility, it is difficult to evaluate ~~our~~ the Company’s business operations and prospects.

The Company Needs Substantial ~~Additional~~ Additional Capital. – Insolvency.

~~Our~~Present ~~present~~ cash flow from operations is not sufficient to pay certain of ~~our~~the Company’s debts as presently structured. At September ~~March 31~~30, 2001, wethe Company had negative working capital of approximately $16,~~398~~900,~~012~~ 000, and weestimates ~~estimate~~ that weit will need to secure additional capital of approximately $6518,000,000 to finance ~~our~~its operations and capital needs over the next twelve months. See the discussion under "Liquidity" above. The failure of the Company to obtain additional capital will significantly restrict ~~our~~ its proposed operations and may make it impossible for usthe Company to fulfill the timing of ~~our~~ its proposed business plan.

~~Status~~Default of Certain Obligations.

In March 2000, wethe Company entered into an agreement with Qwest toCommunications ~~purchase~~in ~~500~~which the Company purchased 504 miles of ~~fiber~~ conduit installed along the CSX railroad track from New Orleans, toLouisiana to Mobile, Alabama, and from Pensacola, FLFlorida to Jacksonville, FLFlorida. ~~The~~Fiber ~~total~~optic ~~purchase~~cable has ~~price~~not ~~under~~yet ~~this~~been ~~agreement~~installed ~~was approximately~~within ~~$15,000,000~~such ~~and~~conduit wepurchased ~~are~~from ~~presently negotiating with~~ Qwest ~~the~~Communications. ~~amendment of the~~The ~~payment schedule under the bill of sale and~~ agreement. Wewith ~~have~~Qwest ~~not~~calls ~~been~~for ~~given~~payments ~~any notice~~ of ~~default~~approximately ~~under~~$15 ~~our~~million ~~agreement~~over ~~and~~the ~~bill~~course of ~~sale. Our obligations under this~~ ~~agreement~~the ~~are personally guaranteed by our president. We also entered into an~~ agreement ~~with an affiliate of Norfolk Southern to lay fiber conduit between Atlanta~~, GAall ~~and Memphis,~~which TNis ~~through~~currently ~~Chattanooga,~~past TNdue atby athe ~~total cost of approximately $29,000,000~~Company. ~~The agreement~~Qwest ~~provided~~has ~~for~~declared ~~payment of $2.9 million on October 15~~a default, ~~2000,~~but ~~which sum~~ has not ~~been paid.~~initiated Wearbitration ~~are~~or ~~negotiating~~other ~~with~~proceedings ~~contractors~~ to ~~amend~~recover the ~~contract and develop new payment schedules~~conduit.

In August 2000, the Company entered into an agreement with a third-party contractor to lay fiber conduit between Atlanta, Georgia and Chattanooga, Tennessee and from Chattanooga to Memphis, Tennessee. The contractor did not complete the conduit installation. The Company has not made any payments under this agreement. This agreement was terminated due to changing in the schedule of installations. The Company plans to amend certain terms of the agreement based upon new schedules. The Company has installed 24 miles of conduit, of which approximately 8 miles was sold to Bell South in fiscal 2001, providing access to the Company’s enterprise data center in Iuka, Mississippi.

The Company Leases its Facilities.

On March 7, 2001, wethe Company finalized a new 20-year lease with the State of Mississippi for ~~our~~its primary facility in Iuka, MS, for 25,000 square feet of office and equipment space. This facility is essential to ~~our~~the Company’s proposed business plan because it already contains many of the features necessary for usthe Company to establish an enterprise data storage (EDS) facility. The State of Mississippi, acting through the Mississippi Development Authority (~~DMA~~MDA), has also granted the Company a 10-year right of first refusal to lease an additional 75,000 square feet at the Iuka facility, to accommodate the Company’s expansive business plan.

The Company Experiences General Risks Associated with Business.

The future success of the Company is ~~heavily~~ heavily dependent on its ability to develop, promote and sustain strong government relationships, reach agreements with certain third parties necessary for the telecommunications needs of its operations and attract and retain customers at suitable prices. ~~Our~~The Company’s business involves competition with existing companies many of which have far greater capital resources and longer operating histories than the Company. There can be no assurance that the business of the Company will ever be profitable.

The Company will Likely Experience Customer Concentration.

