SUNCOM TELECOMMUNICATIONS INC, 20-F, 1999-06-04

SUNCOM TELECOMMUNICATIONS INC
20-F, 1999-06-04
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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FORM 20-F
US SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12 (B) OR (G)
OF THE SECURITIES EXCHANGE ACT OF 1934

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

For the fiscal year ended February 28, 1999

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

For the transition period from ____________ to ____________

Commission file number 0-14356

SUNCOM TELECOMMUNICATIONS INC.,
formerly known as

CAM-NET COMMUNICATIONS NETWORK INC.
(Exact name of Registrant as specified in its charter)

Canada
(Jurisdiction of incorporation or organization)

290 - 171 Water Street,
Vancouver, British Columbia, Canada V6B 1A7
(Address of principal executive offices)

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

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Common Shares Without Par Value
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None

<PAGE>i

Indicate the number of outstanding shares of each of the Company's classes of
capital or common stock as of the close of the period covered by the annual
report.

There were 80,355,306 common shares (the "Shares"), without par value, issued
and outstanding as of May 1, 1999.

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

Indicate by check mark which financial statement item the Registrant has elected
to follow. ITEM 17 ITEM 18 X .
---- -----

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES X NO .

<PAGE>ii

TABLE OF CONTENTS

Page

GLOSSARY iii

PART I 1

Item 1. Description of the Business 1

Item 2. Description of Property 30

Item 3. Legal Proceedings 31

Item 4. Control of the Company 40

Item 5. Nature of Trading Market 40

Item 6. Exchange Controls and Other Limitations
Affecting Security Holders 41

Item 7. Taxation 42

Item 8. Selected Financial Data 43

Item 9. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 45

Item 10. Directors and Officers 55

Item 11. Compensation of Directors and Officers 56

Item 12. Options to Purchase Securities 59

Item 13. Interest of Management in
Certain transaction 59

PART II 59

Item 14. Description of Securities to be
Registered 59

PART III 60

Item 15. Defaults Upon Senior Securities 60

Item 16. Changes in Securities and Changes in
Security for Registered Securities 60

PART IV 60

Item 17. Financial Statements 60

Item 18. Financial Statements 60

Item 19. Financial Statements & Exhibits 61

EXHIBIT Summary Reorganization Plan

SIGNATURES

<PAGE>iii

GLOSSARY

The following terms are used in this Report:

Call Center A business that handles inbound/outbound telemarketing,
customer and technical support, customer order
entry, customer billing, order fulfillment, bill
collection, help desk services and other computer
telephone applications.

Teleconstruction The business of installing a fiber optic
telecommunications network in order to install curb
to home fiber optic capabilities by the year 2010.
This involves the installation of co-axial and copper
wire, T1 lines and the construction of microwave and
satellite relay towers.

eCommerce Business transactions conducted over the Internet, and
involves real time, on-line order processing, fraud
control, payment acceptance and verification.

<PAGE>1

PART I

ITEM 1 DESCRIPTION OF THE BUSINESS

THE COMPANY

Suncom Telecommunications, Inc. ("Suncom" or the "Company") was incorporated
under the laws of the Province of British Columbia on January 29, 1982 under the
name "Thunder Oil & Gas Ltd.". The Company's name was changed to "Thunder
Explorations Ltd." on May 9, 1983. On April 22, 1985, the Company changed its
name to "CAM-NET Communications Network Inc." and on February 1, 1991, the
Company was continued under the Canada Business Corporations Act (the "CBCA").
On August 1, 1997, the Company changed is name to "Suncom Telecommunications,
Inc."

On May 5, 1999, the shareholders of Suncom approved a special resolution to
change the Company name to "VirtualSellers.com, Inc." to reflect the Company's
change focus to eCommerce transaction processing. This name change will take
effect in late May, 1999. The shareholders of Suncom also approved a special
resolution to change the Company's domicile of incorporation from the federal
laws of Canada to the State of Wyoming, United States, at the discretion of the
Board of Directors. As of the date hereof, the Board of Directors have not yet
determined if they will proceed with the change of the Company's domicile of
incorporation.

The Company had the following subsidiaries as of February 28, 1999:

Subsidiaries Jurisdiction Percentage of
of Date of Securities
Incorporation Incorporation Owned
- ---------------------------------------- --------------- --------------- -------------

Canadian-American Communications Inc. British March 6, 1984 100%
Columbia

Canadian Northstar Transmission Systems Ltd. CBCA February 23, 1995 100%

Suncom Telemanagement Inc. British November 23, 1994 100%
(formally Preferred Telemanagment Inc) Columbia

CAM-NET Cellular Inc. Ontario March 8, 1994 100%
(formally Direct Advantage, Inc.
and Invoice Reduction Services, Inc.)

CAM-NET Holdings Inc. 2 Washington October 20, 1986 100%

Northstar Transmission Systems Inc. 2, 3 Washington October 20, 1986 100%

NorthNet Telecommunications Inc. 1 Illinois February 6, 1998 100%
(d.b.a. NorthStar Telesolutions)

eCommerce Solutions Inc. (d.b.a. Illinois May 17, 1999 100%
VirtualSellers.com)
</TABLE>

<PAGE>2

1 NorthNet Telecommunications Inc. (an Illinois corporation qualified to
transact business in Indiana) is the only active subsidiary of the Company.

2 CAM-NET Holdings Inc. and Northstar Transmission Systems Inc. are being
dissolved but a Notice of Dissolution has not yet been issued.

3 Northstar Transmission Systems Inc. is a Washington corporation qualified
to transact business in Illinois and Indiana.

COMPANY

Suncom, formerly known as CAM-NET Communications Network, Inc., was a provider
of long distance services in Canada and the United States. The Company has since
reorganized into a consolidator in the Call Center industry and a provider of
eCommerce transaction processing and customer services.

Through its wholly-owned subsidiary, NorthNet Telecommunications, Inc. (dba
Northstar Telesolutions), Suncom operates one Call Center. The Call Center
provides transaction processing, centralized billing, customer service and
dispatch functions for cable companies in the United States. The Call Center is
capable of providing full service customer and technical support, order entry,
customer billing, order fulfillment, bill collections and help desk services
(the "Call Center Services"). Although currently providing services to a limited
number of small cable companies, Suncom intends to expand the scope of its
operations to offer the Call Center Services to other businesses, including
eCommerce businesses, Internet service providers, providers of technical help
desk support services, property management services, direct broadcast satellite
services, and retailers of medical, healthcare and consumer products.

In May, 1999, Suncom completed the acquisition of all of the property, assets
and undertaking of VirtualSellers.com, Inc. ("VirtualSellers"). Suncom will
continue to operate VirtualSellers' business under a newly created subsidiary
called eCommerce Solutions Inc (d.b.a. VirtualSellers.com). The business
involves the provision of turnkey eCommerce transaction processing and customer
services to small and medium size businesses. With no monthly fees and small
set-up charges, VirtualSellers.com can provide these businesses with immediately
available, customized, secure and complete eCommerce services so that these
businesses can retail their products over the Internet. VirtualSellers.com earns
its revenues by charging the businesses a percentage of each transaction
conducted over the Internet.

In May, 1999, Suncom acquired all of the property, assets and undertaking of
CallDirect Enterprises Inc. ("CallDirect"). Suncom will continue to operate
CallDirect's business as a division of its subsidiary Suncom Telemanagement Inc.
CallDirect is a catalogue reseller of telephone related products and will soon
be a provider of transaction processing and customer services. Suncom intends to
use the Call Center to provide customer service functions for CallDirect.
VirtuallSellers.com has developed a website with eCommerce transaction
processing capabilities which will enable CallDirect to retail its products over
the Internet.

<PAGE>3

COMPANY HISTORY

Until its reorganization in the fiscal year ended February 28, 1998, Suncom was
a telecommunications holding company with subsidiaries operating in both Canada
and the United States. Through its subsidiaries, the Company provided
comprehensive telecommunications services including long distance, local access,
cellular and complete telemanagement services. The Company provided some or all
of such services to commercial and residential customers in British Columbia,
Alberta, Ontario, Quebec and in the greater Chicago, Illinois area.

In July, 1994, the Company acquired Preferred Telemanagement Inc. ("Preferred").
Preferred offered long distance telephone services to customers mainly in Quebec
and Ontario. Preferred assumed the customers' telephone number, thereby becoming
the customer of record to the telephone company. This permitted Preferred to
offer a wide range of telemanagement services in addition to long distance.

In January, 1996, the Company completed the acquisition of Cam-Net Cellular Inc.
("CN Cellular") (formerly 1069708 Ontario Inc. (until September 25, 1996),
Invoice Reduction Services Inc. (until July 19, 1995) and Direct Advantage Inc.
(until January 26, 1996)). The CRTC had earlier directed a subsidiary of a
provincial telephone company, Bell Mobility, to provide CN Cellular with a
contract so that it could provide discounted cellular services. CN Cellular
however never utilized the rights granted unde this contract and those rights
have since lapsed.

In April, 1996, the Company entered into an agreement to merge with privately
owned TeleHub Communications Corp. ("TeleHub"). TeleHub had developed a
technology whereby its software, the Virtual Management, Billing and Control
Platform ("VMBC"), was designed to route and direct voice, data and video
communications over an asynchronous transfer mode ("ATM") network. It was
anticipated that a new U.S. based holding company ("PubCo") would be formed to
effect the merger transaction, pursuant to which the shareholders of Telehub and
PubCo would receive shares of merged PubCo in exchange for their shares of the
merging companies. It was also anticipated that PubCo would be the successor to
the Company's NASDAQ NMS listing.

On September 6, 1996, the Company entered into a separate agreement with
TeleHub, whereby TeleHub agreed to design and implement for the Company a unique
technological system of computer operated programs (the "Programs") which were
to have provided the Company with the billing, customer service, customer
accounting and network platform functions necessary for the Company to be
competitive in the long distance industry.

TeleHub never supplied the Company with the Programs and therefore the Company
commenced a lawsuit in the U.S. District Court for the Northern District of
Illinois, Eastern Division seeking repayment of the all of the funds paid to
Telehub plus compensatory, consequential and incidental damages. The Company
settled this action for US $450,000 in October, 1997. In light of this dispute,

<PAGE>4

the proposed merger between the Company and Telehub was never consummated.

Reorganization under the Companies' Creditors Arrangement Act

Although the Company supplied long distance telephone services to 6.4% of the
Canadian business market and 2.2% of the Canadian residential market,
competitive pressures in the telecommunications industry, increasingly high
technology costs and the lack of sufficient working capital eroded the Company's
potential for profitability.

Despite a number of cost cutting measures carried out in the late 1995 and early
1996 and changes in management, the Company's ability to access the public and
private markets in order to generate working capital was frustrated by the
delisting of the Company by the Vancouver Stock Exchange in October, 1996. The
Vancouver Stock Exchange delisted the Company because of allegations by the
United States Securities and Exchange Commission that a former director of the
Company had used improper methods to promote sales of the Company's Shares in
the market. The negative publicity surrounding the delisting eroded the customer
base and supplier confidence. This, together with the failure of Vancouver
Telephone Company Limited, a major customer, to pay a bill of approximately
CDN$500,000, adversely affected the Company's ability to go forward and put
enough additional pressure on the working capital requirements of the Company
that its management concluded that it should seek protection under the
Companies' Creditors Arrangement Act ("CCAA"), which is similar to bankruptcy
legislation.

On January 14, 1997, the Company filed for and the Court granted protection from
its creditors under the CCAA (the "CCAA Proceeding"). Court protection was
required to ensure that the Company's assets were kept intact during the
reorganization process in order to allow the Company to carry on its business
while formulating a restructuring plan. The accounting firm of KPMG was
appointed by the Court as Monitor to oversee and to assist in the development of
the Company's restructuring plans (the "Plan"). The creditors of the Company
approved the Plan on July 31, 1997 and the Supreme Court of British Columbia
sanctioned the Plan on August 7, 1997.

The Company has implemented a majority of its obligations under the Plan but
there are still some remaining obligations under the Plan, as set out below.

Sale of Operating Assets

Shortly after receiving CCAA protection, it became apparent to the Company that
it would not be able to obtain sufficient new financing for its business
operations early enough in the restructuring process to permit it to continue to
serve its customers. In order to preserve the value of its assets and yield the
greatest return to its creditors, the Company determined it was in its best
interest to sell the Company's commercial and residential customer base for the
highest available price.

<PAGE>5

The Company sold its accounts receivable, capital assets, licences and acquired
customer base to Primus Communications, Inc., Primus Telecommunications Canada
Inc. and 336246 Canada Inc. (collectively, "Primus") for approximately CDN
$6,750,000 on April 7, 1997 with approval of the Court (the "Primus
Transaction"). There was a holdback, held by Russell & DuMoulin in trust, of
CDN$1,000,000 to secure the accuracy of representations and warranties made by
the Company. Approximately $700,000 of this amount is being held by the
Company's auditors to pay to creditors. The holdback was to be retained for a
period of 150 days. To the extent that Primus made claims against the holdback,
Russell & DuMoulin was required to retain an equivalent portion of the holdback.
Since Primus advanced claims exceeding the amount of the holdback, the full
amount of the holdback was held in trust with Russell & DuMoulin pending
resolution of such claims. Recently the Company entered into a settlement with
Primus regarding the holdback, whereby the Company will receive $25,000 for
consulting services and Primus will receive $275,000 of the holdback. The
balance of the holdback has been distributed to creditors under the Plan.

The Company also determined that there was inherent value in the remaining
assets of Cam-Net Communications Inc. ("CNC") and Cam-Net Telecommunications
Inc. ("CNT"), including significant tax losses accrued within the Company's
affiliated groups as a result of business losses incurred during recent years.
These losses would cease to have value over time and could not be readily used
by the Company. On April 17, 1997 the Company sold all of the shares in CNC and
its interest in CNT to London Holdings Inc ("LTG") for cash proceeds of CDN
$3,070,000 (the "LTG Transaction"), approximately CDN$62,000 of which has been
paid to LTG as a holdback to secure an indemnity provided by the Company in
connection with the sale and $5,000 has been paid to creditors. After deducting
commissions of CDN$60,000, the Company realized a gain on the sale of
CDN$3,010,000 during the year ended Feburary 28, 1998. The agreement provided
that the intercompany debt owned by CNC to Cam-Net Communications Network Inc.
("CWK") would be repaid to the Company in annual installments equal to 15% of
the annual profit of CNC for three fiscal years commencing April 30, 1997. The
first CDN$500,000 of the repayment to the Company was to be payable to GT
Communications Inc. pursuant to the Plan in the CCAA proceeding. Since the
Company anticipated little or no repayment of such debt, it recently decided to
sell this receivable for CDN$525,000 with GT Communications Inc. being entitled
to receive approximately $387,000 of the proceeds.

Secured Creditor Settlements

The first step in implementing the Plan was to satisfy the secured creditors. At
the CCAA filing date, AT&T held registered security against the Company and
certain of its subsidiaries identified in the Plan (the "Issuer Companies")
which was alleged to secure approximately CDN$2.8 million as at the end of June,
1997. The Company disputed the validity of these claims and began negotiations
with AT&T to resolve the disputed claims. On July 3, 1997, the Court approved a
settlement between the Company and AT&T which included payment of CDN$1,822,725
and issuance of 1,000,000 Shares and warrants whereby AT&T could acquire an
additional 1,000,000 Shares of the Company at CDN$1.00 per share. AT&T has since
released the Company from any other claims.

<PAGE>6

GT Communications Inc. ("GT") alleged an equitable security interest against all
of the assets of the Issuer Companies based upon agreements alleged to have been
made by the Issuer Companies to grant such security to GT. GT claimed CDN $2.6
million. After extensive negotiations, the Court approved a settlement entitling
GT to an immediate cash settlement of CDN $1.4 million and confirmation of a
claim of CDN $500,000 as an unsecured creditor to be paid only from any
repayment received by the Company fro the LTG Transaction. Since the Company
anticipated little or no repayment from the LTG Transaction, it recently decided
to sell this receivable for CDN$525,000 with GT Communications Inc. being
entitled to receive approximately $387,000 of the proceeds.

Unsecured Creditor Settlements

On July 31, 1997, the classes of creditors of the Issuer Companies met and the
requisite number of creditors holding the required value of claims approved the
Plan. The Plan provided for the distribution of proceeds from the sale of assets
and the recovery from lawsuits on account of creditors' indebtedness. The Plan
also provided that creditors' unpaid debt after receipt of dividends would be
satisfied by a distribution of the Shares by issuing warrants whereby the
unsecured creditors would receive a portion of 13,000,000 Shares in proportion
to their unpaid indebtedness to the total of unpaid debt.

The following is a general review of the significant events in the CCAA
Proceeding:

CDN$6,550,772 of the CDN$6,750,000 received from the Primus Transaction and
approximately CDN$3,000,000 received from the LTG Transaction were paid into a
trust account. CDN$1,000,000 of the CDN$6,550,772 received from the Primus
Transaction represents a holdback which was to be released 150 days after April
8, 1997. Primus made claims exceeding the entire amount of the holdback and
accordingly the holdback remained in trust. Recently the Company entered into a
settlement with Primus regarding the holdback, whereby the Company will receive
$25,000 for consulting services and Primus will receive $275,000 of the
holdback. The balance of the holdback has been distributed to creditors under
the Plan;

Secured creditors with outstanding claims of approximately CDN$5,400,000
received CDN$3,222,724 in cash, a total of 1,000,000 Shares and share purchase
warrants to acquire a total of 1,000,000 Shares at CDN$1.00 per share. In
addition, the Company agreed to acknowledge an additional outstanding claim for
CDN$500,000 by GT, provided that GT would be treated as an unsecured creditor
with respect to such claim, and the claim would be paid only out of the
repayment, if any, that the Company may realize from the LTG Transaction. Since
the Company anticipated little or no repayment from the LTG Transaction, it
recently decided to sell this receivable for CDN$525,000 with GT Communications
Inc. being entitled to receive approximately $387,000 of the proceeds;

<PAGE>7

Government claims, which consist primarily of income, sales or capital taxes,
were to be settled outside the Plan and approximately CDN$580,000 of the
proceeds paid into the trust account were segregated to pay potential Government
claims. To February 28, 1999, $196,533 has been paid for Government claims;

CDN$200,000 of the proceeds paid into the trust account were segregated to pay
for creditor claims arising after the Company and its Canadian subsidiaries
entered CCAA protection. As at February 28, 1999, CDN$349,979 in post CCAA
claims had been paid;

CDN$280,000 of the proceeds paid into the trust account were segregated to pay
for employee and consulting commissions relating to the assets sale and the sale
of CNC and CNT. As at February 28, 1999, all commissions have been paid
amounting in the aggregate to CDN$280,715;

CDN$300,000 of the proceeds paid into the trust account were segregated to pay
for legal, monitor and audit costs, and CDN$35,000 for employee severance. As at
February 28, 1999, CDN$675,533 had been paid for legal, monitor and audit costs,
and CDN$32,925 for employee severances;

CDN$300,000 of the proceeds paid into the trust account was paid to the Company
for working capital purposes on the condition that the CDN$300,000 would be
repayable to the trust account out of any further recoveries from outstanding
litigation and thus would be available to unsecured creditors. As of February
28, 1999, CDN$300,000 has been fully repaid to the trust account from lawsuit
recoveries; and

Unsecured creditors with outstanding claims of approximately CDN$31,000,000 were
to share in the funds remaining in the trust account based on a formula which
allocated a portion of the remaining funds to the Company's creditors and a
portion to the Company's subsidiaries' creditors. As at February 28, 1999,
unsecured creditor claims aggregating CDN$3,184,150 have been paid. In addition,
13,000,000 warrants to acquire, without any further consideration, Shares in the
capital of the Company were issued o November 8, 1998 to the unsecured creditors
based on the above formula.

The remaining restricted cash held in trust may be distributed to unsecured
creditors if and when the matters set out below are settled and government
claims for various taxes have been negotiated.

During the year ended February 28, 1998, the Company recognized a gain on
forgiveness of debt of approximately CDN$25,700,000 representing total secured
and unsecured debt of approximately CDN$34,200,000 less the CDN$6,100,000 paid
to secured and unsecured creditors from the trust account to date and less a
further estimated payment of CDN$2,400,000. To the extent that there is not
enough cash in the trust fund to pay the estimated CDN$2,400,000 after
settlement of Government claims and the Primus conditional payment dispute, the
difference will represent an additional gain on forgiveness of debt which will
be recognized at that time. During the year ended February 28, 1999,

<PAGE>8

approximately $950,000 of the $2,400,000 was repaid from the trust fund leaving
a balance of approximately $1,450,000 in restricted accounts payable.

Significant events subsequent to approval of Plan

Significant events in relation to the implementation of the Plan, subsequent to
its approval by the Court, are as follows:

(a) all Proofs of Claims of creditors have been resolved and
settled;

(b) two dividends have been paid to all creditors in
accordance with the Plan;

(d) under the settlement with AT&T 1,000,000 Shares have
been delivered to AT&T;

(e) the following lawsuit recoveries have been made:

(i) Bell Canada - CDN $100,000.00,
(ii) TeleHub - US$450,000.00, and
(iii) BC Tel - CDN $17,500.00;

(f) distribution to AT&T Long Distance Services Company of
warrants to acquire up to 1,000,000 Shares at an exercise
price of CDN $1.00 per share.

On August 14, 1998, the Issuer Companies obtained an order which permitted them
to:

(a) discharge all pending tax liabilities and transfer certain
trust monies held by its counsel to satisfy those
obligations;

(b) distribute trust funds held by counsel to satisfy all post
filing liabilities arising after January 14, 1997 and prior
to August 7, 1997;

(d) distribute the 13,000,000 warrants and Shares issuable upon
exercise of the warrants to unsecured creditors on an
expedited basis having regard to the fact that the original
formula for the distribution of the warrants was dependent
upon final distribution of all dividends; and

(e) obtain a declaration that the Company has performed its
obligations to repay the CDN$300,000.00 advanced to it from
the trust account for working capital purposes, by remitting
net lawsuit recoveries in that amount.

<PAGE>9

On November 5, 1998, the Company distributed to unsecured creditors warrants to
acquire up to 13,000,000 Shares without further consideration. Recently the
Company entered into a settlement with Primus regarding the holdback, whereby
the Company will receive $25,000 for consulting services and Primus will receive
$275,000 of the holdback. The balance of the holdback has been distributed to
creditors under the Plan.

Remaining Obligations under the Plan

The remaining obligations of the Corporation under the Plan and its agreements
made in relation to transactions made during the term of the Plan are set out
below. None of these obligations require the Company to expend monies or use
assets required subsequent to the approval of the Plan on August 7, 1997 and to
the extent that obligations remain under the Plan that require expenditures of
cash they are fully secured by money in trust except where noted below. The
remaining obligations include:

(a) pursuit of remaining viable lawsuit recoveries which will be at the cost of
the Company. Any net proceeds realized on former CWK claims are entirely to
the benefit of the Company without the requirement to distribute them as
dividends under the Plan. Any recoveries on former CNC claims are paid 6%
to the CNC creditor pool and the balance is to the benefit of the Company
without the requirement to distribute them as dividends under the Plan;

(b) distribution of payments for any remaining Government claims from the
Government claim reserve maintained to pay such claims; and

Business Plan

Much of the information included in this Form 20-F includes or is based upon
estimates, projections or other "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 and are subject to the "safe harbor" created by those
sections. While these forward-looking statements, and any assumptions upon which
they are based, are made in good faith and reflect the Company's current
judgment regarding the direction of its business, actual results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions, or other future performance suggested herein. The Company
undertakes no obligation to update forward-looking statements to reflect events
or circumstances occurring after the date of such statements.

Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties. The Company cautions the readers that important

<PAGE>10

factors in some cases have affected and, in the future, could materially affect
actual results and cause actual results to differ materially from the results
expressed in any such estimates, projections or other "forward-looking
statements". (See "Forward Looking Statements and Risk Factors" for more
information)

The Company's initial Business Plan intended to focus the new organization on
two new core businesses: the Teleconstruction business and the Call Center
business. After exploring several opportunities in these business segments, it
became apparent to the Company that it would focus its efforts on a more
specific niche, transaction processing services. Utilizing a corporate shell
with a completely debt free balance sheet and a significant amount in operating
loss carry forwards, the Company has been pursuing an acquisition and
consolidation strategy involving two distinct business segments based upon
transaction processing services.

The first industry segment is the Call Center business. On January 1, 1998,
Suncom purchased its first Call Center in Indianapolis, Indiana, which is
operated by NorthStar Telesolutions. This Call Center specializes in providing
transaction processing services including customer and technical support,
customer order entry, customer billing, order fulfillment, bill collection, cash
management, help desk services and other computer telephone applications. The
Call Center provides transaction processing services to small and medium size
cable companies and other service organizations. To increase the transaction
processing volume of the Call Center, the Company expanded its services to
include inbound and outbound telemarketing services. These telemarketing
services include targeted marketing campaigns, cold calling, inbound marketing
promotions, upselling campaigns and other such telemarketing services.

The Call Center industry generates more than US$80 billion in North America with
after tax profit margins of approximately 7% to 10% and estimated growth rates
of 25% to 40%. The Company intends to concentrate on the business of transaction
processing and customer service. The Company has identified additional industry
sectors, outside of cable companies, that the Company believes will benefit from
the specialized transaction processing/customer service products of the Call
Center. Those industry sectors include eCommerce businesses, Internet service
providers, providers of technical help desk support services, property
management services, direct broadcast satellite services, and retailers of
medical, healthcare and consumer products. The Company intends to provide highly
specialized administrative, technical and clerical functions by combining
customer care with computer automation, networking and data management. This
will enable the Company's clients to concentrate their attention on marketing
and the growth of their businesses while maintaining a high degree of customer
care/service.

The Company plans to continue to seek out additional opportunities to add
capacity, technology and expertise to its Call Center business. The Company is
cultivating new customers for the Call Center which provide cable related
services, such as local and long distance telecommunications and Internet
access. Suncom anticipates that the services offered by its various customers
can be bundled and/or cross marketed.

<PAGE>11

The second industry segment is the eCommerce business. In May, 1999, Suncom
completed the acquisition of all of the property, assets and undertaking of
VirtualSellers. Suncom will continue to operate VirtualSellers' business under a
newly created subsidiary called eCommerce Solutions Inc (d.b.a.
VirtualSellers.com). VirtualSellers.com's business involves the provision of
turnkey eCommerce transaction processing services for small and medium size
businesses. With no monthly fees and small set-up charges, VirtualSellers.com
can provide these businesses with immediately available, customized, secure and
complete eCommerce services so that these businesses can retail their products
over the Internet. VirtualSellers.com earns its revenue by charging the
businesses a percentage of each transaction conducted over the Internet. This
offers a significant advantage for the large number of small and medium-sized
businesses that do not wish to spend a large amount of time and money developing
and maintaining the ability to process business transactions and retail their
products over the Internet.

While there are many companies offering partial solutions to businesses wanting
to sell products on-line over the Internet, VirtualSellers.com is one of the few
companies that provides a complete eCommerce solution. VirtualSellers.com has
provided this full service eCommerce solutions to over 100 companies. For those
businesses that have existing websites, VirtualSellers.com's objective is to
provide eCommerce transaction processing services within hours after passing the
standard screening and approval process. Prior to providing any of its eCommerce
transaction processing services, a potential business is extensively screened
and subsequently monitored to ensure that such business is a legitimate existing
business with the ability to deliver the products that it is offering for sale
over the Internet.

VirtualSellers.com has the capability to develop, construct and maintain a
website on the Internet in a very short period of time for those businesses
without websites. In addition, VirtualSellers.com offers a variety of
transaction processing services to assist these businesses with their eCommerce
requirements, including integrated on-line marketing, product ordering, billing
and payment collection. VirtualSellers.com also designs website pages, hosts
websites, provides a secure environment for ordering and payment collection,
retains commissions at the point-of-sale, and provides these businesses with all
documentation necessary to effect immediate delivery of any products ordered
over the Internet.

The Company has discovered that a large number of small and medium size
businesses do not have the time nor resources to develop, construct and manage a
website designed to retail their products or services over the Internet. Many
larger corporations continue to outsource their eCommerce transaction processing
requirements in order to gain greater product focus and minimize the incremental
costs associated with marketing their products on-line over the Internet.
Although the Company is focused on transaction processing for existing websites,
the ability to provide development services is essential for modifying websites
so that they can be adapted to process these eCommerce processing transactions.
Developing relationships with website development firms and advertising firms
with interactive divisions is a focus of the Company.

<PAGE>12

By focusing on back end transaction processing, VirtualSellers.com is positioned
to help businesses at any stage in the development of their eCommerce solutions.
For instance, VirtualSellers.com can provide businesses with complete eCommerce
transaction processing systems or provide specified services in conjunction with
the businesses existing website and Internet service provider. This flexibility
provides VirtualSellers.com with a critical competitive advantage and it can
co-exist with the website designers and/or Internet service provider.
Additionally, VirtualSellers.com has created an affiliate/revenue sharing
program whereby such providers are encouraged to be a source of referrals
instead of potential competitors. This program allows Internet service
providers, website designers, website portals providers and others to partner
with the Company for both strategic benefit and financial gain.

VirtualSellers.com has been in operation for the past year and a half and has
established clients with a wide range of business, including celebrity-oriented
websites for the Kansas City Royals, Frank Sinatra and former AFL Kansas City
Chief's football coach Hank Stram, and product orientated websites for Beanie
Babies and various music products.

Management believes many eCommerce related companies can become partners or
clients of VirtualSellers.com. As a result, the Company has created the
VirtualSellers.com affiliate program. This program allows Internet service
providers, website designers, website portal providers, and others to partner
with the Company both for strategic benefit and financial gain. The Company has
finalized an agreement with American Information Systems Inc. ("AIS"), a large
Chicago-based Internet service provider that host websites for various business.
AIS could be considered a potential competitor if it chose to enter the
eCommerce transaction processing business. Instead, VirtualSellers.com and AIS
have entered into an exclusive eCommerce Partnership Agreement, granting
VirtualSellers.com the exclusive rights to market its eCommerce transaction
processing services to over 160,000 websites listed in the AIS directory,
Netmall.com. Under the terms of the agreement, the Company will be exclusively
promoted to Netmall merchants by AIS for the purpose of enabling eCommerce
transactions and providing back-office operations, including fraud prevention,
invoicing and shipping.

Large systems integrators may not be direct competition as they provide complete
eCommerce systems to major corporations such as Disney, Sony and The Gap. The
Company has chosen to target small to medium-sized businesses that cannot afford
to develop eCommerce capabilities. There will be clients that need more complex
systems as they grow and the Company has pursued relationships with system
integrators to pass the client on in a seamless manor and continue to receive
future revenue streams.

VirtualSellers.com has proven its ability to partner with potential competitors
by signing an agreement with DVC Interactive ("DVCI"), a subsidiary of Dugan
Valva Contess Inc. Under the agreement, the Company and DVCI will reciprocally
refer new business prospects and provide services to certain clients and
customers of the other party. The Company will provide eCommerce transaction
processing services, Call Center services, technical support and fraud
protection services, while DVCI will provide the website development and high

<PAGE>13

level design and marketing services. In addition, DVCI will pass on clients that
are currently too small for them to service under a revenue sharing plan. DVCI
is a full services strategic, creative and technical company which enables its
clients to use the Internet and other interactive technologies to drive their
businesses.

Data Quest has predicted that Internet commerce will grow to over $150 billion
by the year 2000, with 70% of that amount being sales of consumer durable goods.
In November, 1998, Forester predicted that "worldwide eCommerce sales will reach
as high as $3.2 trillion in 2003, representing nearly 5% of all global sales."
Forester expects on-line consumers to spend $7.4 billion on travel, $5 billion
on financial services, $3.8 billion on computers, $2.7 billion on entertainment,
and $1.1 billion on books an music in the year 2001.

The market for VirtualSellers.com's services include any businesses that sell a
deliverable or tangible product. VirtualSellers.com intends to use a two-fold
strategy to establish a secure position in the eCommerce transaction processing
marketplace. First, VirtualSellers.com intends to enter into exclusive marketing
agreements with businesses in connection with all of their eCommerce needs.
Second, VirtualSellers.com intends to develop and promote innovative value-added
programs like its webring link program. By strategically placing
VirtualSellers.com's customers on an existing webring, these businesses will get
more exposure to potential customers without any additional advertising
expenses.

VirtualSellers.com creates an on-line shopper friendly environment that is
conducive to facilitating transactions. VirtualSellers.com has produced an
average hit-to-sales ratio of 4.7% versus an industry average of 1%.
VirtualSellers.com objective is to achieve a 0.001% market share of the
eCommerce transaction processing market by the year 2002. The Company attributes
this market share estimate to the ease of implementing eCommerce transaction
processing services and that most sales are anticipated to result from existing
customers of VirtualSellers.com.

Suncom also has the ability to provide VirtualSellers.com's eCommerce customers
with the services offered by the Call Center. This should result in increased
transaction volume by giving consumers multiple avenues by which to purchase
products as well as personal sales, order and billing services.

Suncom is in the process of closing the acquisition of all of the property,
assets and undertaking of CallDirect Enterprises Inc. ("CallDirect").
CallDirect, based in British Columbia, Canada, is a catalogue reseller of
innovative high-tech products including: headsets, telephones, cellular
products, automotive, multimedia, entertainment, travel, security and computer
accessories for office, home and personal use. CallDirect has a distribution
agreement with US based Hello Direct, Inc. to sell its products in Canada.
Suncom will continue to operate CallDirect's business as a division of Suncom's
subsidiary, Suncom Telemanagement Inc. Recently, the business has encountered
cash flow problems despite sales of approximately CDN$2 million in 1998. Suncom
intends to use the Call Center to provide CallDirect's customer service
functions which should prove to reduce the operating costs of CallDirect.
VirtualSellers.com has developed a website with eCommerce transaction processing

<PAGE>14

capabilities which will enable CallDirect to retail its products on-line over
the Internet. The new website should increase the customer base and the Company
anticipates this may lead to a lower operating cost per customer.

To facilitate the growth of the Call Center and eCommerce business segments,
Suncom is in the process of raising up to $1.5 million dollars by way of a
private placement of convertible notes. As at May 15, 1999, over $725,000 has
been raised.

MATERIAL ACQUISITIONS

Network Teleconnect Ltd., Alldial Communications Inc., Telesolutions Corporation
and VisionTel Communications Inc.

In December, 1992, the Company purchased all the outstanding shares in the
capital of Network Teleconnect Ltd. ("Network Teleconnect"), Alldial
Communications Inc. ("Alldial"), Telesolutions Corporation ("Telesolutions") and
VisionTel Communications Inc. ("VisionTel") on an arm's length basis in four
separate transactions. Network Teleconnect, Alldial and VisionTel were
non-facilities-based carriers which provided alternate long distance
telecommunications services similar to those provided by the Company, while
Telesolutions, through its subsidiary Consumers Telephone Corporation, operated
as an aggregator, without its own network, aggregating long distance traffic to
take advantage of the bulk discount services offered by the telephone companies.
All the customers of these acquired companies were served directly by CNC and
CNT.

Network Teleconnect and Alldial were relatively small carriers which
concentrated primarily on providing alternate long distance telecommunications
services to small and medium sized business customers. As partial consideration
for the purchase of the shares of Network Teleconnect, the Company agreed to
issue up to 52,830 Shares to Network Teleconnect shareholders, subject to
certain off-set provisions and performance criteria. The Company ultimately
issued 27,197 Shares to Network Teleconnect shareholders which, after
reconciliation of all off-sets, finalized the consideration payment.

Alldial commenced providing alternate long distance services in 1992 and
operated in Sudbury, Ontario. As partial consideration for the purchase of
Alldial, the Company agreed to issue up to 10,415 Shares to Alldial
shareholders, subject to certain off-set provisions. The Company ultimately
issued 6,750 Shares Alldial shareholders which, after reconciliation of all
off-sets, finalized the consideration payment.

Telesolutions concentrated on providing alternative long-distance
telecommunication services to the residential market. In addition to the Shares
issued to acquire shareholder loans, the Company initially issued 44,869 Shares
as part of the acquisition price for the shares of Telesolutions, subject to the
Company being obliged to repurchase such Shares in certain circumstances.
Pursuant to that obligation, the Company repurchased all of the 44,869 Shares on
May 31, 1993 for CDN$673,000. The Company also agreed to issue additional Shares
to the former shareholders of Telesolutions, subject to certain off-set
provisions and performance criteria. The Company ultimately issued 170,548

<PAGE>15

additional Shares which, after reconciliation of all off-sets, finalized the
consideration payment.

VisionTel was the largest of the companies acquired in 1992 and provided
alternative long-distance services to business customers in Toronto, Ottawa,
Hamilton, London, Guelph, Sarnia and Barrie, Ontario, Montreal, Quebec, and
Vancouver and Victoria, British Columbia. As part of the purchase price for the
shares of VisionTel, the Company agreed to issue to the former shareholder of
VisionTel, subject to certain off-set provisions and performance criteria, up to
236,129 Shares. The purchase agreement governing the VisionTel acquisition
required the Company's former auditors to prepare post-closing financial
statements, as of December 9, 1992, and to deliver such statements to the
parties within 60 days after the closing of the transaction. The fact that
VisionTel's financial books and records were neither accurate nor up-to-date
resulted in substantial delay in preparing the post-closing financial
statements, which were ultimately delivered on June 24, 1993. Based on the
information contained in the post-closing financial statements, the Company
believed that a substantial reduction in the remaining consideration to be paid
to the former shareholder of VisionTel was warranted. Based on that belief, the
Company did not issue any additional share consideration to the former
shareholder. In May, 1993, the former shareholder of VisionTel and GT
Communications Inc. (formerly VisionTel) commenced legal proceedings against the
Company in respect of this matter. (See ITEM 3 - Legal Proceedings for furthe
information.)

Business Telecommunications Corp.

In August, 1993, the Company completed the acquisition of 60% of the shares of
Business Telecommunications Corp. ("BTC") in consideration for the issuance of
40,000 Shares at a deemed price of US$13.00 per Share. Subject to the approval
of the United States Federal Communications Commission, the Company had an
option to acquire the remaining outstanding BTC shares for nominal
consideration. The Company did not seek such approval. BTC provided large
US-based commercial customers with telecommunications services between Chicago,
Illinois and Milwaukee, Wisconsin.

On November 27, 1996, Suncom disposed of its interest in Integrated
Telemanagement Inc. ("ITI") and BTC for cash consideration of US$350,000 and
notes receivable totalling US$2.0 million subject to a reduction in the notes
receivable if the net financing liabilities of ITI and BTC at the disposal date
exceeded US$1.6 million. Several items relating to the sale, including the
amount of the net financing liabilities of ITI and BTC, are in dispute and,
accordingly, collection of the cash and notes is uncertain. To reflect this
uncertainty, the Company has recorded only nominal consideration resulting in a
gain on sale of CDN$663,783, which represents the net financial liabilities of
ITI and BTC at the date of the disposal as recorded in the Company's 1998
Consolidated Financial Statements.

Preferred Telemanagement Inc.

Effective July 1, 1994, the Company acquired all the issued and outstanding
share capital of Preferred Telemanagement Inc. ("Preferred") for cash and Shares
totaling approximately CDN$3.0 million. Preferred had over 1,900 commercial

<PAGE>16

customers in Ontario and Quebec representing more than CDN$500,000 in monthly
charges. Preferred had a marketing plan under which it assumed the customers'
telephone numbers thereby becoming the customer to the telephone company. This
permitted Preferred to offer a wide range of telemanagement services in addition
to long distance. On July 7, 1995, the original Agreement with Preferred was
amended resulting in the Company issuing an additional 192,432 Shares at their
fair value of CDN$2.31 per Share. Preferred subsequently changed its name to
Suncom Telemanagement Inc.

Integrated Telemanagement Inc.

In October, 1995, Suncom acquired all of the shares of ITI, a Chicago based
privately held telemanagement firm offering services similar to the Company's
telemanagement services in the greater Chicago, Illinois area. The consideration
payable to the shareholders of ITI was five times monthly revenue measured in
September, 1995, five times incremental monthly revenue measured in November,
1995 in excess of the September, 1995 revenue and three times monthly revenue in
October, 1997 in excess of the November, 1995 revenue, all payable in Shares.
The consideration was to be reduced in the event the gross profit margin of ITI
for the six months ended December 31, 1995 was less than 32% or if ITI
operations suffered a loss in such period. The amount was to be increased if the
gross profit margin was greater than 32% or in the event ITI earned profits for
the period. The consideration payable in 1997 was subject to similar adjustments
for the two year period ending December 31, 1997. The Company ultimately issued
1,241,912 Shares at US$1.64 per share to the former shareholders of ITI. On
November 27, 1996, the Company disposed of its interest in ITI. (See "Business
Telecommunications Corp." for complete details of the disposition.)

Direct Advantage Inc.

In January, 1996, Suncom completed its acquisition of Direct Advantage Inc.
("Direct Advantage")(formerly 1069708 Ontario Inc. (until September 25, 1996)
and Invoice Reduction Services Inc. (until July 19, 1995)). The principal asset
held by Direct Advantage at that time was an agreement, entered into at the
direction of the CRTC, requiring Bell Mobility to provide cellular mobile
telephone service to Direct Advantage for resale by Direct Advantage. This
service was to be provided by Bell Mobility at th rate of CDN$0.20 per minute
until June 30, 1997. The consideration payable to the shareholders of Direct
Advantage consisted of CDN$200,000 cash, 590,147 Shares at a deemed price of
CDN$1.40 per Share and 200,000 share purchase warrants exercisable at CDN$1.37
per Share. The warrants have since expired unexercised. Direct Advantage
subsequently changed its name to CN Celluar on January 26, 1996.

Global

<PAGE>17

acquire all of the issued and outstanding shares of Global for an aggregate
maximum consideration of CDN$5.00 per common share payable pursuant to a formula
set forth in the Letter. The transaction was subject to certain conditions,
including (without limitation) due diligence examination of Global, approval by
the shareholders of the Company, approval of the Board of Directors of both
parties, and the execution of a definitive Purchase and Sale Agreement. Pursuant
to the Letter, the Company advanced US$250,000 to Global, as evidenced by
promissory notes in such aggregate principal amount (the "Notes"). Regardless of
whether the transaction closed, the Company had the right to (i) call the Notes
and receive payment therefor within 30 business days; (ii) convert the Notes to
the exclusive right to use the Global software used to manage Vision 21 for the
Canadian market place; or (iii) convert the Notes to equity in Global
(collectively, the "Paragraph H Rights"). Global did not go forward with the
transaction contemplated in the Letter and as a result the Company commenced a
lawsuit and was awarded judgment in the amount of US $450,000. The Company does
not anticipate that it will be able to recover any of the amount of the
judgment. See ITEM 3 - Legal Proceedings for more information.

NorthNet Telecommunications dba "NorthStar Telesolutions"

On January 1, 1998, the Company purchased its first customer Call Center just
outside of Indianapolis, Indiana for US$105,000 in consideration for a one year
note payable on December 31, 1998 or convertible into Shares at a rate of
US$0.10 per share. On January 5, 1999, NorthNet Telecommunications ("NorthNet")
exercised its options to convert the note payable into 1,050,000 Shares. This
Call Center is operated by NorthNet and does business under the name of
NorthStar Telesolutions. NorthStar Telesolutions provides customer and technical
support, inbound/outbound telemarketing services, customer billing, bill
collections, order fulfilment, cash management, and dispatch services to small
to mid sized cable companies.

Campbell Technologies

On May 11, 1998, the Company announced the signing of a lock-up agreement to
conditionally acquire a stake in Campbell Technologies ("Campbell"), pursuant to
a full blown takeover bid to be launched within 60 days. Campbell provides
Internet services and eCommerce services. The Company entered into a due
diligence period pending a tender offer. On May 19, 1998, the Company released
Campbell from the lock-up agreement and withdrew its offer for Campbell's common
stock, as the Company's due diligence produced differing valuation opinions
regarding Campbell that made completion of takeover bid impracticable.
Tricor Telemanagement Inc.

<PAGE>18

On May 27, 1998, the Company announced it had signed an agreement to acquire
Tricor Telemanagement Inc. ("Tricor"), a privately held provider of
telecommunications consulting services to businesses in the U.S. and Canada.
Tricor had annualized revenues of CDN$500,000. Under the agreement, the Company
was required to issue 1.2 million Shares in three equal instalments over a
12-month period in exchange for Tricor shares. This acquisition would have given
the Company the ability to offer the combined customer base of the two
companies' expert consulting and professional solution in the area of
telecommunications. Due to the change in the focus of its business, the Company
decided not to proceed with this acquisition.

Telemetrix Resource Group Inc., Tracy Corporation II dba Western Total
Communications and Telemetrix Inc.

On August 19, 1998, Suncom entered into an agreement (the "Telemetrix
Agreement") which would have resulted in a business combination of Suncom with
Telemetrix Resource Group Inc., a Colorado corporation ("TRG"), Tracy
Corporation II which does business as Western Total Communications, a Nebraska
company ("WTC"), and Telemetrix Inc., a Nevada company ("Telemetrix").
Shareholders of Suncom, TRG and WTC would have ended up with shares in
Telemetrix whose shares were intended to trade initially on the OTC Bulletin
Board with an application to have the shares listed on the NASDAQ NMS.

Closing of the business combination was contingent upon a considerable number of
conditions being satisfied, including: satisfactory due diligence, satisfactory
legal opinions about each of the companies and the tax consequences to their
shareholders, Suncom receiving shareholder approval at a special meeting called
to approve the transaction, a fairness opinion from a qualified third party, a
valuation of the assets of TRG and WTC and British Columbia court approval of
the transaction.

On January 6, 1999, the Company announced that it would not proceed with this
business combination as it decided to pursue its dedicated eCommerce strategy
and concentrate its efforts on the Internet market. TRG, WTC and Telemetrix are
indebted to the Company in the amount of approximately US$70,000 for due
diligence, legal and accounting costs and expenses incurred by the Company in
connection with the business combination.

VirtualSellers.com, Inc.

In May, 1999, Suncom acquired of all of the property, assets and undertaking of
VirtualSellers.com, Inc. As consideration for the acquisition, Suncom paid cash
of US$170,000, assumed indebtedness of US$28,928, issued 500,000 Shares at a
deemed price of $0.10 per Share and issued 361,710 share purchase warrants. Each
warrant entitles the holder to purchase one Share at a price of $1.50 per Share
for a period of two years. As part of the acquisition, Suncom entered into
employment agreements with two of the founders of VirtualSellers.

<PAGE>19

Suncom will continue to operate VirtualSellers' business under a newly created
subsidiary called eCommerce Solutions Inc (d.b.a. VirtualSellers.com). The
business involves the provision of turnkey eCommerce transaction processing and
customer services to small and medium size businesses. With no monthly fees and
small set-up charges, VirtualSellers.com can provide these businesses with
immediately available, customized, secure and complete eCommerce services so
that these businesses can retail their products over the Internet.
VirtualSellers.com earns its revenues by charging the businesses a percentage of
each transaction conducted over the Internet.

CallDirect Enterprises Inc.

In May, 1999, Suncom acquired of all of the property, assets and undertaking of
CallDirect Enterprises Inc. As consideration for the acquisition, Suncom issued
1,200,000 Shares at a deemed price of $0.50 per Share. Suncom also assumed the
outstanding indebtedness of CallDirect, approximately CDN$500,000, which Suncom
settled for approximately CDN$109,000. Suncom will continue to operate
CallDirect's business as a division of its subsidiary Suncom Telemanagement Inc.
CallDirect is a catalogue reseller of telephone related products and will soon
be a provider of transaction processing and customer services. Suncom intends to
use the Call Center to provide customer service functions for CallDirect.
VirtuallSellers.com has developed a website with eCommerce transaction
processing capabilities which will enable CallDirect to retail its products over
the Internet.

