As filed with the Securities and Exchange Commission on December 7, 2001
Registration No. 333-65264
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------------------------

PRE-EFFECTIVE AMENDMENT NO. 2
TO FORM SB-2
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

--------------------------------

TELYNX, INC.
(Name of Small Business Issuer as specified in its charter)

DELAWARE 7371 94-3022377
(State or other (Primary Standard (I.R.S. Employer
jurisdiction incorporation Industrial Classificati Identification Number)
or organization) Code Number)

6006 NORTH MESA STREET, SUITE 600
EL PASO, TEXAS 79912
(915) 581-5828
(Address, including zip code, and telephone number,
including area code, of principal executive offices)

ALI AL-DAHWI
CHIEF EXECUTIVE OFFICER
TELYNX, INC.
6006 NORTH MESA STREET, SUITE 600
EL PASO, TEXAS 79912
(915) 581-5828
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

---------------

Copies of all communications, including all communications sent to the
agent for service, should be sent to:

SHELDON G. NUSSBAUM, ESQ.
FULBRIGHT & JAWORSKI L.L.P.
666 FIFTH AVENUE
NEW YORK, NEW YORK 10103
(212) 318-3000

---------------

Approximate date of proposed sale to the public: From time to time after
the effective date of this Registration Statement as the selling stockholders
may determine.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER SHARE(1) AGGREGATE OFFERING PRICE REGISTRATION FEE
--------------------------- ------------ --------------------------- ------------------------ ----------------

Class A Common Stock, $.01 240,344,368 shares(2) $0.008 $1,970,824 $493.00(3)
Par value

(1) The price is estimated in accordance with Rule 457(c) under the Securities
Act of 1933, as amended, solely for the purpose of calculating the registration
fee on the basis of the average of the high and the low prices of the Class A
common stock of Telynx, Inc. as reported on OTC Bulletin Board on October 3,
2001.

(2) Includes 240,344,368 shares of Class A common stock issuable pursuant to our
former equity credit line pursuant to which the registrant was able to require
investors, under certain conditions, to purchase up to $17,000,000 of Class A
common stock. Also registered hereunder, pursuant to Rule 416, are an
indeterminate number of additional shares of Class A common stock that may
become issuable pursuant to stock splits, stock dividends or other similar
transactions. The number of shares of Class A common stock registered hereunder
pursuant to Rule 416, does not include an increased number of shares issuable
under the equity credit line agreement resulting from decreases in the market
price of the Class A common stock.

(3) Previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT SPECIFICALLY STATING THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.

SUBJECT TO COMPLETION, DATED DECEMBER 7, 2001

TELYNX, INC.

240,344,368 SHARES OF CLASS A COMMON STOCK

The 240,344,368 shares of our Class A common stock being offered under this
prospectus may be offered and sold in the aggregate from time to time by The
Keshet Fund L.P., Talbiya B. Investments Ltd., Esquire Trade & Finance, Inc.,
Laurus Master Fund, Ltd., Libra Finance, Keshet L.P., or the selling
stockholders. We received the proceeds from the securities sold by us under our
former equity line, but will not receive any part of the proceeds from the sales
of the shares of our Class A common stock being offered by the selling
stockholders pursuant to this prospectus.

Of the shares offered pursuant to this prospectus, The Keshet Fund L.P.
purchased 63,021,722 shares, Talbiya B. Investments Ltd. purchased 2,050,326
shares, Esquire Trade & Finance, Inc. purchased 39,098,954 shares, Laurus Master
Fund, Ltd. purchased 115,570,000 shares, Libra Finance purchased 543,750 shares
and Keshet L.P. purchased 20,059,616 shares. The selling stockholders may resell
the underlying shares of Class A common stock pursuant to this prospectus.

Due to the floating conversion rate being tied to the stock price of our
securities in our former equity line agreement with the selling stockholders,
additional shares are being registered under this prospectus representing 200%
coverage in the case of a decrease in our stock price prior to the conversion of
the notes previously sold to the selling stockholders to fulfill our obligations
under our former equity line agreement. If the selling stockholders are not
entitled to such additional shares upon the conversion of the notes, the
additional shares shall not be utilized for any other purpose and will be
deregistered within a reasonable time thereafter.

The selling stockholders may offer shares of our Class A common stock on
the OTC Bulletin Board in negotiated transactions or otherwise, or by a
combination of these methods. The selling stockholders may sell the shares
through broker-dealers who may receive compensation from the selling
stockholders in the form of discounts and commissions. The selling stockholders
are "underwriters" within the meaning of the Securities Act of 1933, as amended,
in connection with its sales. We will pay all the costs of registering the
shares under this prospectus.

Our Class A common stock trades on the OTC Bulletin Board under the symbol
"TLXX." On November 28, 2001, the closing sale price of our Class A common stock
on the OTC Bulletin Board was $0.008 per share.

Our principal executive offices are located at Telynx, Inc., 6006 North
Mesa Street, Suite 600, El Paso, Texas 79912, and our telephone number is (915)
581-5828.

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INVESTING IN OUR COMMON STOCK INVOLVES RISKS. YOU ARE URGED TO CAREFULLY READ
THE "RISK FACTORS" SECTION BEGINNING ON PAGE 3 OF THIS PROSPECTUS. IN
PARTICULAR, PLEASE SEE THE RISK FACTOR WITH REGARD TO OUR ACCOUNTANTS MODIFYING
THEIR OPINION ON OUR FINANCIAL STATEMENTS TO INCLUDE AN EXPLANATORY PARAGRAPH
WHEREIN THEY EXPRESS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A
GOING CONCERN.

---------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

---------------

The date of this prospectus is December , 2001.

TABLE OF CONTENTS

PAGE
----

Summary ................................................................ 1
Risk Factors ........................................................... 4
Special Note Regarding Forward-Looking Statements ...................... 12
Use Of Proceeds ........................................................ 12
Dividend Policy ........................................................ 12
Market For Common Equity And Related Stockholder Matters ............... 13
Changes in and Disagreements with Accountants on Accounting & Financial
Disclosure ............................................................ 13
Selected Consolidated Financial Data ................................... 14
Management's Discussion And Analysis Of Financial Condition and Results
of Operations ......................................................... 15
Business ............................................................... 25
Management ............................................................. 29
Related Party Transactions ............................................. 32
Principal Stockholders ................................................. 34
Description Of Capital Stock ........................................... 36
Selling Stockholders ................................................... 38
Plan of Distribution ................................................... 40
Legal Matters .......................................................... 41
Experts ................................................................ 41
Disclosure Of Commission Position On Indemnification ................... 41
Where You Can Find More Information .................................... 42
Consolidated Financial Statements ...................................... F-1

PROSPECTUS SUMMARY

The information below is only a summary of more detailed information
included in other sections of this prospectus. You should read this entire
prospectus carefully, especially the risks of investing in our Class A common
stock under "Risk Factors" on page 2 of this prospectus. Our fiscal year ends
October 31.

TELYNX, INC.

We deliver software and services for the specific purpose of managing
telecommunications networks. Our primary target customers are telecommunications
service providers. Our software and services are designed to create accurate
electronic models of the network infrastructure and assist the customer in the
provisioning of new telecommunications services, such as voice and data
services. The key value offered by our products and services is to favorably
enhance the ability of our customers to provide advanced telecommunication
service applications in a more expeditious timeframe and at a more efficient
cost structure for their wide range of service applications. One of our
products, Telynx, is a commercial offering frequently utilized in the
telecommunications industry. Our services provide for the implementation of this
commercial offering tailored to each customer's network environment.

We design and market a line of software products and related services to
telecommunications service providers. Specifically, our software is designed to
be an integral part of the operations support system environment of
telecommunications service providers. Our software is designed to track
inventory, provision new telecommunications service, and provide a tool for
managing network bandwidth. While the software is designed to manage
telecommunications service provider networks, it can also be used to track and
manage any network. Our services relate to the implementation of our software
and the general consulting surrounding network management.

We currently have five customers; three of our customers are based in the
U.S. and the remaining two are based in Egypt and Malaysia. We have leveraged
our relationship with key industry participants such as Hewlett Packard in order
to gain access into the market. As a sub-contractor to Hewlett Packard we have
two customers, Telecom Egypt and TM TOUCH (Telecom Malaysia), which in the
aggregate represent approximately 83% and 17% of our total revenue for the year
ended June 30, 2000, and for the nine months ended July 31, 2001, respectively.
Additionally, over the past two years, we have made significant investment by
participating in industry forums such as the Telemanagement Forum to further our
position in the domestic market. These forums provide industry standards,
direction, and catalyst function to the market in general. In combination, these
two strategies have leveraged our market awareness.

We have an accumulated deficit of $36.6 million and have shown a 30%
decline in revenue over the previous reported nine months. As noted in the "Risk
Factors" section in this prospectus, our accountants modified their opinion on
our financial statements to include an explanatory paragraph wherein they
express substantial doubt about our ability to continue as a going concern. As
of July 31, 2001, we had $143,000 in cash.

We were incorporated in Delaware as Meadowbrook Rehabilitation Group, Inc.
in 1986. In October 1998, we changed our name to Cambio, Inc. and in November
2000, we changed our name to Telynx, Inc. Our principal office is located at
6006 North Mesa, Suite 600, El Paso, Texas 79912, and our telephone number is
(915) 581-5828.

THE OFFERING

Class A common stock offered by Telynx ..................... No shares(1)

Class A common stock offered by the selling stockholders ... 240,344,368 shares

Class A common stock to be outstanding after this offering . 436,655,337 shares(2)

Use of proceeds ............................................ We will not receive any part of the
proceeds from the sales of these shares
of our Class A common stock. We
received, however, the net sale price
of the convertible notes and warrants
that were issued to the selling
stockholders. All such proceeds have
been used by us for general corporate
purposes.

NASD OTC Bulletin Board Market Trading Symbol .............. TLXX
- ----------

(1) We are not directly selling shares under this prospectus. However, with
respect to the 240,344,368 shares registered on behalf of the investors under
our former equity line agreement, or the selling stockholders under this
prospectus, the resale of these shares are viewed as an indirect primary
distribution of our securities by us.

(2) Based on 196,310,969 shares outstanding as of July 31, 2001, as adjusted to
reflect a 1-for-2 reverse stock split effected by us on June 4, 2001. This
information excludes 15,050,000 shares subject to options outstanding at July
31, 2001, and 500 shares of preferred stock outstanding as of July 31, 2001,
which are convertible into shares of Class A common stock.

SUMMARY FINANCIAL DATA

The following summary financial information is derived from and should be
read carefully together with our financial statements and the related notes to
those statements beginning on Page F-1 of this prospectus. You should also read
"Use of Proceeds," "Management's Discussion and Analysis of Financial Condition"
and "Results of Operations".

YEAR YEAR FOUR MONTHS FOUR MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, OCT. 31, OCT. 31, JULY 31, JULY 31,
2000 1999 2000(1) 1999(1) 2001 2000
-------- -------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Total revenue ................... $ 983,000 $ 823,000 $ 352,000 $ 272,000 $ 556,000 $ 789,000
Gross profit .................... 719,000 537,000 245,000 152,000 409,000 645,000
Loss from continuing
operations ..................... (5,385,000) (9,002,000) (2,286,000) (1,594,000) (5,022,000) (3,501,000)
Gain/(Loss) from discontinued
operations ..................... -- (1,013,000) 641,000 -- -- --
Basic and diluted net loss
per common share(2) ............ (0.76) (5.60) (0.07) (0.80) (0.07) (0.30)
Weighted average shares
outstanding(2) ................. 7,095,483 1,787,230 22,502,458 1,993,015 74,973,086 11,764,338

JULY 31, 2001
-------------
(UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents ................ $ 143,000
Working capital deficit .................. (3,937,000)
Total assets ............................. 742,000
Total stockholders' deficit .............. (4,213,000)
- ----------

(1) In calendar year 2000, we changed our fiscal year-end from June 30 to
October 31.

(2) Share and net loss per common share reflect the June 4, 2001 1-for-2 reverse
stock split retroactive to the beginning of all periods presented.

RISK FACTORS

An investment in our Class A common stock involves a high degree of risk.
You should consider carefully the following risk factors, as well as the other
information included in this prospectus, before deciding whether to invest in
our Class A common stock.

We are likely to require additional capital to continue our operations because
we only had $143,000 in cash as of July 31, 2001, which is not sufficient to
cover our current liabilities.

We had $143,000 in cash and $4,495,000 in current liabilities as of July
31, 2001 and we will likely require additional capital. Our cash is insufficient
to cover our outstanding liabilities. In addition, we expect to continue to
incur net losses in the near term. We will need to obtain significant new
customers for our products, increase the amount of our products ordered by our
current customers or raise additional capital in order to increase our cash
balance in the near term.

As a result of the termination of our former equity line agreement, we
currently do not have any line of credit that we can draw upon when needed.
Therefore, we may not be able to raise additional capital in the future on terms
acceptable to us or at all. If we are unable to raise additional capital in the
future, we may not be able to continue as a going concern.

Our accumulated deficit was approximately $36,624,000 as of July 31, 2001, and
our future profitability is uncertain.

We do not know whether or when our business will be profitable. We have
generated limited revenue to date, and we have experienced significant operating
losses since our inception. As of July 31, 2001, our accumulated deficit was
approximately $36,624,000. As a result of our significant losses, our audit
report for the year ended June 30, 2000 contains an explanatory paragraph
expressing substantial doubt regarding our ability to continue as a going
concern. No assurance can be given that we can or will ever operate profitably.

Our independent auditor has issued a going concern opinion for the four months
ending October 31, 2000 and fiscal year ended June 30, 2000.

Our independent auditor has included an explanatory paragraph regarding our
ability to continue as a going concern for the four months ending October 31,
2000 and the fiscal year ended June 30, 2000. Among the factors cited by the
accountants that raised substantial doubt as to our ability to continue as a
going concern are the continued recurring losses incurred by us from operations.
See "Management Discussion and Analysis of Financial Condition and Results of
Operations - Going Concern Opinion" on page 14.

We recently issued shares at significantly below the market price and we cannot
assure you that we will not do so in the future.

In 2000 and 2001, we completed various financings pursuant to which we
issued shares of Class A common stock at significantly below the market value of
our Class A common stock at that time. Our sale of Class A common stock at
significantly below market price refers to sales of Class A common stock to
investors at a sale price per share of $0.25 and $0.044, when our stock was
trading between $0.60 and $0.056 in the public market. Due to our current
financial situation, we cannot assure you that we will not issue shares in the
future at a price per share which is less than the then current market price.

The amount of securities issued to the investors pursuant to our former equity
line agreement is based on a floating conversion rate, and the convertible notes
and warrants issued under the subscription agreement could result in significant
dilution of the per share value of our Class A common stock held by current
stockholders.

Because the securities issued to the investors under our former equity line
agreement is based on a floating conversion rate that is tied to the average
market price of our securities just prior to the time of conversion or exercise,
convertible notes and warrants issued under the subscription agreement could
result in significant dilution of the per share value of our Class A common
stock held by current investors.

Some of the specific factors that may contribute to the dilution in the
value of our Class A common stock include the following:

o the lower effective purchase price per share of Class A common stock
under our former equity line could result in additional shares being
issuable under our outstanding convertible preferred stock;

o the perceived risk of dilution may cause the investors under our
former equity line agreement as well as our other stockholders to sell
their shares, which would contribute to the downward movement in the
price of our Class A common stock and could cause our securities to
lose their entire value and trade at fractions of a penny; and

o the significant downward pressure on the trading price of our Class A
common stock could encourage our stockholders to engage in short
sales, which would further contribute to the price decline of our
Class A common stock, and create a greater liklihood that our
securities will trade at fractions of a penny.

Up to 240,344,368 shares of our Class A common stock will become eligible for
public sale that could have a depressive effect on our stock.

When our registration statement, of which this prospectus is a part, is
declared effective by the SEC, 238,349,368 shares of our Class A common stock,
upon conversion of certain outstanding notes, will be eligible for immediate
resale on the public market and 1,995,000 shares of our Class A common stock
underlying warrants, upon their exercise, will be eligible for immediate resale
on the public market in connection with our former equity line agreement.
Additionally, if a significant number of shares are offered for sale
simultaneously, it would have a depressive effect on the trading price of our
Class A common stock on the public market and create a risk that the trading
price would continue to drop below a penny. Our stock market price has traded
below $0.01 for the past several months and has traded as low as $.0.005 per
share. If and to the extent that our investors sell their Class A common stock,
our stock price may further decrease due to the additional shares in the market.
Assuming that our investors would convert the warrants and sell all of their
shares registered in this prospectus based on a current stock price below the
conversion price of the warrants, the following chart shows the number of
additional shares that the investors would be entitled to if the stock price
were to decline by 25%, 50% or 75% from $0.0088.

Stock Price % Decline Number of Shares
----------- --------- ----------------

$0.0066 25% 39,724,895
$0.0044 50% 119,174,684
$0.0022 75% 357,524,052

Additionally, if the investors sell their shares issued upon conversion of
the notes and underlying the warrants, the following chart shows the dilutive
effects on shareholders with a 0%, 25%, 50% and 75% decline in the stock price
of the Class A common stock:

On Notes Only On Notes & Warrants
----------------------------- -------------------------------
Stock Price % Decline Number of Shares % Dilution Number of Shares % Dilution
----------- --------- ---------------- ---------- ---------------- ----------

$0.0088 None 120,390,498 99.0% 122,385,498 99.0%
$0.0066 25% 40,940,709 97.0% 42,935,708 97.2%
$0.0044 50% 120,390,498 99.0% 122,385,498 99.0%
$0.0022 75% 358,739,866 99.7% 360,734,866 99.7%

Our Class A common stock is currently classified as a "penny stock" which could
cause investors to experience delays and other difficulties in trading shares in
the stock market.

Our Class A common stock is quoted and traded on the Over-The-Counter
Bulletin Board, or OTCBB. As a result, an investor could find it more difficult
to dispose of, or to obtain, accurate quotations as to the market value of our
stock. In addition, trading in our Class A common stock is covered by what is
known as the "Penny Stock Rules". The Penny Stock Rules require brokers to
provide additional disclosure in connection with any trades involving a stock
defined as a "penny stock", including the delivery, prior

to any penny stock transaction, of a disclosure schedule explaining the penny
stock market and the risks associated therewith. The regulations governing penny
stocks could limit the ability of the selling shareholders or their brokers to
sell the shares offered under this prospectus in the secondary market. Our stock
will be covered by the Penny Stock Rules until it has a market price of $5.00
per share or more, subject to certain exceptions.

The receipt of payments to the finders in connection with our former equity line
of credit agreement may be inconsistent with the provisions of Section 15 under
the Securities Exchange Act of 1934, as amended.