Until and unless the Company secures ~~multiple~~ multiple customer relationships, it is likely that the Company will experience periods during which it will be highly dependent on one or a limited number of customers. Dependence on a single or a few customers will make it difficult to satisfactorily negotiate attractive prices for the Company's services and will expose the Company to the risk of substantial losses if a single dominant customer ~~scenters~~stops conducting business with the Company.

The Company Must Comply with Telecommunications Regulations.

Most of the Company's proposed business services and products are subject to regulation at the federal and state levels. These regulations are in some cases uncertain and are often undergoing change. The failure of the Company to comply with these regulations could have a materially adverse effect on the Company.

The Company Must Comply with Environmental Regulations.

The Company's intended operations, especially the construction and operation of a fiber optic network, are subject to various federal, state and local laws and regulations relating to the protection of the environment. These environmental laws and regulations, which have become increasingly stringent, are implemented principally by the Environmental Protection Agency and comparable state agencies, and govern the management of hazardous wastes, the discharge of pollutants into the air and into surface and underground waters, and the manufacture and disposal of certain substances. There are no material environmental claims currently pending or, to the Company's knowledge, threatened against the Company. In addition, the Company believes that its operations are in material compliance with current laws and regulations. The Company estimates that any expenses incurred in maintaining compliance with current laws and regulations will not have a material effect on the Company's earnings or capital expenditures. However, there can be no assurance that current regulatory requirements will not change, that currently unforeseen environmental incidents will not occur, or that past non-compliance with environmental laws will not be discovered on the Company's properties.

The Company's Operating Results are Likely to Fluctuate Widely.

The Company expects that its operating results for the foreseeable future are likely to fluctuate widely from quarter to quarter and from year to year. This is especially true while the Company is building its fiber optic and wireless broadband network. Fluctuation of results may occur due to a variety of factors including, demand for and market acceptance of the Company's products and services, reliability of service and network availability, the ability to increase bandwidth as necessary, customer retention, capacity utilization of the Company's enterprise data storage facility, the timing of customer needs, the timing and magnitude of capital expenditures, changes in pricing policies or practices of competitors, and changes in governmental regulations.

The Company will Face Significant Competition.

The Company's market is intensely competitive. There can be no assurance that the Company will have the resources to compete successfully in the future. Current and potential competitors include national, foreign and regional Internet service providers, global, regional and local telecommunications companies and the Regional Bell Operating Companies, providers of server hosting and data storage services, and other technology services and products companies. Most of these competitors will have substantially greater resources than the Company.

The Company is Entering a New Market.

The market for Internet system and network management solutions has only recently begun to develop, is evolving rapidly and is characterized by an increasing number of market entrants. This market may not prove to be viable or, if it becomes viable, may not continue to grow. The Company currently incurs costs in excess of its revenues. If the Company cannot attract and retain a customer base, it will not be able to increase its sales and revenues nor create economies of scale to offset its fixed and operating costs.

The Company Must be able to Manage Growth.

In order for the Company to accomplish its proposed business plan, it must experience rapid growth in building its enterprise data storage facilities and network infrastructure, expand its service offering, expand its geographical coverage, expand its customer base and increase the number of employees. This growth is expected to place a significant strain on the Company's financial, management, operational and other resources, including its ability to ensure customer satisfaction. This expansion will require significant time commitments from senior management and involve the efficient management of multiple relationships with a growing number of third parties. The Company's ability to manage its growth effectively will require the Company to continue to expand operating and financial procedures and controls, to upgrade operational, financial and management information systems and to attract, train, motivate and retain key employees. The ability to attract, hire and retain qualified employees in today's competitive employment market is another significant challenge which the Company faces. If the Company's executives are unable to manage growth effectively, the Company's business could be materially adversely affected.

System Failures Could Lead to Significant Costs.

The Company must protect its network infrastructure and equipment against damage from human error, physical or electronic security breaches, power loss and other facility failures, fire, earthquake, flood, telecommunications failure, sabotage, vandalism and similar events. Despite extensive precautions the Company has taken, a natural disaster or other unanticipated problems at the Company's facilities could result in interruptions in services or significant damage to customer equipment or data. Any damage to or failure of the Company's systems or service providers could result in reductions in, or terminations of, services supplied to the Company's customers, which could have a material adverse effect on the Company's business.