FORWARD LOOKING STATEMENTS AND MATERIAL RISKS IN THE COMPANY'S BUSINESS

Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties as outlined below. The Company cautions the
readers that important factors in some cases have affected and, in the future,
could materially affect actual results and cause actual results to differ
materially from the results expressed in any such estimates, projections or
other "forward-looking statements". Readers should carefully consider the
following factors in evaluating the Company, its business and any investment in
the Company.

<PAGE>20

History of Losses

The Company has incurred substantial net losses and has a substantial net
operating loss carryover. These losses were mainly incurred in operations which
the Company no longer operates. The Company has incurred losses since entering
the alternate long distance telecommunications business and has continued to
lose money during the transition of becoming a transaction processing/customer
service company. For the period ended February 28, 1998, the Company showed a
profit of CDN $24,535,877 as a result of the gain on forgiveness of debt. For
the year ended February 28, 1999, the Company showed losses of CDN$2,429,137.
The Company projects that it will continue to incur losses for the period ending
February 28, 2000, but should be at a positive monthly run rate after that time.
While the Company feels confident that it can secure additional funds through a
rights offering and successfully carry out its business plan, there can be no
assurance that the Company will accomplish these tasks and return to
profitability.

Working Capital and Liquidity

The Company currently has a working capital surplus of CDN$1,200,000 but has had
significant working capital deficiencies in the past. As of February 28, 1999,
the accumulated deficit was CDN$12,521,323. Furthermore, the Company has
experienced negative cash flows during each of the last three years of
operations. The Company has historically depended upon capital infusion from the
issuance of long term debt and equity securities to provide the cash needed to
fund operations. The Company's ability to continue in business is dependent upon
the Company's continued ability to obtain significant funding from external
sources, initially from the proceeds of a private placement and then from debt
and equity markets. There can be no assurances that the Company will be able to
raise sufficient funds from these or other sources to execute its business plan.

Dependence Upon Key Customers

The Company is dependent upon a limited number of customers for a substantial
portion of its revenues. The acquisitions of CallDirect and VirtualSellers and
diversification of the Company's business serve to reduce this risk. To date,
the Company has acquired one Call Center in Indianapolis, Indiana, which
currently services various cable companies. The loss of any of these customers
would have a material, significant adverse impact upon the Call Center's
revenues and prospects for profits but would no significantly impact Suncom's
working capital, liquidity or the long term prospects. Each customer accounted
for no more than 25% of the Call Center's total revenue for the year ended
February 28, 1999. Although the Company expects to expand its customer base,
there can be no assurance that the Company will be successful and, if the
customer base is expanded, that the Company will be able to retain its existing
customers. Furthermore, an unexpected decline in sales to any of such customers
could have a material adverse effect upon the Company. In addition, there are no
firm contracts governing the Company's relationship with any of its customers.
Accordingly, such business relationships could be terminated or curtailed at any
time. The lack of firm contracts between the Company and its customers could

<PAGE>21

have a material adverse impact on the Company's revenue. Although the Company
intends to diversify out of the cable industry and is currently pursuing
opportunities to acquire and consolidate additional Call Centers, there is no
guarantee that the Company will be successful in its plans.

The eCommerce business segment operated under the name VirtualSellers.com is
estimated to produce 80% to 90% of Suncom's revenue. While several of
VirtualSellers' clients may produce substantial sales, none will account for
more than 7% of VirtualSellers' total revenue. The remaining revenues will be
generated from the Call Center and CallDirect operations. As with the Call
Center, an unexpected decline in sales to any of its eCommerce customers could
have a material adverse effect upon the Company.

Competition

Many of the Company's competitors in both the Call Center and eCommerce business
segments are substantially larger than the Company and have significantly
greater financial resources and marketing capabilities than the Company,
together with better name recognition. It is also possible that new competitors
may emerge and acquire significant market share. Competitors with superior
resources and capabilities may be able to utilize such advantages to market
their products and services better, faster and/or cheaper than the Company.
Increased competition is likely to result in price reductions, reduced gross
margins and loss of market share, any of which could have a material adverse
effect upon the Company's business, results of operations and financial
condition. In addition, there can be no assurance that the Company will be able
to compete successfully against its present or future competitors.

The telecommunications and Internet markets are both very competitive. The
Company will compete directly with companies providing similar products and
services which may have certain commercial advantages. Suncom's success depends
on management's ability to identify and make acquisitions of operating
"telephone call centers" and other related telecommunication and Internet
businesses. The goal is to capitalize on the first to market lead while the
market is wide open.

Suncom's ability to compete successfully will require it to develop and maintain
technologically advanced products and services, attract and retain highly
qualified personnel, obtain a significant customer base using the "eCommerce
solutions" and "telephone call center" and related services, whether alone or
with third parties. There can be no assurance that the Company will be able to
achieve these objectives. Failure to do so would have a material adverse effect
on Suncom's business, operating results and financial condition. Furthermore,
the Company's potential products and services, if successfully developed, will
compete directly with other existing and subsequently developed products using
competing technologies. There can be no assurance that the Company's competitors
will not succeed in developing or marketing technologies and products that are
more effective and commercially desirable than those developed or marketed by
the Company or that would render the Company's technology and products non
competitive. Failure of the Company's potential products to compete successfully
with products using competing technologies will have a material adverse effect
on the Company's business, operating results and financial condition.

<PAGE>22

VirtualSellers has entered an industry that is in its infancy. Competition comes
in several forms. There are traditional companies that sell hardware and
software; there are design companies that develop eCommerce solutions for
business; and there are on-line malls that house a multitude of websites for
various businesses. In general, these are not direct competitors in that they do
not supply complete eCommerce transaction development and processing services.

The closest direct competition to the services provided by VirtualSellers comes
from iCat, ViaWeb, iBill and Octagon. Each of these companies provides software
for eCommerce transaction processing and hosts companies wanting to outsource
the eCommerce portion of their websites. However, many of these companies do not
provide the back-office services, merchant services, customer service, order
tracking, or technical services. VirtualSellers has chosen to concentrate on
superior service and making the eCommerce transaction itself easy for the client
and their customers - safe, secure and timely. VirtualSellers' competitive
advantage is derived from the fact that it provides a complete eCommerce
solution/service to small and medium size businesses.

Dependence Upon Key Personnel

The loss of the services of any of the Company's management and other key
employees, for any reason, may have a materially adverse effect on the prospects
of the Company. The Company has entered into a month-to-month employment
agreement with Dennis Sinclair, the President and CEO of the Company. As such,
there is nothing preventing Dr. Sinclair from departing at any time from
employment with the Company. Although the Company believes that the loss of Dr.
Sinclair will not have a material adverse impac upon the Company, there can be
no assurance in this regard, nor any assurance that the Company will be able to
find a suitable replacement to Dr. Sinclair. Furthermore, the Company does not
maintain "key man" life insurance on the lives of Dr. Sinclair or any other
officers of the Company. To the extent that the services of any key employee of
the Company become unavailable, the Company will be required to retain other
qualified persons; however, there can be no assurance that it will be able to
employ qualified persons upon acceptable terms.

The Company's business is labor intensive and places significant importance on
its ability to recruit and retain technical and professional personnel. The
success of the Company is therefore dependent upon its ability to identify, hire
and retain additional qualified personnel, for whose services the Company will
be in competition with other prospective employers, many of which may have
significantly greater resources than the Company. Additionally, demand for
qualified personnel conversant with certain technologies is intense and may
outstrip supply as new and additional skills are required to keep pace with
evolving computer technology. There can be no assurance that the Company will be
able to hire and, if so, retain such additional qualified personnel. Failure to
attract and retain such personnel could have a material adverse effect upon the
Company.

<PAGE>23

Reliance upon Technology and Computer Systems

The Company's Call Center and transaction processing systems utilize
sophisticated and specialized telecommunications, network and computer
technology, and has focused on the application of this technology to meet its
clients' needs. The Company anticipates that it will be necessary to continue to
invest in and develop new and enhanced technology on a timely basis to maintain
its competitiveness. Significant capital expenditures may be required to keep
its technology up to date. Investments in technology and future investments in
upgrades and enhancements to software for such technology may not necessarily
maintain the Company's competitiveness. The Company's future success will also
depend in part on its ability to anticipate and develop information technology
solutions which keep pace with evolving industry standards and changing client
demands. In addition, the Company's business is highly dependent upon its
computer and telephone equipment and software systems, and the temporary or
permanent loss of such equipment or systems, through casualty, operating
malfunction or otherwise, could have a material adverse effect upon the Company.

Dependence upon Trend Toward Outsourcing

The Company's business and growth depends in large part on the industry trend
toward outsourcing information technology and administrative services. There can
be no assurance that this trend will continue, as organizations may elect to
perform such services in-house. The Company intends to alleviate its dependence
upon any one revenue stream by expanding its business operations vertically and
horizontally. Nevertheless, a significant change in the direction of this trend
toward outsourcing could have a material adverse effect on the Company.

Risk of Emergency Interruption of Call Center and Network Operations

The Company's operations are dependent upon its ability to protect its Call
Center, its eCommerce business and its information databases against damage that
may be caused by fire, power failure, telecommunications failures, unauthorized
intrusion, computer viruses and other emergencies. The Company has taken
precautions to protect itself and its customers from events that could interrupt
delivery of the Company's services. These precautions include off-site storage
of backup data, fire protection and physical security systems, backup power
generators and a disaster recovery plan. The Company also maintains business
interruption insurance in amounts the Company considers adequate.
Notwithstanding such precautions, there can be no assurance that a fire, natural
disaster, human error, equipment malfunction or inadequacy, or other event will
not occur.

Similar precautions have been implemented with the development of the network
and telecommunication systems for the eCommerce transaction processing business.
Duplication has been built into the networks by having redundant equipment
maintained onsite. Back-up generators and power protection systems have been
installed to ensure continuous operations and firewalls have been installed to
ensure system integrity and safety. Duplicate providers of bandwidth have been
chosen to ensure that connectivity wil be uninterrupted. All this ensures that

<PAGE>24

customers and vendors will have continuous service to the eCommerce systems
pending a complete interruption of the telecommunications and power
infrastructures. Notwithstanding such precautions, there can be no assurance
that a fire, natural disaster, human error, equipment malfunction or inadequacy,
or other event will not occur.

Uncertain Ability to Manage Growth

The Company's ability to achieve its planned growth is dependent upon a number
of factors including, but not limited to, its ability to hire, train and
assimilate management and other employees, the adequacy of the Company's
financial resources, the Company's ability to identify and efficiently provide
and perform such new products and services as the Company's customers may
require in the future and its ability to adapt its own systems to accommodate
its expanded operations. In addition, there can be no assurance that the Company
will be able to achieve its planned expansion or that it will be able to manage
successfully such expanded operations. Failure to manage anticipated growth
effectively and efficiently could have a material adverse effect on the Company.

Implementation of Acquisition Strategy

Although the Company has recently completed the acquisition of the Call Center,
VirtualSellers and CallDirect, it intends to pursue other acquisitions. There
can be no assurance that the Company will be able to consummate or, if
consummated, successfully integrate the operations and management of future
acquisitions. Acquisitions involve significant risks which could have a material
adverse effect on the Company, including: (i) diversion of management's
attention to the assimilation of the business to b acquired; (ii) the risk that
the acquired business will fail to maintain the quality of services that the
Company has historically provided; (iii) the need to implement financial and
other systems and add management resources; (iv) the risk that key employees of
the acquired business will leave after the acquisition; (v) potential
liabilities of the acquired business; (vi) unforeseen difficulties in the
acquired operations; (vii) adverse short-term effects on the Company's operating
results; (viii) lack o success in assimilating or integrating the operations of
acquired businesses with those of the Company; (ix) the dilutive effect of the
issuance of additional equity securities; (x) the incurrence of additional debt;
and (xi) the amortization of goodwill and other intangible assets involved in
any acquisitions that are accounted for using the purchase method of accounting.
There can be no assurance that the Company will successfully implement its
acquisition strategy. Furthermore, there can be no assurance any acquisition
will achieve levels of revenue and profitability or otherwise perform as
expected, or be consummated on acceptable terms to enhance shareholder value.
The Company is currently reviewing various companies for acquisition but has no
arrangements or understanding with any party with respect to any further
acquisitions. The Company, however, continues to monitor acquisition
opportunities.

<PAGE>25

Rapid Technological Change

The future success of the Company will depend in large part upon its ability to
keep pace with technology. Rapid changes have occurred, and are likely to
continue to occur. There can be no assurance that the Company's development
efforts will not be rendered obsolete by research efforts and technological
advances made by others. The market for information technology services is
characterized by rapid technological advances, frequent new product
introductions and enhancements, and changes in customer requirements. Although
the Company believes that the Call Center and eCommerce business are sufficient
for the present, it is believed that the Company's future success will depend in
large part on its ability to service new products, platforms and rapidly
changing technology. These factors will require the Company to provide
adequately trained personnel to address the increasingly sophisticated, complex
and evolving needs of its customers. The Company's ability to capitalize on
future acquisitions in the Call Center and eCommerce industries will depend on
its ability to (i) enhance its software and successfully integrate such software
into the Company's technical product support services, (ii) adapt such software
to new hardware and operating system requirements and (iii) develop new software
products in an industry characterized by increasingly rapid product and
technological obsolescence. Any failure by the Company to anticipate or respond
rapidly to technological advances, new products and enhancements, or changes in
customer requirements could have a material adverse effect on the Company.

Reliance on Collaborative Relationships

The Company plans to pursue collaborative arrangements with other market leaders
to develop, manufacture and market eCommerce and telecommunication services. One
such agreement already exists with ASI, a web hosting company that has 160,000
business available to market our complete e-commerce solutions. The Company's
future success will depend in large part on its ability to continue to form
collaborative arrangements with third parties, their strategic interest in the
potential products under development and, eventually, their success in marketing
or willingness to purchase any such products. These programs may require the
Company to share control over its marketing programs or restrict its ability to
engage in certain areas of product development, production and marketing. These
programs may also be subject to unilateral termination by the Company's
collaborative partners without cause or default and without an ability to cure
any defaults. Accordingly, the Company may compete with its partners (and others
to whom disclosure maybe made) for commercial sales of any products or services
developed in these arrangements. There can be no assurance that the Company will
be able to enter into collaborative arrangements on commercially reasonable
terms, that these arrangements, if established, will result in successful
programs to develop, manufacture or market products or that, if those programs
are successful, the Company's collaborative partners will not seek to compete
directly through jointly developed products themselves or obtain them from
alternative sources.

<PAGE>26

Need for Additional Financing

The Company's ability to continue in business depends upon its continued ability
to obtain financing. The Company is currently raising additional funds through
the sale of additional equity and is looking to secure asset financing for
network computer equipment. If this additional capital were raised through
borrowing or other debt financing, the Company would incur substantial
additional interest expense. Sales of additional equity securities, through a
traditional underwritten offering, would dilute, on a pro rata basis, the
percentage ownership of all holders of common shares. There can be no assurance
that any such financing would be available upon terms and conditions acceptable
to the Company, if at all. The inability to obtain additional financing in a
sufficient amount when needed and upon acceptable terms and conditions could
have a material adverse effect upon the Company.

Although the Company believes that it can raise financing sufficient to meet its
immediate needs, it will require funds to finance its development and marketing
activities in the future. There can be no assurance that such funds will be
available or available on terms satisfactory to the Company. If additional funds
are raised by issuing equity securities, further dilution to existing or future
stockholders is likely to result. If adequate funds are not available on
acceptable terms when needed, the Company may be required to delay, scale-back
or eliminate marketing of one or more of its products or development programs or
obtain funds through arrangements with collaborative partners or others that may
require the Company to relinquish rights to certain of its technologies, product
candidates or potential products that it would not otherwise relinquish.
Inadequate funding also could impair the Company's ability to compete in the
marketplace and could result in its dissolution. The Company regularly examines
opportunities to expand its technology base and product line through means such
as licenses, joint ventures and acquisition of assets of ongoing business and
may issue securities in connection with such transactions. However, no
commitments to enter into or pursue and such transaction have been made at this
time and there can be no assurance that any such discussions will result in any
transaction being concluded.

Marketing

The Company will be required to develop a marketing and sales force that will
effectively demonstrate the advantages of its services and products. The
Company's marketing and selling experience of their services to date is very
limited. The Company may also elect to enter into agreements or relationships
with third parties regarding the commercialization or marketing of its products
and services. There can be no assurance that the Company will be able to
establish adequate sales and distribution capabilities, that it will be able to
enter into marketing agreements or relationships with third parties on
financially acceptable terms or that any third parties with whom it enters into
such arrangements will be successful in marketing the Company's products.

<PAGE>27

Market for the Company's Securities and Possible Volatility of Share Prices

The market price of the Shares, has fluctuated significantly and is likely to
continue to fluctuate in the future. Announcements by the Company or others
regarding the receipt of customer orders, changes in recommendations of
securities analysts, results of customer field trials, timing of product
shipments, scientific discoveries, technological innovations, litigation,
product developments, patents or proprietary rights, government regulation, and
general market conditions may have a significant impact on the market price of
the Shares.

Year 2000

The year 2000 poses potential problems to computer programs which have been
written using two digits rather than four to define the applicable year.
Computer programs of the Company, its suppliers or customers that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of operations including, among other things, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities.

The Company is working to resolve the potential impact of the year 2000 caused
by support vendors such as banks, credit card companies, credit card processing
facilities, and telephone companies. The Company has not completed its
assessment, but currently believes that costs of addressing this issue will not
have a material adverse impact on the its financial position. However, if the
Company and third parties upon which it relies are unable to address this issue
in a timely manner, it could result in a material financial risk to the Company.
In order to assure that this does not occur, the Company plans to devote all
resources required to resolve any significant year 2000 issues in a timely
manner. It should be noted that all of the aforementioned third party vendors
are large organizations and have a plan for addressing year 2000 problems in
place. They have devoted substantial resources to this as it has the potential
to dramatically impact their business.

Year 2000 and the Call Center

With reference to the Call Center's telephone system (which was purchased in
August 1998) and computer system, the Company has received written assurances
from their respective suppliers that they are all year 2000 compliant. The most
significant risk that has been identified by the Company is the potential
disruption in telephone service if regional or national telephone carriers
experience year 2000 incompatibility problems. If the Call Center is deprived of
access to telephone service for a significant period of time, the Company
expects that it may lose approximately one to four percent of its daily revenue
from Call Center operations. The Company is in the process of contacting its
clients and advising them of this potential problem, so as to minimize the risk
of jeopardizing its existing client contracts.

<PAGE>28

is delayed. In view of the efforts being made by financial institutions to
counter this risk, the Company believes that this is a relatively small risk.

Year 2000 and eCommerce

VirtualSellers has installed or migrated to year 2000 compatible products.
VirtualSellers has fixed all applications including hardware, system software,
application software, voice mail, telephone systems and billing platforms.
Testing has been performed at two levels. First, the individual elements that
make up the system were tested to ensure each functions correctly. Second, the
total information technology environment has been tested to ensure that all
interfaces work properly including applications from outside our environment
that feed data and dates to VirtualSellers' systems.

VirtualSellers' business facility has battery back-up for 12 hours, but is
otherwise at the same risk of power and telephone disruption as are most other
businesses. If power and telephone services are disrupted nationwide,
VirtualSellers' customers will be unable to send Internet orders until service
is restored. It is anticipated that while some sales may be lost as a result,
most will merely be postponed since VirtualSellers' competitors will likely be
similarly affected. On the other hand, if power and telephone service disruption
is localized, there is greater potential for lost sales, since potential
customers may in that case place orders with competitors in a non-affected area.
The financial impact of disruption to such service, if any, is not expected to
become material unless service is disrupted for more than three to five days.
Clients will be advised in advance of this risk and as a result, the Company
does not foresee any significant loss of clients.

Disruption in credit card processing also poses some potential risk. If the
operation of credit card systems is interrupted, VirtualSellers can hold orders
for batch processing and set up an automated message explaining any delay in
order-processing to persons placing orders. If the delay is significant, persons
placing orders will be contacted to discuss alternative forms of payment, and to
verify whether they wish to keep credit card orders pending restoration of
credit card processing services. It i anticipated that the financial impact to
VirtualSellers will only become material if credit card connections are
disrupted for more than ten days. VirtualSellers will be informing its customers
of these potential issues.

Authorization and Discretionary Issuance of Preferred Stock

The Company is authorized to issue 150,000,000 each of Class A and Class B
Preference Shares, with such designations, rights and preferences as may be
determined from time to time by its Board of Directors. Accordingly, the
Company's Board of Directors is empowered, without stockholder approval, to
issue Preference Shares with dividend, liquidation, conversion or other rights
which could adversely affect the rights of the Company's Shareholders. The
issuance of Preference Shares could, among other things, adversely affect the
voting power of the Company's Shareholders and, under certain circumstances,
make it more difficult for a third party to gain control of the Company,
discourage bids for Shares at a premium or otherwise adversely affect the market
price for Shares.

<PAGE>29

Limited Liability of Directors, Officers and Others

The Company's bylaws contain provisions limiting the liability of officers and
directors of the Company for all acts, receipts, neglects or defaults of
themselves and all other officers or directors of the Company or for any other
loss, damage or expense happening to the Company which shall happen in the
execution of the duties of such officers or directors. Such limitations on
liability may reduce the likelihood of derivative litigation against officers
and directors of the Company and may discourage or deter the Company's
Shareholders from suing officers and directors of the Company based upon
breaches of their duties to the Company, though such an action, if successful,
might otherwise benefit the Company and its shareholders.

Potential Expenses Arising from Indemnification of Officers and Directors

The Company's bylaws contain provisions entitling its directors and officers to
indemnification from all costs, charges, expenses, including any amount paid to
settle an action or satisfy a judgment reasonably incurred by such officer or
director with respect to any civil, criminal or administrative action or
proceeding to which such officer or director is made a party by reason of being
or having been an officer or director of the Company. The Company has authorized
the indemnification of its officers and directors in such other circumstances
permitted under the CBCA which may reduce the likelihood of derivative
litigation against directors and officers and may discourage or deter
shareholders from suing directors or officers for breaches of their duties to
the Company, though such an action, if successful, might otherwise benefit the
Company and its shareholders. The Company's bylaws also provide for the
indemnification of directors and officers of the Company from judgments, fines,
amounts paid in settlement and reasonable expenses as a result of an action or
proceeding in which they may be involved by reason of being or having been a
director or officer of the Company as long as the acts were done in good faith.
The Company is not presently aware of any claims which would result in its
indemnification of its directors and officers. Such provisions do not eliminate
the personal liability of its directors and officers for monetary damages as a
result of a breach of fiduciary duty. The Company wil indemnify against
reasonable costs and expenses incurred in connection with any action, suit or
proceeding to which any of such individuals were made a party by reason of his
or her being or having been such a director of officer, unless such person has
been adjudicated to have been liable for negligence or misconduct in his or her
corporate duties. Although the Company may obtain an insurance policy which will
cover such indemnity, there can be no assurance that such a policy will be
available or that, if available, it will be adequate. To the extent that the
Company is required to expend funds to indemnify officers and directors, there
could be a material adverse effect upon the financial condition of the Company.

Furthermore, the Company's bylaws allow for insurance for the benefit of
officers and directors of the Company against such liabilities and in such
amounts as the Board of Directors may determine. The Company currently
subscribes to Directors and Officers Liability Insurance from Tri-City Brokerage
of Illinois, Inc. for $2,000,000 for each claim and as an annual aggregate.

<PAGE>30

Dilution and Dividend Policy

The grant and exercise warrants of creditors or otherwise or stock options would
likely result in a dilution of the value of the Shares. Moreover, the Company
may seek authorization to increase the number of its authorized shares and to
sell additional securities and/or rights to purchase such securities at any time
in the future. Dilution of the value of the Shares would likely result from such
sales.