We paid fees and commissions to "finders" in connection with their
introducing us to the investors under our former equity line of credit
agreement. These finders were Alon Enterprises Ltd., The Bodie Investment Group,
and Libra Finance, S.A. These finders assisted us only in locating new investors
under our former equity line agreement. Alon and Libra received 10% of the cash
proceeds that we received in connection with an investor exercising a warrant
issued under our former equity line agreement. Libra and Talbiya also received
warrants issuable in connection with the balance of the put.

The Staff of the Securities and Exchange Commission has indicated to us
that the receipt of these payments may be inconsistent with the registration
provisions of Section 15 of the Securities Exchange Act of 1934, as amended.
Management does not believe that they are in violation of any securities laws.
If these payments owed to the finders on puts already exercised by us are
determined to be inconsistent with Section 15, then under Section 29 of the
Securities Exchange Act:

o our obligation to pay a finder's fee to these entities may be voidable
by us;

o the investors may have the right to rescind their purchase of our
securities in which case we may not be able to exercise the put; and

o we may be subject to regulatory action.

Our revenues and profitability have fluctuated and could fluctuate significantly
in the future, which may limit your ability to predict our future performance.

Our revenues and profitability may vary significantly from fiscal quarter
to fiscal quarter as well as in comparison to the corresponding fiscal quarter
of the preceding year. Period-to-period comparisons of our results of operations
may not be meaningful, and you should not rely upon them as indications of our
future performance.

Some of the factors that may contribute to future fluctuations in our
quarterly and annual operating results include:

o development and introduction of new operating systems and new product
development expenses;

o our introduction or enhancement of our products;

o changes in our pricing policies or those of our competitors;

o technological changes in computer systems and environments;

o market readiness to deploy network systems management products for
distributed computing environments; and

o customer order deferrals in anticipation of new products and product
enhancements.

We face a high level of competition in establishing our products in the software
systems market of the telecommunications industry because our competitors often
have greater resources and more established product lines than we do which may
adversely affect our profitability.

The markets in which we operate are competitive, highly fragmented and
rapidly changing. We compete with other established businesses in the software
systems market of the telecommunications industry such as Granite Systems, Inc.,
Nortel Networks, Cramer Systems Europe Ltd., Eftia, VisionAEL and others that
market similar products. We are developing a customer base in markets where our
products may overlap with products of our competitors that are already
established in such market. We may not be able to convince potential customers
to try our products or services over the known brands of competitors or that our
products or services are better or more attractive than that of our competitors.
In order to compete effectively, our strategy is to enhance our current
products, enhance the operability of our products with one another, develop new
products and introduce them in the market in a timely fashion for customer
response. We anticipate continued growth of competition in the
telecommunications industry and, consequently, the entrance of new competitors
into the software systems market in the future.

The principal competitive factors in our market are quality, performance,
price, customer support and training, business reputation and product attributes
such as scalability, compatibility, functionality and acceptance. In addition,
we compete with a number of companies that have substantially greater financial,
technical, sales, marketing and other resources as well as greater name
recognition. As a result, our competitors may be able to adapt more quickly to
new or emerging technologies and changes in customers' requirements, or be able
to devote greater resources to the promotion and sale of their products and
services.

We cannot assure you that we will be able to compete successfully against
current or future competitors or that competitive pressures faced by us will not
have a material adverse effect on our business, financial condition and
operating results.

The software systems market of the telecommunications industry is rapidly
evolving and we may not be able to keep pace with technological changes which
could result in a loss of revenues.

Our success depends on our ability to continue to enhance existing software
related products, respond to changing customer requirements and develop and
introduce in a timely manner new products that keep pace with technological
developments. During fiscal year 2000, we enhanced our netRunner product and
delivered the enhanced product to our customers on a timely basis. During fiscal
year 2001, we further enhanced our netRunner product and introduced it under the
Telynx brand name. Our further development of netRunner included major
enhancements and consistent additions to the product as well as providing
capabilities that our customers and potential customers demanded. The success of
Telynx depends on increased market acceptance by software telecommunications
customers. With the recent decrease in spending in the telecommunications
industry as a whole, our business could suffer dramatically if our products are
not accepted or not perceived to be effective.

Though we have a favorable track record of meeting deliverables of our
customer base, we cannot be sure that we will be able to meet all our customers'
expectations or that we will be successful in our efforts to keep pace with
technological changes.

We have five customers with Telecom Egypt and TM Touch (Telecom Malaysia)
representing 83% of our net revenue, and the loss of any one of our customers,
or a reduction in spending by these customers, could have a disproportionate
impact on our revenues.

Our market segment consists mainly of telecommunication service providers.
Although the growth of this segment has slowed

recently, this segment is still considered dynamic and rapidly growing even
though it represents a limited number of installed customer bases. Our two
largest customers, Telecom Egypt and TM Touch (Telecom Malaysia), represented
83% of our net revenue for the year ended June 30, 2000. We have a total of five
customers, and only two of these customers are based in the United States. This
concentration of our customers can cause our revenues and earnings to fluctuate
from quarter to quarter based on these customers' requirements and the timing of
their orders. None of our major customers has any obligation to purchase
additional products or services, and these customers generally have acquired
fully paid licenses to their installed systems. Therefore, there can be no
assurance that any of our major customers will continue to purchase new systems,
systems enhancements and services in amounts similar to previous years. Also the
recent general reduction in capital spending in the telecommunication industry
could adversely affect us. A reduction, delay or cancellation in orders from any
of our major customers would lower our revenues. In addition, the acquisition by
a third party of one of our major customers could result in the loss of that
customer and could disrupt a significant source of revenue.

We currently have only five customers, and two of those customers are located in
Egypt and Malaysia and accounted for 83% of our net revenue for the year ended
June 30, 2000, and if we do not successfully address issues related to
international risks, our revenues may decrease.

Our customer base consists of telecommunications service providers around
the world, concentrated mostly in Egypt and Malaysia. Telecommunications and the
requirement for related services are ever increasing around the world especially
due to the increased demand for wireless and internet services. Although we have
minimal assets outside of the United States, our customer sales in Egypt and
Malaysia accounted for 83% of our revenue for the year ended June 30, 2000.
International sales, however, also involve possible longer accounts receivable
payment cycles and unexpected changes in regulatory requirements, including
royalty and tax withholdings. World events, such as civil unrest, cancellations
or delays of orders, or possible restriction of import/export activities by
governments, may negatively impact us and may lead to loss of revenue.

Since our revenues depend, in large part, on customer sales in Egypt and
Malaysia, we are subject to inherent political and business risks that have a
potential of impairing these operations and against which we may not be fully
capable of insuring or otherwise mitigating, including uncertainties associated
with:

o currency exchange rate fluctuations;

o economic and political instability;

o currency repatriation;

o infrastructure;

o expropriation; and

o unexpected changes in regulatory requirements.

We are subject to the risks of currency and exchange rate fluctuations. A
substantial portion of revenue is earned in foreign currencies on a
pre-converted United States dollar equivalent basis. Fluctuations in currency
exchange rates can affect, on a United States dollar conversion basis, the
amount of our revenue from international operations. We may not be able to
offset these fluctuations by hedges or to enter into hedge contracts on terms
acceptable to us. Such restrictions and currency fluctuations could have an
adverse effect on our business.

We make sales to customers in emerging and developing third world
countries, including Egypt and Malaysia. Operating in these emerging markets
subjects us to inherent risks and uncertainties which are typically more
volatile and less developed commercially and politically than markets in the
United States or Western Europe. In the past, these countries have experienced
sharp downturns in demand, high inflation or other economic instability.
Malaysia experienced severe economic crises from 1997 to 1999. Economic
deterioration in these countries could adversely affect our financial condition
or results of operations. In addition, political instability in certain
countries in the Eastern Mediterranean region could restrict our ability to make
sales in these regions.

We may face interruption of production and services due to increased security
measures in response to terrorism.

Our business depends on the free flow of products and services through the
channels of commerce. Recently, in response to terrorists' activities and
threats aimed at the United States, transportation, mail, financial and other
services have been slowed or stopped altogether. Further delays or stoppages in
transportation, mail, financial or other services could have a material adverse
effect on our business, results of operations and financial condition.
Furthermore, we may experience an increase in operating costs, such as costs for
transportation, insurance and security as a result of the activities and
potential activities. We may also experience delays in receiving payments from
payers that have been affected by the terrorist activities and potential
activities. The U.S. economy in general is being adversely affected by the
terrorist activities and potential activities and any economic downturn could
adversely impact our results of operations, impair our ability to raise capital
or otherwise adversely affect our ability to grow our business.

We are dependent on two products to generate revenues to fund our business and
operations and have declining resources allocated to the development of new
products.

Our product line is composed of two software systems for managing
telecommunications networks. Our primary product is Telynx Version 2, and we
rely on this product and updates to this product for all of our sales revenue.
Because we have limited resources, we must restrict our product development
efforts to two products and operating systems. These efforts may not be
successful or, even if successful, any resulting products or operating systems
may not achieve market acceptance. As a result, if we misjudge the market for,
or are delayed in the production of, a particular product, our revenues will be
adversely effected.

Additionally, we can not guarantee the success of any newly introduced
product including Revenue Assurance. Therefore, we may be forced to absorb the
cost of developing that product without a return of our expenses. Though we have
limited resources, our strategy is to achieve market acceptance on our current
products and diversify into other complementary products which will meet
customer expectations and enhance return for our current stockholders.

Our success depends on our ability to attract, retain and motivate management
and other personnel, and the loss of these personnel would harm our ability to
increase revenues.

Our success depends in large part on the continued service of our
management and key personnel, including Ali Al-Dahwi, our Chairman and Chief
Executive Officer, and Scott Munden, President, Chief Operating Officer and
Chief Technology Officer. Their industry knowledge, market expertise, market
recognition, and standing relationships are critical to our ability to achieve
market penetration. Competition for qualified personnel in the software systems
market is intense, and there are a limited number of persons with knowledge of,
and experience in, this industry. We have entered into an employment agreement
with Mr. Al-Dahwi, but have no key man life insurance coverage on him. Any of
our other executive officers may terminate their employment with us at any time.
The loss of services from one or more of our management team or key personnel
could have a material adverse effect on our business, financial condition and
operating results. Although we currently experience relatively low rates of
turnover for our management team and key personnel, the rate of turnover may
increase in the future. Our continued ability to compete effectively in our
business depends on our ability to attract, retain and motivate these
individuals.

We may not be able to protect and enforce our intellectual property rights.

We rely on a combination of copyright, trademark and trade secret laws,
confidentiality procedures and licensing arrangements to establish and protect
our proprietary rights. Presently, we have no patents, no patent applications on
file, and have no intent to file patent applications in the near future. As part
of our confidentiality procedures, we generally enter into non-disclosure
agreements with our employees, distributors and corporate partners, and license
agreements with respect to our software, documentation and other

proprietary information. Despite these precautions, it may be possible for a
third party to copy or otherwise obtain and use our products or technology
without authorization, or to develop similar technology independently. Policing
unauthorized use of our products is difficult and, although we are unable to
determine the extent to which piracy of our software products exists, software
piracy can be expected to be a persistent problem.

In selling our products, we rely on both signed license agreements and
"shrink wrap" licenses that are not signed by licensees and which, therefore,
may be unenforceable under the laws of some jurisdictions. In addition,
effective protection of intellectual property rights is unavailable or limited
in certain foreign countries. The protection of our proprietary rights may not
be adequate and our competitors may independently develop similar technology,
duplicate our products or design around any of our intellectual property rights.

We are not aware that any of our products infringe the proprietary rights
of third parties. However, third parties may claim such infringement by us with
respect to current or future products. We expect that software product
developers will increasingly be subject to such claims as the number of products
and competitors in our industry segment grows and the functionality of products
in the industry segment overlaps.

Rights of various holders of our equity to acquire shares of Class A common
stock may dilute the future value of the Class A common stock.

As of July 31, 2001, there were outstanding a total of 500 shares of our
Series B convertible preferred stock. These Series B shares presently are
convertible, at any time at the option of their holders, into an aggregate of
125,000 shares of our Class A common stock. These shares of preferred stock also
have anti-dilution protections, which could make them convertible into
additional shares of Class A common stock. Also at July 31, 2001, there were
outstanding no shares of Series C convertible preferred stock. Additionally, as
of July 31, 2001, employee options to purchase 15,050,000 shares were
outstanding. As of July 31, 2001, there are also warrants to purchase up to
2,392,500 shares of our Class A common stock exercisable at ranges between $1.58
to $0.02 per share.

We have and may in the future issue additional preferred stock which could
adversely affect the rights of holders of our Class A common stock.

Our board of directors has the authority to issue up to 1,000,000 shares of
our preferred stock and to determine the price, rights, preferences and
privileges of those shares without any further vote or action by the
stockholders. We presently have outstanding 500 shares of Series B convertible
preferred stock and no shares of Series C preferred stock. Preferred
stockholders could adversely affect the rights of holders of Class A common
stock by:

o exercising voting, redemption and conversion rights to the detriment
of the holders of Class A common stock;

o receiving preferences over the holders of Class A common stock
regarding or surplus funds in the event of our dissolution or
liquidation;

o delaying, deferring or preventing a change in control of our company;
and

o discouraging bids for our Class A common stock at a premium over the
market price of the Class A common stock.

We expect to experience volatility in our share price, which could negatively
affect your investment, and you may not be able to resell your shares at or
above the offering price.

The price you pay in this offering may vary from the market price of our
Class A common stock after the offering. If you purchase shares of Class A
common stock, you may not be able to resell those shares at or above the
offering price. The market price of our Class A common stock has fluctuated
significantly in the past and we expect that our Class A common stock price will
fluctuate significantly in the future due to:

o any deviations in our net revenues, gross margins or net losses from
levels expected by securities analysts;

o changes in financial estimates by securities analysts;

o changes in market valuations of other companies in the same or similar
markets; and

o future sales of common stock or other securities.

In addition, the OTC Bulletin Board Market has experienced extreme
volatility that has often been unrelated to the performance of particular
companies. Future market fluctuations may cause our stock price to fall
regardless of our performance.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. We have based these
forward-looking statements largely on our current expectations and projections
about future events and financial trends affecting the financial condition of
our business. These forward-looking statements are subject to a number of risks,
uncertainties and assumptions.

In addition, in this prospectus, the words "believe", "may", "will",
"estimate", "continue", "anticipate", "intend", "expect" and similar expressions
as they relate to Telynx, our business or our management, are intended to
identify forward-looking statements.

In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this prospectus may not occur and actual results
could differ materially from those anticipated or implied in the forward-looking
statements.

USE OF PROCEEDS

We will not receive any part of the proceeds from the sales of these shares
of our Class A common stock. We have received the sale price of any convertible
notes or warrants that were issued to the selling shareholders. All such
proceeds have or will be used by us for general corporate purposes.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock. We
currently anticipate that we will retain any future earnings for the development
and operation of our business. Therefore, we do not anticipate paying cash
dividends on our capital stock in the foreseeable future. Any future dividends
will be at the discretion of our board of directors.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our Class A common stock is traded in the OTC Bulletin Board Market. On
December 5, 2001, the closing sales price of the Class A common stock was
$0.012 per share.

Prices below may not be actual representations of daily trading ranges. The
bid quotations represent interdealer prices, without adjustment for retail
markup, markdown or commission and may not necessarily represent actual
transactions. The table below sets forth the quarterly high and low closing
sales prices for the Class A common stock in the period from July 1, 1998
through Decembre 5, 2001:

PRICE PER SHARE(1)
--------------------
HIGH LOW
-------- -------

YEAR ENDED OCTOBER 31, 2002
First quarter through 12/5/01 ....... $ 0.017 $ 0.005

YEAR ENDED OCTOBER 31, 2001(2)
Transition period 7/1/00-10/31/00 ... $ 0.800 $ 0.300
First quarter ....................... 0.320 0.048
Second quarter ...................... 0.068 0.020
Third quarter ....................... 0.050 0.015
Fourth quarter ...................... 0.020 0.005

YEAR ENDED JUNE 30, 2000
First quarter ....................... $2.875 $1.250
Second quarter ...................... 1.750 0.375
Third quarter ....................... 6.500 0.375
Fourth quarter ...................... 2.312 0.570

YEAR ENDED JUNE 30, 1999
First quarter ....................... $ 2.125 $ 0.875
Second quarter ...................... 2.250 0.500
Third quarter ....................... 1.000 0.250
Fourth quarter ...................... 5.750 0.375

*As of July 31, 2001, there were approximately 275 holders of record of our
Class A common stock.

- ----------

(1) As adjusted to reflect a 1-for-2 reverse stock split effected by us on June
4, 2001.

(2) In November 2000, we changed our fiscal year-end to October 31, from June
30.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

On September 6, 2000, Grant Thornton LLP resigned as our independent
accountants.

In connection with the audits of our financial statements for each of the
two fiscal years ended June 30, 1999 and June 30, 1998, and during the most
recent interim period preceding Grant Thornton LLP's resignation, there were no
disagreements between Grant Thornton LLP and us on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Grant
Thornton LLP, would have caused it to make reference to the subject matter of
the disagreement in connection with the change in accountants.

BDO Seidman, LLP was retained as our new independent accountants on August
31, 2000. Prior to retaining BDO Seidman, LLP on August 31, 2000, we had no
consultation with them. The decision to engage BDO Seidman, LLP as our
accountants was approved by our Board of Directors.

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations and our financial statements and the related notes
included elsewhere in this prospectus. The selected statement of operations data
for the periods from July 1, 1998 through October 31, 2000 are derived from our
audited financial statements included elsewhere in this prospectus. The selected
consolidated financial data for the four month period ending October 31, 1999,
along with the nine month period ending July 31, 2001 and 2000, and the selected
balance sheet date as of July 31, 2001, are derived from our unaudited financial
statements, which, in the opinion of management, have been prepared on the same
basis as the audited consolidated financial statements. The results for the nine
months ended July 31, 2001 and 2000 and the four months ended October 31, 2000
and 1999 may not be indicative of the results for the full year.

JULY 31, 2001
-------------
(UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents .................. $ 143,000
Working capital deficit .................... (3,937,000)
Total assets ............................... 742,000
Total stockholders' deficit ................ (4,213,000)
- --------------

(1) In calendar year 2000, we changed our fiscal year-end from June 30 to
October 31.

(2) Share and net loss per common share reflect the June 4, 2001 1-for-2 reverse
stock split retroactive to the beginning of all periods presented.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

We have leveraged our relationship with key industry players such as
Hewlett Packard in order to gain penetration in the marketplace. Specifically,
individual long standing relationships in international markets have produced
business for us in the Middle East as well as in the Far East. The first two
years of product revenue for us were derived in large part from these sources.
Additionally, we have made significant investment in participating with industry
forums such as the Telemanagement Forum to further our position in the domestic
market. These forums provide industry standards, direction, and catalyst
function to the market in general. Telynx has participated for two years in
these activities. In combination, these two strategies have leveraged our market
awareness.