The Company will Depend on Network Interconnections with Third Parties.

The Company will rely, in part, on a number of public and private network interconnections to allow its customers to connect to other networks. If the networks with which the Company interconnects were to discontinue their interconnections, the Company's ability to exchange traffic would be significantly constrained. Furthermore, the Company's business could be harmed if these networks do not add more bandwidth to accommodate increased traffic. Some of these networks will likely require the payment of fees for the right to maintain interconnections. There usually is nothing to prevent any networks from increasing fees or denying access. In such cases, the Company's ability to pursue the proposed business plan could be materially adversely affected.

Some of the Company's Business may be Subject to International Risks.

The Company is pursuing international business opportunities, especially with respect to the Country of Turkey. Risks inherent in international operations include unexpected changes in regulatory requirements, export restrictions, tariffs and other trade barriers; challenges in staffing and managing foreign operations; differences in technology standards; employment laws and practices in foreign countries; longer payment cycles and problems in collecting accounts receivable; political instability; changes in currency exchange rates and imposition of currency exchange controls and potentially adverse tax consequences.

~~This~~Item Quarterly Report on Form 10-Q and other reports and statements issued on behalf of the Company may include forward-looking statements in reliance on the safe harbor provided by the Private Securities Litigation Reform Act of 19953. ~~Forward-looking~~Quantitative ~~statements include the use of forward-looking words such as "plans," "estimates," "believes," "expects," "may," "will," "should," "anticipates"~~ and ~~"proposes"~~Qualitative ~~and~~Disclosures ~~the~~About ~~negative~~Market or other variations of such terms or comparable terminology, or by discussion of strategy or business plans that involve risks and uncertainties. These forward-looking statements are subject to substantial risks and uncertainties, including those discussed above, and actual results may differ materially from those contained in any such forward-looking statement. Reference is made to Exhibit 99.1, Private Securities Litigation Reform Act of 1995, Safe Harbor Compliance Statement for Forward-Looking Statements, filed with this Form 10-Q.Risk

The Company has not entered into any transaction using derivative financial instruments and believes that its exposure to market risk associated with other financial instruments is not material. The Company's cash equivalents are maintained primarily in money market risks maturing in less than three months. Accordingly, the Company does not believe that it has any significant exposure to interest rate risk. The Company currently operates only in the United States and all sales are made in U.S. dollars. Accordingly, the Company does not have any material exposure to foreign currency rate fluctuations.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Reference is made toin Note 98 to the Notes to Condensed Consolidated Financial Statements.

~~David~~On ~~Cray~~March 26, 2001, the Company's ~~former~~was ~~vice president~~served with a summons and ~~treasurer~~complaint entitled Tom Epperson, ~~resigned~~Freddie ~~his~~Wilson ~~positions~~and ~~effective~~Omega ~~March~~Shelters, Inc. 5v. North American DataCom, ~~2001~~Inc. and North American Infotech, ~~which~~LLC, ~~resignation~~(U.S.D.C. ~~followed~~Northern aDistrict ~~leave~~ of ~~absence~~Mississippi, Case No. 1:02CV105-D-D). The ~~Company~~action ~~disagrees~~relates ~~with~~to ~~Mr.~~alleged ~~Cray~~damages resulting ~~regarding~~from ~~the~~an ~~terms~~agreement ~~and~~to build a prototype composite fiber shelter by Omega ~~circumstances~~Shelters, ofwhich ~~Mr.~~prototype ~~Cray~~was subject to the Company’s ~~departure~~receipt and ~~has~~acceptance. ~~received~~The agreement aat ~~Notice~~issue ofalso ~~Arbitration~~contains ~~from Mr~~an arbitration provision. ~~Cray~~In ~~pursuant~~the tocomplaint plaintiff’s ~~his~~state ~~employment~~that ~~agreement~~Omega Shelters’ immediate predecessor, Yellow Creek Lodges, Inc., ~~The~~was ~~Company~~forced isinto ~~exploring~~bankruptcy ~~avenues~~in tothe ~~resolve~~ United States Bankruptcy Court for the Northern ~~matter~~District ~~with~~of MrMississippi. ~~Cray~~While the dismissed action sought damages of $2.2 million, ~~and~~the Company believes that itthe ~~has~~claim ~~strong~~for ~~meritorious~~damages ~~to Mr.~~is ~~Cray's~~wholly without merit and that ~~claims.~~the WeCompany dowill not ~~believe~~be ~~that~~materially ~~any~~adversely ~~claims~~affected by ~~Mr.~~the ~~Cray,~~outcome ~~even~~of ifany ~~successful~~future proceedings, ~~will~~if ~~have~~filed. ~~a material~~By ~~adverse~~decision ~~effect~~of ~~upon~~the Court dated June 28, 2001, the ~~Company~~matter orwas dismissed ~~its~~without ~~financial~~prejudice ~~condition~~for lack of subject matter jurisdiction. No further action has been filed.