In addition, the Company may determine to grant additional stock options or
other forms of equity-based incentive compensation to the Company's management
and/or employees to attract and retain such personnel. The Company also may in
the future offer equity participation in connection with the obtaining of
non-equity financing, such as debt or leasing arrangements accompanied by
warrants to purchase equity securities of the Company. Any of these actions
could have a dilutive effect upon the holders of the Shares.

The Company has never paid a cash dividend on the Shares and does not expect to
pay dividends in the foreseeable future.

Anti-Takeover Provisions

At the present time, the Company's Board of Directors has not adopted any
shareholder rights plan or any anti-takeover provisions in its Charter or
Bylaws.

Litigation

The Company is involved in substantial and continuing litigation. A detailed
discussion of such litigation and the Company's discussion of the prospects of
each pending matter is contained in the section entitled "ITEM 3 - LEGAL
PROCEEDINGS".

ITEM 2 DESCRIPTION OF PROPERTY

The Company currently has four leased office locations:

(a) The Company's executive office is located at 290 - 171 Water Street,
Vancouver British Columbia, V6B 1A7. The office space is approximately
1,200 square feet and is leased on a month-to-month basis for a monthly
base rent of $825.00;

(b) The Company has additional office space located at Suite 1000, 120 North
LaSalle, Chicago, Illinois, 60602. The office space is approximately 3,400
square feet and is leased on a yearly basis;

(c) The Company, through its subsidiary NorthNet Telecommunications Inc.,
leases the Company's Call Center located in Greenwood, Indiana. This is
approximately an 8,000 square foot facility; and

<PAGE>31

(d) The Company has recently leased a warehouse facility located at 3075
Tollview Drive, Rolling Meadows, IL to house VirtualSellers' eCommerce
business. This is approximately an 20,000 square foot facility and is
leased for a five year term for a monthly based rent, during the first
year, of $18,333 plus property operating costs and taxes.

ITEM 3 LEGAL PROCEEDINGS

GT COMMUNICATIONS INC.

The Company was named as a defendant in a lawsuit filed on May 19, 1993 (the
"Lawsuit") by GT Communications Inc. (formerly named VisionTel Holdings, Inc.)
("GT") in the British Columbia Supreme Court which arose out of a share purchase
agreement (the "VisionTel Agreement") dated December 9, 1992 among the Company,
GT (then known as VisionTel Holdings Inc.), Edmond N. Chisel and Giorgio
Alorra-Abbondi for the sale and purchase of the issued and outstanding shares of
VisonTel Communications Inc. ("VisonTel"). GT alleged that the Company failed to
meet its obligations as purchaser under the VisionTel Agreement by not
delivering either certain payments of money or Shares at specified times. The
Company claimed that it was prevented from making any such delivery because of
certain breaches by GT of the VisionTel Agreement relating to representations
and warranties concerning VisionTel's financial records. The Company filed a
counterclaim against GT seeking damages allegedly caused by the aforementioned
breaches by GT of the VisionTel Agreement. In September 1995, the parties agreed
to adjourn the legal proceedings and the matter went to binding arbitration. In
February 1996, the arbitrator ruled that the Company should pay GT an additional
CDN $3.4 million plus interest.

Pursuant to the terms of an agreement dated March 21, 1996 (the "Settlement
Agreement"), the Company and GT subsequently settled their dispute over
consideration due under the VisionTel Agreement. The Company agreed to pay GT
CDN $4 million in monthly installments of varying amounts extending into March
1997, plus interest at 16% per annum, compounded monthly. Under the terms of the
Settlement Agreement, CDN $100,000 of the indebtedness was payable in cash and
the balance was payable in cash or in common shares of the Company, at the
option of the Company, with a market value equal to the cash payments due,
provided the proceeds from the resale of such shares equal to a certain set
amount (the "Fixed Amount"). If the proceeds were less than the Fixed Amount,
the Company was to pay to GT the difference between the amount of the proceeds
and the Fixed Amount, thereby guaranteeing that GT will receive an aggregate of
approximately CDN $3.9 million from the resale of such shares.

After filing for CCAA protection, the Company settled GT's claim
on the following basis:

(a) an immediate cash payment to GT of CDN $1,400,000; and

(b) confirmation of a claim under the CCAA proceedings of CDN $500,000, with no
right to receive dividends or warrants under the Plan, to be secured only
against the LTG contingent payment, with a proxy granted to GT in favor of
the Company in relation to the Claim.

<PAGE>32

See EXHIBIT 1.1 for further details.

WILLIAM PRATT

A civil action was filed on or about August 27, 1993 in the Los Angeles Superior
Court by William Pratt against several defendants, including the Company,
seeking monetary damages in the amount of approximately US $577,000. In his
complaint, Mr. Pratt alleges several causes of action with respect to the
financing and support of a race car for one season, including breach of contract
and other related causes of action. Mr. Pratt obtained an entry of default
against the defendants on November 16, 1993. The Company's motion to vacate the
default judgment was denied as were the Company's appeals to the Appellate Court
and the State Supreme Court. Claims of US $577,000 were made by the Company and
disallowed by the Courts. A Proof of Claim in the amount of CDN $250,000 was
settled in the CCAA Proceeding and Mr. Pratt became part of the CNC/CNT General
Creditors and will receive a pro-rated portion of the CDN $250,000 through
dividend payments from the CNC/CNT Pool.

See EXHIBIT 1.1 for further details.

FEENEY / DELINKO

The Company and certain present and former officers and directors of the Company
have been named as defendants in two class action complaints filed in the United
States District Court for the Eastern District of Pennsylvania (the "Court"),
James J. Feeney v. Cam-Net Communications Network Inc., et al. Case #94-CV-6431)
and Jeff Delinko v. Cam-Net Communications Network, Inc., et al., (Case
#95-593). The Feeney action names Daryl Buerge, Robert Moore and Michael Gilley
as additional defendants and was filed on October 2, 1994 and served upon the
Company in December, 1994. The Delinko action names these individuals and Jamie
Stallwood, a former vice president of the Company as additional defendants and
was filed on February 1, 1995 but has not been served upon the Company. Both
actions seek damages for purchasers of the Company's common stock for specified
periods and allege that the Company made certain misleading statements or
omissions in violation of Section 10(b) and Rule 10b-5 under the Securities
Exchange Act of 1934 which inflated the price of the common stock during the
class period. The Feeney and Delinko actions seek damages for purchasers of
common stock from August 7, 1993 to February 15, 1994 and from July 7, 1993 to
July 28, 1994, respectively.

The Plaintiffs and the Company entered into a Stipulation and Agreement of
Compromise and Settlement (the "Settlement") which was approved by the Court
pursuant to the terms of a Final Judgment and Order of Dismissal of Actions
dated as of May 14, 1996. The Settlement released the Company and all other
defendants from liability to all purchasers of common stock of the Company from
July 7, 1993 through and including September 2, 1994, unless the purchaser
validly and timely requested to be excluded from the Settlement Class. The
holders of a total of 2300 shares of common stock opted out of the Settlement

<PAGE>33

Class. The Settlement provided for the payment by the Company of expenses of the
settlement in an amount up to US $175,000 and the issuance of the Company's
common stock in the amount of US $2,225,000. A Proof of Claim in the amount of
CDN $1,250,000 was settled in the CCAA Proceeding and the Plaintiffs became part
of the CNC/CNT General Creditors and will receive a pro-rated portion of the CDN
$1,250,000 through dividend payments from the CNC/CNT Pool.

See EXHIBIT 1.1 for further details.

GLOBAL TELEMEDIA INTERNATIONAL, INC.

On July 17, 1996, the Company entered into a non-binding letter of intent (the
"Letter") with Global Telemedia International, Inc. ("Global"), a Florida
corporation which offers a wide variety of discounted telecommunications
services. Pursuant to the terms and conditions of the Letter, the Company would
acquire all of the issued and outstanding shares of Global for an aggregate
maximum consideration of CDN $5.00 per common share payable pursuant to a
formula set forth in the Letter. The transaction was subject to certain
conditions, including (without limitation) due diligence examination of Global,
approval by the shareholders of the Company and approval of the Board of
Directors of both parties, and negotiation and execution of a definitive
Purchase and Sale Agreement. In addition, the Letter provides that, regardless
of the closing of the proposed transaction described therein, with respect to US
$250,000 which has been advanced by the Company to Global as evidenced by
promissory notes in such aggregate principal amount (the "Notes"), the Company
shall have the right to (i) call the Notes and receive payment therefor within
30 business days; (ii) convert the Notes to the exclusive right to Global
software used to manage Vision 21 for the Canadian market place; or (iii)
convert the Notes to equity in Global.

The Company commenced action against Global in the US District Court for the
Northern District of Georgia, to collect monies due from Global to the Company
under the Notes. The Company was successful at trial obtaining an award of US
$450,000 but does not expect that it will be able to collect on the judgment
against Global because of Global's lack of assets.

VANCOUVER TELEPHONE COMPANY LTD.

Vancouver Telephone Company Ltd. ("VanTel") is a former customer of the Company
who has refused to pay outstanding invoices totaling approximately US $500,000.
The Company commenced a lawsuit in November 1996 in the Supreme Court of British
Columbia (Vancouver Registry) seeking payment of the monies. VanTel raised the
defenses that the Company: (a) failed to provide contractual services to VanTel
in a manner and of a quality required by VanTel; (b) unilaterally terminated the
contract between the Company and VanTel without adequate notice or proper cause;
and (c) failed to give proper notice of price increases to VanTel (the
"Defences"). VanTel brought a counterclaim as against the Company, in January
1997, alleging damages in the form of higher rates and less favorable payment
terms and loss of business as a result of the Company's actions. The Company was
successful in obtaining an order striking the Defences on a preliminary motion.

<PAGE>34

VanTel has appealed that order and the appeal is schedule t be heard in June,
1999. A trial of the Company's claim has been scheduled for November, 1999. Any
recovery from this lawsuit will be paid as follows: 6% to the CNC creditor pool
and the balance to the Company without the requirement to distribute them as
dividends under the Plan.

PACIFIC GATEWAY EXCHANGE

Pacific Gateway Exchange is a former customer of the Company who has refused to
pay outstanding invoices totaling approximately US $100,000. No action has been
undertaken at this date, but is expected in the near future.

COMMSEN COMMUNICATIONS INC.

The Company has made a claim against Commsen Communications Inc. ("Commsen") in
the amount of $400,000 with Commsen advancing a counterclaim for $250,000. The
Company commenced the action in the Ontario Supreme Court.

BELL CANADA

The Company has recovered US $100,000 in a disputed Proof of Claim process in
the CCAA proceeding. The monies will form part of the CNC/CNT Pool for
distribution as a dividend to CNC/CNT General Creditors. See EXHIBIT 1.1 for
further details.

BC TEL

The Company has recovered CDN $17,500 in a disputed Proof of Claim process in
the CCAA proceeding. The monies will be paid to the Company directly, with the
exception of CDN $1,050 which will form part of the CNC/CNT Pool for
distribution as a dividend to CNC/CNT General Creditors.

CCAA PROCEEDING

On January 14, 1997, the Company filed for and the Court granted protection from
its creditors under the Companies Creditors Arrangement Act, which is
legislation similar to bankruptcy legislation (the "CCAA Proceeding"). Court
protection was required to ensure that the Company's assets were kept intact
during the reorganization process in order to allow the Company to carry on its
business while formulating a restructuring plan. The accounting firm of KPMG was
appointed by the Court as Monitor to oversee and to assist in the development of
the Company's restructuring plans (the "Plan"). The creditors of the Company
approved the Plan on July 31, 1997 and the Supreme Court of British Columbia
sanctioned the Plan on August 7, 1997.

The Company has implemented a majority of its obligations under the Plan but
there are still some remaining obligations under the Plan, as set out below.

<PAGE>35

Sale of Operating Assets

<PAGE>36

Secured Creditor Settlements

Unsecured Creditor Settlements

The following is a general review of the significant events in the CCAA
Proceeding:

Secured creditors with outstanding claims of approximately CDN$5,400,000
received CDN$3,222,724 in cash, a total of 1,000,000 Shares and share purchase

<PAGE>37

warrants to acquire a total of 1,000,000 Shares at CDN$1.00 per share. In
addition, the Company agreed to acknowledge an additional outstanding claim for
CDN$500,000 by GT, provided that GT would be treated as an unsecured creditor
with respect to such claim, and the claim would be paid only out of the
repayment, if any, that the Company may realize from the LTG Transaction. Since
the Company anticipated little or no repayment from the LTG Transaction, it
recently decided to sell this receivable for CDN$525,000 with GT Communications
Inc. being entitled to receive approximately $387,000 of the proceeds;

The remaining restricted cash held in trust may be distributed to unsecured
creditors if and when the matters set out below are settled and government
claims for various taxes have been negotiated.

<PAGE>38

Significant events subsequent to approval of Plan

Significant events in relation to the implementation of the Plan, subsequent to
its approval by the Court, are as follows:

(a) all Proofs of Claims of creditors have been resolved and settled;

(b) two dividends have been paid to all creditors in accordance with the Plan;

(d) under the settlement with AT&T 1,000,000 Shares have been delivered to
AT&T;

(e) the following lawsuit recoveries have been made:

(i) Bell Canada - CDN $100,000.00,
(ii) TeleHub - US$450,000.00, and
(iii) BC Tel - CDN $17,500.00;

(f) distribution to AT&T Long Distance Services Company of warrants to acquire
up to 1,000,000 Shares at an exercise price of CDN $1.00 per share.

On August 14, 1998, the Issuer Companies obtained an order which permitted them
to:

(a) discharge all pending tax liabilities and transfer certain trust monies
held by its counsel to satisfy those obligations;

(b) distribute trust funds held by counsel to satisfy all post filing
liabilities arising after January 14, 1997 and prior to August 7, 1997;

<PAGE>39

(d) distribute the 13,000,000 warrants and Shares issuable upon exercise of the
warrants to unsecured creditors on an expedited basis having regard to the
fact that the original formula for the distribution of the warrants was
dependent upon final distribution of all dividends; and

(e) obtain a declaration that the Company has performed its obligations to
repay the CDN$300,000.00 advanced to it from the trust account for working
capital purposes, by remitting net lawsuit recoveries in that amount.

Remaining Obligations under the Plan

(b) distribution of payments for any remaining Government claims from the
Government claim reserve maintained to pay such claims; and

See EXHIBIT 1.1 and Note 2 to the Consolidated Financial Statements for further
details on the Plan and its implementation.

AT & T

In early, 1999, it came to the Company's attention that three independent
affiliates of AT&T Wireless Network had adopted the name "Suncom" and began
offering customers access to a variety of wireless telecommunications services
and products under that name. The Company negotiated a settlement of US$975,000

<PAGE>40

from Triton PCS Operating Company LLC for the rights to the Suncom trademark and
tradename in exchange for the Company agreeing to phase out the use of its name
within 60 days of the settlement. Accordingly, on May 5, 1999, the shareholders
of Suncom approved a special resolution to change the Company name to
"VirtualSellers.com, Inc." to reflect the Company's change focus to eCommerce
transaction processing. This name change will take effect in late May 1999.

ITEM 4 CONTROL OF THE COMPANY

To the best of the Company's knowledge no person beneficially owns more than 10%
of any class of the Company's voting securities. The following table sets forth
the amount of shares held by certain nominees and beneficially owned by the
officers and directors of the Company as a group as of May 1, 1999.
- -------------------------------------------------------------------------------

Title of Identity of Person or Amount Percent of
Class or Group Owned Class (1)
- ----------------- ----------------------- ------------ ------------
Officers and N/A 6,550,082(2) 8.1%
Directors
(4 persons)

Notes:

(1) There were 80,355,306 common shares issued and outstanding as of May 1,
1999.

(2) The Company believes that all persons hold legal title and has no knowledge
of actual ownership.

ITEM 5 NATURE OF TRADING MARKET

The Company's common stock was traded on the Vancouver Stock Exchange in British
Columbia, Canada until October 31, 1996 when it was de-listed, and on the NASDAQ
- - National Market ("NMS") in the United States until November 5, 1996, when it
was de-listed. From November, 1996 to November 1997, there was limited
transactional volume through pink slip trading. The Company was approved for
listing on the National Association of Securities Dealers' Over-the-Counter
Bulletin Board (the "OTCBB") on November 5, 1997 under the symbol "SNLMF".
Although the Company ultimately intends to list its common stock on the NASDAQ
Small Cap or NMS, it does not currently meet the listing requirements of the
Small Cap or NMS.

<PAGE>40

The high and low trades on the Vancouver Stock Exchange and the high and low
bids on the NASDAQ NMS for the periods referenced below were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

Quarter Ended VSE(1) NASDAQ-NMS(2)
- --------------- --- -------------

High Low Volume High Low Volume
------ ------ ---------- ------ ----- ------------

May 31, 1996 4.05 0.90 7,909,200 3.00 0.66 58,709,971

August 31, 1996 3.40 1.70 2,768,184 1.56 1.06 25,753,376

November 30, 1996 2.90 1.40 1,988,873 2.22 0.88 14,767,910
</TABLE>

(1) Amounts in Canadian Dollars.
(2) Amounts in United States Dollars.

Results from November 30, 1996 through May 1, 1998 are not obtainable as the
company was listed on the OTCBB and does not make these statistics available.
Beginning May 1, 1998, the NASD changed the way it treats foreign reporting
entities such as the Company and made these statistics available on an ongoing
basis.

The high and low trades on the OTCBB for the periods referenced below were as
follows:

Quarter Ended OTCBB(1)
- -------------
High Low Volume
------ ------ -----------
August 31, 1998 0.52 0.25 10,695,600

November 30, 1998 0.40 0.12 14,078,000

February 28, 1999 0.70 0.155 40,085,600

(1) Amounts in United States Dollars.

As of May 1, 1999, the registrar and transfer agent for the Company reported
that 74,164,177 Shares were registered to 1929 residents residing in the United
Sates and 6,381,106 Shares were registered to 48 residents of Canada.

ITEM 6 EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

There are no government laws, decrees or regulations in Canada which restrict
the export or import of capital or which affect the remittance of dividends,
interest or other payments to non-resident holders of the Company's securities.
Any remittances of dividends to United States residents and to other
non-residents are, however, subject to withholding tax. See "ITEM 7 - Taxation."

Except as provided in the Investment Canada Act (the "Investment Act"), there
are no limitations under the laws of Canada, the Province of British Columbia or
in the Articles of Continuance or other constituting documents of the Company on
the right of foreigners to hold or vote shares or other securities of the
Company.

The Investment Act will prohibit implementation, or if necessary, require
divestiture of an investment deemed "reviewable" under the Investment Act by an

<PAGE>42

investor that is not a "Canadian" as defined in the Investment Act (a
"non-Canadian"), unless after review the minister responsible for the Investment
Act ("the Minister") is satisfied that the "reviewable" investment is likely to
be of net benefit to Canada. An investment in securities of the Company by a
non-Canadian (other than an "American" as defined in the Investment Act) would
be reviewable under the Investment Act if it was an investment to acquire
control of the Company and the value of the assets of the Company was CDN$5
million or more. A non-Canadian (other than an American) would be deemed to
acquire control of the Company for the purposes of the Investment Act if the
non-Canadian acquired a majority of the outstanding voting shares of the Company
(or less than a majority but controlled the Company in fact through the
ownership of one third or more of the outstanding voting shares of the Company)
unless it could be established that, on the acquisition, the Company was not
controlled in fact by the acquirer through the ownership of such shares. Certain
transactions in relation to the Company's securities would be exempt from review
under the Investment Act, including, among others, the following:

1. acquisition of shares by a person in the ordinary course of that person's
business as a trader or dealer in securities;

2. acquisition of control of the Company in connection with the realization of
security granted for a loan or other financial assistance and not for any
purpose related to the provisions of the Investment Act; and

3. acquisition of control of the Company by reason of an amalgamation, merger,
consolidation or corporate reorganization following which the ultimate
direct or indirect control of the Company, through the ownership of voting
interests, remains unchanged.

The Investment Act was amended with the World Trade Organization Agreement to
provide for special review thresholds for "WTO Investors" of countries belonging
to the World Trade Organization, among others, nationals and permanent residents
(including "WTO Investor controlled entities" as defined in the Investment Act).
Under the Investment Act, as amended, an investment in the Company's securities
by WTO Investors would be reviewable only if it was an investment to acquire
control of the Company and the value of the assets of the Company was equal to
or greater than a specified amount (the "Review Threshold"), which is published
by the Minister after its determination for any particular year. The Review
Threshold is currently CDN $172 million.

ITEM 7 TAXATION

CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES

The following is a general summary of the principal Canadian federal income tax
consequences applicable to a holder of the Company's securities who is a
resident of the United States and who is not a resident of Canada and who does

<PAGE>43

not use or hold, and is not deemed to use or hold, his/her securities in
connection with carrying on a business in Canada (a "US Resident holder").

This general summary is based upon the current provisions of the Income Tax Act
(Canada) (the "ITA"), the regulations thereunder (the "Regulations"), the
current publicly announced administrative and assessing policies of Revenue
Canada, Taxation, and all specific proposals (the "Tax Proposals,') to amend the
ITA and Regulations announced by the Minister of Finance (Canada) prior to the
date hereof. This description is not exhaustive of all possible Canadian federal
income tax consequences and, except fo the Tax Proposals, does not take into
account or anticipate any changes in law, whether by legislative, governmental
or judicial action, nor does it take into account provincial or foreign tax
considerations which may differ significantly from those discussed herein. The
following is a general discussion only and is not intended to be, nor should it
be construed to be, legal or tax advice to any holder or prospective holder of
the Company's Shares. Shareholders should consult their own attorney, accountant
or tax adviser concerning the tax consequences of an investment in Shares of the
Company.

DIVIDENDS

Dividends paid on the Company's Shares to a US-Resident holder will be subject
to withholding tax. The Canada-US Income Tax Convention (1980) (the "Treaty")
provides that the normal 25% withholding tax rate is reduced to 15% on dividends
paid on shares of a Canadian corporation (such as the Company) to residents of
the United States, and also provides for a further reduction of this rate to 5%
where the beneficial owner of the dividends is a corporation resident in the
United States owning at least 10% of the voting shares of the company paying
the dividend.

CAPITAL GAINS

As the Shares of the Company are not presently listed on a prescribed stock
exchange in Canada, a US Resident holder will be taxable under the ITA on the
disposition thereof, unless an exemption from such tax is available under the
Treaty.

No tax under the ITA will be payable on a capital gain realized on Shares of the
Company disposed of by a US Resident holder by reason of the Treaty unless the
value of such Shares is derived principally from real property situated in
Canada, or the US Resident holder is an individual who was a resident of Canada
for one hundred twenty months during any period of twenty consecutive years
preceding the sale of the Shares and was resident of Canada at some time during
the ten years immediately preceding the sale of the Shares and the Shares (or
property for which the Shares were substituted in a tax deferred transaction
under the ITA) were owned by the individual holder at the time he ceased to be a
resident of Canada. However, in such a case, certain transitional relief under
the Treaty may be available.

<PAGE>44

ITEM 8 SELECTED FINANCIAL DATA

The selected consolidated financial data presented below for the five year
period ended February 28, 1999 is derived from the Company's consolidated
financial statements which were examined by the Company's independent auditor.
The information set forth below should be read in conjunction with the
Consolidated Financial Statements of the Company (including related notes
thereto) and "Management's Discussion and Analysis of Financial Condition and
Results of Operations". The data is presented in Canadian dollars.