Acquisition of Cambio Networks, Inc. On September 14, 1998, we acquired
Cambio Networks, Inc. Under the terms of the agreement and plan of merger,
Cambio Networks' shareholders received an aggregate of 619,421 shares of our
Class A common stock representing approximately 32.3% of the outstanding Class A
and Class B common stock. Immediately following the acquisition of Cambio
Networks in September 1998, we implemented a restructuring plan involving the
closing and relocating of our headquarters from Bellevue, Washington to an
existing office in Dallas, Texas. In addition, we moved our research and
development offices to El Paso, Texas and assimilated our finance and accounting
functions into our existing capabilities in Emeryville, California and
subsequently to El Paso, Texas. We maintained our domestic sales and service
offices in Parsippany, New Jersey until their closure in December 1998. The
Dallas, Texas office was closed in January 2001.

In an effort to consolidate offices within our operations, finance and
administrative functions, our domestic sales and services office was relocated
to El Paso, Texas. Internationally, we have sales executives in London, England
and Cairo, Egypt. No material costs were incurred in connection with these
consolidation efforts.

Disposition of Healthcare Operations. On February 2, 1999, we entered into
an agreement with Imperial Loan Management Corporation whereby we transferred
all of the issued and outstanding stock of our discontinued healthcare
subsidiaries to Imperial. As part of the agreement, Imperial will use its best
efforts to liquidate each of the subsidiaries, settling outstanding obligations
and collecting all amounts due. We are entitled to receive one-half of any
amounts remaining after payment of the Imperial loans and expenses. We are
informed that Imperial has received funds in settlement on some of the
receivables of approximately $641,000. These funds were reserved to pay off the
loans and related interest of approximately $641,000 from Imperial Loan
Management Corp. on January 4, 2001. Approximately $700,000 of assets in the
form of receivables remain uncollected or unsettled, which Imperial is
continuing to use its best efforts to collect on. We consider the realization of
the remaining assets to be unlikely and, therefore, we have fully written off
such assets. All other material obligations of the subsidiaries have been
settled. Under our agreement with Imperial, they are required to provide us with
quarterly reports with respect to Imperial's progress in liquidating the assets
that we transferred to them.

GOING CONCERN OPINION

Our independent certified public accountants' report on our consolidated
financial statements for the year ended June 30, 2000 and October 31, 2000
contains an explanatory paragraph regarding our ability to continue as a going
concern. Among the factors cited by the accountants that raised substantial
doubt to our ability to continue as a going concern are our continued recurring
losses incurred by us from operations. The accountants state that our ability to
continue as a going concern is subject to the attainment of profitable
operations or our seeking additional funding through various financing
arrangements. We have developed a plan to achieve profitability and allay doubts
as to our ability to continue as a going concern. This plan includes: (1)
increased marketing of our existing products to increase sales and (2) utilizing
long term financing which may be provided by certain subscribers under our
former equity line which has been discontinued. As of yet, there is no agreement
on the nature and magnitude of the commitments nor when we expect that any
financing to close, but discussions between the parties are continuing. For the
foreseeable future, we intend to cover our operating needs with our current cash
flow generated through sales of our products and services and cost reduction
measures.

RESULTS OF OPERATIONS

NINE MONTHS ENDED JULY 31, 2001 AS COMPARED TO NINE MONTHS ENDED JULY 31, 2000

In the fiscal year 2000, our business plan was centered around rebuilding
our product and gearing up our operations for delivery and sale. The business
model was based on obtaining increased funding for our operations, the proceeds
of which would provide for the increased cash flow required to cover additional
expenses of human resources and operating capital in these efforts. Moving into
fiscal year 2001, this plan was dramatically modified due to market and economic
conditions causing a lag in anticipated revenue stream. The increase in expenses
for the nine months ended July 31, 2001 versus the nine months ended July 31,
2000 is a direct correlation to increases in expenses of building the business
model during the first six months of the year offset by a turnaround and
decreases in the following three months related to cost containment and
reduction in workforce implemented in March 2001.

Revenues. For the nine months ended July 31, 2001, revenues were down 30%
from $789,000 in 2000 to $556,000 in 2001. The decrease for the nine months was
mainly attributable to a reduction of software sales and installations of
$454,000 offset by increased maintenance revenue of $221,000 for this nine-month
period versus last period. This lag in revenues was attributed to several
factors. As previously stated, our business plan was structured to build the
business based on a model of increased funding. While funding was secured for
operations, additional funding was held back due to market conditions. This
affected our growth strategy as well as the anticipated revenue increase in the
domestic market. Our business model did accommodate for growing international
business. Procuring business of this nature generally takes longer to cultivate.
In addition, while our business model was scaled back to reflect current market
conditions, domestic sales efforts have continued while the market remains slow
in the telecommunications sector.

Cost of Revenues. Cost of revenues increased slightly by 2% from $144,000
for the nine months ended July 31, 2001 to $147,000 for the nine months ended
July 31, 2000. The increase is mainly attributable to increased cost of sales
related to software sales and maintenance of $15,000 and $46,000, respectively,
offset by reduced cost of consulting services of approximately $58,000.

Gross Profit. Gross margin decreased from 81.7% for the nine months ended
July 31, 2000 to 73.6% for the nine months ended July 31, 2001. The decrease was
mainly attributable to reduced software sales and installations revenues for the
nine months ended July 31, 2001 by approximately $454,000 with slightly higher
cost of sales related to those revenues offset by increased maintenance revenue
of $221,000 with lower cost of sales incurred for those services.

Sales and Marketing. For the nine months ended July 31, 2001, sales and
marketing costs were up 5% from $729,000 in 2000 to $763,000 in 2001. The
increase for the nine months was primarily related to additional sales and
marketing personnel costs of approximately $106,000 primarily offset by cost
savings of reduced travel costs of approximately $64,000 for this nine month
period versus the comparable nine month period last year. The increase in
expense was associated with increased hiring during the first six months of the
year versus workforce reductions and cost containment measures implemented in
March 2001. We implemented strategic restructuring of the sales and marketing
focus that we intend to result in increased sales with minimal costs to us,
thereby increasing our operational efficiency. We have implemented a plan to
reduce costs while maintaining market momentum in producing revenue. This is
being accomplished by restructuring the organization to focus key resources more
in the sales and marketing area,

relying on external sources for lead production, and direct executive
involvement in our sales effort. The reduction in workforce effected March 2001
has had the desired effect both on operational costs as well as refocusing sales
efforts.

Services. For the nine months ended July 31, 2001, services expenses costs
were up 45% from $311,000 in 2000 to $452,000 in 2001. This increase is
primarily attributable to additional personnel costs of approximately $160,000
offset by miscellaneous operating cost reductions of approximately $19,000 for
this nine month period versus the comparable nine month period last year. In
addition to additional personnel, during the previous period, much of the
service work required was done in-house versus on-site. This in-house cost was
absorbed by the Company and was not reimbursed as a billable cost from the
client. As our projects progress beyond their initial development stage, more
direct involvement is required in their implementation. The costs of sending our
personnel to service new installations are negotiated with the customer as part
of our contract with the customer. Those costs are billed to the customer as
installation costs and reflected as a component of cost of goods sold.

Research and Development. For the nine months ended July 31, 2001, research
and development costs were up 54% from $401,000 in 2000 to $619,000 in 2001. For
the nine month period, the increase was mainly attributable to additional hires
of personnel. Compensation cost increased by approximately $133,000 and
recruitment of personnel cost increased by approximately $11,000. Additional
cost increases associated with research and development was travel related costs
of approximately $102,000. Our engineering group located in El Paso was doubled
in size and another engineering operation was established in Houston, Texas,
with the addition of two engineering resources. These increased costs were
incurred during the first six months of the year and were partially offset
subsequently by our cost containment program and reduction in workforce
implemented in March 2001.

General and Administrative. For the nine months ended July 31, 2001,
general and administrative costs were down 13% from $2,635,000 in 2000 to
$2,298,000 in 2001. For the nine month period, the decrease was mainly
attributable to cost savings in outside professional fees of approximately
$651,000, and other miscellaneous expenses of approximately $102,000 offset by
increased compensation costs of approximately $91,000, and increases in travel
costs by approximately $25,000. Included also is a settlement of open payable
litigation issues for approximately $170,000 versus a gain on settlement in the
prior period of approximately $130,000.

Interest. Interest expense increased $1,220,000 for the nine month period
ended July 31, 2001 versus July 31, 2000. The increase is primarily attributable
to the write-off of value associated with the warrants and beneficial conversion
feature of the convertible notes issued in accordance with the Financial
Accounting Standard Board's EITF's Statement 00-27 and 98-5.

FOUR MONTHS ENDED OCTOBER 31, 2000 AS COMPARED TO FOUR MONTHS ENDED OCTOBER 31,
1999:

Revenues. For the four month period ending October 31, 2000, revenues
increased 29% from $272,000 for the four months ended October 31, 1999 to
$352,000 for the four months ended October 31, 2000, an increase of
approximately $80,000. The increase was mainly attributable to increased sales
of our software of approximately $313,000. Maintenance revenue decreased
approximately $31,000 and billings to customers for installation services
decreased approximately $202,000.

Cost of Revenues. Cost of revenues decreased 11% from $120,000 for the four
months ended October 31, 1999 to $107,000 for the four months ended October 31,
2000. This decline in costs is mainly attributable to reduced costs associated
with maintenance and services of $96,000, partially offset by increased costs of
software sales of $83,000. The decrease is attributable to the percentage of
revenue represented by software versus services where the margin is much higher
in software.

Gross Profit. Gross Margin increased from 56% for the four months ended
October 31, 1999 to 70% for the four months ended October 31, 2000. The increase
was attributable to higher software sales for the four months ended October 31,
2000 with lower costs of sales associated versus no software sales for the four
month ended October 31, 1999.

Sales and Marketing. For the four month period ending October 31, 2000,
sales and marketing expenses decreased 8% from $422,000 for the four months
ended October 31, 1999 to $387,000 for the four months ended October 31, 2000.
This decrease is mainly attributable to reductions in travel related costs of
$2,000, reductions in personnel costs including salaries, benefits and
recruitment costs of approximately $5,000 and reduction of general sales and
marketing expenses of approximately $24,000.

Services. For the four month period ending October 31, 2000, services
increased 27% from $142,000 for the four months ended October 31, 1999 to
$181,000 for the four months ended October 31, 2000. This increase is mainly
attributable to increased travel expense from fiscal 1999 to fiscal 2000 of
approximately $25,000, general services department expense increase from fiscal
1999 to 2000 of approximately $23,000 offset by cost reductions in payroll
salary and benefits of approximately $9,000. As our

projects progress beyond their initial development stage, more direct
involvement is required in their implementation. The costs of sending our
personnel to service new installations are negotiated with the customer as part
of the contract entered into with the customer. Those costs are billed to the
customer as installation costs and reflected as a component of cost of goods
sold. Our services people have on occasion traveled to the prospective customer
to help demonstrate a product along with assisting in the sales call, both on
site of the customer and also on the phone or through an internet connection.

Research and Development. Research and development remained relatively
constant from $262,000 for the four months ended October 31, 1999, reducing
slightly to $254,000 for the four months ended October 31, 2000. The reduction
is mainly by cost savings of consultants in the prior year of approximately
$14,000 offset by recruitment charges of personnel to be hired of approximately
$6,000. There was employee turnover in the organization and subsequent
replacement of this personnel caused costs to remain relatively constant between
the two periods. This expense category increased over the next six months from
historical by additional salary expenses and recruitment charges associated with
increased personnel hiring due to the build-up of engineering staff as part of
the business plan reflecting significant cost increase moving into the period
ending April 2001.

General and Administrative. For the four month period ending October 31,
2000, general and administrative costs increased 81% from $897,000 for the four
months ended October 31, 1999 to $1,625,000 for the four months ended October
31, 2000. This increase is attributable to increase of personnel costs including
salaries, benefits and recruitment costs of approximately $125,000, increase of
outside professional services of approximately $599,000, and travel related
costs of $4,000. Consistent with services and research and development, selected
employees within the general and administrative area provide some sales and
marketing benefit for our core product.

Interest. For the four month period ending October 31, 2000, interest
expense increased 121% from $38,000 for the four months ended October 31, 1999
to $84,000 for the four months ended October 31, 2000. These increases are
representative of additional financing by us this four month period versus the
prior four month period ending October 31, 1999.

Discontinued Operations. For the four month period ending October 31, 2000,
discontinued operations recorded a gain of approximately $641,000 on the
revaluation of receivables from the disposition of our healthcare operations in
fiscal 1999. The gain was based on a revised estimate of the value of these
accounts receivable which were assigned to Imperial. These accounts were
previously fully reserved and are associated with the discontinued healthcare
operations. The revised estimates is based on information provided by Imperial
Loan Management Corp. and their collection activity.

YEAR ENDED JUNE 30, 2000 AS COMPARED TO YEAR ENDED JUNE 30, 1999:

Revenues. Revenues increased $160,000, or 19%, from $823,000 for the twelve
months ended June 30, 1999 compared to $983,000 for the twelve months ended June
30, 2000. Increases in sales have mainly been reflected by product shipments of
netRunner to Hewlett Packard clients in Middle East and Southeast Asia as
compared to the prior year. Revenues for the twelve months ended June 30, 2000
were split between sales, services and maintenance, primarily of the netRunner
product, compared to revenues for the twelve months ended June 30, 1999 which
were split between sales, services and maintenance split between the netRunner,
36% of total sales, and Command products, 64% of total sales. We served as a
subcontractor to Hewlett Packard in these engagements and provided parts of the
service where Hewlett Packard was providing a broader solution to the client. We
have worked with partners such as Hewlett Packard in selling our products either
directly to their customer or through bundling our products with other products
and selling the combined product as a package to the end customer. Although we
have found these relationships to be beneficial, we are increasing our own sales
initiative teams to increase our operating efficiencies. Because netRunner is
our new product, and because of liquidity difficulties, the launch and marketing
activities of the netRunner product were severely constrained which resulted in
poorer sales performance and market penetration than what we projected for the
twelve months ended June 30, 2000. The increase in revenue is directly
attributed to the strategic relationship with Hewlett Packard and the business
leveraged as a result of this relationship. For the 12 months ended June 30,
2000, sales of our netRunner product line fared much better than the prior
twelve month period ended June 30, 1999.

Cost of Revenues. Cost of revenues declined from $286,000 for the twelve
months ended June 30, 1999 to $264,000 for the twelve months ended June 30,
2000. The decline is attributable to the reduced cost of sales related to the
shipments of the netRunner product in fiscal 2000 as compared to higher costs of
revenue associated with the Command product mainly in fiscal 1999. As mentioned
above, the Command product made up 64% of revenues in the twelve months ending
June 30, 1999 but negligible revenues in the twelve months ending June 30, 2000.

Gross Profit. Gross Margin increased from 65% in 1999 to 73% in 2000 due to
the change of mix in products sold. The

increase in margin from 1999 to 2000 is representative of the higher margin
provided by the netRunner product with a higher gross margin mark-up whose sales
grew in 2000 and the drop in sales of the Command product with a lower gross
margin mark-up.

Sales & Marketing. Sales & Marketing costs increased $876,000, or 358%,
from $245,000 for the twelve months ended June 30, 1999 compared to $1,121,000
for the twelve months ended June 30, 2000. The increase in sales & marketing
cost is represented in additional selling expense related to increased personnel
cost of approximately $334,000 and increased travel related sales cost of
approximately $84,000. Additionally, we incurred $458,000 in direct activities
geared at increasing market exposure and generating revenue which also included
partner participation activity costs.

Services. Services costs increased $207,000, or 97%, from $214,000 for the
twelve months ended June 30, 1999 compared to $421,000 for the twelve months
ended June 30, 2000. The increased services costs is represented in additional
personnel cost of approximately $134,000, general expenses of $99,000 offset by
a reduction of travel related service costs of approximately $26,000.

Research & Development. Research and development costs increased $314,000
or 112% to $594,000 for the twelve months ended June 30, 2000 compared to
$280,000 for the twelve months ended June 30, 1999. The increase in the research
and development department represents additional staff and outsourced
engineering and development costs related in our product development, netRunner.

General and Administrative. General and administrative costs remained
consistent from $3,912,000 in fiscal 1999 to $3,894,000 in fiscal 2000.

Interest. Interest income increased approximately $11,000 from $13,000 for
the twelve months ended June 30, 1999 to $24,000 for the twelve months ended
June 30, 2000. Interest expense increased approximately $32,000 from $66,000 for
the twelve months ended June 30, 1999 to $98,000 for the twelve months June 30,
2000. The increase in interest expense is mainly representative of additional
financing by us in fiscal 2000 versus fiscal 1999.

Net loss from continuing operations decreased $3,617,000, or 40%, from
$9,002,000 for the twelve months ended June 30, 1999 compared to $5,385,000 for
the twelve months ended June 30, 2000. The decrease was primarily the result of
fiscal year 1999 write-off of goodwill for $4,850,000 originally recorded as
part of the acquisition of Cambio Networks. The subsequent write-off of this
goodwill was taken in response to the inability of the primary product of Cambio
Networks, Command, to maintain its place in the market without a major upgrade
and the prohibitive cost of such an upgrade. We withdrew the Command product
from the marketplace in the fourth quarter of fiscal year 1999 and decided to
write off the goodwill associated with the Command product. Also included in the
twelve months ended June 30, 2000 is approximately $1,000,000 compensation
expenses associated with issuance of stocks, options and warrants to employees
and warrant holders at reduced offering prices compared to current market price.

Discontinued Operations. In fiscal year 1999, we recorded a loss in
discontinued operations by charging off the remaining net assets from the
discontinued operations of our healthcare business. The assets were composed of
the remaining receivables from the healthcare operation. The charge was
appropriate as we felt that collectibility was uncertain.

LIQUIDITY AND CAPITAL RESOURCES

Since the beginning of 1999, we have been challenged in raising financing
to support our operations as we have undergone a transformation of moving from
the Command product offering to our netRunner product and subsequently to Telynx
Version 2. Included with the operational challenges of the new product, we have
the added responsibility of old debts and obligations from the past. We have
used private placement offerings of our common stock and convertible debt to
provide the capital required to meet our daily operating requirements. In July
2000, we entered into a $17 million credit facility with certain subscribers
whereby they agreed to purchase 6% promissory notes convertible into our Class A
common stock at the option of the holder. From July 1, 2000 to July 31, 2001, we
issued promissory notes of approximately $3,000,000 under the credit facility of
this amount, $1,672,000 was converted into common stock in accordance with its
terms.