OnDavid ~~March 26~~Cray, ~~2001,~~ the Company's ~~was~~former ~~served with a~~vice ~~summons~~president and ~~complaint in an action~~treasurer, ~~Tom~~resigned ~~Epperson,~~his ~~Freddie~~positions ~~Wilson~~effective ~~and~~March ~~Omega Shelters~~5, ~~Inc. v. North American DataCom~~2001, ~~Inc.~~which ~~and~~resignation followed ~~North~~a ~~American~~leave ~~Infotech, LLC, (U.S.D.C. Northern District~~ of ~~Mississippi, Case No~~absence. ~~1:02CV105-D-D).~~ The Company ~~has~~disagrees ~~been~~with ~~granted~~Mr. ~~an extension,~~Cray ~~until~~regarding ~~May 30, 2001, to answer, appear, move or otherwise respond to~~ the ~~lawsuit.~~ ~~The~~terms ~~action relates to alleged damages resulting from an agreement to build~~and acircumstances ~~prototype~~of ~~composite~~Mr. ~~fiber shelter by Omega Shelters, which prototype was subject to the Company'~~Cray’s ~~receipt~~departure and ~~acceptance.~~has ~~The~~received ~~agreement~~a atNotice ~~issue~~of ~~also~~Arbitration ~~contains an arbitration~~from ~~provision~~Mr. InCray ~~the~~pursuant ~~complaint plaintiff's~~to ~~state~~his ~~that~~employment ~~Omega Shelters' immediate predecessor, Yellow Creek Lodges, Inc~~agreement., ~~was~~The ~~forced~~Company ~~into~~is ~~bankruptcy~~exploring inavenues ~~the~~to ~~United States~~resolve ~~Bankruptcy Court for~~ the ~~Northern~~matter ~~District~~with ~~of Mississippi~~Mr. ~~The~~Cray, ~~Company~~and believes that it has strong meritorious ~~defenses~~ to ~~the action, disputes the allegations, and intends to~~ ~~vigorously defend the lawsuit~~Mr. ~~While the action seeks damages of $2~~Cray's claims.2 ~~million,~~The ~~we believe that the claim for damages is wholly without merit and that the~~ Company ~~will~~does not ~~be materially~~believe ~~adversely~~that ~~effected~~any claims by ~~the outcome of the proceeding~~Mr. ~~Neither~~Cray, ~~can~~even weif ~~determine~~successful, will athave ~~the~~a ~~date~~material ofadverse ~~this~~effect ~~Quarterly~~upon ~~Report what impact~~ the ~~bankruptcy~~Company ~~proceeding~~or ~~involving plaintiff~~its ~~corporation's~~financial ~~predecessor will have on this action~~condition.

Item 2. Changes in Securities and Use of Proceeds

In ~~July~~August ~~2000~~2001, ~~holders~~the ofCompany issued ~~stock options exercised~~ the ~~options~~following ~~and acquired 11,542~~ restricted shares of common stock ~~at an aggregate exercise price of $10,000.~~ :

InThe ~~July~~Company ~~2000~~issued 90,000 werestricted ~~awarded~~shares 1of common stock to Magnolia Electric Company for services rendered to the Company. These shares were valued at $0.14 per share,~~000~~ the closing bid price of our common stock at the day of issuance. The Company issued 12,500 restricted shares of common stock to Jamie Wadkins, 20,000 ~~three~~restricted ~~unaffiliated~~shares ~~individuals~~of ascommon astock ~~non-cash~~to ~~prize~~Keith inBarnett ~~connection~~and ~~with~~7,500 arestricted ~~logo~~shares ~~contest~~of ~~held~~common stock to Edgar Earl Wadkins for ~~local~~equipment. ~~area~~These ~~students~~shares were valued at $0.20 per share, the closing bid price of our common stock at the day of issuance. The Company issued 250,500 restricted shares of common stock for a settlement of claims against the Company. These shares were valued at $0.22 per share, the closing bid price of our common stock at the day of issuance.