Selected Consolidated Financial Data (1)(2)
------------------------------------
(Stated in Canadian Dollars)

Fiscal Year Ended February 28 (29)
-----------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>

1999 1998 1997 1996 1995
---------- ---------- ------------- ------------ -----------
Revenue 265,715 1,274,385 38,328,435 46,344,583 51,124,355
Direct Costs Nil (3) 814,465 34,036,369 43,211,488 42,442,935
Operating Expenses 873,159 749,800 9,857,275 13,725,476 13,076,500
Income (Loss) From Operations (607,444) (289,880) (5,565,209) (10,592,381) (4,395,080)
Amortization 28,457 7,167 9,325,803 12,989,345 9,800,075
Administrative Expenses 1,651,589 2,297,322 7,422,714 7,540,661 6,385,470
Net Income (Loss) (2,429,137) 24,535,877 (40,698,248) (48,540,250) (24,379,072)
Income (Loss) per Share (.04) .50 (.99) (2.78) (1.94)
Total Assets 328,932 1,180,851 (4) 9,769,215 35,011,844 52,705,531
Long-Term Debt Nil 722,932 Nil 8,888,196 9,371,901
Cash Dividends per Common
Share Nil Nil Nil Nil Nil
</TABLE>

1. The audited financial information set forth in this table was prepared and
is presented in accordance with generally-accepted accounting principles in
Canada.

2. See ITEM 9 - Management's Discussion and Analysis of Financial Condition
and Results of Operations and ITEM 9 - United States Generally Accepted
Accounting Principles Reconciliation.

3. Direct costs were nil as there was a change in accounting procedure to
record all costs as selling and/or general and administrative costs.

4. Assets were restated for the period ending February 28, 1998. Assets were
previously reported as $3,555,166.

Since June 1, 1970, the government of Canada has permitted a floating exchange
rate to determine the value of the Canadian dollar as compared to the United
States dollar. For the past fiscal years ended February 28 (or 29), the
following exchange rates were in effect for Canadian dollars exchanged for
United States dollars, expressed in terms of Canadian dollars (based on the noon
buying rates in New York City, for cable transfers in Canadian dollars, as
certified for customs purposes by the Federal Reserve Bank of New York):

<PAGE>45
<TABLE>
<S> <C> <C> <C>
Year Average Low-High Year End/Period End
- ---- ------- -------- -------------------
1994 1.3071 1.2428 - 1.3546 1.3522
1995 1.3782 1.3410 - 1.4238 1.3937
1996 1.3670 1.3285 - 1.4178 1.3728
1997 1.3244 1.3939 - 1.3486 1.3679
1998 1.48296 1.5845 - 1.4037 1.5358
Period ending
February 28, 1999 1.50832 1.5465 - 1.4820 1.5087
</TABLE>

ITEM 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (All numbers in Canadian Dollars unless
otherwise stated)

RESULTS OF OPERATIONS

FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998

Revenues for the year ended February 28, 1999 ("Fiscal 1999") of $265,715 were
down by $1.1 million, a decrease of 86.3% from the revenues of $1,274,385 for
the year ended February 28, 1998 ("Fiscal 1998"). For the 1999 and 1998 fiscal
years, the only source of operating revenue came from the Call Center in
Indiana. The monthly revenues increased to $18,500 per month from the cable
customers at this facility. This is up from approximately $14,000 per month last
year, an increase of 32%. This business is still running at a loss which is the
reason it was purchased so inexpensively. The Call Center has positioned itself
to take on more business form its existing clients early in 1999 and is
projected to reach break even by June, 1999. There is ample room for growth
given a large potential market, as well as the expandability of the Call Center
location. The Call Center can be expanded to handle 35-40 operators and can
potentially generate as much as $350,000-$500,000 a month in revenue. There are
significant fixed costs that can be leveraged as new business is brought into
the Call Center. The process of integrating the eCommerce clientbase with the
Call Center is almost complete. This should provide a significant revenue stream
for the Call Center as well as additional transaction processing revenue for the
recently acquired eCommerce business.

There were no additional material revenues earned in Fiscal 1999 as compared to
certain legal settlements recognized in Fiscal 1998. In Fiscal 1998 the Company
settled with TeleHub for US $450,000, with Bell Canada for CDN$100,000, and with
BCTel for CDN$17,500.

<PAGE>46

Direct costs in Fiscal 1999 were $0, compared to direct costs of $0.8 million in
Fiscal 1998, a decrease of $0.8 million. This decrease was due to a change in
accounting procedures, classifying all expenses as selling and/or general and
administrative costs. This included expenses that fell under direct costs in
Fiscal 1998. Gross profit for Fiscal 1999 decreased 57% from $0.46 million in
Fiscal 1998 to $0.27 million in 1999. Gross margins for the Call Center business
are approximately 45% of revenues.

Amortization charges comprise the amortization of capital assets, acquired
customer base and other assets. Amortization charges for Fiscal 1999 of $28,457
have increased 400% from $7,167 in the previous year. This is the result of
capital expenditures for computers, printers and related technology for the Call
Center.

For the Fiscal 1999, the Company recognized a loss of $2.43 million or $0.04 per
Share, compared to a gain of $24.5 million or $0.50 per share for the Fiscal
1998. The gain in Fiscal 1998 is the result of the sale of the long distance
assets in 1997 and the gain on forgiveness of debt taken in 1998, and not from
operations which was running at a loss of approximately $16,000/month. For
Fiscal 1999, the Call Center had reduced its operating loss to $13,000/month and
is expected to reach a break even poin by June, 1999.

The Company's cash position has decreased during the year from $1,064,908 at the
end of Fiscal 1998 to $114,402 at the end of Fiscal 1999, a decrease of
$950,506. This can be attributed to a net loss for the year of $2,429,137. In
addition, $1,463,559 was raised through the issuance of equity in Fiscal 1999.
These monies were used to finance working capital requirements and retire debt.
An investment of $393,097 in VirtualSellers.com, Inc. was written off as an loss
but the investment loss is expected to be reversed in the year ended February
28, 2000 given the closing of the acquisition of all of the assets and
undertaking of VirtualSellers' business as an ongoing concern.

FISCAL YEAR 1998 COMPARED TO FISCAL YEAR 1997

Revenues for Fiscal 1998 of $1.27 million were down by $37 million, a decrease
of 96.6% from the revenues of $38.3 million for the year ended February 28, 1997
("Fiscal 1997"). In Fiscal 1998, the only source of operating revenue came from
two months of revenue generated by the Call Center. The monthly revenues from
the five customers at the Call Center were approximately $14,000- $18,000/month.
The business was running at a loss which is the reason it was purchased so
inexpensively.

The remainder of the revenue realized in Fiscal 1998 came from legal settlements
and tax and government refunds. The Company settled with TeleHub for US$450,000,
with Bell Canada for CDN$100,000, and with BCTel for CDN$17,500.

Direct costs in Fiscal 1998 were $0.81 million, compared to direct costs of $34
million in Fiscal 1997, a decrease of $33.2 million or 97.6%. Direct costs were
64% of revenue for Fiscal 1998 compared to 89% in the prior year. This 25%
decrease is a result of replacing the residential customer base with higher
margin business customer base. Gross profits for Fiscal 1998 decreased 89% from

<PAGE>47

$4.3 million in Fiscal 1997 to $0.46 million in Fiscal 1998. Gross profit as a
percentage of revenue increased from 11% in Fiscal 1997 to 36% in Fiscal 1998.
Operating expenses decreased by $9.15 million or 93% from $9.8 million for
Fiscal 1997 to $0.75 million for Fiscal 1998. During the year administrative
expenses decreased by 69.6% from $7.4 million to $2.25 million.

Amortization charges comprised the amortization of capital assets, acquired
customer base and other assets. Amortization charges for Fiscal 1998 of $7,167
have decreased 99.9% from $9.3 million in the previous year. This decrease is
due to the sell off of the long distance assets in Fiscal 1997 and relatively
few assets purchased in Fiscal 1998.

For Fiscal 1998, the Company recognized a gain of $24.5 million or $0.50 per
share, compared to a loss of $40.7 million or $0.99 per share for Fiscal 1997.
This gain is the result of the sale of the long distance assets in Fiscal 1997
and the gain on forgiveness of debt taken in Fiscal 1998, and not from
operations which ran at a loss of approximately $14,000/month.

The Company's cash position increased from $179,770 at the end of Fiscal 1997 to
$1,064,908 at the end of Fiscal 1998. During Fiscal 1998, $9.75 million was
received from the sale of assets and subsidiaries. A net use of $2.2 million was
generated by different financing vehicles including the issuance of convertible
debentures and common shares. Operations posted a net use of funds totaling $4.2
million including $24.5 million in net income, a use of $28.7 million on
forgiveness of debt and $1.56 million generated by the loss on the TeleHub
settlement. For further information see Footnote 4 of the Notes to Consolidated
Financial Statements.

FISCAL YEAR 1997 COMPARED TO FISCAL YEAR 1996

Revenues for Fiscal 1997 of $38.3 were down from revenues of $46.3 million by $8
million, a decrease of 17.3%, for the year ended February 28, 1996 ("Fiscal
1996"). The Company's long distance business that was shut down in the fourth
quarter of Fiscal 1997 was expected to be made profitable by the implementation
of the BSCAP software (billing and network platform software system) which was
to have been installed and made operational by TeleHub by November 1, 1996. As a
result of TeleHub's breach of the September 6, 1996 Agreement, the Company had
no choice but to shut down substantial aspects of its business. This shut down,
combined with the turn around efforts deployed throughout the fiscal year, have
caused the identified operational improvements.

Direct costs of $34 million decreased by $9.2 million from $43.2 million, a
decrease of 21.3%. Direct costs were 89% of revenue for the Fiscal 1997 compared
to 93% in the prior year. This 4% decrease was a result of replacing primarily
what was a residential customer base with a higher margin traffic business
customer base. Gross profit increased 36% from $3.1 million in Fiscal 1996 to
$4.3 million in Fiscal 1997. Gross profit as a percentage of revenue increased
from 6.7% in Fiscal 1996 to 11% in Fiscal 1997. Operating expenses decreased by
$3,868,000 or 28% from $13.7 million for Fiscal 1996 to $9.8 million for Fiscal
1997. During the year, administrative expenses decreased by 1.6% from $7.5
million to $7.4 million.

<PAGE>48

Amortization charges comprised the amortization of capital assets, acquired
customer base and other assets. Amortization charges for 1997 of $9.3 million
represented a 28% decrease from $12.9 million in the previous year. $3.8 million
of this decrease in amortization was due to lower amortization of deferred
advertising and media research costs. There was a $2.2 million increase in
amortization of acquired customer base costs and a $2.6 million increase in
amortization of finance charges, but a decreas in the amortization of capital
assets. The acquired customer base costs have been written off this year to
their realized value when sold to Primus.

For Fiscal 1997, the Company incurred a loss of $40.7 million or $0.99 per
share, compared to a loss of $48.5 million or $2.78 per share for Fiscal 1996.
This dollar loss was 16% lower and 64% less per share than in the previous year
and resulted from the Company's cost cutting measures and additional shares of
stock issued.

The Company's cash position increased during the year from $37,850 at the end of
Fiscal 1996 to $179,770 at the end of Fiscal 1997. During the year $3,102,500
was received in cash upon the exercise of employee and director options;
$2,495,647 in common shares were issued for settlement of debt; $33,446 for
employee compensation; $246,667 for finders' fees; $1,144,446 for the
acquisition of ITI; $590,147 for the acquisition of the cellular license; and
$2,799,542 for the conversion of preferred shares. For further information see
Footnotes 4 and 10 of the Notes to Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

During Fiscal 1999, the Company used monies previously generated by the issuance
of equity to provide working capital. Working capital requirements consisted
mainly of rent, legal and accounting costs and employee compensation. The
Company expended money for due diligence, legal and accounting expenses in
connection with several acquisitions (Tricor, Campbell and Telemetrix) that
ultimately did not proceed to fruition. The acquisition of the Call Center on
January 1, 1998 was transacted for a US$105,00 note payable in one year or
convertible into Shares at a price of US$0.10 per Share on or before December
31, 1998. The holder of the note converted the full principal and interest
amount of the note into Shares In March, 1998 the Company closed its private
placement, with a maximum offering limit of US$4,000,000, with subscriptions for
US$850,000. Funds generated by this offering were used for operations and
potential acquisitions. In January 1999, the Company commenced a convertible
note offering of up to US$4,000,000 in order to raise working capital for the
Call Center and eCommerce business. As at the end of Fiscal 1999, there were
subscriptions of approximately $480,000 for this offering and as at May 15,
1999, the Company received subscriptions of $725,000. In March 1999, Suncom
settled with an affiliate of AT&T the rights to use the trademark and tradename
of "Suncom". The Company received a cash payment of US$975,000 in exchange for
the rights to use the name "Suncom".

For the balance of the 1999 calendar year, the Company anticipates significant
working capital requirements above the usual working capital requirements of

<PAGE>49

rent, salaries and legal and accounting services. The Company anticipates making
investments of up to US$1,500,000 in capital equipment to provide the network
infrastructure required for the growth of the eCommerce business. The Company
also anticipates that CallDirect will also need working capital as it grows its
catalog and eCommerce business. While there will be recognizable economies of
scale in bringing the Call Center support to the facility in Indianapolis, the
Call Center business will require approximately $300,000 to reestablish itself.
As mentioned, the Call Center is expected to reach the break even point in June,
1999, and will not require any significant working capital investments. The
Company continues to look for acquisition candidates within the scope of its
business plan. Ideally, potential candidates will be under-performin businesses
that fit into the transaction processing/customer service business model and
that can be acquired for notes payable or Shares. This will limit the amount of
cash needed allowing almost all available funds to be used by the Company for
continuing operations. This follows the model used for the acquisition of the
Company's Call Center. Additional working capital requirements for acquisitions
and/or operations will be met by further financing through the current
convertible note offering and future offerings until the Company can establish a
profitable track record.

Historically over the past three years, a significant component of the Company's
operating losses resulted from the Company's acquisition of facilities and
equipment at a rapid rate in anticipation of increasing demand for services. The
effect of this planned expansion at a rate that at times has exceeded immediate
demand for services has contributed to the losses from operations. Since much of
the equipment was acquired under long-term lease arrangements, such acquisitions
have had and will continue to have an effect on profit margins until the
equipment is fully paid.

YEAR 2000 DISCLOSURE

<PAGE>50

Year 2000 and the Call Center

The Company has also identified disruption in credit card processing as a
potential risk. As this could impact on cash flow from Call Center operations,
the Company is contacting it clients with the view to determining how they would
like the Company to handle late payments/disconnects if credit card processing
is delayed. In view of the efforts being made by financial institutions to
counter this risk, the Company believes that this is a relatively small risk.

Year 2000 and eCommerce

<PAGE>51

verify whether they wish to keep credit card orders pending restoration of
credit card processing services. It i anticipated that the financial impact to
VirtualSellers will only become material if credit card connections are
disrupted for more than ten days. VirtualSellers will be informing its customers
of these potential issues.

UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES RECONCILIATION

The Company's financial statements are prepared in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP"), which do not differ
materially from United States generally accepted accounting principles ("US
GAAP") with respect to accounting policies and disclosures in the Company's
financial statements except as follows:

Under US GAAP, advertising and media research costs, employee education
advances and foreign exchange gains and losses deferred under Canadian GAAP
would be expensed. In addition, shares to be issued for settlement of debt
would be classified as long-term liabilities until the shares are issued.

Giving effect to these differences under US GAAP, the Company's net income
(loss) net income (loss) per share for the years ended February 28, 1999,
February 29, 1998 and February 28, 1997 were ($2.4 million) or ($0.04 per
share), $24.5 million or $.50 per share and ($40.4 million) or ($.98 per share),
respectively.

Total assets, determined in accordance with US GAAP at February 28, 1999, 1998
and 1997 were $328,932, $1.18 million and $9.76 million, respectively. Under US
GAAP an audit report on the Company's financial statements would include an
explanation regarding the Company's ability to continue as a going concern. See
Footnote 12 to the Consolidated Financial Statements for additional information
concerning reconciliation of the Company's financial statements.

CERTAIN FINANCINGS

REVIEW OF PAST FINANCINGS

On February 28, 1992 the Company issued and sold by way of private placement US
$1,000 face amount of non-transferable subordinated debentures (the "1995
Debentures") in an amount totaling US $6.0 million. The 1995 Debentures were
unsecured, bore interest at the rate of 10% per annum and were due on February
28, 1995. The 1995 Debentures were convertible into Shares at the option of the
purchaser at a price of US $10.00 per Share from March 1, 1992 to February 28,
1993, US $10.50 per share from March 1, 1993 to February 28, 1994, and US $11.00
per Share from March l, 1994 to February 28, 1995. The Company had the right to
force conversion of the 1995 Debentures at any time after the first anniversary

<PAGE>52

at the conversion price in effect at that time if, at that time, the Shares of
the Company had traded at a price equal to or greater than 100% of the
conversion price in effect at that time for a period of twenty consecutive
calendar days.

As an inducement to the purchase of the 1995 Debentures, the Company issued
60,000 Shares at a deemed price of US $10.00 per Share to the purchasers of the
debentures on a pro rata basis. The Shares issued as an inducement and the
Shares issued on conversion of the 1995 Debentures were subject to resale
restrictions under applicable securities laws and may only be traded through the
facilities of the Vancouver Stock Exchange. The 1995 Debentures were issued
pursuant to a Trust Indenture dated as of May 31, 1990, as amended by a First
Supplemental Trust Indenture dated February 11, 1992, and as amended by a Second
Supplemental Trust Indenture dated February 28, 1993 (the "Trust Indenture")
with Montreal Trust Company of Canada as the trustee. The Company also issued
19,600 Shares at a deemed price of US $10.00 per Share as Finders' Fees in
connection with the issuance and sale of the 1995 Debentures.

On February 26, 1993 and March 1, 1993 the Company issued 515,000 Shares at a
deemed price of US $10.00 per Share and 80,949 Shares at a deemed price of US
$10.50 per Share respectively to convert all of the 1995 Debentures. The
conversion of debt to equity reduced interest expense for fiscal 1994 by US
$600,000.

On July 31, 1992, the Company issued and sold by way of private placement US
$1,000 face amount of convertible subordinated debentures (the "1997
Debentures") in an amount totaling US $5.0 million to certain United States
mutual funds. The 1997 Debentures were unsecured, bore interest at the rate of
10% per annum and were due on August 15, 1997. The 1997 Debentures were
convertible into Shares at the option of the holder at a price of US $12.50 per
Share. The Company had the right to force conversion o the 1997 Debentures at
any time after July 15, 1994 at a conversion price of US $12.50 per Share if, at
that time, the Shares have traded at a price equal to or greater than 110% of
the conversion price for a period of twenty consecutive calendar days. Any
Shares issued on conversion of the debentures are subject to resale restrictions
under applicable securities laws and may only be traded through the facilities
of the Vancouver Stock Exchange. The 1997 Debentures were issued pursuant to the
Trust Indenture, as amended by a Third Supplemental Trust Indenture dated July
15, 1992. The Company also issued 36,600 Shares at a deemed price of US $12.50
per share as finders' fees in connection with the issuance and sale of the 1997
Debentures. All of the outstanding 1997 Debentures have been redeemed upon
issuance of US $11.3 million convertible debentures (see below).

On February 21, 1994, the Company issued 1,222,465 Shares due to the exercise of
1,071,400 special warrants by which the Company raised $14,999,600 before
commissions of $899,976.

In September, 1995, the Company issued and sold by way of private placement
21,500 preferred shares (the "Preferred Shares") at a deemed price of US $100
per Preferred Share in an amount totaling US $2,150,000. A fee of US $215,000
was paid to an unaffiliated third party for placement of the Preferred Shares.

<PAGE>53

The Preferred Shares, valued for purposes of conversion at US $100.00 per
Preferred Share, were convertible into Shares at a price per Share equal to the
lower of (i) the product of .70 multiplied by the "Average Stock Price before
Notice" per Share and (ii) the product of .70 multiplied by the "Average Stock
Price before Subscription" per Share, subject to certain adjustments. "Average
Stock Price before Notice" and "Average Stock Price before Subscription" mean
the average daily closing bid prices for Shares for the period of five (5)
consecutive trading days, respectively, immediately preceding the date of the
notice of conversion of the Shares and immediately preceding the date of
subscription for the Shares.

During the period of November, 1995 through January, 1996 all of the outstanding
Preferred Shares were converted into a total of 2,799,542 Shares. The Shares
issued on conversion of the Preferred Shares are subject to resale restrictions
under applicable securities laws.

On April 4, 1996, the Company issued and sold by way of private placement US
$1,000 unsecured, non-transferable debentures (the "Fourth Series Convertible
Debentures") in the aggregate principal amount of US $11,300,000. The Fourth
Series Convertible Debentures (i) mature on April 4, 1998; (ii) bear interest at
the rate of 11.5% per annum payable quarterly; (iii) are redeemable and
purchasable by the Company at any time at par plus accrued and unpaid interest;
and (iv) are convertible into Shares of the Company at the option of the holder
thereof or by the Company if certain conditions are met. The Fourth Series
Convertible Debentures were issued pursuant to the Trust Indenture, as amended
by a Fourth Supplemental Indenture dated as of April 4, 1996 (the "Fourth
Supplemental Indenture").

The Fourth Series Convertible Debentures are convertible into Shares at the
option of the holder at US $2.00 per Share, subject to certain adjustments set
forth in the Fourth Supplemental Indenture. The Company had the right to force
conversion of the Fourth Series Convertible Debentures at a conversion price of
US $2.00 per Share if, at that time, the Shares have traded at a price equal to
or greater than 150% of the conversion price for a period of twenty (20)
consecutive days.

On May 31, 1996, the Company received US $11.3 million on issuance of debentures
bearing interest at 11.5% per annum, repayable on May 31, 1998 and convertible
into Shares of the Company at the option of the holder at a price of US $2.00
per Share. Part of the proceeds were used to redeem the 1997 series convertible
debentures. The Company also issued 4,235 Shares to the debenture holders as an
inducement fee and 541,666 common shares to a third party as a finders fee.
During 1997, US $750,000 in convertible debentures were converted for 375,000
Shares.
As part of a US $4,000,000 offering of convertible debentures (subsequently
closed in March 1998 at US $850,000), the Company received US $500,000 between
November 20, 1997 and February 28, 1998. The debentures bear interest at 9% per
annum, are repayable on or before the date which is nine months after the
offering is completed and were convertible into Shares of the Company at a rate
of US $.10 per Share at any time after March 12, 1998. Subsequent to year end,
the Company received a further US $50,00 and the offering was closed. All the

<PAGE>54

debenture holders exchanged their debentures, and 8,500,000 Shares have been
issued. There was no interest paid or accrued on these debentures.

The Company issued a US $105,000 promissory note in conjunction with an
acquisition of assets for the Call Center. The note was non-interest bearing,
secured by the assets purchased, repayable on December 31, 1998 or convertible
into Shares at a rate of US $1.0 per share on December 31, 1998. The holder of
the note exchanged the full principal and interest amount of the note into
Shares.

CURRENT FINANCINGS

In January 1999, the Company commenced an offering of up to US $4,000,000 of
convertible debentures. By May 15, 1999, the Company had received $725,000 in
subscriptions. The debentures bear interest at 9% per annum, are repayable on or
before a date to be determined to be twelve months after the offering is
completed and are convertible into Shares at a rate of US$0.10 per Share at any
time after the close of the offerings.

ITEM 10 DIRECTORS AND OFFICERS

The following table sets forth the names, municipalities of residence and
principal occupations of the directors and officers of the Company.

Name, Office Held, Principal Director Share Ownership As of
Place of Residence Occupation Since May 1, 1992 (2)
- -------------------- ---------------------------------------------- ------------------ -------------------------
Dennis Sinclair, Director and President of the Company since December 6, 1996 4,250,000
President, CEO and December 6, 1996. Senior Equity analyst for
Director for H.J. Meyers & Company, Inc. from 8/95-
Chicago, Illinois 12/96; Investment Banker for Newport West
Securities from 1/94 - 8/95; Vice President
of Business Development for Validyne
Engineering from 8/93-10/94; Consultant with
Dennis Sinclair & Associates from 1988-1993

Raymond Mol, Director and COO of Company since 11/96. November 1996 700,000
Director Promoter of Call Director Enterprises from
Surrey, BC 1/96-10/96. Founding Partner, CFO and Director
of Lifestart Learning Systems from 6/93-8/95.