This equity line was terminated effective October 4, 2001 in order to
comply with recent Securities Exchange Commission regulations. Certain of the
subscribers under the former equity line may provide future financings needed by
the Company. As yet, there is no agreement on the nature and magnitude of the
commitments nor when we expect that financing to close. Discussions between the
parties are continuing. As shown on the balance sheet at July 31, 2001, we have
convertible notes payable of approximately $1,328,000 exclusive of discounts
totaling $868,000; $713,000 payable to investors and stockholders, along with
various accounts payable and accrued expenses of over $3,700,000. Although we
are generating revenues, they have not been sufficient to satisfy our current
on-going cost structure. We anticipate needing approximately $250,000 a month
from external funding sources in additional financing beyond our current revenue
stream to sufficiently cover our operating budgetary requirements for the next
six months. If we are unable to raise additional capital in the future, we may
not be able to continue as a going concern.

On January 19, 2001, we issued $350,000 in principal amount of convertible
notes bearing an interest rate of 8% which were converted into 8,000,000 shares
of our Class A common stock at the holder's option during the three months ended
April 30, 2001. Also, during the three months ended April 30, 2001, we received
advances from the same subscriber of $250,000 which are convertible into
approximately 5,714,000 shares of our Class A common stock.

The use of cash in operating activities of $2,684,000 for the nine months
ended July 31, 2001 was primarily composed of a net loss of $5,022,000, plus
increases in prepaid expenses, other assets and decreases in deferred revenue of
$35,000, $37,000 and $35,000, respectively, partially offset by adjustments for
depreciation expense of $49,000, expenses settled by payments in Class A common
stock of $91,000, interest expense on warrants and beneficial conversion of debt
of $1,249,000, decreases in accounts receivable of $103,000 and increases in
accounts payable and accrued expenses of $953,000 as a result of increases in
vendor payables. This use of cash in our operating activities of $2,684,000 for
the nine months ended July 31, 2001 is compared to $1,977,000 for the nine
months ended July 31, 2000, which was primarily composed of net losses of
$3,501,000 for the nine months ended July 31, 2000, with increases in
receivables of $25,000, prepaid expenses of $23,000 and decreases in accounts
payable and accrued liabilities of $120,000, mainly offset by expenses settled
by payments in Class A common stock of $1,536,000, adjustments for depreciation
of $66,000, decreases in other assets of $14,000 and increases in deferred
revenue of $76,000 for the nine months ended July 31, 2000.

During the nine months ended July 31, 2001, we made capital expenditures
mainly in software and computer/network equipment totaling $16,000 versus
$28,000 of capital expenditures made for the same period last year.

The financing activities during the nine months ended July 31, 2001
consisted of proceeds from the issuance of our common stock of approximately
$145,000 versus $1,287,000 for the nine months ended July 31, 2000. We had
proceeds from notes payable to stockholder of $67,000 for the nine months ended
July 31, 2001 versus $245,000 for the nine months ended July 31, 2000. We had
proceeds from the issuance of convertible debt debentures of $2,600,000 for the
nine months ended July 31, 2001 versus $880,000, net of $120,000 finders fees,
for the nine months ended July 31, 2000. During the nine month period, we
recorded the non cash redemption of convertible debt debentures and related
interest of approximately $2,057,000 which was converted into our common stock.

The aggregate amount of capital equity that we have raised since June 30,
2000, the end of the last fiscal year, has been approximately $844,000. These
financings have been raised through private placements to various qualified
investors.

Though we have recorded negative operational cash flow during the past two
years while developing our core product, this product is now commercially
available. During the promotion of our new product, we have received a favorable
response in the industry and from our core customer base. This has resulted in
increased interest in our products that we anticipate will provide us with
increased sales revenue. Our fixed cost base is low, and we anticipate that our
operational cash flow will turn positive to the extent the forecasted sales
materialize. However, there can be no assurance that sales will increase or
additional capital will be available on terms favorable to us. If adequate funds
are not available to us, our operations would be impaired, including any
operational efficiencies to provide our client base with superior services and
performance. If we are unable to raise additional capital in the future, we may
not be able to continue as a going concern. In the high tech telecommunications
industry in which we compete, quality and efficiency are highly important to our
competitive advantage and our ability to grow our business. As a result of the
above conditions, our most recent audited financial statements contained a going
concern opinion issued by our accountants.

Additionally, we have committed resources to localize our products to the
Japanese and Chinese languages after negotiations with our strategic partners
and potential clients. The localized product assures that we are in a unique
position among all of our competitors to address the needs of Japanese, Korean
and Mainland China markets. Most of our competitors do not yet have significant
presence in these markets. Our existing strategic relationships, and a localized
version of the product, should ensure our ability to take a market lead in these
areas. The product should be ready by mid 2002 with anticipated sales soon after
that.

We are a party to an agreement dated February 2, 1999 with Imperial. The
primary subject matter of the agreement concerns the liquidation of assets
transferred from us to Imperial and the use of those liquidation proceeds as
payment of two outstanding loans between Imperial and us and our wholly owned
subsidiary. These notes were settled and paid off January 4, 2001 upon Imperial
receiving approximately $641,000 on settlement on receivables.

The agreement required us, among other things, to pay fees to Imperial for
the liquidation of assets transferred to Imperial, pay interest to Imperial on
the outstanding principal balance of the loans, and to pay the remaining
outstanding principal balance on the loans on February 1, 2000, if liquidation
proceeds had not already satisfied the loans. Imperial's obligation under the
agreement, among other things, was to liquidate the assets transferred to
Imperial (consisting primarily of medicare related receivables of the company's
former medical business), apply the proceeds of said liquidation to pay down the
outstanding loan balances, and to provide quarterly reports to us with respect
to Imperial's progress in liquidating the assets transferred from us to
Imperial.

By letter dated August 16, 1999, we notified Imperial that Imperial was in
breach of the agreement by virtue of the fact that Imperial had not provided
quarterly reports for the quarters ended March 31 and June 30, 1999. We further
advised Imperial that we would discontinue paying any additional funds to
Imperial until this breach was cured. In late September 1999, Imperial
subsequently provided reports for the quarters ended March 31 and June 30, 1999.
Since then, no additional quarterly reports have been provided by Imperial as
required under the agreement. Additionally, through discussions with Imperial
and pursuant to the reports provided, it appears that to date Imperial has
liquidated approximately $721,000 of the $1,300,000 in assets transferred to it.

We are informed that Imperial has recently received monies in settlement on
some of the receivables of approximately $641,000. These funds were used to pay
off the loans and related interest of approximately $641,000 from Imperial Loan
Management Corp. on January 4, 2001. Approximately $700,000 of assets in the
form of receivables remain uncollected or unsettled, for which Imperial is to
use its best efforts to collect on. We consider the realization of the remaining
assets to be unlikely and, therefore, we have fully reserved such assets. All
other material obligations of the subsidiaries have been settled. Under our
agreement with Imperial, they are required to provide us with quarterly reports
with respect to Imperial's progress in liquidating the assets that we
transferred to them.

We have no commitments for capital expenditures currently outstanding.

Our operating results could vary significantly from period to period, as a
result of a variety of factors including the requisition cycles of our
customers, the financial position of our customers and competitive factors. We
are not subject to any seasonality factors.

We are late on filings and payments of certain payroll taxes. Management
plans to meet with the Internal Revenue Service and establish a plan to correct
the deficiency and stay current.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued SFAS 141,
Business Combinations, and SFAS 142, Goodwill and Other Intangible Assets. SFAS
141 requires business combinations initiated after June 30, 2001 to be accounted
for using the purchase method of accounting. It also specifies the types of
acquired intangible assets that are required to be recognized and reported
separately from goodwill. SFAS 142 will require that goodwill and certain
intangibles no longer be amortized, but instead tested for impairment at least
annually. SFAS 142 is required to be applied starting with fiscal years
beginning after December 15, 2001. The Company does not expect adoption of SFAS
141 and 142 to affect the results of past transactions. However, all future
business combinations will be accounted for under the purchase method, which may
result in the recognition of goodwill and other intangible assets, some of which
will be recognized through operations, either by amortization or impairment
charges, in the future.

The Financial Accounting Standards Board has issued SFAS 143, Accounting
for Asset Retirement Obligations, and SFAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. Legal obligations are
obligations that a party is required to settle as a result of an existing or
enacted law, statute, ordinance or contract. This statement amends SFAS 19,
Financial Accounting and Reporting by Oil and Gas Producing Companies. SFAS 144
addresses the primary objectives of developing one accounting model based on the
framework established in SFAS 121, Accounting for the Impairment of Long-Lived
Assets to be Disposed Of by sale and to address significant implementation
issues. The accounting model for long-lived assets to be disposed of by sale
applies to all long-lived assets, including discontinued operations and replaces
the provisions of APB 30, Reporting Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business. As these two pronouncements have
just been released, the Company has not had the chance to review the impact
fully, although the Management of the Company believe these two statements will
not have a material effect on the Company's results of operations or its
financial position.

EQUITY LINE OF CREDIT

We entered into a subscription agreement with The Keshet Fund L.P., Keshet
L.P., Nesher Ltd., Talbiya B. Investments Ltd. and Esquire Trade & Finance, Inc.
on July 27, 2000, and subsequently amended to include Laurus Master Fund, Ltd.,
for the future issuance and purchase of shares of our Class A common stock. The
subscription agreement established what is sometimes termed an equity line of
credit or equity drawdown facility. This equity line agreement has been
terminated.

Under a recent SEC Release promulgated in March 2001, our equity line of
credit is no longer available as a source of financing for us and has been
terminated. Certain of the subscribers under the former equity line may provide
future financings needed by us. As yet, there is not an agreement on the nature
and magnitude of the commitments nor when we expect that any financing to close,
but discussions between the parties are continuing. For the foreseeable future,
we intend to cover our operating needs with our current cash flow generated
through sales of our products and services and cost reduction measures.

Pursuant to our former equity line of credit and subject to satisfaction of
the conditions set forth below, we sold and issued to the investors under the
equity line agreement, from time to time, $2,750,000 of convertible notes. These
notes previously issued under our former equity line agreement may be converted
at a conversion price equal to the lesser of (1) 85% of the average of the three
lowest closing prices of the Class A common stock for the thirty trading days
prior to the Closing Date or (2) 78% of the average of the three lowest closing
prices of the Class A common stock for the ninety trading days prior to the
Conversion Date.

We are registering pursuant to this registration statement the shares
underlying the following convertible notes which have been issued previously
under our former equity line. Pursuant to termination of our equity line, no
more shares will be issued.

Date Put
---- ---

July 27, 2000 .............. $1,000,000
December 28, 2000 .......... 150,000
January 20, 2001 ........... 150,000
February 16, 2001 .......... 250,000
March 15, 2001 ............. 250,000
May 2, 2001 ................ 150,000
May 13, 2001 ............... 100,000
May 16, 2001 ............... 30,000
June 13, 2001 .............. 100,000
June 19, 2001 .............. 500,000
June 26, 2001 .............. 70,000
----------
$2,750,000

In conjunction with our former equity line of credit, we issued to some of
the investors under the equity line agreement warrants to purchase up to
1,995,000 shares of Class A common stock, at an exercise price ranging from
$0.024 to $0.56 per share. These warrants may be exercised with various
expirations through June 26, 2006. The warrants contain provisions that adjust
the purchase price and number of shares issuable to investors under the equity
line agreement upon the occurrence of certain events, such as a stock split,
reverse stock split, stock dividend, merger, or recapitalization. The investors
under our former equity line agreement may effect a cashless exercise of the
warrants only in the period prior to the effectiveness of the registration
statement of which this prospectus is a part.

Under our former equity line of credit, we agreed to register the
underlying Class A common stock for resale by the investors, which will permit
them to resell the Class A common stock from time to time in the open market or
in privately-negotiated transactions. We will prepare and file amendments and
supplements to the registration statement as may be necessary in order to keep
it effective as long as the investors own any of our Class A common stock. We
have agreed to bear certain expenses, other than broker discounts and
commissions, if any, in connection with the preparation and filing of the
registration statement and any amendments to it.

We paid an aggregate of approximately $275,000 in finders fees and
commissions to Alon Enterprises Ltd., Bodie Investment Group, and Libra Finance
S.A. in connection with the credit line with Laurus Funds, Ltd.

The former equity line and corresponding terms have been filed publicly on
a Form 8-K dated July 27, 2000 and is incorporated here by reference.

On July 19, 2001, an additional $250,000 was drawn down pursuant to the
terms of our former equity line agreement. In conjunction with this put, an
additional $25,000 was paid as a finder's fee. The shares underlying the
convertible notes and warrants put to the investors on July 19, 2001 have not
been registered pursuant to this registration statement.

BUSINESS

We have leveraged our relationship with key industry players such as
Hewlett Packard in order to gain penetration in the marketplace. Specifically,
individual long standing relationships in international markets have produced
business for us in the Middle East as well as the Far East. The first two years
of product revenue for us were derived in large part from these sources.
Additionally, we have made significant investment in participating with industry
forums such as the Telemanagement Forum to further our position in the domestic
market. These forums provide industry standards, direction, and catalyst
function to the market in general. Telynx has participated for two years in
these activities. In combination, these two strategies have leveraged our market
awareness.

On September 14, 1998, we acquired Cambio Networks, Inc., pursuant to an
agreement and plan of merger, dated as of April 3, 1998, as amended by the
agreement of amendment, dated as of July 27, 1998. Under the terms of the
agreement, Networks' shareholders received an aggregate of 619,421 shares of our
Class A common stock representing approximately 32.3% of the then outstanding
Class A and Class B common stock. The primary product of Cambio Networks was the
Command product. The acquisition of the telecommunications product enabled us to
diversify into other operations.

On October 20, 1998, we changed our name from Meadowbrook Rehabilitation
Group, Inc. to Cambio Inc. and in November 2000, we changed our name to Telynx,
Inc. Prior to June 30, 1998, we provided outpatient, home health, and
traditional acute, sub-acute and post-acute comprehensive rehabilitation
services. Since the beginning of the fiscal year ended June 30, 1997, and as a
result of poor operating results and poor prospects for growth in their
respective markets, our board of directors began to sell our healthcare
operating assets. As of June 30, 1998, our assets consisted mainly of cash and
accounts receivable.

On February 2, 1999, we entered into an agreement with Imperial Loan
Management Corporation whereby we transferred all of the issued and outstanding
stock of our discontinued healthcare subsidiaries to Imperial. Under the terms
of the agreement, Imperial used its best efforts to liquidate each of the
subsidiaries, settling outstanding obligations and collecting all amounts due.
We are entitled to receive one-half of any amounts remaining after payment of
the Imperial loans, which were settled and paid January 4, 2001 after Imperial
liquidated assets to settle the loans, and expenses. We are informed that
Imperial has received monies in settlement on some of the receivables of
approximately $641,000. These funds will be used to pay off the loans and
related interest of approximately $641,000 from Imperial Loan Management Corp.
on January 4, 2001. Approximately $700,000 of assets in the form of receivables
remain uncollected or unsettled, which Imperial is continuing to use its best
efforts to collect on. We consider the realization of the remaining assets to be
unlikely and, therefore, we have fully written off such assets. All other
material obligations of the subsidiaries have been settled.

On June 1, 2001, our shareholders met to discuss and vote on a proposal
recommended by our Board of Directors related to a 1-for-2 reverse stock split.
Shareholders voted for approval of the 1-for-2 reverse stock split and we filed
an amendment to the corporation's charter with the State of Delaware and the
1-for-2 reverse stock split was subsequently effective on June 4, 2001.

Our goal is to become the premier provider of software solutions by
providing the telecommunications and wireless communication industries with the
highest utilization of their capital and giving our customers competitive
advantage in providing new and enhanced services within their markets. We
continually strive to broaden our solution offerings to increase market share
for our customers by delivering end-to-end turnkey solutions amplifying
usability and simplicity designed for end user. Based on estimates from Frost &
Sullivan, the total OSS market is estimated at over $16 billion in the year
2002. Inventory/Provisioning represents 3% of this market. We will broaden our
offerings into other areas within the space such as service activation and work
flow management. This will provide additional market potential for the company
in the coming years.

PRODUCTS AND SERVICES

Telynx offers inventory/provisioning and revenue assurance solutions to the
telecommunications market. Telynx solutions are geared at streamlining and
reducing provisioning intervals and addressing revenue leakage for
telecommunications service providers. The current flagship product Telynx v2,
was released in March of 2001 and has met with wide acceptance from the market,
partners, and customers.

Product Improvements:

In September of 2000, a re-engineered version of the original netRunner
product was released to market, netRunner CMP v5. Significant time and effort
was spent in re-engineering the product to be a completely open and scalable
architecture based on industry standards. Scalability and open interfaces are
seen as the keys to market penetration moving forward. Version 5 was further
enhanced in architecture and was introduced as Telynx v2 in March of 2001.
Telynx v2 was very well received in the market by our partners, by prospects
viewing the product and by the industry forums in which we participate. We use a
variety of sources for input into the product direction and functionality. These
sources consist of industry forums, telecommunications consultants, customer
usage and general industry trends from key periodicals.

In May of 2001, Telynx announced its new Revenue Assurance offering.
Revenue Assurance is a new market space for Telynx, but remains in the OSS
space. Revenue Assurance is the process by which a carrier/service provider
validates that it is billing for services provided, accurately rating plans for
billing, and assuring that service is properly provisioned. Frost & Sullivan and
Deloitte Touche estimated in 1998 and 2000, through their readily available
newsletter on the telecommunications industry, that somewhere between 2-12% of
revenue is lost due to one of these factors. These reports are available on-line
through the respective web sites. Some fees may apply. In times of increasing
competition and the need to show clear value differentiation, we believe that
our Revenue Assurance offering is a cost-effective solution.

Professional Services:

Since July 2000, Telynx has continued to engage in services for the Telecom
Egypt project. These services relate to additional customization contracted to
Telynx by Hewlett Packard. All deliverables against the original contract had
been met. Our expertise and quality of deliverables caused HP to continue
engaging Telynx for other related services. In January of 2001, Telynx completed
and received customer sign-off for the TM Touch Wireless project. The project
was officially commissioned with Hewlett Packard and the Customer on May 2,
2001. Telynx has also successfully completed its implementation with Avista
Communications. Final project deliverables were completed in June of 2001.
Telynx, with its partners, have also begun projects with Ericsson and the City
of Toulouse in France. In June of 2001, Telynx announced an initial project with
Saudi Telecom for data loading.

MARKETING AND SALES

Telynx is targeting the telecommunications market with its suite of
products and solutions. The telecommunications industry is primarily focused in
the area of providing convergent services to the public and private sector.
These services include voice, data and multi-media. Telynx's solution offering
is positioned to cover the asset management platform that is considered a
crucial part of the Operations Support Systems (OSS) area of the
telecommunication industry. Providing a system that assists in the areas of
network inventory, provisioning, circuit allocation and assignment, as well as
bandwidth utilization helps the service providers with faster time to market
activity and more reliable service maintenance.

Our marketing activity is focused on the service providers. This market
includes the Regional Bell Operating Company (RBOCs), Competitive Local Exchange
Carrier (CLECs), Incumbent Local Exchange Carrier (ILECs), Broadband providers,
cellular, Public Telephone and Telegraph (PTTs) and Internet providers. We
concentrate our attention on joining the forums in which new strategies are
molded and service providers look for guidance. Our involvement in the TMF
(Telemanagement Forum) is such an example. Other marketing activities include
the joint representation between Telynx and our partners in trade shows and
specialized exhibitions.