In August 2000, holders of stock options exercised the options and acquired 115,423 restricted shares of common stock at an aggregate exercise price of $10,000.

In August 2000, we closed a private placement of 317,500 restricted shares of common stock for a total purchase price of $635,000 to a private investor. Costs for this placement was $59,997 which was satisfied by the issuance of 30,000 restricted shares of common stock.

In September 2000, we sold 500 shares of Series B Cumulative Convertible Preferred Stock to our president, director and principal shareholder for a purchase price of $1,000 per share. Each share of the Series B Cumulative Convertible Preferred Stock was initially convertible into 500 restricted shares of common stock commencing July 1, 2001, and was entitled to an annual dividend of $60. Effective December 28, 2000 the conversion ratio was amended from 500 restricted shares of common stock to 2000 restricted shares.

In September 2000, the Company closed the private placement of 150,000 restricted shares of common stock for a total purchase price of approximately $442,125. The Company paid certain fees associated with this placement through the issuance of 3,000 restricted shares of restricted common stock and the payment of $13,700 in cash. The terms of the transaction provided that the Company file a registration statement under the Act with SEC for the resale of the 150,000 shares by October 5, 2000. Delays in filing the registration statement with the SEC after October 5, 2000 required the Company to make a payment in cash or common stock based upon the closing bid price of our shares on the OTC:BB as of the end of each fifteen day period. The Company filed a registration statement on Form S-1 and issued 22,225 restricted shares of common stock for said filing delays. The registration statement was declared effective on January 31, 2001, including the shares issued due to the delay in filing.

In December 2000, the Company sold 326 additional shares of Series B Cumulative Convertible Preferred Stock to the Company's president, director and principal shareholder for a purchase price of $1,000 per share.

In March 2001, the Company sold 378 additional shares of Series B Cumulative Convertible Preferred Stock to the Company's president, director and principal shareholder for a purchase price of $1,000 per share.

The sales and issuances of restricted securities in the transactions described above were deemed by the Company to be exempt from the registration requirements under the Act in reliance upon Section 4(2) of the Act, Regulation D promulgated thereunder, and, in the case of the issuance of common stock as a prize in a logo contest, on the basis that no "sale" as defined in the Act occurred.

Item 3. Default Upon Senior Securities

None

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

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

~~(a)~~During ~~Exhibits:~~the quarter ended September 30, 2001, we did not file any Reports on Form 8-K.

Exhibit No.	Document Description
99.1	Safe Harbor Compliance Statement for Forward-Looking Statements
99.2	Registration Statement on Form Form S-1, file no. 333-51748, declared effective by the SEC on January 31, 2001, and incorporated by reference herein.

(b) Form 8-K.

During the quarter ended March 31, 2001, we did not file any Reports on Form 8-K.

SIGNATURES

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

North American DataCom, Inc.

By: /s/ Robert R. Crawford Robert R. Crawford, ~~President~~Chairman, Chief Executive Officer and Chief ~~Executive~~Financial Officer Dated: ~~May~~November 1419, 2001 Iuka, MS

Exhibit 99.1

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS

In passing the Private Securities Litigation Reform Act of 1995 (the "Reform Act"), 15 U.S.C.A. Section 77z-2 and 78u-5 (Supp. 1996), Congress encouraged public companies to make "forward-looking statements" by creating a safe harbor to protect companies from securities law liability in connection with forward-looking statements. North American DataCom, Inc. (the "Company") intends to qualify both its written and oral forward-looking statements for protection under the Reform Act and any other similar safe harbor provisions.

"Forward-looking statements" are defined by the Reform Act. Generally, forward-looking statements include expressed expectations of future events and the assumptions on which the expressed expectations are based. All forward- looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected. Due to those uncertainties and risks, the investment community is urged not to place undue reliance on written or oral forward-looking statements of the Company. The Company undertakes no obligation to update or revise this Safe Harbor Compliance Statement for Forward-Looking Statements (the "Safe Harbor Statement") to reflect future developments.

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