Mel Baille, Principal in Baille and Associates Consulting November 1996 450,000
Director from 12/96-present. VP of Marketing and Sales
West Vancouver, Westel Telecommunications from 12/95-12/96. VP
BC Sales Western Canada, Unitel Communications Inc.
from 1991-1995.

<PAGE>55

Cary Berman (1) Secretary and VP Corporate Development for the N/A 1,150,000
Secretary and VP Company since May 1997. Owner of Lube at Work
Corporate Development from January 1995 to May 1997. Health Care
Chicago, IL Consultant for Blue Cross and Blue Shield in
1994.

</TABLE>
(1) Mr. Sinclair is married to Mr. Berman's mother.

(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to the common
shares beneficially owned by them.

ITEM 11 COMPENSATION OF DIRECTORS AND OFFICERS
(All numbers in Canadian dollars unless otherwise noted)

The following table sets forth remuneration received by each of the Company's
officers and directors in the fiscal years ended February 28, 1999 and February
28, 1998:

SUMMARY COMPENSATION TABLE

Long Term Pay-
Annual Compensation Compensation(1) outs
---------------------------- ----------------------- -------

Securities
Other Under Restricted
Annual Options/ Shares or LTIP All Other
Name and Principal Compen- SAR's Restricted Pay- Compen-
Position Year Salary Bonus sation(2) Granted Share Units outs sation
- -------------------- ------- --------- -------- ----------- ----------- ----------- -------- -----------

Dr. Dennis Sinclair 1999 $210,000 N/A N/A Nil N/A N/A Nil
President, 1998 $210,000 N/A N/A Nil N/A N/A $425,000(3)
CEO and Director
- -------------------- ------- --------- -------- ----------- ----------- ----------- -------- -----------

Cary Berman 1999 $75,000 N/A N/A Nil N/A N/A $ 93,500(4)
Corporate Secretary 1998 $75,000 N/A N/A Nil N/A N/A $ 6,000(4)
and VP Corporate
Dev.
- -------------------- ------- --------- -------- ----------- ----------- ----------- -------- -----------

Raymond Mol(5) 1999 N/A N/A N/A Nil N/A N/A N/A
Director Former COO 1998 $30,000 N/A N/A Nil N/A N/A $ 32,000(6)

Mel Baillie 1999 N/A N/A N/A Nil N/A N/A N/A
Director 1998 N/A N/A N/A Nil N/A N/A $10,000(7)

- -------------------- ------- --------- -------- ----------- ----------- ----------- -------- -----------
</TABLE>
(1) The Corporation has not granted any restricted shares or restricted share
units, stock appreciation rights or long term incentive plan payouts to the
named officers and directors during the fiscal years indicated.
(2) The value of perquisites and other personal benefits, securities and
property for the named officers and directors that do not exceed the less
of $50,000 or 10% of the total of the annual salary and bonus is not
reported herein.
(3) Dr. Dennis Sinclair received 2,500,000 common shares valued at $425,000 as
part of his compensation as President CEO and director for the period ended
February 28, 1998.

<PAGE>56

(4) Cary Berman received 150,000 common shares valued at $6,000 as part of his
compensation as Vice-President, CFO and Corporate Secretary for the period
ended February 28, 1998 and 900,000 common shares valued at $93,000 for the
period ended February 28, 1999.
(5) Mr. Mol resigned as COO on June 30, 1997.
(6) Mr. Mol received 800,000 common shares valued at $32,000 as part of his
compensation as COO and director.
(7) Mr. Baillie received 200,000 common shares valued at $10,000 as part of his
compensation as director.

Option Grants During the Most Recently Completed Financial Year

There are no options or grants issued for the period ended February 28, 1999.

Aggregated Option Exercises During Most Recently Completed Year and Financial
Year-End Option Values

There are no outstanding grants or options as of the year ended February 28,
1999.

Option Repricings

During the fiscal year ended February 28, 1999, there were no options that were
repriced.

TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS

As a term of the employment contracts between the Company and each of Dr. Dennis
Sinclair, Michael Gilley and Raymond Mol, each of these members of management
were entitled to receive in addition to their normal compensation, a fixed
percentage of the gross revenue generated by any significant transaction in
relation to the Company and its subsidiaries. Certain agreements and prior
transactions have created an entitlement for those three (3) employees of
$280,000, which entitlement was disclosed to and approved by creditors and the
Court in the CCAA Proceeding. The obligations to these employees were met by the
Company under the CCAA Proceeding.

As a cost-saving measure, Messrs. Gilley and Mol resigned from the Company
effective July 22, 1997 and June 30, 1997, respectively, and agreed to continue
to provide services to the Company pursuant to consultant agreements. Both of
the consultant agreements have since expired. Dr. Dennis Sinclair and Cary
Berman continue as employees of the Company under employment agreements. The
monthly compensation received by each employee (or the consulting company) is as
follows:

Dr. Dennis Sinclair $17,500
Cary Berman $ 7,500

The employment agreements with each of Dr. Dennis Sinclair and Mr. Cary Berman
provide that in the event that the board of directors directs Dr. Sinclair or
Mr. Berman to negotiate the terms of a transfer, sale, merger, takeover,
acquisition, reorganization or consolidation of the Company (or all or

<PAGE>57

substantially all of the assets of the Company or the Company's shares) (each, a
"Transaction"), then Dr. Sinclair or Mr. Berman, as the case may be, is to
receive a bonus of 1.5% of the monetary value of such Transaction, upon approval
of the Transaction by the Board of Directors of the Company. The bonus is to be
paid in common shares based on the then average trading price immediately prior
to the announcement of such Transaction.

COMPOSITION OF COMPENSATION COMMITTEE

The Board of Directors maintains a Compensation Committee consisting of at least
two directors, each of whom shall not be employees of the Company. The
Compensation Committee is currently composed of Mr. Raymond Mol and Mr. Mel
Baille. The Committee will make recommendations to the Board of Directors
concerning the salaries of all executive officers. In addition, the Compensation
Committee determines the amounts of any grants of equity securities and the
individuals to whom awards should be made.

COMPOSITION OF AUDIT COMMITTEE

The Board of Directors maintains an Audit Committee. The Audit Committee is
composed of Messrs. Sinclair and Mol. The function of the Audit Committee is to
review and approve the scope of audit procedures employed by the Company's
independent auditors, to review the results of the auditor's examination, the
scope of audits, the auditor's opinions on the adequacy of internal controls and
quality of financial reporting, and the Company's accounting and reporting
principles, policies and practices, as well as the Company's accounting,
financial and operating controls. The Audit Committee also reports to the Board
of Directors with respect to such matters and recommends the selection of
independent auditors.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Company's executive compensation program is designed to provide incentives
for the enhancement of shareholder value, the successful implementation of the
Company's business plans and improvements in personal performance. The total
compensation program is comprised of two components: base salary and long term
incentive by way of stock. An executive's base salary is determined by an
assessment of his or her performance and consideration of competitive
compensation levels for comparable public companies In order to link the
interests of the executives with the interests of the shareholders and to
encourage the executives to promote the long term interests of the Company and
its shareholders, the Company issues fully paid and non-assessable common
shares as a portion of their compensation. The granting of shares must be
approved by the Company's Board of Directors. The Board of Directors places
relatively greater emphasis on the long term incentive component of an
executive's total compensation package

President and CEO's Compensation

Dr. Dennis Sinclair has been granted a level of compensation appropriate with
his past experience and performance with the Company. Included in this valuation

<PAGE>58

is Dr. Sinclair's success in taking the Company though the CCAA process and its
relisting on the NASD exchange. During the fiscal year ended February 28, 1999,
Dr. Sinclair was paid US$210,000 per year plus 2,500,000 shares of common stock.
As of May 1, 1999, Dr. Sinclair will receive a increase in base salary US$80,000
per year plus 1,500,000 shares of common stock.

ITEM 12 OPTIONS TO PURCHASE SECURITIES

There were no outstanding options granted to officers or directors of the
Company as at February 28, 1999. As part of the CCAA Proceeding, the Company has
issued 13,000,000 warrants to former creditors. Each warrant entitles the holder
thereof the acquire one Share without further consideration. The warrants expire
two years after issuance. As at February 28, 1999, 8,183,337 Shares have been
issued to creditors pursuant to the exercise of such warrants.

ITEM 13 INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Except as set forth below, none of the insiders of the Company, nor any
associate or affiliate of said persons, has had any material interest, direct or
indirect, in any transaction since the commencement of the Company's last
financial year, or in any proposed transaction, which has materially affected or
would materially affect the Company or any of its subsidiaries.

Dr. Dennis Sinclair, the President, Chief Executive Officer and a director of
the Company is a principal and the sole shareholder of Concept 10 Incorporated
(the "Agent"), who is acting as the Agent with respect to an offering by the
Company of up to $4,000,000 of convertible notes (the "Offering"). In exchange
for acting as the Agent for the Offering, Concept 10 Incorporated will receive a
cash commission equal to seven and one-half percent (7.5%) of the gross proceeds
received from the Offering.

See ITEM 11 - Termination of Employment, Change in Responsibilities and
Employment Contracts with respect to terms of the insiders employment
agreements.

PART II

ITEM 14 DESCRIPTION OF SECURITIES TO BE REGISTERED

Not applicable

<PAGE>59

PART III

ITEM 15 DEFAULTS UPON SENIOR SECURITIES

The Company defaulted in the payment of principal and interest on all of its
debenture obligations, which was one of the reasons the Company sought
protection from its creditors under the CCAA Proceeding. Under the Plan of
Reorganization the debenture holders will receive between CDN$.10 and CDN$.25 on
the dollar and as detailed in the Summary of the Reorganization Plan in Exhibit
1.1.

ITEM 16 CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES
Not applicable.

PART IV

ITEM 17 FINANCIAL STATEMENTS

Not applicable. See ITEM 18 - Financial Statements.

ITEM 18 FINANCIAL STATEMENTS
(All numbers are Canadian Dollars unless otherwise noted)

Consolidated Balance Sheets of the Company as of February 28, 1999, February 28,
1998, and February 28, 1997, together with the Consolidated Statements of
Operations and Deficit, and Changes in Financial Position and Consolidated
Schedules of Operating Expenses and Administrative Expenses for the years ended
February 28, 1999, February 28, 1998 and February 28, 1997 reported on by KPMG
Peat Marwick Thorne Chartered Accountants.

These financial statements are expressed in Canadian dollars and were prepared
in accordance with Canadian generally-accepted accounting principles, which are
substantially the same as United States generally-accepted accounting
principles. For a reconciliation of Canadian with United States
generally-accepted accounting principles, see Note 12 to the Company's
Consolidated Financial Statements. For a history of the exchange rates in effect
between the Canadian dollar and the United States dollar, see ITEM 8 - Selected
Financial Data.

ITEM 19 FINANCIAL STATEMENTS AND EXHIBITS All Audited Statements are
in Canadian Dollars and presented on a consolidated basis.

Audited Consolidated Financials - Fiscal Year Ending February 28, 1999

<PAGE>60

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this Annual Report to be signed on its
behalf by the undersigned, hereunto duly authorized.

Dated: May 28, 1999 SUNCOM Telecommunications, Inc.

By:/s/ Dr. DENNIS SINCLAIR
----------------------------
Dr. Dennis Sinclair
Chief Executive Officer

<PAGE>61

Auditors Report to the Shareholders 63

Balance Sheet 65

Statements of Operations and Deficit 66

Statement of Changes in Financial Position 67

Notes to Financial Statements 68

Schedule of Administrative Expenses 81

<PAGE>62

Consolidated Financial Statements of

SUNCOM TELECOMMUNICATIONS INC.
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

<PAGE>63

Auditors' Report to the Shareholders

We have audited the consolidated balance sheets of Suncom Telecommunications
Inc. as at February 28, 1999 and 1998 and the consolidated statements of
operations and deficit and changes in financial position for the years ended
February 28, 1999, 1998 and 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at February 28, 1999
and 1998 and the results of its operations and the changes in its financial
position for the years ended February 28, 1999, 1998 and 1997 in accordance with
generally accepted accounting principles in Canada.

Significant differences between Canadian and United States generally accepted
accounting principles are quantified and explained in note 12 to the financial
statements.

"KPMG"

Chartered Accountants

Vancouver, Canada

March 10, 1999

<PAGE>64

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING DIFFERENCE

In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the Company's ability to continue as a going concern, such as those described in
note 1 to the financial statements. Our report to the shareholders dated March
10, 1999, is expressed in accordance with Canadian reporting standards which do
not permit a reference to such events and conditions in the auditors' report
when these are adequately disclosed in the financial statements.

"KPMG"

Chartered Accountants

Vancouver, Canada

March 10, 1999

<PAGE>65

SUNCOM TELECOMMUNICATIONS INC.
Consolidated Balance Sheets
(Expressed in Canadian dollars)

As at February 28, 1999 and 1998

<TABLE>
<S> <C> <C>
1999 1998
- --------------------------------------------------------- ----------------- -----------------

Assets

Current assets:
Cash and cash equivalents $ 114,402 $ 1,064,908
Accounts receivable (note 14) 45,095 25,282
Prepaid expenses and advances (note 6) 21,756 15,357
------------ ----------
181,253 1,105,547

Investment (note 7) 1 -

Capital assets (note 8) 147,678 157,957

Restricted cash held in trust (note 3) 1,519,656 2,291,662
Less trust accounts payable and accrued liabilities 1,519,656 2,374,315
- (82,653)
------------- ----------
$ 328,932 $ 1,180,851
============= =========

Liabilities and Deficiency in Assets

Current liabilities:
Accounts payable and accrued liabilities $ 261,258 $ 147,599
Current portion of long-term debt 412,020 150,150
------------- --------
673,278 297,749

Employee obligations (note 10(c)) - 434,000

Long-term debt (note 9) - 722,932

Shareholders' deficiency in assets:
Share capital (note 10) 12,176,977 9,818,356
Deficit (12,521,323) (10,092,186)
-------------- ------------
(344,346) (273,830)

Future operations (note 1)
Contingencies (notes 3, 4, 5 and 13)
$ 328,932 $ 1,180,851
============= ==============
</TABLE>

See accompanying notes to consolidated financial statements.

On behalf of the Board:

"Dennis Sinclair "Raymond Mol"
- --------------------- --------------
Director Director

<PAGE>66

SUNCOM TELECOMMUNICATIONS INC.
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)
<TABLE>
<S> <C> <C> <C>

Years ended February 28,
1999 1998 1997
- --------------------------------------------- ---------------- --------------- ----------------

Revenue $ 265,715 $ 1,274,385 $ 38,328,435

Costs and expenses:
Direct costs - 814,465 34,036,369
Selling, general and administrative
expenses (schedule) 2,524,748 3,047,122 17,279,989
Depreciation and amortization 28,457 7,167 9,325,803
----------- ------------- ---------------
2,553,205 3,868,754 60,642,161
----------- ------------- ---------------

Loss before other income (expense) 2,287,490 2,594,369 22,313,726

Other income (expense):
Foreign exchange gains (losses) 65,542 6,143 (261,167)
Miscellaneous 85,076 126,818 173,921
Loss on sale of capital assets (8,766) - -
Write-down of investment (note 7) (283,499) - -
Gain on forgiveness of debt (note 3) - 25,672,726 -
Gain on sale of CNC and CNT (note 5) - 3,010,000 -
Income tax interest and penalties - (125,021) -
Loss on settlement of lawsuit - (1,560,420) -
Loss on settlement of class action lawsuit - - (3,312,000)
Write-down of assets held for resale (note 4) - - (15,207,861)
Gain on sale of subsidiaries - - 663,783
Lawsuit expenses - - (441,198)
-------------- --------------- ---------------
(141,647) 27,130,246 (18,384,522)

Net income (loss) for the year (2,429,137) 24,535,877 (40,698,248)

Deficit, beginning of year (10,092,186) (34,628,063) (111,464,815)

Reduction of common share stated capital
(note-10(d)) - - 117,535,000

Deficit, end of year $(12,521,323) $ (10,092,186) $ (34,628,063)
-------------- -------------- --------------

Net income (loss) per common share
(note 2(f) $ (0.04) $ 0.50 $ (0.99)
============= ================ ==============

See accompanying notes to consolidated financial statements.

<PAGE>67

SUNCOM TELECOMMUNICATIONS INC.
Consolidated Statements of Changes in Financial Position
(Expressed in Canadian dollars)

Years ended February 28,

1999 1998 1997
- ---------------------------------------------- --------------- -------------- ------------------

Cash provided by (used in):

Operations:
Net income (loss) for the year $ (2,429,137) $ 24,535,877 $ (40,698,248)
Items not involving cash:
Write-down of investment 283,499 - -
Depreciation and amortization 28,457 7,167 9,325,803
Loss on sale of capital assets 8,766 - -
Gain on forgiveness of debt - (25,672,726) -
Loss on settlement of TeleHub lawsuit - 1,560,420 -
Gain on sale of CNC and CNT - (3,010,000) -
Amortization of deferred foreign exchange
loss - - 261,167
Gain on sale of ITI and BTC - - (663,783)
Write-down of assets held for resale - - 15,207,861
Change in non-cash operating working capital:
Accounts receivable (19,813) (25,282) 4,780,681
Prepaid expenses and advances (6,399) 1,263,668 (1,756,083)
Accounts payable and accrued liabilities 113,659 (2,901,724) (6,824,661)
Unearned revenue and tenant inducements - - (230,115)
------------- ------------ --------------
(2,020,968) (4,242,600) (20,597,378)

Financing:
Issuance of common shares 2,358,621 527,910 28,102,576
2000 convertible debentures issued 412,020 - -
1999 convertible debentures issued 499,000 722,932 -
1999 convertible debentures repaid (1,221,932) - -
Notes issued (repaid) (150,150) 150,150 -
Employee obligations (434,000) 434,000 -
Shares to be issued - (4,010,468) (3,692,790)
1998 series convertible debentures issued - - 15,512,330
1998 series convertible debentures repaid - - (6,933,000)
1998 series convertible debentures converted - - (1,021,905)
Demand loans repaid - - (5,814,363)
Bank indebtedness of U.S. subsidiaries at
disposal date - - 1,758,355
Capital lease payments - - (1,134,285)
Interest portion of lease payments - - 362,141
------------ ------------ --------------
1,463,559 (2,175,476) 27,139,059
Investments:
Investment (283,500) - -
Acquisition of capital assets (26,944) (165,124) (68,425)
Restricted cash held in trust (82,653) (2,291,662) -
Proceeds on sale of subsidiaries - 3,010,000 -
Proceeds on sale of assets - 6,750,000 -
Deferred financing costs - - (6,290,306)
Licence and acquired customer base - - (41,030)
------------ ------------ -------------
(393,097) 7,303,214 (6,399,761)
------------ ------------ -------------

Increase (decrease) in cash and cash equivalents (950,506) 885,138 141,920

Cash and cash equivalents, beginning of year 1,064,908 179,770 37,850
------------ ------------ --------------
Cash and cash equivalents, end of year $ 114,402 $ 1,064,908 $ 179,770
============ ============ ==============
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>68

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

1. Future operations:

These consolidated financial statements have been prepared on a going
concern basis which assumes the realization of assets and liquidation of
liabilities in the normal course of business. The Company incurred a net
loss for the year ended February 28, 1999 in the amount of $2,363,681 and
has a working capital deficiency of $416,569 at February 28, 1999. The
application of the going concern concept and the Company's ability to
recover its investment and capital assets are dependent on the Company's
ability to raise additional capital through the issuance of shares, on its
ability to obtain debt financing and on its ability to acquire additional
profitable operating call centers. Management believes the Company will
raise additional capital through the issuance of shares and convertible
debentures to meet its obligations as they become payable and to acquire
additional operating assets.

2. Significant accounting policies:

(a) Basis of presentation:

These consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in Canada. Except as disclosed in note
12, these principles do not differ materially from accounting principles
generally accepted in the United States.

These consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All subsidiaries were acquired from unrelated
parties and have been accounted for using the purchase method.

Their results of operations have been included from the respective
effective dates of acquisition. All significant intercompany balances and
transactions have been eliminated.

Canadian subsidiaries United States subsidiaries
- ----------------------------------------- ------------------------------------

Cam-Net Communications Inc. ("CNC") ** Cam-Net Inc.

Cam-Net Telecommunications Inc. ("CNT")** Cam-Net Holdings Inc.

Canadian-American Communications Inc. Cam-Net Systems Inc.

Canadian Northstar Transmission Systems Ltd. Northstar Transmission Systems Inc.

Preferred Telemanagement Inc. ("PTI") Northstar Telesolutions Inc.

Direct Advantage Inc.
</TABLE>

** Both of these Canadian subsidiaries were sold on April 30, 1997 (note 5).
The results of operations to the sale date are included in these
consolidated financial statements.

(b) Cash and cash equivalents:

Cash and cash equivalents includes short-term instruments which, on
acquisition, have a remaining term to maturity of three months or less.

<PAGE>69

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 2
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

2. Significant accounting policies (continued):

Capital assets are recorded at cost. Depreciation is recorded using the
straight-line method over the following estimated useful lives:

Office equipment 5 years

No depreciation is recorded on capital assets not yet put in use.

(d) Revenue recognition:

The Company recognizes revenue from its call center based on monthly per
customer charges for standard services.

(e) Foreign exchange:

Balance sheet items denominated in United States dollars are translated into
Canadian dollars at exchange rates prevailing at the balance sheet date for
monetary items and at exchange rates in effect at the transaction date for
non-monetary items. Statement of operations items are translated at actual or
average rates prevailing during the year. Gains and losses on translation of
long-term monetary items are deferred and amortized over the remaining life of
the items. Gains and losses on translation of current monetary items are
included in operations as incurred.

(f) Net income (loss) per common share:

Basic net income (loss) per common share is computed based on the
weighted average number of common shares outstanding during the year, which were
are follows:

1999 65,748,339
1998 48,619,799
1997 41,084,545
Fully diluted earnings per share for 1998 is $0.40. Fully diluted earnings per
share has not been presented for 1999 and 1997 as this would have the effect of
reducing the loss per share.

<PAGE>70

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 3
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

2. Significant accounting policies (continued):

(g) Use of estimates:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of the assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. In
these consolidated financial statements, significant areas requiring the use of
management estimates relate to the determination of the recoverability of
accounts receivable and capital assets and the related income statement amounts
for bad debt expense and depreciation and amortization. Actual results could
differ from those estimates.

(h) Financial instruments:

The fair values of cash and cash equivalents, accounts receivable, advances and
accounts payable and accrued liabilities approximates their carrying values due
to the short term nature of these amounts. The fair value of the Company's
long-term debt which includes debentures and notes payable, approximates its
carrying value as these instruments have been recently issued at market interest
rates.