The market potential on a global basis for Telynx is significant. There are
several factors to which this growth potential can be attributed. First,
deregulation of telecommunications is occurring on a global scale. This causes
significant expansion in the market where previously it was fixed. In addition,
the worldwide demand for bandwidth has caused an explosion in infrastructure
building. This infrastructure is both wireline based and wireless based.
Telynx's sales strategy is both direct and indirect. We will leverage our
partner relationship to penetrate markets we currently do not have resources to
focus on directly and we are directly targeting the North American, European,
Middle Eastern, and Asian markets.

Product re-engineering and market slowdowns did affect sales in the last 12
months. However, since the introduction of Telynx v2, the Company has increased
its overall sales pipeline to 900 accounts and its business forecast by over 30
accounts. The sales pipeline in this case is defined by the number of accounts
that have been identified for targeting. Forecast in this case indicates the
number of accounts that have been qualified as revenue opportunities for the
Company. The Company has not released any revenue projections for the current
fiscal year ending October 31, 2001. The Company does anticipate significant
performance increases in revenue in the last two fiscal quarters over the first
two fiscal quarters.

PARTNERSHIP AND ALLIANCE

The market requires that we have both a competitive and a collaborative
strategy. The industry is driving the OSS market away from point solutions and
towards a single solution offering. Our partnership and alliance strategy is
designed with this in mind. We leverage the market presence of our large
partners while embedding our technology into their overall solution. Our
partners are Hewlett Packard, Oracle, Sirti, Logica, Alcatel, Information +
Graphic Systems, Inc., Solutions Plus, Sapura System Malaysia (SSM), Step 9 and
Active Software. The partnerships are based typically on two types of
agreements. First, a joint marketing agreement will exist between the two
companies. A joint marketing agreement generally means an intent by both
companies to jointly market their solution to prospects. This implies a general
level of technical integration between our solutions. These agreements are
non-exclusive and can be renewed or terminated at the end of a twelve-month
period. Second, a re-seller/systems integrator agreement can be made between the
two companies. This entails a negotiated commission for the resale of the
product and certification in providing services to deliver the product. The
final agreement type is also known as an OEM (Other Equipment Manufacturer).
This enables the vendor to sell the product under its own brand.

SOFTWARE DEVELOPMENT

Product Development continues to focus on the expansion of the
functionality in Telynx v2. Additional capabilities being added relate to data
loading, data synchronization with live networks, revenue assurance, order
management, and activation. There is an ever increasing demand for integration
into existing environments. We believe that the current version is the most
flexible on the market in this respect and will continue to expand the open
scalable architecture in this direction. In addition, it is widely known that
the key to a successful flow-through provisioning system is the data. How it is
input, how it is migrated, how it is maintained and the processes for
accomplishing this are the determining factors in successful implementations. We
are already seeing the demand for products and services in this regard, and has
begun to develop solutions to address them. We are also being engaged in
professional services to help carriers address these issues.

COMPETITION

Competition in the telecommunications markets is intense. However, we
believe that the segment of the market within which Telynx competes is currently
under-served. Our top five competitors are Granite Systems, Inc., Nortel
Networks, Cramer Systems Europe Ltd., Eftia, and VisionAEL. The combined revenue
for inventory/provisioning solutions provided by these vendors is less than the
total market size as reported by Frost & Sullivan. While competition in this
segment is not intense, the rapid changes within the industry as a whole could
change this. Our continued development of enhanced network management and
operational support systems should broaden its range of available competing
products. Competitors include hardware manufacturers that have developed
software (or obtained software from third parties) to operate on their hardware.
We also encounter competition from a large number of small software developers,
which sell software or integrated systems either for specific industries or
applications within those industries.

We believe that in order to maintain and improve our competitive position,
we must continue to offer comprehensive services that help customers effectively
implement a complete, integrated software solution by providing a full range of
industry-leading consulting, integration, training and customer support
services. The timely delivery of flexible, cost-effective solutions for the
growing dynamic marketplace will continue to be our competitive initiative. We
believe Telynx's international focus clearly provides a competitive advantage
moving forward. Some of our competitors have little or no international
presence.

PROPRIETARY RIGHTS

We rely on a combination of copyright, trademark and trade secret laws,
confidentiality procedures and licensing arrangements to establish and protect
own proprietary rights. Presently, we have no patents, no patent applications on
file, and no intent to file patent applications in the near future. As part of
our confidentiality procedures, we enter into non-disclosure agreements with our
employees, distributors and corporate partners, and license agreements with
respect to our software, documentation and other proprietary information.
Despite these precautions, it may be possible for a third party to copy or
otherwise obtain and use our products or technology without authorization, or to
develop similar technology independently. In selling our products, we rely on
both signed license agreements and "shrink wrap" licenses that are not signed by
licensees and, therefore, may be unenforceable under the laws of certain
jurisdictions. In addition, effective protection of intellectual property rights
is unavailable or limited in certain foreign countries. Currently, Telynx has
issued Telynx Version 3.0. This release is totally owned by Telynx and there are
no longer any source code co-ownership issues as there was with prior software
sold. The initial netRunner product was acquired technology in 1998.

Under a joint code-ownership agreement with Phifer Consulting, the code was
developed and exclusively marketed by Telynx, Inc. Release 4.5 of netRunner in
February of 1999 was developed exclusively by Telynx, Inc. The co-ownership
agreement of original source code was terminated by the two parties under a
mutual agreement between Phifer Consulting and Telynx, Inc.

EMPLOYEES

As of July 31, 2001, we had approximately 27 full time employees,
consisting of 3 in executive, 11 in engineering, 1 in marketing, 5 in sales, 2
in finance, and 5 in accounting and logistics. Our future performance depends
upon the continued service of our key members of management, as well as
marketing, sales, consulting and product development personnel, and except for
Ali Al-Dahwi, none of whom are bound by an employment contract, and upon our
ability to attract and retain highly skilled personnel in these areas.
Competition for such personnel is intense, and there can be no assurance that we
can retain our key employees or that we will be successful in attracting,
assimilating and retaining such personnel in the future. None of our employees
are represented by a labor union. We have not experienced any work stoppages and
consider our relations with our employees to be good.

PROPERTY

The corporate office is located at 6006 Mesa, Suite 600, El Paso, Texas,
79912. The El Paso office is approximately 7,800 square feet ($8,400 monthly).
We have additional sales and support representatives in Dallas, Texas; the
Washington, D.C. area; London, United Kingdom; and sales and support
representatives in Asia (Kuala Lumpur, Malaysia) and the Middle East (Cairo,
Egypt and Saudi Arabia).

LEGAL PROCEEDINGS

Telynx is a party to various claims and routine litigation arising in the
ordinary course of business. We do not believe that the results of any such
claim litigation, individually or in the aggregate, will have a material adverse
effect on our business, financial position or results of operations.

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth information regarding our executive officers and
directors.

NAME AGE POSITION
------------------- ----- ------------------------------------------------------

Ali Al-Dahwi ........ 46 Chairman of the Board, Chief Executive Officer and
Director

Scott Munden ........ 38 President, Chief Operating Officer and Chief
Technology Officer and Director

Dr. Ziad El-Dukair .. 40 Executive Vice President, Director

Kent J. Van Houten .. 48 Vice President of Finance, Chief Financial Officer
and Secretary

Naglaa Marzouk ...... 30 Executive Vice President-Logistics

Lin Meyer ........... 53 Vice President of North American Sales & Alliances

Ali Al-Dahwi has served as a Director since 1998 and has served as Chief
Executive Officer since October 2001 and served as President and Chief Executive
Officer from January 1999 to October 2001. From September 1998 to January 1999,
Mr. Al-Dahwi was our President and Chief Operating Officer. Mr. Al-Dahwi held
various positions at Accugraph Corporation from 1982 to 1998, including Vice
President and General Manager - Global Complex Enterprise Network Business Unit
and Vice President of International Operations. Prior to Accugraph, Mr. Al-Dahwi
served as a Civil Engineer. Mr. Al-Dahwi holds a B.S. in Civil Engineering from
the University of Texas El Paso.

Scott Munden has served as a Director since September 2001 and has served
as our President and Chief Operating Officer since October 2001 and Chief
Operating Officer from February 2001 to October 2001. Mr. Munden had previously
been our Chief Technology Officer and Executive Vice President of Product and
Technology since January 2000. Mr. Munden joined us in 1998 as Director of
Product Marketing and Development. From 1996 to 1998, Mr. Munden was General
Manager at IBIS Corporation. Prior to this, Mr. Munden held various positions at
Accugraph Corporation from 1987 to 1996, including Solutions Architect and
Product Manager. Prior to 1987, Mr. Munden worked at Wang Labs. Mr. Munden holds
a B.S. in Economics from the University of Texas El Paso.

Dr. Ziad El-Dukair was appointed to our Board of Directors in January 2001
and joined us as an Executive Vice President in January 2001. Dr. El-Dukair was
a private consultant from 1998 to 2001. From 1990 to 1998, Dr. El-Dukair held
the position of President and C.E.O., as well as board member, for Thinet
International, a leading French construction company. Dr. El-Dukair holds a
Ph.D. in Construction Engineering and Management from the University of Maryland
and a Masters in Engineering Administration from George Washington University.

Kent J. Van Houten has served as Vice President of Finance, Chief Financial
Officer since June 2000. From January 2000 to April 2000, Mr. Van Houten was a
consultant with RF Monolithics, Inc. From May 1995 to October 1999, Mr. Van
Houten was Chief Financial Officer, Secretary and Treasurer with Peerless
Manufacturing. Co. From 1975 to 1994, Mr. Van Houten held various positions with
National Gypsum Company, and its wholly owned subsidiary, The Austin Company.
Mr. Van Houten holds a B.B.A. in accounting from Howard Payne University.

Naglaa Marzouk has served as Executive Vice President of Corporate
Logistics since January 2001. From December 2000 to January 2001, Ms. Marzouk
was Director of Corporate Logistics and Support. From June 1999 to December
2000, Ms. Marzouk was the Logistics and Support Manager. From June 1998 to May
1999, Ms. Marzouk was Software Production Engineer for AgilTech, Inc., USA, and
from November 1996 to June 1998, Ms. Marzouk was Application Engineer for the
Institute of Advanced Manufacturing Sciences, USA. Ms. Marzouk holds a B.S. in
Electrical Engineering from Cairo University.

Lin Meyer has served as our Vice President of Strategic Partners and
Alliances since February 2001. Ms. Meyer was hired in

April 1999 as our Director Telecom Sales and Channel Programs and was
subsequently promoted on June 1999 to Vice President Strategic Partners and
Alliances before her recent promotion to Vice President of Strategic Partners
and Alliances in February 2001. Before her employment with us, Ms. Meyer served
as a Regional Manager for Beechwood Consulting from 1998 to April 1999. From
1996 to 1998, Ms. Meyer held the position of National Account Manager, Business
Markets, with American Telephone & Telegraph. Ms. Meyer holds a B.S. degree in
Education from Coe College.

BOARD OF DIRECTORS

We currently have authorized three directors. The current directors are Ali
Al-Dahwi, Dr. Ziad El-Dukair and Scott Munden. These directors hold office until
each annual meeting of stockholders or until their successors are elected or
appointed. Thereafter, at each annual meeting of stockholders the successors to
the directors will be elected to serve from the time of election and
qualification until the next annual meeting following election.

DIRECTOR COMPENSATION

Directors and the Secretary do not receive any cash compensation, although
they are reimbursed for actual and reasonable out-of-pocket expenses in
connection with attendance of board of director and committee meetings.
Directors and the board secretary are compensated in the Class A common stock of
104,167 and 83,334 shares, respectively, paid every fiscal quarter.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to compensation
amended for the transition period from July 1, 2000 to October 31, 2000 and as
of June 30, 2000 during the last three fiscal years paid by us for services by
our Chief Executive Officer and our four other highest-paid executive officers
whose total salary and bonus for such fiscal year exceeded $100,000,
collectively referred to below as the Named Executive Officers:

LONG-TERM
COMPENSATION AWARDS
-------------------
ANNUAL COMPENSATION NUMBER OF
FISCAL --------------------------- SECURITIES OF OTHER
YEAR SALARY BONUS UNDERLYING OPTIONS* COMPENSATION
-------- ---------- ---------- ------------------- ------------

Ali Al-Dahwi ........ 2000(1) $91,669(3) $ 3,336 0 --
2000(2) 150,015 19,370 277,500 --
1999 112,512 8,895 125,000 --
1998 0 0 0 --

Steve Dong(4) ....... 2000(1) 12,750 2,224 0 --
2000(2) 135,000 9,448 143,750 --
1999 43,015 0 166,500 --
1998 0 0 0 --

Anas El-Mahdi ....... 2000(1) 45,000(5) 1,578 0 --
2000(2) 124,167 12,354 250,250 --
1999 78,750 0 60,000 --
1998 0 0 0 --

Scott Munden ........ 2000(1) 52,500(6) 1,112 0 --
2000(2) 105,000 13,964 272,250 --
1999 48,399 0 38,000 --
1998 0 0 0 --

Kent Van Houten ..... 2000(1) 42,087(7) 0 0 --
2000(2) 7,132 0 0 --
1999 0 0 0 --
1998 0 0 0 --

Lin Meyer ........... 2000(1) 40,905(8) 0 0 --
2000(2) 100,000 0 75,000 --
1999 18,799 0 0 --
1998 0 0 0 --

- ----------
* As adjusted to reflect a 1-for-2 reverse stock split effected by us on June
4, 2001.

(1) Compensations for the period from July 1, 2000 to October 31, 2000,
reflecting a change in our fiscal year end.

(2) Compensations for the year ended June 30, 2000.
(3) Mr. Al-Dahwi's compensation, on an annualized basis, would have been
approximately $250,000.
(4) Mr. Dong terminated his employment in July 2000.
(5) Mr. El-Mahdi's compensation, on an annualized basis, would have been
approximately $135,000.
(6) Mr. Munden's compensation, on an annualized basis, would have been
approximately $135,000.
(7) Mr. Van Houten's compensation, on an annualized basis, would have been
approximately $135,000.
(8) Ms. Meyer's compensation, on an annualized basis, would have been
approximately $123,000.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth each grant of stock options during the fiscal
year ended June 30, 2000 to each of the Named Executive Officers. No stock
appreciation rights were granted during such fiscal year.

INDIVIDUAL GRANTS
------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
NAME AND PRINCIPAL OPTIONS EMPLOYEES IN PRICE EXPIRATION
POSITION GRANTED* FISCAL 2000 ($/SHARE)* DATE
----------------------- ---------- ------------- ---------- ----------

Ali Al-Dahwi 277,500 15.14% $ 0.40 09/14/04
Chief Executive Officer

Steve Dong 143,750 7.8% $ 0.40 03/05/05
Vice President

Anas El-Mahdi 250,250 13.6% $ 0.40 10/01/04
Vice President of Sales

Scott Munden 272,250 14.8% $ 0.40 10/26/04
Chief Operating Officer

Lin Meyer 75,000 4.1% $ 0.40 04/19/05
Vice President of North
American Sales &
Alliances

* For the period July 1, 2000 to October 31, 2000, we did not issue any stock
options or grants. As adjusted to reflect a 1-for-2 reverse stock split effected
by us on June 4, 2001.

OPTION VALUES

The following table sets forth for each of the Named Executive Officers
options exercised and the number and value of securities underlying unexercised
options that are held by the Named Executive Officers as of June 30, 2000.

SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT YEAR
ON VALUE OPTIONS AT YEAR END END ($)
EXERCISE* REALIZED EXERCISABLE/UNEXERCISABLE (1) EXERCISABLE/UNEXERCISABLE
--------- -------- ----------------------------- ----------------------------

Ali Al-Dahwi 608,386 $243,354 202,500/0 $45,562/$0

Steve Dong 166,500 $ 66,000 0/168,187 $0/$37,842

Anas El-Mahdi 7,292 $ 2,917 103,417/206,834 $23,269/$46,537

Scott Munden 0 0 103,417/206,834 $23,269/$46,537

Lin Meyer 0 0 25,000/50,000 $5,625/$11,250

* For the period July 1, 2000 to October 31, 2000, we did not issue any stock
options or grants.

(1) As adjusted to reflect a 1-for-2 reverse stock split effected by us on June
4, 2001.

EMPLOYMENT AGREEMENT

At this time, we do not have a long-term incentive plan. We do have an
employment agreement with Mr. Al-Dahwi dated February 4, 1999. The terms of the
contract generally provide for the following and reflect a 1-for-2 reverse stock
split effected by us on June 4, 2001:

o salary of $250,000, with a bonus of 1.5% of sales;

o 500,000 options with each option being exercisable for 1 share of the
Company's Class A Common Shares at $0.40 a share. 375,000 of the options
vest over a three-year period and the remaining 125,000 vested at
issuance;

o a one-year renewable term, which renews on February 4, 2002; and

o Mr. Al-Dahwi, in the event of termination of the agreement, is entitled
to a severance payment of six months base salary payable semi-monthly
over six months, and all options outstanding will vest.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, based on factors including voting and
investment power with respect to shares. Percentage of beneficial ownership is
based on shares of our Class A common stock outstanding as of July 31, 2001.
Shares of Class A common stock subject to options or warrants currently
exercisable, or exercisable within 60 days after July 31, 2001, are deemed
outstanding for the purpose of computing the percentage ownership of the person
holding such options or warrants, but are not deemed outstanding for computing
the percentage ownership of any other person. The address of the individuals
listed above is c/o Telynx, Inc., 6006 North Mesa Street, Suite 600, El Paso,
Texas 79912.

RELATED PARTY TRANSACTIONS

There were no material interests, direct or indirect, of directors,
executive officers or senior officers or any known associate or affiliate of any
of the foregoing in any transaction during the last two years, or in any
proposed transaction which has materially affected or would materially affect us
or any of our subsidiaries and which is not otherwise disclosed herein except
for the following:

On February 2, 1999, we entered into an agreement with Imperial Loan
Management Corporation whereby we transferred all of the issued and outstanding
stock of our discontinued healthcare subsidiaries to Imperial, an affiliate of
our former Chairman and CEO, Harvey Wm. Glasser, M.D., who is overseeing the
liquidation of the subsidiaries on behalf of Imperial. As part of the agreement,
Imperial will use its best efforts to liquidate each of the subsidiaries,
settling outstanding obligations and collecting all amounts due. We are entitled
to receive one-half of proceeds received after payment of all expenses and notes
payable. In connection with this transaction, we recorded a charge to write-off
the remaining net assets from discontinued operations in fiscal year 1999.
Effective January 4, 2001,

Imperial has collected approximately $641,000 on the receivables of which was
used to pay off and cancel all the outstanding Imperial loans and related
interest.

Under our agreement with Imperial, they are required to provide us with
quarterly reports with respect to Imperial's progress in liquidating the assets
that we transferred to them.

PRINCIPAL STOCKHOLDERS

The following table sets forth information as relating to the beneficial
ownership of our Class A common stock as of October 31, 2001, and as adjusted to
reflect the sale of shares of our Class A common stock by the selling
stockholders, by:

o each beneficial owner of more than 5% of our common stock;

o each director of Telynx;

o each of our named executive officers; and

o all executive officers and directors as a group.

All persons listed have sole voting and investment power with respect to
their shares unless otherwise indicated. Unless indicated, the business address
of the beneficial owners is: c/o Telynx, Inc., 6006 North Mesa Street, Suite
600, El Paso, Texas 79912.

NUMBER OF SHARES OF CLASS A COMMON PERCENT OF SHARES OF
STOCK BENEFICIALLY CLASS A COMMON STOCK
NAME OWNED(1) BENEFICIALLY OWNED
---- ---------------------------------- ---------------------

Trenton Development Ltd.(2) 47,748,143 12.6%
13 Avenue da Bude
Geneva, Switzerland 1202

Parsons Project Management and 38,400,000 10.2%
Engineering Consultancy Group Ltd(3)
13 Avenue da Bude
Geneva, Switzerland 1202

Laurus Master Fund, Ltd.(4) 92,729,091 4.99%
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

The Keshet Fund(5) 30,961,781 4.99%
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Keshet L.P.(6) 22,028,523 4.99%
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Esquire Trade & Finance, Inc.(7) 19,318,182 4.99%
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Lamya Al-Ali 10,080,000 2.7%

Ali Al-Dahwi(8) 5,047,795 1.3%

Dr. Ziad El-Dukair 2,560,000 *

Scott Munden(9) 729,535 *

Kent Van Houten(10) 427,417 *

Naglaa Marzouk(11) 674,167 *

Lin Meyer(12) 342,333 *

All directors and executive officers
as a group (6 persons) 9,781,247 2.6%

- ----------

* Less than 1%

(1) The number of shares beneficially owned reflects a 1-for-2 reverse stock
split effective as of June 4, 2001.
(2) Represents shares held by Trenton Development Ltd. The following natural
persons or entities may be deemed to beneficially own more than 5% of our
Class A common stock because they exercise voting and/or dispositive powers
for the shares held by Trenton Development Ltd: John J. Ryan, Jr. Mr. Ryan
disclaims beneficial ownership of these shares, except to the extent of
his/her pecuniary interest, if any.
(3) Represents shares held by Parsons Project Management and Engineering
Consultancy Group Ltd. The following natural persons or entities may be
deemed to beneficially own more than 5% of our Class A common stock because
they exercise voting and/or dispositive powers for the shares held by
Parsons Project Management and Engineering Consultancy Group Ltd.: John J.
Ryan, Jr. Mr. Ryan disclaims beneficial ownership of these shares, except
to the extent of his/her pecuniary interest, if any.

(4) Represents the aggregate number of shares held by Laurus Master Fund, Ltd.
if Laurus Master Fund, Ltd. could convert all of its shares. However,
Laurus Master Fund, Ltd. has contractually agreed to restrict its ability
to convert or exercise its notes or warrants and receive shares of our
common stock such that the number of shares of common stock held by it and
its affiliates after such conversion or exercise does not exceed 4.99% of
the then issued and outstanding shares of common stock. In accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, Laurus Capital
Management, L.L.C. may be deemed a control person of the shares owned by
Laurus Master Fund, Ltd. David Grin and Eugene Grin are the principals of
Laurus Capital Management, L.L.C.
(5) Represents the aggregate number of shares held by The Keshet Fund L.P. if
The Keshet Fund L.P. could convert all of its shares. However, The Keshet
Fund L.P. has contractually agreed to restrict its ability to convert or
exercise its notes or warrants and receive shares of our common stock such
that the number of shares of common stock held by it and its affiliates
after such conversion or exercise does not exceed 4.99% of the then issued
and outstanding shares of common stock. John Clarke may be deemed to
beneficially control the shares held by The Keshet Fund L.P.
(6) Represents the aggregate number of shares held by Keshet L.P. if Keshet
L.P. could convert all of its shares. However, Keshet L.P. has
contractually agreed to restrict its ability to convert or exercise its
notes or warrants and receive shares of our common stock such that the
number of shares of common stock held by it and its affiliates after such
conversion or exercise does not exceed 4.99% of the then issued and
outstanding shares of common stock. John Clarke may be deemed to
beneficially control the shares held by Keshet L.P.
(7) Represents the aggregate number of shares held by Esquire Trade & Finance
Inc. if Esquire Trade & Finance Inc. could convert all of its shares.
However, Esquire Trade & Finance Inc. has contractually agreed to restrict
its ability to convert or exercise its notes or warrants and receive shares
of our common stock such that the number of shares of common stock held by
it and its affiliates after such conversion or exercise does not exceed
4.99% of the then issued and outstanding shares of common stock. Gisella
Kindel may be deemed to beneficially control the shares held by Esquire
Trade & Finance Inc.
(8) Includes 1,925,000 shares issuable upon exercise of options that are
exercisable within 60 days after October 31, 2001.
(9) Includes 666,667 shares issuable upon exercise of options that are
exercisable within 60 days after October 31, 2001.
(10) Includes 250,000 shares issuable upon exercise of options that are
exercisable within 60 days after October 31, 2001.
(11) Includes 666,667 shares issuable upon exercise of options that are
exercisable within 60 days after October 31, 2001.
(12) Includes 333,333 shares issuable upon exercise of options that are
exercisable within 60 days after October 31, 2001.

DESCRIPTION OF CAPITAL STOCK

Effective as of July 31, 2001 and through the date of this filing, our
authorized capital stock consists of 1,005,000,000 shares of common stock, $0.01
par value and 1,000,000 shares of preferred stock, $0.01 par value. We also
effected a 1-for-2 reverse stock split on June 4, 2001.

The following is a summary of some of the provisions of the common stock
and preferred stock provisions of our amended certificate of incorporation and
bylaws.

COMMON STOCK

As of July 31, 2001, there were 196,310,969 shares of Class A common stock
as adjusted for a 1-for-2 reverse stock split, and no shares of Class B common
stock outstanding. As of July 31, 2001, there are 15,050,000 shares of Class A
common stock subject to the exercise of outstanding options. The holders of
common stock are entitled to one vote per share on all matters to be voted on by
the stockholders. Subject to preferences that may be applicable to any
outstanding preferred stock, the holders of common stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds legally available therefor. In the event of the
liquidation, dissolution, or winding up of Telynx, the holders of common stock
are entitled to share ratably in all assets remaining after payment of
liabilities, subject to prior distribution rights of preferred stock, if any,
then outstanding. The common stock has no preemptive or conversion rights or
other subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are fully
paid and non-assessable, and the shares of common stock to be issued on
completion of this offering will be fully paid and non-assessable.

PREFERRED STOCK

There are 1,000,000 shares of preferred stock authorized and 500 shares of
Series B preferred stock are outstanding. The 500 shares issued are convertible
into shares of common stock at a ratio of 250:1, as adjusted for a 1-for-2
reverse stock split effected by us on June 4, 2001. Also at July 31, 2001, there
were outstanding no shares of Series C convertible preferred stock. Preferred
stock has a priority over our common stock with respect to dividends and to
other distributions, including the distribution of assets upon liquidation.

The Series B preferred stock was issued at $100 per share and has the
following attributes:

i. Each share is convertible into 250 shares of the Class A common stock.
ii. Each share is entitled to vote and receive dividends as if it has been
converted.
iii. Each share is entitled to a liquidation preference of $100 per share.
iv. Each share is redeemable at our option for its $100 liquidation value if
the market price of the Class A common stock equals or exceeds 500% of the
conversion price and the Class A common stock has traded with an average
daily volume in excess of 50,000 shares for a period of 30 consecutive
trading days.
v. Each share is redeemable at the holder's option if we (a) materially breach
our obligations under the Certificate of Designations or the Series B
Convertible Preferred Stock Purchase Agreement, dated as of February 1,
1999, and the breach continues for a period of thirty (30) days after
notice, (b) sell all or substantially all of our assets, (c) become
insolvent or (d) go private.
vi. Each share enjoys preemptive rights to purchase certain capital stock,
including warrants or securities convertible into capital stock.

The board of directors has the authority to issue the preferred stock in
one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series or the designation
of such series, without further vote or action by the stockholders. We may be
obligated to repurchase or redeem any preferred stock that we chose. The
issuance of preferred stock may have the effect of delaying, deferring or
preventing a change in control of Telynx without further action by the
stockholders and may adversely affect the voting and other rights of the holders
of common stock. The issuance of preferred stock with voting and conversion
rights may adversely affect the voting power of the holders of common stock,
including the loss of voting control to others. At present, we have no plans to
issue any additional shares of preferred stock.

WARRANTS

On May 3, 1999, we sold 19,500 shares of preferred stock and issued 628,000
warrants to purchase 628,000 shares of Class A common stock at $0.40 per share
for an average value of $251,200. The warrants were issued as a fee for the sale
of the preferred stock. Each warrant was valued at $0.40, which was the cost of
the stock issued in the offering. The warrants expire May 6, 2004. During 2000,
the holders of these warrants exercised 542,500 warrants under a cashless
exercise feature of the grant. At October 31, 2000, 85,500 warrants remain
outstanding.

During February 2000, we issued 1,000,000 warrants to purchase Class A
common stock in connection with the sale of 333,500 shares of Class A common
stock. These warrants are exercisable into 1,000,000 shares of the Class A
common stock at $0.30 per share for an average value of $300,000. Of these
warrants 250,000 were issued as a fee for the sale of the common stock. The
warrants were valued at $185,000. The warrants were exercised during 2000.

During July 2000, we issued 625,000 warrants to purchase 625,000 shares of
Class A common stock at $0.54 per share for an aggregate value of $337,500. The
warrants were issued as a fee for the sale of convertible notes payable. The
warrants are valued at $373,000. The warrants expire July 27, 2005.

There are a total of 772,500 warrants outstanding at October 31, 2000 at an
exercisable weighted average price of $0.61 per share.

As of July 31, 2001, we have outstanding warrants to purchase 2,392,500 of
our Class A common stock. The weighted average exercise price of our warrants is
$0.19.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS
AND DELAWARE LAW

Certificate of Incorporation and Bylaws. Our Bylaws provide that all
stockholder actions must be effected either at a duly called meeting or by a
consent in writing. Further, provisions of the Bylaws provide that the
stockholders may amend the Bylaws or certain provisions of the Certificate of
Incorporation with the affirmative vote of 50% of the capital stock.

Delaware Takeover Statute. We are subject to Section 203 of the Delaware
General Corporation Law, or DGCL, Section 203 which regulates corporate
acquisitions, prevents certain Delaware corporations from engaging, under
certain circumstances in a "business combination" with any "interested
stockholder" for three years following the date that such stockholder becomes an
interested stockholder. For purposes of DGCL Section 203, a "business
combination" includes, among other things, a merger or consolidation involving
Telynx and the interested stockholder and the sale of more than ten percent
(10%) of Telynx's assets. In general DGCL Section 203 defines an "interested
stockholder" as any entity or person beneficially owning fifteen percent (15%)
or more of the outstanding voting stock of Telynx and any entity or person
affiliated with or controlling or controlled by such entity or person. A
Delaware corporation may "opt out" of DGCL. Section 203 with an express
provision in its original certificate of incorporation or an express provision
in its certificate of incorporation or by-laws resulting from amendments
approved by the holders of at least a majority of the corporation's outstanding
voting shares. We have not "opted out" of the provisions of DGCL Section 203.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the common stock is American Stock
Transfer and Trust Company.

The following table sets forth the common stock ownership of the selling
stockholder, as of July 31, 2001, as adjusted to reflect the sale of the common
stock in this offering. Except as described in this prospectus, no selling
stockholder has held any position or office or had any other material
relationship with us or any of our predecessors or affiliates within the past
three years.

We have chosen to register 240,344,368 shares of common stock on behalf of
the selling stockholders. This includes no shares of common stock currently held
by the selling stockholders. The shares listed below may be sold pursuant to
this prospectus or in privately negotiated transactions. Accordingly, we cannot
estimate the number of shares of common stock that the selling stockholder will
sell under this prospectus.

The selling stockholders have advised us that they are the beneficial
owners of the shares being offered.

SELLING STOCKHOLDERS

This prospectus relates to the registration of 240,344,368 shares of our
Class A common stock for resale by certain selling stockholders. The following
table contains certain information about the selling stockholders and the shares
of common stock that they are offering pursuant to this prospectus.

Shares of Class
A
Common Stock
Shares Offered Shares
Beneficially Under This Beneficially
Owned Before Registration Owned After
the Offering* Statement** Offering
------------- --------------- -------------

The Keshet Fund L.P. (1) 30,961,781(7) 63,021,722 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Talbiya B. Investments(2) 1,381,818(7) 2,050,326 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Esquire Trade & Finance Inc.(3) 21,590,909(7) 39,098,954 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Laurus Master Fund, Ltd.(4) 57,388,182(7) 115,570,000 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Libra Finance(5) 543,750(7) 543,750 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Keshet L.P. (6) 9,664,886(7) 20,059,616 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

- --------------------------------------------------------------------------------

The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which
the selling stockholder has sole or shared voting power or investment power and
also any shares which the selling stockholder has the right to acquire within 60
days. The actual number of shares of common stock issuable upon the conversion
of the convertible note is subject to adjustment depending on, among other
factors, the future market price of the common stock, and could be materially
less or more than the number estimated in the table.

* As adjusted for a 1-for-2 reverse stock split effected by us on June 4,
2001.

** Represents 200% of the shares of common stock issuable upon conversion of
the convertible note and all of the shares issuable upon the exercise of
warrants of the selling stockholder. Because the number of shares of common
stock issuable upon conversion of the convertible note is dependent in part
upon the market price of the common stock prior to a conversion, the actual
number of shares of common stock that will be issued upon conversion will
fluctuate daily and cannot be determined at this time. However, certain of
our selling stockholders have contractually agreed to restrict its ability
to convert or exercise its notes or warrants and receive shares of our
common stock such that the number of shares of common stock held by its
affiliates after such conversion or exercise does not exceed 4.99% of the
then issued and outstanding shares of common stock.

(1) This selling stockholder, who is an investor under our former equity line
agreement, may not be required to purchase more than 4.99% of the issued
and outstanding shares of Telynx pursuant to the terms of their agreements
with Telynx. John Clarke is a director of The Keshet Fund, L.P. and makes
investment decisions on behalf of Keshet Fund.

(2) The selling stockholder is issued warrants that are exercisable into shares
of Telynx common stock at their option for a period of five years from
issuance. John Clarke is a director of Talbiya B. Investments and makes
investment decisions on behalf of Talbiya.

(3) This selling stockholder, who is an investor under our former equity line
agreement, may not be required to purchase more than 4.99% of the issued
and outstanding shares of Telynx pursuant to the terms of their agreements
with Telynx. Gisela Kindle is a director of Esquire Trade & Finance, Inc.
and makes investment decisions on behalf of Esquire.

(4) This selling stockholder may not be required to purchase more than 4.99% of
the issued and outstanding shares of Telynx pursuant to the terms of their
agreements with Telynx. In accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, Laurus Capital Management, L.L.C. may be deemed a
control person of the shares owned by such entity. David Grin and Eugene
Grin are the principals of Laurus Capital Management L.L.C.

(5) These shares are issuable pursuant to our former equity line agreement. The
selling stockholder was issued warrants that are exercisable into shares of
Telynx common stock at their option for a period of five years from
issuance. Seymour Braun, Esq. is a director of Libra Finance and makes
investment decisions on behalf of Libra.

(6) These shares are issuable pursuant to our former equity line agreement. The
selling stockholder was issued warrants that are exercisable into shares of
Telynx common stock at their option for a period of five years from
issuance. John Clarke is a director of Keshet L.P. and makes investment
decisions on behalf of Keshet L.P.

(7) Includes shares issuable upon exercise of a convertible note and warrants
issued to the subscriber under the former equity line agreement.

PLAN OF DISTRIBUTION

We are registering the shares of common stock on behalf of the selling
stockholders. We will pay all costs, expenses and fees in connection with this
registration, except that the selling stockholders will pay underwriting
discounts and selling commissions, if any. We will not receive any of the
proceeds from the sale of the shares by the selling stockholders. We will
receive, however, the net sale price of any convertible notes or warrants that
are issued to the investors under our former equity line agreement if, and to
the extent, we elect to put such securities to these entities. We did not have
any prior relationship with any of the investors under our former equity line
agreement. When we refer to the "selling stockholders" in this prospectus, that
term includes donees and pledgees selling shares of common stock under this
prospectus which were received from the selling stockholders.

The selling stockholders may sell their shares at various times in one or
more of the following transactions:

o on the OTC Bulletin Board (or any other exchange on which the shares
may be listed);

o in the over-the-counter market;

o in negotiated transactions other than on such exchange;

o by pledge to secure debts and other obligations;

o in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions, in covering previously established
short positions and in settlement of other transactions in
standardized or over-the-counter options; or

o in a combination of any of the above transactions.

The selling stockholders may sell their shares at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices. The selling stockholders may sell shares
directly or may use broker-dealers to sell their shares. The broker-dealers will
either receive discounts or commissions from the selling stockholders, or they
will receive commissions from purchasers of shares. This compensation may be in
excess of customary commission.

The selling stockholders may also sell all or a portion of their shares
under Rule 144 under the Securities Act of 1933, or may pledge shares as
collateral for margin accounts. These shares could then further be resold
pursuant to the terms of such accounts.

Under certain circumstances, the selling stockholders and any
broker-dealers that participate in the distribution might be deemed to be
"underwriters" within the meaning of the Securities Act and any commission
received by them and any profit on the resale of the shares of common stock as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act. The selling stockholders may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of the
shares against certain liabilities, including liabilities arising under the
Securities Act. Liabilities under the federal securities laws cannot be waived.

The selling stockholders under our former equity line agreement are
"underwriters" within the meaning of the Securities Act of 1933, as amended in
connection with the sale of common stock offered by it under this prospectus.
Other selling stockholders may be deemed to be "underwriters" under the
Securities Act. Therefore, the selling stockholders will be subject to
prospectus delivery requirements under the Securities Act. Furthermore, in the
event of a "distribution" of their shares, the selling stockholders, any selling
broker or dealer and any "affiliated purchasers" may be subject to Rule 10b-6
under the Exchange Act or Regulation M under the Exchange Act, which prohibits,
with certain exceptions, any such person from bidding for or purchasing any
security which is the subject of such distribution until such person's
participation in that distribution is completed. In addition, Rule 10b-7 under
the Exchange Act or Regulation M prohibits any "stabilizing bid" or "stabilizing
purchase" for the purpose of pegging, fixing or stabilizing the price of the
common stock in connection with this offering. We have informed the selling
stockholders that the anti-manipulative provisions of Regulation M promulgated
under the Exchange Act may apply to their sales in the market.