3. Reorganization plan:

On January 14, 1997, the Company and its Canadian subsidiaries filed for and
received protection under the Company Creditors' Arrangements Act ("CCAA"). On
July 4, 1997, the Company submitted a Reorganization Plan (the "Plan") to its
secured and unsecured creditors. Secured and unsecured creditors approved the
Plan on August 8, 1997. Details of the Plan are as follows:

$6,550,772 of the $6,750,000 received on the asset sale as disclosed in
note 4 and approximately $3,070,000 received on the sale of the Company's
subsidiaries CNC and CNT as disclosed in note 5 were paid into a trust
account. $1,000,000 of the $6,550,772 received on the sale of assets
represents a conditional payment; ; Secured creditors with outstanding
claims of approximately $5,400,000 were paid $3,222,724 in cash, issued
1,000,000 shares (note 10(b)) and were issued a share purchase warrant to
acquire 1,000,000 shares in the Company at $1 per share. In addition, the
Company agreed with one secured creditor on a further $500,000 as an
outstanding claim which will only be settled from contingent consideration
which may be earned on the sale of CNC and CNT (note 5);

Crown claims, which consist primarily of income, sales or capital taxes,
were to be settled outside the Plan and approximately $580,000 of the
proceeds paid into the trust account was segregated to pay for potential
Crown claims. To February 28, 1999, $196,533 have been paid for Crown
claims;

<PAGE>71

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 4
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

3. Reorganization plan (continued):

$200,000 of the proceeds paid into the trust account was segregated to
pay for creditor claims after the Company and its Canadian
subsidiaries entered CCAA protection. Subsequent to the approval of
the Plan, a further $150,000 was approved by the courts to pay for
additional post CCAA claims. To February 28, 1999, $349,979 in post
CCAA claims have been paid;

$280,000 of the proceeds paid into the trust account was segregated to
pay for employee and consulting commissions relating to the assets
sale as disclosed in note 4 and the sale of CNC and CNT as disclosed
in note 5. At February 28, 1999, all commissions have been paid and
the amount paid was $280,715;

$300,000 of the proceeds paid into the trust account was segregated to
pay for legal, monitor and audit costs and $35,000 for employee
severance. Subsequent to the approval of the Plan, approximately
$352,000 has been approved by the courts as additional payments for
legal and monitor expenses. To February 28, 1999, $652,220 had been
paid for legal, monitor and audit costs and $32,925 for employee
severance;

$300,000 of the proceeds paid into the trust account was paid to the
Company for working capital purposes on the condition that the
$300,000 is repayable to the trust account out of any further
recoveries from outstanding litigation and thus may be available to
unsecured creditors to the extent of future recoveries. During 1998
and 1999, $317,500 was repaid to the trust account from recoveries
from litigation; and

Unsecured creditors with outstanding claims of approximately
$31,000,000 were to share in the funds remaining in the trust account
based on a formula which allocated a portion of the remaining funds to
the Company's creditors and a portion to the Company's subsidiaries'
creditors. To February 28, 1999, unsecured creditor claims aggregating
$3,184,150 have been paid. In addition, 13,000,000 shares were to be
issued to the unsecured creditors based on the same formula used to
allocate the remaining cash in the trust account (note 10(c)).

<PAGE>72

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 5
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

3. Reorganization plan (continued):

Actual receipts and expenditures of the trust account from the date of
inception to February 28, 1999 and 1998 are as follows:

1999 1998
- ---------------------------------------------- ---------------------- --------------------

Receipts:
Proceeds from sale of assets $ - $ 6,550,772
Proceeds from the sale of CNC and CNT - 3,070,000
Interest revenue 57,935 78,565
Lawsuit recoveries 217,500 100,000
Miscellaneous revenue 1,693 2,125

277,128 9,801,462
-------------- -------------

Expenditures:
Secured creditor payments - 3,222,724
Unsecured creditor payments 591,372 2,892,778
Crown claims 196,533 -
Legal, monitor and audit costs 72,215 580,005
Commissions - 280,715
Working capital - 300,000
Post filing claims 164,428 185,551
Severance costs - 32,925
Other 24,586 15,102
-------------- ------------
1,049,134 7,509,800
-------------- ------------

Restricted cash held in trust (772,006) 2,291,662

Restricted cash held in trust, beginning 2,291,662 -
-------------- ------------
Restricted cash held in trust, closing $ 1,519,656 $ 2,291,662
============== =============
</TABLE>

The remaining restricted cash held in trust, if any, will be distributed to
unsecured creditors once the following matters are settled:

The $1,000,000 conditional payment received on the asset sale (note 4) is
currently in dispute. The purchaser is claiming that the conditional
payment should be returned to the purchaser. The Company is claiming that
the conditional payment should be released and available to settle creditor
claims. The outcome of this dispute is currently not determinable; and

Crown claims for various taxes are currently in negotiation.

<PAGE>73

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 6
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

3. Reorganization plan (continued):

During the year ended February 28, 1998, the Company recognized a gain on
forgiveness of debt of approximately $25,700,000 representing total secured
and unsecured debt of approximately $34,200,000 less the $6,100,000 paid to
secured and unsecured creditors from the trust account to date and less a
further estimated payment of $2,400,000. To the extent that there is not
enough cash in the trust fund to pay the estimated $2,400,000 after
settlement of Crown claims and the conditional payment dispute, the
difference will represent additional gain on forgiveness of debt which will
be recognized at that time. During the year ended February 28, 1999,
approximately $900,000 of the $2,400,000 was repaid from the trust fund
leaving a balance of approximately $1,500,000 in restricted accounts
payable.

4. Sale of assets:

On April 7, 1997, the Company sold its accounts receivable, capital assets
including leased assets, licences and acquired customer base for cash of
$6,750,000. These assets sold represented all of the Company's and
subsidiaries' significant operating assets.

As at February 28, 1997, the following write-down of assets was required to
reflect the difference between the proceeds received subsequent to year end and
the net book values of the assets sold:

Proceeds received on April 7, 1997 $ 6,750,000
Less carrying value of assets sold at February 28, 1997:
Accounts receivable 3,947,599
Prepaid expenses and advances 1,790
Capital assets 8,259,086
Licence and acquired customer base 6,087,834
Deferred costs 3,661,552
---------------
21,957,861
----------------
Write-down recorded at February 28, 1997 $ 15,207,861
===============

Of the $6,750,000 received, $1,000,000 is a conditional payment to protect the
purchaser against incorrect representations or warranties by the Company and its
subsidiaries in relation to the accounts receivable and customer base. The
contingent payment was to be released 150 days after April 8, 1997 if the
purchaser made no claim against the hold-back. The purchaser is disputing the
entire amount of the hold-back, whereas the Company believes the hold-back
should be released. The outcome of this contingency is not determinable.

<PAGE>74

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 7
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

5. Disposal of CNC and CNT:

On April 30, 1997, the Company sold the common shares of its wholly-owned
subsidiary, CNC, including CNC's wholly-owned subsidiary, CNT, for cash proceeds
of $3,070,000. After deducting commissions paid on the sale of $60,000, the
Company realized a gain on the sale of $3,010,000. Additional contingent
consideration will be receivable to the extent of 15% of CNC's consolidated net
income for each fiscal year of CNC commencing 36 months after April 30, 1997.
Contingent consideration will be recorded when the amounts are determinable. The
first $500,000 of contingent consideration received will be payable to a secured
creditor as disclosed in note 3. Any additional amounts will be available to the
Company and will not be available for CCAA creditors.

6. Prepaid expenses and advances:

1999 1998
------------ -----------

Prepaid expenses $ 5,049 $ 3,442
Deposits 16,707 11,915
---------- -----------
$ 21,756 $ 15,357
========== ===========

7. Investment:

In 1999, the Company commenced negotiations for a license agreement with
Internet Presence Coordinators, Inc. ("IPC") (d.b.a. Virtual Sellers.com)
whereby the Company would acquire the right to operate the business and use the
assets of IPC in return for a royalty of 1% of net revenues and 3,000,000 common
shares of the Company if certain pro forma revenue and expense projections are
met.

Under a preliminary agreement which is currently under renegotiations, the
Company had committed to raise U.S. $2,000,000 to fund the business, but if the
Company did not raise the U.S. $2,000,000, the Company had the option to cancel
the license agreement and IPC would have had to repay two times all amounts
advanced. To February 28, 1999, $170,000 (CDN. $283,500) has been advanced to
IPC to fund the business.

The Company has written down the amounts advanced to IPC to $1 to reflect
the uncertain collectibility of the amounts advanced.

<PAGE>75

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 8
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

8. Capital assets:

1999

Accumulated Net book
Cost depreciation value
---------- -------------- -----------
Office equipment $ 179,839 $ 32,161 $ 147,678

1998

Accumulated Net book
Cost depreciation value
---------- -------------- -----------

Office equipment $ 165,124 $ 7,167 $ 157,957

On December 11, 1997, the Company acquired office equipment, billing center
customer contracts and certain licenses relating to a call center operating in
Indianapolis for U.S. $105,000. The purchase price has been allocated to office
equipment in the amount of CDN. $150,150.

9. Long-term debt:

1999 1998

2000 series convertible debentures $ 412,020 $ -

1999 series convertible debentures - 722,932

Note payable - 150,150
---------- ----------
412,020 873,082
Less current portion 412,020 150,150
---------- ----------
$ - $ 722,932
========== ==========

2000 series convertible debentures:

As part of a U.S. $4,000,000 offering of convertible debentures, the Company
received U.S. $272,500 (CDN. $412,020) between January 19, 1999 and February 28,
1999. The debentures bear interest at 8% per annum, are repayable on January 15,
2000 and are convertible into common shares of the Company at a rate of U.S.
$0.18 per share. The Company has not determined nor separated the liability and
equity components of the convertible debentures due to the short-term life of
the debenture.

<PAGE>76

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 9
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

9. Long-term debt (continued):

1999 series convertible debentures:

As part of a U.S. $4,000,000 (subsequently closed in March 1998 at U.S.
$850,000) offering of convertible debentures, the Company received U.S. $500,000
(CDN. $722,932) between November 20, 1997 and February 28, 1998. The debentures
bear interest at 9% per annum, are repayable on or before a date to be
determined to be nine months after this public offering is completed and are
convertible into common shares of the Company at a rate of U.S. $0.10 per share
at any time after March 12, 1998. In fiscal 1999, the Company received a further
U.S. $250,000 (CDN. $499,000) and the offering was closed. All the debenture
holders have subsequently exchanged their debentures for common stock and
8,500,000 shares have been subsequently issued. The Company has not determined
nor separated the liability and equity components of the convertible debentures
due to the subsequent conversion of all the debentures to common shares.

Note payable:

The Company issued a U.S. $105,000 (CDN. $150,150) promissory note in
conjunction with an acquisition of assets as disclosed in note 8. The note was
non-interest bearing, secured by the assets purchased, repayable on December 31,
1998 or convertible into common shares of the Company at a rate of U.S. $0.10
per share on December 31, 1998. The note was converted into common shares on
December 31, 1998.

10. Share capital:

(a) Authorized:

200,000,000 common shares without par value

150,000,000 class A preference shares without par value

150,000,000 class B preference shares without par value

<PAGE>77

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 10
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

10. Share capital (continued):

(b) Issued and outstanding common shares:

<TABLE>
<S> <C> <C>
Number
of shares Amount
------------ -----------

Balance, February 29, 1996 25,448,602 $ 98,722,870

Shares issued during the year:
For cash on the exercise of employee and director options 8,686,018 11,984,886
For cash on the exercise of warrants 200,000 274,000
For settlement of debt 6,107,994 9,485,974
For employees' compensation 34,797 34,797
For inducement fee relating to 1998 series
convertible debentures 4,351,194 4,622,208
For finders' fee relating to 1998 series
convertible debentures 692,130 750,903
Conversion of 1998 series convertible debentures 375,000 1,021,905
Acquisition of Integrated Telemanagement Inc. 97,466 -
Conversion of preferred shares 30,761 35,375
Less share issue costs - (107,472)
Reduction of common share stated capital (note 10(d) - (117,535,000)
----------- ------------
Balance, February 28, 1997 46,023,962 9,290,446

Shares issued during the year:
For settlement of debt 1,000,000 28,000
For employees' and directors' compensation 5,566,000 316,396
For services received 1,310,811 183,514
---------- ------------
Balance, February 28, 1998 53,900,773 9,818,356

Shares issued during the year:
For employees' and directors' compensation 5,463,000 977,929
Conversion of 1999 series convertible debentures 8,500,000 1,221,932
Exercise of CCAA warrants (note 10(c)) 8,183,337 -
Conversion of notes payable 1,050,000 158,760

Balance, February 28, 1999 77,097,110 $ 12,176,977
========== ==========
</TABLE>

Shares issued as consideration on the acquisition of customer base have been
recorded based on the value specified in the purchase agreements, which was not
greater than the market value of the shares at the date of issuance. Where no
price is specified in the purchase agreement, shares issued have been recorded
based on the market value of the shares at the date of issuance. Shares issued
for directors and employee compensation and for services received have been
recorded at the market value of the shares at date of issuance.

The Company has committed to issue 13,000,000 shares to former creditors under a
reorganization plan as disclosed in note 3. As at February 28, 1999, 8,183,337
shares have been issued to creditors leaving an outstanding commitment to issue
4,816,663 shares.

<PAGE>78

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 11
(Expressed in Canadian dollars)
Years ended February 28, 1999, 1998 and 1997

10. Share capital (continued):

(d) Reduction of common share stated capital:

On August 22, 1996, the shareholders of the Company passed a special
resolution to reduce the stated capital of the Company's common shares by
$117,535,000.

11. Income taxes:

The Company's wholly-owned subsidiary, PTI, has non-capital income tax loss
carryforwards of approximately $7,000,000 expiring over a four year period
commencing in 2001.

12. Reconciliation of Canadian to United States generally accepted
accounting principles ("GAAP"):

These financial statements are prepared in accordance with Canadian GAAP,
which do not differ materially from U.S. GAAP with respect to the accounting
policies and disclosures in these financial statements, except as follows:

(a) Statement of operations, total assets and deficiency in assets:

Under U.S. GAAP, foreign exchange gains and losses deferred under Canadian GAAP
would be expensed. In addition, shares to be issued for settlement of debt would
be classified as long-term liabilities until the shares are issued.

The effect of the differences on loss, total assets and deficiency in
assets are as follows:

<TABLE>
<S> <C> <C> <C>
1999 1998 1997
-------------- -------------- ---------------

Net income (loss), as determined in
accordance with Canadian GAA $ (2,429,137) $ 24,535,877 $ (40,698,248)
Deferred foreign exchange loss - - 261,167
-------------- -------------- ---------------
Net income (loss), as determined in accordance
with U.S. GAAP $ (2,429,137) $ 24,535,877 $ (40,437,081)
============== ============== ===============

Net income (loss) per share - U.S. GAAP $ (0.04) $ 0.50 $ (0.98)
============== ============== ==============

1999 1998
-------------- --------------

Total assets, as determined in accordance with
Canadian GAAP and U.S. GAAP $ 328,932 $ 1,180,851
============= ==============

1999 1998
------------ --------------

Shareholders' deficiency in assets, as determined in
accordance with Canadian and U.S. GAAP $ (344,346) $ (273,830)
============= =============
</TABLE>

<PAGE>78

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 12
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

12. Reconciliation of Canadian to United States generally accepted
accounting principles ("GAAP") (continued):

(b) Statement of changes in financial position:

Under U.S. GAAP, the statement of changes in financial position is
presented as a statement of cash flows.

Under a cash flow presentation non-cash transactions would not be shown
in the statement but would be disclosed separately in a note to the financial
statements.

In respect of these financial statements, the Company had the following
material non-cash transactions:

1999 1998 1997
------------ ---------- -----------
Issuance of shares for:
Employee and director compensation $ 977,929 $ 316,396 $ 34,797
Conversion of debentures and
notes payable 1,380,692 - 1,057,640
Settlement of debt - 28,000 9,485,974
Inducement fee - - 4,622,208
Finders' fee - - 750,903
Services received - 183,514 -
----------- -------------- -----------
$ 2,358,621 $ 527,910 $15,951,522

The above amounts would be subtracted from the related balances in the Canadian
GAAP statements of changes in financial position for funds provided by and used
in financing activities with corresponding reductions in the related balance for
funds used in investing activities, with the exception of the settlement of debt
and employee compensation transactions, which would affect funds used for
operations. Under U.S. GAAP, interest and income taxes paid would be disclosed
supplementally to the cash flow statement. Interest of $19,976 (1998 - $nil;
1997 - $1,991,870) was paid in the year. No income taxes were paid in the years
presented.

In February 1992, the Financial Accounting Standards Board issued Statement No.
109, "Accounting for Income Taxes". Statement 109 has changed the method
companies use to account for income taxes from the deferred method to an asset
and liability method. The application of this statement would not have a
material effect on the Company's financial statements. In addition, certain
disclosure requirements of this statement are not included in these financial
statements.

<PAGE>80

SUNCOM TELECOMMUNICATIONS INC.
Notes to Consolidated Financial Statements, page 13
(Expressed in Canadian dollars)

Years ended February 28, 1999, 1998 and 1997

12. Reconciliation of Canadian to United States generally accepted
accounting principles ("GAAP") (continued):

(d) Income statement classification:

Under U.S. GAAP, no subtotals would be presented in the consolidated
statements of operations immediately after costs and expenses. All items
disclosed as other income (expense) except for the gain on settlement of
debt would be included in income from operations. The gain on settlement of
debt in 1998 would be disclosed as an extraordinary item.

13. Uncertainty due to the Year 2000 Issue:

The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effect of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers or other
third parties, will be fully resolved.

14. Related party transactions:

Included in accounts receivable is $26,136 due from Concept 10 Inc., a
wholly-owned subsidiary of the Company's President and Director.

<PAGE>81

SUNCOM TELECOMMUNICATIONS INC.
Consolidated Schedule of Selling, general and Administrative Expenses
(Expressed in Canadian dollars)

Years ended February 28,
<TABLE>
<S> <C> <C> <C>

1999 1998 1997
-------------- -------------- --------------

Wages and benefits $ 1,031,776 $ 1,230,890 $ 5,983,043
Marketing and advertising 357,350 13,501 690,602
Accounting and legal 320,806 664,453 1,069,798
Office and sundry 191,591 532,097 447,128
Rent, utilities and property taxes 148,706 69,062 726,582
Travel and promotion 142,352 106,319 396,780
Insurance 98,988 210,943 261,193
Consulting fees 63,519 176,721 664,734
Telephone 49,750 18,021 512,651
Bad debts 34,557 - 1,368,702
Bank charges and interest 22,510 1,779 144,758
Printing 19,023 1,982 148,217
Billing system fees 17,738 1,311 -
Automobile 16,297 4,063 63,297
Equipment rental 7,875 3,346 54,924
Subscriptions and dues 1,088 - 18,339
Licences, taxes and dues 530 - 246,850
Commissions 292 12,461 251,087
Professional development - 173 21,760
Credit service - - 55,261
Debenture and demand loan interest - - 1,991,870
Financing charges - - 1,910,532
Listing and filing fees - - 55,410
Repairs and maintenance - - 177,805
Transfer agent - - 18,666
------------ ------------ -------------

$ 2,524,748 $ 3,047,122 $ 17,279,989
============ ============ =============

</TABLE>

SUMMARY OF REORGANIZATION PLAN

SUMMARY OF THE REORGANIZATION PLAN
OF CAM-NET COMMUNICATIONS NETWORK INC.,
AND ITS SUBSIDIARY COMPANIES

The capitalised words and terms used in this summary are defined in the
"Definitions" section at the end of this summary.

History

The Cam-Net Group commenced operations in 1986. At that time, its primary
business was as an alternate long distance provider in the telecommunications
industry. CWK is a public company which, until October 1996, was listed on both
the Vancouver and NASDAQ Stock Exchanges.

By 1996, the Cam-Net Group had expanded its operations to over $46
million of consolidated gross revenues, with over 42,000 Canadian customers
representing 6.4% of the Canadian business market and 2.2% of Canada's
residential customers. However the competitive pressures in the
telecommunications industry, the increasingly high technology costs associated
with the industry and a lack of sufficient working capital combined to erode the
Cam-Net Group's profitability such that the Group suffered losse of more than
$48 million in 1996.

Despite a number of cost cutting measures carried out in late 1995 and
early 1996, and changes in Management, the Group's ability to access the public
and private markets to generate working capital was frustrated by the delisting
of CWK in October of 1996. The negative publicity surrounding this event also
caused an erosion in the customer base and a reduction of supplier confidence
which put so much pressure on the working capital requirements of the Group that
Management concluded that the Cam- Net Group should seek court protection under
the CCAA.

On January 14, 1997, the Cam-Net Group filed for and was granted court
protection from its Creditors under the CCAA by the Court. Court protection was
required in order to ensure that the Cam-Net Group's assets were kept intact
during the reorganization process and to allow the Cam-Net Group to carry on its
business while formulating a restructuring plan. Concurrently, KPMG Inc. was
appointed by the Court as Monitor to oversee and to assist in the development of
the restructuring plans of the Cam- Net Group and to report to the Court and to
the Creditors of the Cam-Net Group.

Court Proceedings

On January 14, 1997, the Cam-Net Group applied to the Court for
protection from its Creditors under the CCAA. The Initial Order stayed all
proceedings against the Cam-Net Group, suspended the obligations of the Cam-Net
Group incurred prior to the Filing Date, required all persons having agreements
to supply goods or services to any of the Cam-Net Group to continue supplying
the same and authorized the Cam-Net Group to implement a downsizing by means of
an orderly disposition of certain of its assets and a reduction of its
work-force. The Initial Order also appointed the Monitor to observe and report
to the Court on a monthly basis on the financial and business affairs of the
Cam-Net Group. The Initial Order was substantially confirmed by an Order made on
February 5, 1997.

Subsequent to the confirmation of the Initial Order, further orders were
made by the Court in relation to various procedural and substantive matters
including the approval of the sale transactions and the approval of settlements
with certain Secured Creditors referred to under "Post Filing Developments"
below.

<PAGE>

The Reorganization Plan was approved by the Court for presentation to
the Creditors for approval on July 4, 1997.

Asset Sales

It became apparent to Management of the Cam-Net Group after the Filing
Date that it would not be able to obtain sufficient new financing for its
business operations early enough in the restructuring to permit it to continue
to service its Commercial and Residential Customer Base. In order to preserve
the value of those assets and yield the greatest return to its Creditors,
Management determined that it was in the best interests of the Cam-Net Group and
its Creditors to sell the Commercial and Residential Customer Base for the best
achievable price.

Accordingly, Management solicited offers for the Customer Base and
related technology and equipment used to service the Customer Base and entered
into a tentative agreement to sell the Customer Base and related equipment to
Primus, subject to the approval of the Court in the Proceeding. The Court
approval process resulted in several potential purchasers, including Primus,
submitting sealed bids to the Court and, in the result, the Court approved the
sale of the Sold Assets to Primus pursuant to th Purchase Agreement for an
amount which produced Sale Proceeds of approximately $6,590,000 on April 8,
1997. Of that amount, $1 million represents a conditional payment to protect
Primus against incorrect representations or warranties by the Companies in
relation to the customer base or receivables which will be released to the
Cam-Net Group 150 days after April 8, 1997 if Primus makes no claim against the
holdback.

It was also apparent to Management that there were significant tax
losses accrued within the Cam-Net Group as a result of the business losses
incurred during recent years. These tax losses would cease to have value over
time, and could not be readily used by the Cam-Net Group following the sale of
the Sold Assets. Accordingly, the Cam-Net Group solicited offers for the shares
of CNC which CWK owned and on April 17, 1997, CWK entered into the LTG Agreement
which contemplated the payment of $3,000,000 to CWK, subject to certain
conditions, on or before September 30, 1997. The LTG Agreement was approved by
the Court in the Proceeding. The first $100 of the purchase price was paid for
the Shares and the remainder is due on or before September 30, 1997. The payment
of that amount at the end of September is primarily dependent upon a favorable
tax ruling from Revenue Canada and upon Creditor and Court approval of a Plan of
Arrangement under the CCAA for CNC and CNT.

The LTG Agreement also contained an option for LTG to acquire most of
the balance of the unissued shares of CWK for an additional amount and a
provision for the future payment of the intercompany debt owed to CWK by CNC
commencing in the year 2000. The option was not exercised by LTG.

As a result of the foregoing transactions, aggregate funds of between
approximately $5.5 million and $9.5 million (depending upon the ultimate status
of the Purchase Agreement and the LTG Agreement) would be available for payment
of priority claims authorized in the Proceedings, claims of Secured Creditors
and eventual distribution to General Creditors. The particulars of the intended
distribution of these funds is discussed in more detail below under "Allocation
of Recoveries and Costs".

Business Plan

As a result of the sale of the Customer Base and related assets,
Management has created the Business Plan which is intended to focus CWK (and
PTI), as the remaining companies with the Cam-Net Group after the completion of
the LTG Agreement at the end of September, upon two new core businesses: the
Teleconstruction business and the Call Center business. Management is continuing
its efforts to identify potential acquisitions and potential new investors to
enable it to embark upon the implementation of the Business Plan upon the
successful completion of this Restructuring.