If we are notified by the selling stockholders that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer,

we will file a supplement to this prospectus, if required, under Rule 424(b)
under the Securities Act, disclosing the following:

o the names of the selling stockholders and of the participating
broker-dealer(s);

o the number of shares involved;

o the price at which such shares were sold;

o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;

o that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus; and

o other facts material to the transaction.

In addition, if we are notified by the selling stockholders that a donee or
pledgee intends to sell more than 500 shares, we will file a supplement to this
prospectus.

The selling stockholders may be entitled under agreements entered into with
us to indemnification from us against liabilities under the Securities Act.

In order to comply with certain state securities laws, if applicable, these
shares of Class A common stock will not be sold in a particular state unless
they have been registered or qualified for sale in that state or any exemption
from registration or qualification is available and complied with.

LEGAL MATTERS

The validity of the issuance of the shares of common stock offered by this
prospectus will be passed upon for us by Fulbright & Jaworski L.L.P., New York,
New York.

EXPERTS

The financial statements and schedules included in this prospectus and in
the Registration Statement have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their reports (which contain an explanatory paragraph regarding our ability to
continue as a going concern) appearing elsewhere herein and in the Registration
Statement and are included in reliance upon such reports given upon the
authority of said firm as experts in auditing and accounting. Grant Thornton
LLP, independent certified public accountants, have audited our consolidated
financial statements at June 30, 1999, as set forth in their report.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES

Our corporation is organized under the laws of the State of Delaware.
Section 145 of the DGCL, in general, empowers a Delaware corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any lawsuit or proceeding (other than an action by or in the right of that
corporation) due to the fact that such person is or was a director, officer,
employee or agent of that corporation, or is or was serving at the request of
that corporation as a director, officer, employee or agent of another
corporation or entity. A corporation is also allowed, in advance of the final
disposition of a lawsuit or proceeding, to pay the expenses (including
attorneys' fees) incurred by any officer, director, employee or agent in
defending the action, as long as the person undertakes to repay this amount if
it is ultimately determined that he or she is not entitled to be indemnified by
the corporation. In addition, Delaware law allows a corporation to indemnify
these persons against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by any of them in
connection with the lawsuit or proceeding if (a) he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and (b) with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful.

A Delaware corporation also can indemnify its officers and directors in an
action by or in the right of the corporation to procure a

judgment in its favor under the same conditions, except that judicial approval
is needed to indemnify any officer or director who is adjudged to be liable to
the corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any such action, the corporation must indemnify him
or her against the expenses (including attorneys' fees) which he or she actually
and reasonably incurred in connection with this action. The indemnification
provided by Delaware law is not deemed to be exclusive of any other rights to
which an officer or director may be entitled under any corporation's own
organizational documents, agreements or otherwise.

As permitted by Section 145 of the DGCL, Article VI of our restated
certificate of incorporation provides that we will indemnify each person who is
or was our director, officer, employee or agent (including the heirs, executors,
administrators or estate of these individuals) or is or was serving at our
request as a director, officer, employee or agent of another entity, to the
fullest extent that the law permits. This indemnification is exclusive of any
other rights to which any of these individuals otherwise may be entitled. The
indemnification also continues after a person ceases to be a director, officer,
employee or agent of our company and inures to the benefit of the heirs,
executors and administrators of these individuals. Expenses (including
attorneys' fees) incurred in defending any lawsuit or proceeding are also paid
by us in advance of the final disposition of these lawsuits or proceedings after
we receive an undertaking from the indemnified person to repay this amount if it
is ultimately determined that he or she is not entitled to be indemnified by us.
Article VI further provides that our directors are not personally liable to us
or our stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of his or her duty of loyalty
to us or our stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL (which deals with unlawful dividends or stock purchases
or redemptions), or (iv) for any transaction from which he or she derived an
improper personal benefit. Our By-laws also provide that, to the fullest extent
permitted by law, we will indemnify any person who is a party or otherwise
involved in any proceeding because of the fact that he or she is or was a
director or officer of our company or was serving at our request.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to any of these foregoing provisions, or otherwise, we have been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may inspect and
copy any document we file at the SEC's Public Reference Room at 450 Fifth
Street, N.W. Washington, D.C. 20549 or at the SEC's other public reference
facilities in New York, New York, or Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's web site on the Internet
at http://www.sec.gov. This web site contains reports, proxy and information
statements and other information regarding our company and other registrants
that file electronically with the SEC.

INDEX TO FINANCIAL STATEMENTS

PAGE
----

TELYNX, INC. AND SUBSIDIARIES [FORMERLY CAMBIO, INC.] CONSOLIDATED FINANCIAL
STATEMENTS:
Report of Independent Certified Public Accountants - BDO Seidman, LLP .......... F-2
Report of Independent Certified Public Accountants - Grant Thornton, LLP ....... F-3
Consolidated Financial Statements:
Balance Sheets ............................................................... F-4
Statements of Operations ..................................................... F-5
Statements of Stockholders' Deficit .......................................... F-6
Statements of Cash Flows ..................................................... F-9
Notes to Financial Statements ................................................ F-10

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders of Telynx, Inc.

We have audited the accompanying consolidated balance sheets of Telynx, Inc. (a
Delaware corporation) and subsidiaries (formerly Cambio, Inc.) as of June 30,
2000 and October 31, 2000, and the related consolidated statements of
operations, stockholders' deficit and cash flows for the year ended June 30,
2000 and the four months ended October 31, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Telynx,
Inc. and subsidiaries as of June 30, 2000 and October 31, 2000, and the
consolidated results of their operations and their cash flows for the year and
the four months then ended, respectively, in conformity with accounting
principles generally accepted in the United States of America.

We also audited the adjustments described in Note 3 to the consolidated
financial statement pertaining to the reverse stock split that were applied to
restate the 1999 consolidated financial statements. In our opinion, such
adjustments are appropriate and have been properly applied.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the consolidated
financial statements, the Company incurred a net loss of $5,385,000 and
$1,645,000 during the year ended June 30, 2000 and the four months ended October
31, 2000, and, as of October 31, 2000, the Company's liabilities exceeded its
current assets and total assets by $4,063,000 and $3,242,000, respectively.
These factors, among others, as discussed in Note 2 to the consolidated
financial statements, raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ BDO Seidman, LLP

Dallas, Texas
November 13, 2001

F-2

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders of Telynx, Inc.

We have audited the accompanying consolidated statements of operations, changes
in stockholders' deficit and cash flows of Telynx, Inc. and subsidiaries
(formerly Cambio, Inc.) for the year ended June 30, 1999 (which have been
restated and are no longer presented herein). These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and the
consolidated cash flows of Telynx, Inc. and subsidiaries for the year ended June
30, 1999, in conformity with accounting principles generally accepted in the
United States of America.

/s/ GRANT THORNTON LLP

San Jose, California
September 1, 1999

F-3

TELYNX, INC. AND SUBSIDIARIES [FKA CAMBIO, INC.]
CONSOLIDATED BALANCE SHEETS

JUNE 30, OCTOBER 31, JULY 31,
ASSETS 2000 2000 2001
---------------------------------------------- ------------ ------------ ------------
(UNAUDITED)

Current Assets
Cash and cash equivalents .................... $ 302,000 $ 42,000 $ 143,000
Accounts receivable .......................... 161,000 398,000 295,000
Deposits and prepaid expenses ................ 25,000 85,000 120,000
------------ ------------ ------------
Total Current Assets ...................... 488,000 525,000 558,000

Net assets of discontinued operations ............ -- 641,000 --
Deferred financing cost, net ..................... -- 110,000 147,000
Property and equipment, net ...................... 62,000 70,000 37,000
------------ ------------ ------------
$ 550,000 $ 1,346,000 $ 742,000
============ ============ ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts payable and accrued liabilities ..... $ 2,496,000 $ 2,794,000 $ 3,747,000
Notes payable of discontinued operations ..... 678,000 678,000 --
Notes payable to stockholders ................ 478,000 396,000 463,000
Payable to investor .......................... -- -- 250,000
Deferred revenue ............................. 15,000 70,000 35,000
------------ ------------ ------------
Total current liabilities ................. 3,667,000 3,938,000 4,495,000
------------ ------------ ------------
Convertible notes payable to investors ........... -- 650,000 460,000

Commitments and contingencies

Stockholders' deficit (Note 3)
Preferred stock, $.01 par value - 1,000,000
shares authorized 4,567 shares issued and -- -- --
outstanding June 30, 2000; 500 shares issued
and outstanding October 31, 2000 and July 31,
2001 Common stock, $.01 par value -
1,005,000,000 shares authorized 19,679,675
shares issued and outstanding June 30, 2000;
24,868,477 shares issued and outstanding
October 31, 2000; 196,310,969 shares issued
and outstanding July 31, 2001 ............... 197,000 249,000 1,963,000
Paid-in capital .............................. 26,643,000 28,111,000 30,448,000
Accumulated deficit .......................... (29,957,000) (31,602,000) (36,624,000)
------------ ------------ ------------
Total stockholders' deficit ............... (3,117,000) (3,242,000) (4,213,000)
------------ ------------ ------------
Total liabilities and stockholders'
deficit .................................. $ 550,000 $ 1,346,000 $ 742,000
============ ============ ============

See accompanying notes to consolidated financial statements

F-4

TELYNX, INC. AND SUBSIDIARIES [FKA CAMBIO, INC.]
CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED FOUR MONTHS ENDED NINE MONTHS ENDED
JUNE 30, OCTOBER 31, JULY 31
----------------------------- -------------------------- ----------------------------
2000 1999 2000 1999 2001 2000
------------- ------------ ----------- ----------- ----------- ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)

Net revenues ..................... $ 983,000 $ 823,000 $ 352,000 $ 272,000 $ 556,000 $ 789,000
Cost of revenue .................. 264,000 286,000 107,000 120,000 147,000 144,000
----------- ------------ ----------- ----------- ----------- -----------
Gross profit ............. 719,000 537,000 245,000 152,000 409,000 645,000
----------- ------------ ----------- ----------- ----------- -----------

Operating expenses
Sales and marketing ........... 1,121,000 245,000 387,000 422,000 763,000 729,000
Services ...................... 421,000 214,000 181,000 142,000 452,000 311,000
Research and development ...... 594,000 280,000 254,000 262,000 619,000 401,000
Administrative and general
expenses ..................... 3,894,000 3,912,000 1,625,000 897,000 2,298,000 2,635,000
----------- ------------ ----------- ----------- ----------- -----------
Total operating
expenses ................ 6,030,000 4,651,000 2,447,000 1,723,000 4,132,000 4,076,000
----------- ------------ ----------- ----------- ----------- -----------
Loss from operations ..... (5,311,000) (4,114,000) (2,202,000) (1,571,000) (3,723,000) (3,431,000)
----------- ------------ ----------- ----------- ----------- -----------
Other income (expense)
Interest income ............... 24,000 13,000 -- 15,000 -- 9,000
Interest expense .............. (98,000) (66,000) (84,000) (38,000) (1,299,000) (79,000)
Write-off of goodwill ......... -- (4,850,000) -- -- --
Other, net .................... -- 15,000 -- -- -- --
----------- ------------ ----------- ----------- ----------- -----------
Total other expense ...... (74,000) (4,888,000) (84,000) (23,000) (1,299,000) (70,000)
----------- ------------ ----------- ----------- ------------ -----------
Loss from continuing
operations ................... (5,385,000) (9,002,000) (2,286,000) (1,594,000) (5,022,000) (3,501,000)
----------- ------------ ----------- ----------- ----------- -----------
Discontinued operations
Gain/(Loss) from disposal of
discontinued operations ..... -- (1,013,000) 641,000 -- -- --
----------- ------------ ----------- ----------- ----------- -----------

Gain/(Loss) from discontinued
operations ................... -- (1,013,000) 641,000 -- -- --
----------- ------------ ----------- ----------- ----------- -----------
Net loss ......................... $(5,385,000) $(10,015,000) $(1,645,000) $(1,594,000) $(5,022,000) $(3,501,000)
=========== ============ =========== =========== =========== ===========
Basic and diluted net loss per
common share-continued operations
(Note 3) ........................ $ (0.76) $ (5.04) $ (0.10) $ (0.80) $ (0.07) $ (0.30)
Basic and diluted net
gain/(loss) per common
share-discontinued operations
(Note 3) ........................ $ -- $ (0.56) $ 0.03 $ -- -- --
----------- ------------ ----------- ----------- ----------- -----------
Basic and diluted net loss per
common share .................... $ (0.76) $ (5.60) $ (0.07) $ (0.80) $ (0.07) $ (0.30)
=========== ============ =========== =========== =========== ===========
Weighted average shares
outstanding (Note 3) ............ 7,095,483 1,787,230 22,502,458 1,993,015 74,973,086 11,764,338
=========== ============ =========== =========== =========== ===========

See accompanying notes to consolidated financial statements

F-5

TELYNX, INC. AND SUBSIDIARIES [FKA CAMBIO, INC.]
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 1999 & 2000 (NOTE 3)

TOTAL
PREFERRED STOCK CLASS A CLASS B STOCK-
----------------- -------------------- -------------------- PAID-IN ACCUM. HOLDERS
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT DEFICIT
------- -------- ---------- -------- ---------- -------- ----------- ------------ ------------

Balance, --June 30,
1998 -- $ -- 717,035 $ 7,000 579,750 $ 6,000 $17,618,000 $(14,557,000) $ 3,074,000

Net Loss -- -- -- -- -- -- -- (10,015,000) (10,015,000)
Issuance of
Common Stock
In connection
with Cambio
Networks,
Inc. acquisition -- -- 619,421 6,000 -- -- 613,000 -- 619,000

Conversion of
debt into
preferred stock 14,073 -- -- -- -- -- 1,407,000 -- 1,407,000

Issuance of
Preferred Stock 37,000 1,000 -- -- -- -- 3,699,000 -- 3,700,000

Conversion of
Class B to
Class A stock -- -- 579,750 6,000 (579,750) (6,000) -- -- --
------- -------- ---------- -------- ---------- -------- ----------- ------------ ------------
Balance, --June 30,
1999 51,073 1,000 1,916,206 19,000 -- -- 23,337,000 (24,572,000) (1,215,000)

Net Loss -- -- -- -- -- -- -- (5,385,000) (5,385,000)

Issuance of
Common Stock
including
4,271,000
shares issued
for proceeds
of $1,483,000 -- -- 6,136,969 62,000 -- -- 3,188,000 -- 3,250,000

Conversion of
Preferred Stock
into Class A
stock (46,506) (1,000) 11,626,500 116,000 -- -- (115,000) -- --

Options Granted
and Warrants
issued -- -- -- -- -- -- 233,000 -- 233,000
------- -------- ---------- -------- ---------- -------- ----------- ------------ ------------

Balance, --June 30,
2000 4,567 -- 19,679,675 $197,000 -- -- $26,643,000 $(29,957,000) $ (3,117,000)
======= ======== ========== ======== ========== ======== =========== ============ ============

See accompanying notes to consolidated financial statements

F-6

TELYNX, INC. AND SUBSIDIARIES [FKA CAMBIO, INC.]
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE FOUR MONTHS ENDED OCTOBER 31, 2000
(Note 3) (continued)

Balance, July 1,
2000 4,567 -- 19,679,675 $197,000 -- -- $26,643,000 $(29,957,000) $ (3,117,000)

Net Loss -- -- -- -- -- -- -- (1,645,000) (1,645,000)

Warrants issued
with convertible debt -- -- -- -- -- -- 373,000 -- 373,000
------- -------- ---------- -------- ---------- -------- ----------- ------------ ------------

Conversion of
convertible note to
common stock -- -- -- -- -- -- 99,000 -- 99,000
------- -------- ---------- -------- ---------- -------- ----------- ------------ ------------

Issuance of Common
Stock including
2,740,000 shares
issued for proceeds
of $675,000 -- -- 4,172,052 42,000 -- -- 1,006,000 -- 1,048,000

Conversion of
Preferred Stock t
Class A Stock (4,067) -- 1,016,750 10,000 -- -- (10,000) -- --
------- -------- ---------- -------- ---------- -------- ----------- ------------ ------------

Balance, October 31,
2000

500 -- 24,868,477 $249,000 -- -- $28,111,000 $(31,602,000) $ (3,242,000)
======= ======== ========== ======== ========== ======== =========== ============ ============

F-7

TELYNX, INC. AND SUBSIDIARIES [FKA CAMBIO, INC.]
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE NINE MONTHS ENDED JULY 31, 2001 (unaudited)
(Note 3) (continued)

TOTAL
PREFERRED STOCK CLASS A CLASS B STOCK-
----------------- ---------------------- -------------------- PAID-IN ACCUM. HOLDERS
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT DEFICIT
------- -------- ---------- ---------- ---------- -------- ----------- ------------ -----------

Balance, November 1,
2000 (unaudited) 500 -- 24,868,477 $249,000 -- -- $28,111,000 $(31,602,000) $(3,242,000)

Net Loss (unaudited) -- -- -- -- -- -- 5,022,000) (5,022,000)

Beneficial
Conversion Expense
(unaudited) -- -- -- -- -- -- 1,758,000 -- 1,758,000

Exchange Common to
Series C Preferred Stock
(unaudited) 1,260 -- (8,276,233) (83,000) -- -- 83,000 -- --

Conversion of
Series C Preferred Stock
to Class A Stock
(unaudited) (1,260) -- 100,800,000 1,008,000 -- -- (1,008,000) -- --

Conversion of debt
and interest into
Class A common
stock less deferred
finance costs of -- -- 66,065,967 661,000 -- -- 1,396,000 -- 2,057,000
$184,000 (unaudited)

Issuance of Common
Stock, including
2,900,000 shares
issued for proceeds
of $145,000
(unaudited) -- -- 12,852,758 128,000 -- -- 108,000 -- 236,000
------- -------- ----------- ---------- --------- -------- ----------- ------------ -----------

Balance, July 31,
2001 (unaudited) 500 $ -- 196,310,969 $1,963,000 -- -- $30,448,000 $(36,624,000) $(4,213,000)
======= ======== =========== ========== ========= ======== =========== ============ ===========

See accompanying notes to consolidated financial statements

F-8

TELYNX, INC. AND SUBSIDIARIES [FKA CAMBIO, INC.]
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED FOUR MONTHS ENDED NINE MONTHS ENDED
JUNE 30, OCTOBER 31, JULY 31,
------------------------- ------------------------ ------------------------
2000 1999 2000 1999 2001 2000
----------- ------------ ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)