In light of the sale transactions completed or to be completed, the
names of CWK, CNC, CNT and PTI have been or will be changed to SUNCOM
Telecommunications Inc., Wintel CNC Communications Inc., Wintel CNT
Communications Inc. and SUNCOM Telemanagement Inc., respectively.

<PAGE>

Secured Creditor Settlements

At the Filing Date, ATT held registered security against the Companies which was
alleged to secure approximately $2,800,000 as at the end of June, 1997,
exclusive of legal costs and accrued interest. The Companies questioned the
validity and quantum of this security claim on various grounds, and negotiations
were entered into between ATT and the Companies subsequent to the Filing Date to
resolve the disputed claim. On July 3, 1997, the Court approved a settlement of
ATT's claim on the following basis:

(a) an immediate cash payment to ATT of $1,822,724.17;
(b) issuance of 1,000,000 free trading shares of CWK to ATT by
September 30, 1997; and
(c) issuance of a warrant whereby ATT could acquire an
additional 1,000,000 shares of CWK at a price of $1.00 per
share.

At the Filing Date, GT alleged an equitable security interest against all of the
assets of the Companies based upon agreements alleged to have been made by the
Companies to grant security to them. GT claimed that at least $2,600,000,
exclusive of legal costs, was outstanding in relation to this claim as at the
end of June, 1997 and that interest accrued thereon at the rate of 16% per
annum.

Following negotiations between GT and the Companies, on July 4, 1997,
the Court approved the settlement of GT's claim on the following basis:

(a) an immediate cash payment to GT of $1,400,000; and
(b) confirmation of a Claim under the Plan of $500,000, with no
right to receive dividends or warrants under the Plan, to be
secured only against the LTG Contingent Payment, with a
proxy granted by GT in favor of the Companies in relation to
the Claim.

The effect of the two settlements with Secured Creditors was to
eliminate uncertainty with respect to the Plan and the entitlement of Creditors
thereunder, as well as the costs of litigating the disputes with the Secured
Creditors. The settlements also ensure that additional funds will be available
to the Creditors as a result of significant reductions in the Claims of these
two Secured Creditors.

The settlements finally resolve all issues between the Companies and
those Secured Creditors, except that the full Claim of ATT (less the amount paid
to date) will be resurrected against the Companies if the free trading shares
are not made available to them by September 30, 1997. The Companies are
currently seeking the necessary regulatory exemption to permit the issuance of
such shares.

DESCRIPTION OF THE PLAN

Pursuant to the Plan, the claims and interests of Creditors of the
Cam-Net Group will be compromised and satisfied as described in the Plan and as
summarized below. Following the completion of the transactions and the making of
payments set out in the Plan, CWK will seek the necessary regulatory and
shareholder approval to allow Creditors to acquire an equity position in CWK to
achieve further value.

The following is a summary of the treatment of the various
constituencies of the Cam-Net Group under the Plan. The following summary is
qualified by reference to the full text of the Plan and shareholders are urged
to read the Plan in its entirety for a complete understanding of the treatment
of the various constituencies of the Cam-Net Group under the Plan. A copy of the
Plan is available from SUNCOM Telecommunications Inc. upon request.

Treatment of Secured Creditors

Pursuant to the Plan, Secured Creditors will be excluded from the Plan
to the extent that their security is deemed to be valid and enforceable and
fully secured by the value of the assets of the Cam-Net Group against which the
Secured Creditor holds a security interest.

Where any portion of a Secured Creditor's security is not valid and
enforceable, or where the value of the assets of the Cam-Net Group against which
the Secured Creditor holds a security interest are less than the amount claimed
by the Secured Creditor, then such Secured Creditor will have the right to file
a Claim for such unsecured amount in the appropriate General Creditor Class.

<PAGE>

Treatment of Bondholders

Pursuant to the Plan, each Bondholder will be paid in compromise and
full satisfaction of its Claim, a cash payment of $1.

Treatment of CWK General Creditors

Pursuant to the Plan, each CWK General Creditor will be paid, in
compromise and full satisfaction of its Claim, a cash payment or payments equal
to its proportionate share of the CWK Pool and the Net Lawsuit Recovery
applicable to CWK. Thereafter, the Remaining Debt will be converted to shares of
CWK on a formula based upon each Creditor's pro rata share of the 13 million
shares available for distribution to all Creditors.

Treatment of CNC/CNT General Creditors

Pursuant to the Plan, each CNC/CNT General Creditor will be paid, in
compromise and full satisfaction of its Claim, a cash payment or payments equal
to its proportionate share of the CNC/CNT Pool and the Net Lawsuit Recovery
applicable to CNC and CNT. Thereafter, the Remaining Debt will be converted to
shares of CWK on a formula based upon each Creditor's pro rata share of the 13
million shares available for distribution to all Creditors.

Treatment of PTI General Creditors

Pursuant to the Plan, each PTI General Creditor will receive, in
compromise and full satisfaction of its Claim, the right to convert its
Remaining Debt into shares of CWK on a formula based upon each Creditor's pro
rata share of the 13 million shares available for distribution to all Creditors.

Dividend Conversion Option

If the Plan is approved, and subject to obtaining the necessary
regulatory approvals, all Creditors who are entitled to receive a dividend under
the Plan will have the option of converting their dividend entitlement to shares
in CWK, at a price of 10(cent) per share (or such other price as is required by
the regulatory authorities). The option will be exercised after the Final Order
and prior to the first payments under the Plan.

Persons Not Affected by the Plan

The claims of the following persons against the Cam-Net Group are not
affected by the Plan:

(a) any supplier of goods and services to the Cam-Net Group
after the Filing Date whose unpaid claim does not
constitute a Claim under the Plan;

(b) the Federal Crown and the Provincial Crown in respect of
income, sales, goods and services and other taxes, duties,
assessments or similar charges in the nature of a tax and
other imposts, and the equivalent U.S. taxing authority in
relation to employee taxes or withholding; and

(c) persons currently employed by any member of the Cam-Net
Group who have not received notice of termination, in
their capacity as employees or directors and/or officers
of any member of the Cam-Net Group.

<PAGE>

Allocation of Recoveries and Costs

For purposes of calculating the dividend amounts payable to Creditors in
relation to the proceeds of liquidation of certain of the assets of the Cam-Net
Group, the notional concept of a CWK Pool and a CNC/CNT pool has been created.
Each Pool is intended to represent the proceeds which would be available to a
Creditor of CWK, CNC or CNT in the event of a bankruptcy of CWK or CNC
respectively, under the provisions of the Bankruptcy and Insolvency Act. For
simplicity, Creditors of CNT (a subsidiary o CNC) have been treated as though
they were Creditors of CNC.

To calculate the amounts available in each Pool, the Purchase Proceeds
(which represent the sale of operating assets owned by CNC) will conceptually be
allocated to the CNC/CNT Pool and the LTG Proceeds will be allocated to the CWK
Pool. The CNC/CNT Pool will then be reduced by the amount required to pay up to
$200,000 of specified liabilities accrued subsequent to the Filing Date, the
legal and accounting costs incurred in the Proceeding (less $100,000 of such
costs which are allocated to the CWK Pool), amounts owing to the Crown (which
are outside the Plan) and commissions of Management relating to the Purchase
Agreement. Finally, the ATT settlement amount will be deducted from the CNC Pool
(since ATT's Claim represents an operational expense of CNC).

After these deductions, the CNC/CNT Pool will then be further reduced by
transferring to the CWK Pool that portion of the CNC/CNT Pool which is equal to
the percentage relationship that the shareholder loans of CWK to CNC and CNT
bear to the total Claims in the CNC/CNT General Creditor Class. Based upon a
review conducted by the Monitor, it is anticipated this will move approximately
90% of the remaining CNT/CNC Pool into the CWK Pool.

The CWK Pool will be reduced by $100,000 for legal and monitor costs,
amounts owing to the Crown by CWK, KPMG's costs relating to the preparation of
an audit of the Cam-Net Group, Management commissions relating to the LTG
Agreement and other transactions, employee severance costs, and additional
working capital fund requirements of $300,000 for continued operations. Finally,
GT's settlement amount will be deducted from the CWK Pool since GT's Claim
originated in CWK on the original acquisition of assets by CWK from GT.

The residual amounts in each Pool will then be used to calculate the
dividends payable to Creditors in the CWK General Creditor Class and the CNC/CNT
General Creditor Class based upon a pro-rata distribution to CWK and CNC/CNT
Creditors, respectively.

The Net Lawsuit Recoveries will initially be divided between CWK and CNC
Creditors based upon the named plaintiff in the Lawsuit, provided that a Net
Lawsuit Recovery in any action where CNC is a Creditor will be divided between
the CWK and CNC/CNT Creditors on a percentage basis, similar to the division of
proceeds in the CNC/CNT Pool referenced above. Thereafter, the first $300,000 of
the CWK Net Lawsuit Recoveries will be paid to the CWK General Creditors, with
the balance being retained by CWK All of the CNC/CNT Net Lawsuit Recoveries
(after transfer of an appropriate percentage to the CWK General Creditors) will
be paid to CNC/CNT General Creditors.

Dividend Amounts

Because the total proceeds available for distribution, the costs to be
incurred and the total number of Claims will not be known at the date of the
Meeting, Creditors will not know the amount of dividend to which they will
ultimately be entitled at the time of the Meeting. However, a range of recovery
can be anticipated as follows, assuming total claims in CWK of $16,000,000 and
total Claims in CNC/CNT of $120,000,000 (of which $110,000,000 is CWK's
Shareholder Loan).

<PAGE>

CNC Dividend Calculation: $6,400,000.00
Total Sale Proceeds 2,600,000.00
-------------
LESS: approved deductions 3,800,000.00

Transfer to CWK Pool
($110,000, $120,000 x $3,800,000) $3,483,333.00

Net Balance = $ 316,667.00
-------------

CNC Dividend payment ($316,667, $10,000,000) = $0.03 on the dollar

CWK Dividend Calculation:

Total Pool Proceeds: $3,483,333.00
LESS: approved deductions 2,350,000.00
--------------
Net Balance = 1,133,333.00

If LTG does not complete: ($1,133,333, $16,000,000) = $0.07 on the dollar

If LTG completes: ($4,133,333, $16,000,000) = $0.26 cents on the dollar

The foregoing calculation assumes no reduction in the Primus $1,000,000 holdback
and ignores any additional recovery from Lawsuits. It is also based upon
assumptions with respect to costs.

Creditors should recognize that any estimated dividend recovery at this stage is
subject to contingencies and is inherently uncertain. However, any dividend
recovered by Creditors will be at least equal to what they would receive if the
Plan fails and a bankruptcy results, and they will also be receiving an equity
position in CWK.

Priority Costs

In addition to legal and accounting costs and the approved settlement to
Secured Creditors, the funds available for distribution to General Creditors
will be reduced by priority Crown Claims presently estimated to aggregate
$230,000 for CWK and $350,000 for CNC, Management Commissions of $160,000 for
CWK and $120,000 for CNC, payments to Post Filing Date creditors of $200,000,
severance payments to former employees of CWK of approximately $35,000 and
$300,000 in Working Capital funding for CWK. Of the Working Capital amount,
approximately $100,000 will have been expended by the Companies by the date of
the Meetings. The $300,000 Working Capital amount is repayable to Creditors out
of the Net Lawsuit Recoveries, if and when received.

Timing of Payments

The initial payment of funds collected to date from the liquidation of
assets of the Cam-Net Group will be distributed to Creditors 30 days after the
Deadline. Thereafter, payments will be made as further funds become available,
subject to the amounts available and the costs associated with such payments.

Warrants

Each Creditor will be entitled to convert its Remaining Debt to shares
of CWK on a pro-rata basis in relation to the 13,000,000 total shares available
to Creditors. This conversion will have the effect of giving Creditors
approximately 25% of the total issued and outstanding share capital of CWK,
based upon the total number of shares currently outstanding. The issuance of
shares to Creditors will be subject to regulatory and shareholder approvals
which will be sought by Management after the Final Order. A failure to obtain
any one or more of such approvals will not constitute a default under the Plan.

<PAGE>

Lawsuit Recoveries

On the sale of the assets of the Companies to Primus, all of the
accounts receivables in relation to the operations of the business were sold
with the exception of the following significant claims or receivables, all of
which are Lawsuits for the purpose of calculating the Net Lawsuit Recoveries:

(1) Vancouver Telephone Company

A claim by CNC in the amount of $474,767.07 for services provided
which is the subject of litigation in the British Columbia
Supreme Court. A counterclaim in the approximate amount of the
claim has been advanced by Van Tel.

(2) Pacific Gateway Exchange Inc.

A claim by CNC in an amount of approximately $400,000.00 which is
disputed by Pacific Gateway Exchange Inc., a California based
company. No action has been commenced and offsets have been
asserted by Pacific Gateway.

(3) Global Telemedia

A claim by CWK in the amount of $250,000.00 which is the subject
of litigation commenced in the state of Georgia for the recovery
of loans advanced. Liability has been denied, but no counterclaim
has been issued.

(4) Commsen Communications Inc.

A claim by CNC in the approximate amount of $400,000.00 which has
been advanced in the Ontario courts. A counterclaim of
$250,000.00 has been advanced by Commsen.

(6) TeleHub Communications Corp.

A claim by CWK which has been advanced in the State of Illinois
for the recovery of a $1,350,000.00 U.S. deposit together with
damages for breach of distribution rights for software and
billing system platforms. TeleHub has defended the claim and
denied liability.

No reasonably accurate determination or assessment can be made as to the
anticipated Net Lawsuit Recoveries in respect of these claims and litigation at
this time.

Creditor and Court Approval of the Plan

The Creditors of the Companies approved the Plan by the requisite
majorities of creditors in the various classes at meetings conducted on July 31,
1997.

The Court sanctioned the Plan by Order dated August 7, 1997. Upon
pronouncement of the sanction Order, the Companies proceeded to implement the
Plan.

Significant events subsequent to approval of Plan

Subsequent to the approval of the Plan by the Court, the Companies have
implemented the Plan. Significant events in relation to the implementation are
as follows:

(a) all Proofs of Claims of Creditors have been resolved and settled;

(b) an initial divided has been paid to all Creditors in accordance with
the Plan;

<PAGE>

(d) under the settlement with ATT 1,000,000 shares were delivered to
ATT;

(e) the $1,000,000 Holdback in relation to the Primus purchase of
assets was not resolved;

(f) lawsuit recoveries were made as follows:

(i) Bell Canada - $100,000.00

(ii) TeleHub - $450,000.00

(iii) BC Tel - $17,500.00

On August 14, 1998 the Companies obtained an order which permitted them to:

(a) discharge all pending tax liabilities and transfer certain
trust monies held by its counsel to satisfy those
obligations;

(b) distribute trust funds held by counsel to satisfy all
remaining liabilities of the Companies arising after the
Initial Order and before the Sanction Order;

(d) distribute the Warrants and the Shares on an expedited basis
having regard to the fact that the original formula for the
distribution of the Warrants was dependent upon final
distribution of all dividends;

(e) obtain a declaration that CWK has now performed its
obligations to remit net lawsuit recoveries in the amount of
$300,000.00 and as such the Promissory Note given as
security for an advance of $300,000.00 has now been
discharged in full.

As a consequence of the above Order, the Companies will issue a further dividend
in September of 1998 and the Warrants will likely be issued in September of
1998.
Remaining Obligations under the Plan

Subsequent to performing those matters referred to in the order of August 14,
1998 the remaining obligations of the Companies under the Plan are as follows:

(a) pursue viable lawsuit recoveries;

(b) distribute the Warrants and the Shares;

(d) distribute dividends to Creditors that arise from lawsuit
recoveries or the Primus Holdback or excess funds held in
trust by its counsel as security for obligations under the
Plan.

DEFINITIONS

"ATT" means AT&T Canada Long Distance Services Company

"BCCA" means the Company Act of British Columbia as amended and in effect from
time to time.

"Bondholders" means the holders of bonds issued under the Trust Deeds issued on
January 13, 1997 by CNC, CNT and PTI.

<PAGE>

"Business Plan" means the plan outlining the existing and new business
opportunities that CWK intends to carry out as described in the Information
Circular.

"Cam-Net Group" means collectively CWK, CNC, CNT and PTI.

"CBCA" means the Canada Business Corporations Act as amended and in effect from
time to time.

"CCAA" means the Companies' Creditors Arrangements Act R.S.C. 1985 c. C-36 as
amended and in effect from time to time.

"Claim" means a claim for an amount alleged by a person to be owed to it, or any
obligation, enforceable right, duty or liability, contingent or otherwise, or
any cause of action against one or more of the Companies as at the Filing Date,
or, in the case of claims arising subsequent to the Filing Date as a result of
the operations or downsizing of the operations of the Cam-Net Group approved by
the Court in the Proceeding, as at the date of the Meetings, either:

(a) as set forth in a Proof of Claim which has either:

(i) been admitted by the Companies for all purposes, or

(ii) been determined by a Court of competent jurisdiction
to be a proper obligation of the Companies; or

(b) been determined by the Companies to be a proper obligation of
the Companies; or

(c) for which a valid Proof of Claim could have been filed with
the Companies, but which Proof of Claim was not so filed.

"Claimant" means a person filing a Proof of Claim with the Companies which is
objected to by the Companies until either:

(a) disallowed by a Court of competent jurisdiction, in which
case the Claimant shall not have a Claim; or

(b) allowed, either in whole or in part, by a Court of competent
jurisdiction in which case the amount so allowed will become
a Claim.

"Class" means that group of persons constituting any of the following: Secured
Creditors, CWK General Creditors, CNC/CNT General Creditors, PTI General
Creditors or Bondholders.

"CNC" means Cam-Net Communications Inc.

"CNC/CNT General Creditors" means Equipment Lessors or Creditors of CNC or CNT
who hold no security interest in the property of CNC or CNT and includes Secured
Creditors of CNC or CNT for such part of the Claim of such Secured Creditors for
which there is no security as against the personal property of CNC or CNT.

"CNC/CNT Pool" means the allocated portion of the Sales Proceeds attributed to
the Creditors of CNC and CNT for purposes of calculating the amount available
for distribution to CNC/CNT General Creditors pursuant to the Plan after
deduction of priority claims referred to in paragraph 3.03.

"CNT" means Cam-Net Telecommunications Inc.

"Commercial and Residential Customer Base" means the active commercial and
residential accounts of CWK to which the Cam-Net Group provided telephone and
telecommunications services.

"Companies" means CWK, CNC, CNT and PTI.

"Court" means the Supreme Court of British Columbia.

<PAGE>

"Creditor" means a person having a Claim.

"Crown" means the Canadian crown in the right of any province as well as in the
right of the Dominion or any equivalent United States taxing authority in
relation to employee taxes or withholdings.

"CWK" means Cam-Net Communications Network Inc.

"CWK General Creditors" means Equipment Lessors or Creditors of CWK who hold no
security interest in the property of CWK and includes Secured Creditors of CWK
for such part of the Claim of such Secured Creditors for which there is no
security as against the personal property of CWK.

"CWK Pool" means the allocated portion of the Sales Proceeds and LTG Proceeds
attributed to the Creditors of CWK for purposes of calculating the amount
available for distribution to Creditors of CWK pursuant to the Plan after
deduction of priority claims referred to in paragraph 3.03.

"CWK Shareholder Loans" means the amount owed by CNC, CNT or PTI to CWK.

"Deadline" means the date which is thirty days following the date of the Final
Order.

"Effective Date" means the date upon which the Final Order is accepted for
filing by the Registrar.

"Equipment Lessors" means those persons who are members of one of the General
Creditor Classes who have leased personal property to the Companies and who hold
valid leases or security charging such personal property.

"Excluded Assets" means those assets not purchased by Primus or LTG and which
are retained by the Companies.

"Filing Date" means January 14, 1997.

"Final Order" means the order of the Court approving the Plan or Plans.

"General Creditors" means CWK General Creditors, CNC/CNT General Creditors, and
PTI General Creditors.

"GT" means GT Communications Inc.

"Information Circular" means the information circular to be prepared by
Management which will accompany the mailing of this Plan to Creditors.

"Initial Order" means the order of the Court granted in the Proceedings on
January 14, 1997 as superseded by the Order of the Court granted in the
Proceedings on February 5, 1997.

"Interim Order" means the order of the Court made on July 4, 1997 directing the
holding of the Meetings and providing such other directions as may be
appropriate in the circumstances.

"Lawsuits" means all of the Companies' causes of action and all actions which
have been commenced or which may in the future be commenced by the Companies
against any persons owing money to the Companies or in any way liable to the
Companies including certain of their former management, professional advisors
and others for return of monies and loss and damage suffered by the Companies.

"LTG" means LTG Holdings Inc., Oakville, Ontario.

"LTG Agreement" means the agreement of purchase and sale between CWK and LTG for
the purchase of the shares of CNC dated as of April 17, 1997 (as amended).

"LTG Proceeds" means the net adjusted sales proceeds to be realized by CWK if
and when the LTG Agreement completes, exclusive of the LTG Contingent Payment.

<PAGE>

"LTG Contingent Payment" means the payment to CWK by LTG under the LTG Agreement
of a percentage of future profits, if any, commencing in the year 2000.

"Management" means the boards of directors and officers of the Companies.

"Meetings" means the meetings of the Classes to be held pursuant to the Interim
Order for the purpose of considering, and if thought fit, voting to approve the
Plan, as same may be amended at any such Meeting, and agreeing to the compromise
and arrangement constituted thereby, and any adjournment thereof.

"Net Lawsuit Recovery" means the amount recovered by the Companies in the
Lawsuits after payment of all fees, disbursements, charges and expenses incurred
in respect of or in relation to such Lawsuits.

"Plan" or "Plans" means this Reorganization Plan or Plans among the Companies
and their Creditors, as from time to time amended, modified or supplemented
pursuant to an order of the Court, or pursuant to an agreement among the
Companies and any Creditor or Class, as provided for herein or pursuant to any
Meeting of any Class.

"Proceeding" means the proceeding commenced by the Cam-Net Group in the Court on
January 14, 1997 under Action No. 970112 Vancouver Registry.

"Proof of Claim" means a form of proof of claim as provided by the Companies in
connection with the Proceeding and the Plan.

"Primus" means Primus Telecommunications, Inc., Primus Telecommunications Canada
Inc. or 3362426 Canada Inc.

"PTI General Creditors" means Equipment Lessors or Creditors of PTI who hold no
security interest in the property of PTI and includes Secured Creditors of PTI
for such part of the Claim of such Secured Creditors for which there is no
security as against the personal property of PTI.

"Purchase Agreement" means the agreement of purchase and sale between the
Companies and Primus for the purchase of the Sold Assets.

"Registrar" means the Registrar of Companies for the Province of British
Columbia under the BCCA and the Director appointed under the CBCA.

"Remaining Debt" means the amount which is the difference between the provable
Claim of a CWK General Creditor, a CNC/CNT General Creditor or a PTI General
Creditor and the amount which it has been paid under the Plan upon distribution
of the Sale Proceeds and the LTG Proceeds. Remaining Debt shall not constitute
an enforceable claim against the Companies.

"Sale Proceeds" means the net adjusted sale proceeds received pursuant to the
Purchase Agreement, as reduced by any payments back to Primus from the holdback
portion, or any payments authorized by the Court in the Proceeding.

"Secured Creditors" means persons who are deemed by this Plan to be Secured
Creditors or who are recognized by the Companies to hold a valid security
interest in any property or asset of the Companies in an amount which is
admitted by the Companies.

"Sold Assets" means the assets purchased by Primus pursuant to the Purchase
Agreement.

"Trust Deeds" means those trust deeds dated as of January 13, 1997 pursuant to
which debentures were issued by PTI, CNC or CNT.

"Vesting Order" means the Order pronounced April 7, 1997 whereby the Purchase
Agreement was approved.

"Warrant" means the instrument by which a General Creditor's Remaining Debt may
be converted into shares of CWK.