Cash flows from operating activities:
Net loss ..................................... $(5,385,000) $(10,015,000) $(1,645,000) $(1,594,000) $(5,022,000) $(3,501,000)
Adjustments to reconcile net loss to
cashused in operating:
Depreciation and amortization ............. 97,000 195,000 41,000 38,000 49,000 66,000
Write-off of goodwill ..................... -- 4,850,000 -- -- -- --
Expenses and settlements paid with
equity ................................... 1,594,000 -- 349,000 17,000 91,000 1,536,000
Beneficial conversion costs of
convertible debt and warrants ............ -- -- 23,000 -- 1,249,000 --
----------- ------------ ----------- ----------- ----------- -----------
Gain on sale of equipment ................. -- (2,000) -- -- -- --
(Gain)/Loss from discontinued
operations ............................... -- 1,013,000 (641,000) -- -- --
Changes in assets and liabilities:
Receivables ............................. 42,000 (5,000) (237,000) (76,000) 103,000 (25,000)
Prepaid expenses ........................ 10,000 60,000 (60,000) 9,000 (35,000) (23,000)
Other assets ............................ 12,000 (25,000) -- -- (37,000) 14,000
Net assets of discontinued
operations ............................. -- (211,000) -- -- -- --
Accounts payable and accrued
liabilities ............................ 214,000 974,000 298,000 (296,000) 953,000 (120,000)
Deferred revenue ....................... (77,000) (123,000) 55,000 (89,000) (35,000) 76,000
----------- ------------ ----------- ----------- ----------- -----------
Net cash used in operating
activities .......................... (3,493,000) (3,289,000) (1,817,000) (1,991,000) (2,684,000 (1,977,000)
----------- ------------ ----------- ----------- ----------- -----------

Cash flows from investing activities:
Proceeds from sale of equipment .............. -- 25,000 -- -- -- --
Additions to property and equipment .......... (18,000) (143,000) (39,000) (9,000) (16,000) (28,000)
Cash advanced to acquired company ............ -- (638,000) -- -- -- --
Costs related to acquisition ................. -- (100,000) -- -- -- --
----------- ------------ ----------- ----------- ----------- -----------
Net cash used in investing
activities .......................... (18,000) (856,000) (39,000) (9,000) (16,000) (28,000)
----------- ------------ ----------- ----------- ----------- -----------

Cash flows from financing activities:
Proceeds from issuance of convertible debt ... -- -- 880,000 378,000 2,600,000 880,000
Proceeds from issuance of stock and warrants . 1,483,000 3,700,000 675,000 -- 145,000 1,287,000
Proceeds from exercise of stock options ...... -- -- 24,000 36,000 -- --
Borrowings on debt ........................... 407,000 64,000 -- -- 67,000 245,000
Net proceeds of loans collateralized by
assets of discontinued operations ........... -- 678,000 -- -- -- --
Decrease in restricted cash .................. -- 302,000 -- -- -- --
Other ........................................ -- -- 17,000 (1,000) (11,000) --
----------- ------------ ----------- ----------- ----------- -----------
Net cash provided by financing
activities .......................... 1,890,000 4,744,000 1,596,000 413,000 2,801,000 2,412,000
----------- ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents .................................. (1,621,000) 599,000 (260,000) (1,587,000) 101,000 407,000
Cash and cash equivalents, beginning of
period ........................................ 1,923,000 1,324,000 302,000 1,923,000 42,000 381,000
----------- ------------ ----------- ----------- ----------- -----------
Cash and cash equivalents, end of period ....... $ 302,000 $ 1,923,000 $ 42,000 $ 336,000 $ 143,000 $ 788,000
=========== ============ =========== =========== =========== ===========
Supplemental disclosure of cash flow
information:
Interest paid ............................ $ 17,000 $ 21,000 $ -- $ 12,000 $ -- $ --
Income taxes paid ........................ $ -- $ -- $ -- $ -- $ -- $ --

Supplemental disclosure of non-cash
investing and financing activities:

Purchase of Cambio Networks, Inc.
Common stock issued to seller .................. -- $ 619,000 -- -- -- --
Liabilities assumed (including cash advanced
prior to acquisition of $1,513,000) -- $ 4,658,000 -- -- -- --
Non-cash financing activity: ...................
Acquisition costs .............................. -- $ 100,000 -- -- -- --
Assets acquired (incl. goodwill of
$4,875,000) ................................... -- $ 5,377,000 -- -- -- --
Conversion of debt into preferred stock......... -- $ 1,207,000 -- -- -- --
Conversion of debt into common stock ........... $ 178,000 -- $ 99,000 -- $ 2,057,000 $ 358,000
Conversion of accruals into common stock........ $ 228,000 -- -- -- -- --
Conversion of preferred stock into common
stock ......................................... $ 116,000 -- -- -- $ 1,008,000 $ 232,000
Conversion of common into preferred ............ $ -- -- -- -- $ 83,000 $ --
Warrants issued on convertible debt ............ $ -- -- $ 373,000 -- $ -- $ --
Discount of beneficial conversion on debt ...... $ -- -- -- -- $ 1,758,000 $ --
Payment of Imperial Loan debt................... -- -- -- -- $ 678,000 --
----------- ------------ ----------- ----------- ----------- -----------

See accompanying notes to consolidated financial statements

F-9

TELYNX, INC. AND SUBSIDIARIES [FKA CAMBIO, INC.]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND OPERATIONS

Telynx, Inc. ("Telynx" or the "Company"), formerly Meadowbrook
Rehabilitation Group, Inc. and Cambio, Inc. acquired Cambio Networks, Inc.
("Networks") on September 14, 1998. The Company currently provides professional
services and supplies software products for operations support systems of
telecommunications networks. The Company's primary product is Telynx. The
Company's corporate headquarters is in El Paso, Texas. The Company's accounting,
finance, and research and development functions are located in El Paso, Texas.
The Company also has sales executives located in the United Kingdom and Egypt.

Prior to the acquisition of Networks, the Company provided outpatient, home
health, and traditional acute, sub-acute and post-acute comprehensive
rehabilitation services through several subsidiaries. In the fourth quarter of
fiscal 1998, the Company's Board of Directors decided to discontinue the
Company's remaining rehabilitation operations due to continued losses and a
diminishing market for the Company's services. Previously, several of the
Company's service locations and units had been sold or otherwise disposed. In
connection with the decision to discontinue the remaining operations, the
Company recorded a charge of $1,563,000 for the write down of tangible and
intangible assets, termination and severance costs and other costs of disposal.
As of June 30, 1998, all health care operations had substantially ceased and the
Company's assets consisted almost exclusively of cash and accounts receivable.

On February 2, 1999, the Company transferred all of the issued and
outstanding stock of the discontinued healthcare subsidiaries (the
"Subsidiaries") to Imperial Loan Management Corporation ("Imperial"). The
Company received no proceeds from the transfer. Prior to the transfer, Imperial
loaned $900,000 to the Subsidiaries and Telynx, represented by 10% notes payable
due February 1, 2000. There is a subsequent agreement allowing for interest to
remain accruing along with a monthly collection fee payable to Imperial.
Imperial uses its best efforts to liquidate each of the Subsidiaries, settle
outstanding obligations and collect all amounts receivable. Telynx remains a
guarantor of the Imperial loans, amounting to $678,000 as of October 31, 2000.
Upon liquidation of the Subsidiaries and settlement of the outstanding
indebtedness, Telynx is entitled to receive one-half of the proceeds remaining
after payment of Imperial's expenses. At October 31, 2000, the assets and
liabilities of the discontinued businesses consist primarily of the accounts
receivable and the Imperial loans. The Company has received information from
Imperial that $641,000 has been collected on the liquidation of the subsidiaries
effective January 4, 2001. The Company has therefore changed its estimate of net
asset value on the receivables to $641,000. For the four months ended October
31, 2000, the Company recorded a charge by decreasing the valuation allowance
against the assets with an offsetting $641,000 gain from disposal of
discontinued operations on the income statement. The Company considers the
realization of the remaining assets to be unlikely and the assets have been
fully reserved. All other material obligations of the Subsidiaries have been
settled, including the Imperial loans which were paid off effective January 4,
2001.

Results of discontinued operations are as follows:

Four Months
Year Ended Ended
----------------------- October 31,
2000 1999 2000
-------- ----------- -----------

Net revenues .................................................. $ -- $ -- $ --
Net expenses .................................................. -- -- --
-------- ----------- --------
Net income/(loss) from operations of discontinued businesses .. $ -- $ -- $ --
======== =========== ========

Net income/(loss) on disposal of discontinued businesses ...... $ -- $(1,013,000) $641,000
======== =========== ========

The operations of Networks are reflected in the Company's fiscal year 1999
results from the date that Networks was acquired by the Company. Pro forma
results for 1999 are not presented, as the results would not be materially
different than the results reported.

F-10

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As shown in the
consolidated financial statements, the Company incurred net losses of $5,385,000
and $10,015,000 during the years ended June 30, 2000 and 1999, and the Company
incurred net losses of $1,645,000 during the four months ended October 31, 2000.
As of October 31, 2000, the Company's current liabilities exceeded its current
assets and total assets by $4,063,000 and $3,242,000, respectively. These
conditions give rise to substantial doubt about the Company's ability to
continue as a going concern. No assurances can be given that they will be
successful. The financial statements do not contain any adjustments for the
outcome of this uncertainty.

As discussed in Note 5, in July 2000 the Company entered into a Subscription
Agreement (the "Subscription Agreement") whereby the Company offered for sale up
to $17,000,000 principal amount of 6% convertible notes (the "Notes") and
issuance of common stock purchase warrants, as defined in the Subscription
Agreement. Through July 31, 2001, the Company sold $3,000,000 in Notes with
proceeds, net of fees, of $2,700,000.

In order to comply with recent Securities Exchange Commission regulations,
the equity line has been terminated and no further investments will be made in
the Company under the equity line. Certain of the subscribers under the former
equity line may provide future financings needed by the Company. As yet, there
is not an agreement on the nature and magnitude of the commitments nor when we
expect that financing to close. Discussions between the parties are continuing.
For the foreseeable future, the Company intends to cover its operating needs
with its current cash flow generated through sales of Company products and
services and cost reduction measures.

NOTE 3 - SUMMARY OF ACCOUNTING POLICIES

A summary of the Company's significant accounting policies applied in the
preparation of the accompanying financial statements follows.

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND REVERSE STOCK SPLIT

The consolidated financial statements as of July 31, 2001 and for the four
months ended October 31, 1999, the nine months ended July 31, 2001 and 2000, are
unaudited, and have been prepared on the same basis as the audited financial
statements included herein. In the opinion of management, such unaudited
financial statements include all adjustments consisting of normal recurring
accruals necessary to present fairly the information set forth therein. Results
for interim periods are not indicative of results to be expected for an entire
year. In November 2000, the Company adopted an October 31 year-end.

Effective June 4, 2001, our shareholders voted in a special meeting to amend
the articles of incorporation to effect a 1-for-2 reverse stock split, and this
split is reflected retroactively to the first period presented in the financial
statements. Also, during that meeting, authorized shares were increased to
1,000,000,000 for Class A common stock.

REVENUE RECOGNITION

Revenue is recognized when earned in accordance with American Institute of
Certified Public Accountants Statements of Position ("SOP") 97-2, "Software
Revenue Recognition," as amended by SOP 98-9, giving proper attention to facts
such as persuasive evidence of an arrangement by a signed contract or purchase
order from the customer, delivery has occurred, fee is fixed and determinable,
and collectibility is probable. Revenue from products licensed to customers
directly and distributed by

F-11

resellers of telecommunications software is recorded when the software has been
delivered to the customer or end user. Maintenance revenue is recognized ratably
over the maintenance contract period. Revenue from professional services are
recorded monthly when the services are performed and invoiced. All software
revenues relate to products directly licensed to customers. Currently the
Company does not have revenues for products not directly licensed to the
customer. As the Company's sales contract or arrangement contains multiple
elements including software, maintenance, implementation and training, revenue
is determined using separate element value based on vendor specific objective
evidence of fair value. The Company's software product can stand alone as a
separate product. Though the Company recognizes the ability of their software
licenses to be sold exclusive of installation, maintenance and training, and
though they recognize that separate sale may be an appropriate strategy, they
have not acted upon nor have they offered to sell their software licenses in
that manner yet. The Company's maintenance contracts have options for annual
renewals. The Company makes provision for bad debts and sales returns during the
accounting period when the Company realizes it is probable that the receivable
may not be collected or that a return is likely. Based on operating history,
returns are rare and currently estimated at zero.

CONSOLIDATION

The consolidated financial statements include the accounts of Telynx and
Networks. All significant intercompany accounts and transactions have been
eliminated.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided for under the
straight-line method in amounts sufficient to relate the cost of depreciable
assets to operations over their estimated service lives, which range from one to
five years. Leasehold improvements are amortized over the lesser of the lease
term or the estimated useful life of the assets.

RESEARCH AND DEVELOPMENT COSTS

All expenditures for research and development are expensed when incurred.
Software development costs are charged to expense until technological
feasibility of the computer software product has been established. No software
development costs have been capitalized through October 31, 2000, as costs
incurred after establishing technological feasibility have been immaterial.

INCOME TAXES

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. When management determines that it is more likely than not that a
deferred tax asset will not be realized, a valuation allowance is established.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of cash and cash equivalents, accounts receivables and
accounts payables approximates carrying value due to the short maturity of such
instruments. The fair value of debt with related parties is not readily
determinable due to the terms of the debt and no comparable market for such
debt.

USE OF ESTIMATES

In preparing the Company's financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

LOSS PER SHARE

Basic loss per share is computed using the weighted average number of common
shares outstanding during the period. Diluted loss per share is computed using
the weighted average number of common and dilutive potential common shares
outstanding during the period. Potential common shares, consisting of options
and warrants, have not been included in computing diluted EPS

F-12

for the four months ending October 31, 2000 and fiscal years ending 2000 and
1999 as their effects are antidilutive. The per share information in the
financial statements give retroactive effect, to the earliest period presented,
to the June 4, 2001 reverse stock split.

CASH AND CASH EQUIVALENTS

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

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents and trade
accounts receivable. Cash equivalents are maintained with high quality
institutions and are regularly monitored by management. The Company extends
credit to its customers, most of whom are large, established companies. Credit
risk is mitigated by performing ongoing credit evaluations of its customers'
financial condition. The Company generally does not require collateral. The
Company provides an allowance for expected uncollectible amounts and actual
amounts not collected have been within management's expectations.

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company accounts for stock-based awards to employees using the intrinsic
value method in accordance with Accounting Principles Board Opinion No. 25,
"Accounting For Stock Issued To Employees." The Company provides additional pro
forma disclosures as required under Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting For Stock-Based Compensation."

SEGMENT REPORTING

The Company currently has one operating segment based on the markets in
which the Company operates and the information used to manage the business.
Identifiable assets held outside the United States are not material. Revenues
attributable to customers outside the United States, amounted to $65,000 and
$36,000, primarily in Egypt and Malaysia, respectively, for the four months
ended October 31, 2000, $665,000 and $147,000, primarily in Egypt and Malaysia,
respectively, for the twelve months ended June 30, 2000 and $479,000, primarily
in Egypt, in 1999.

GOODWILL

In 1999, the Company recorded an impairment loss on the goodwill associated
with the Networks acquisition, as the products obtained in the acquisition were
no longer being sold by the Company.

NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Board has issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended by SFAS No. 137, which
is effective for financial statements issued for periods beginning after June
15, 2000. SFAS No. 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The adoption is
not expected to materially impact the results of operations, financial position
and financial statement disclosures in the period in which it is adopted, and is
not expected to have a significant impact on future financial statements.

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 outlines the basic criteria that must be met to recognize
revenue and provides guidance for disclosure related to revenue recognition
policies. In June 2000, the SEC issued SAB 101 that delayed the implementation
date of SAB 101 until the quarter ended December 31, 2000 with retroactive
application to the beginning of our fiscal year. The Company does not expect the
adoption of SAB 101 to have a material impact on its financial position of
results of operations.

In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - an Interpretation of APB No.
25" ("FIN 44"). FIN 44 clarified the application of Opinion No. 25 for certain
issues including: (a)

F-13

the definition of employee for purposes of applying Opinion No. 25, (b) the
criteria for determining whether a plan qualifies as a non-compensatory plan,
(c) the accounting consequences of various modifications to the terms of a
previously fixed stock option or various modifications to the terms of a
previously fixed stock option or award, and (d) the accounting for an exchange
of stock compensation awards in a business combination. In general, FIN 44 is
effective July 1, 2000. The Company does not expect the adoption of FIN 44 to
have a material impact on its financial position or results of operations.

In June 2001, the Financial Accounting Standards Board issued SFAS 141,
Business Combinations, and SFAS 142, Goodwill and Other Intangible Assets. SFAS
141 requires business combinations initiated after June 30, 2001 to be accounted
for using the purchase method of accounting. It also specifies the types of
acquired intangible assets that are required to be recognized and reported
separately from goodwill. SFAS 142 will require that goodwill and certain
intangibles no longer be amortized, but instead tested for impairment at least
annually. SFAS 142 is required to be applied starting with fiscal years
beginning after December 15, 2001. The Company does not expect adoption SFAS 141
and 142 to affect the results of past transactions. However, all future business
combinations will be accounted for under the purchase method, which may result
in the recognition of goodwill and other intangible assets, some of which will
be recognized through operations, either by amortization or impairmentcharges,
in the future.

The Financial Accounting Standards Board has issued SFAS 143, "Accounting
for Asset Retirement Obligations," and SFAS 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets". SFAS 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. Legal obligations are
obligations that a party is required to settle as a result of an existing or
enacted law, statute, ordinance or contract. This statement amends SFAS 19,
"Financial Accounting and Reporting by Oil and Gas Producing Companies". SFAS
144 develops one accounting model based on the framework established in SFAS
121, "Accounting for the Impairment of Long-Lived Assets to be Disposed Of" and
to address significant implementation issues. The accounting model for
long-lived assets to be disposed of by sale applies to all long-lived assets,
including discontinued operations and replaces the provisions of APB 30,
Reporting Results of Operations - Discontinued Events and Extraordinary Items".
Management has not fully reviewed the impact, although the Management believes
these two statements will not have a material effect on the Company's results of
operations or its financial position.

RECLASSIFICATIONS

Certain items in 1999 have been reclassified to conform to the 2000
presentation. These reclassifications have no effect on the Company's financial
position or results of operations.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

June 30, October 31,
2000 2000
---- ----

Office and computer equipment ..................... $289,000 $318,000
Leasehold improvements ............................ 27,000 34,000
-------- --------
316,000 352,000
Less accumulated depreciation and amortization .... 254,000 282,000
-------- --------
$ 62,000 $ 70,000
======== ========

NOTE 5 - NOTES PAYABLE

F-14

Notes payable to stockholders are as follows:

June 30, October 31, July 31,
Notes Payable to Stockholders 2000 2000 2001
- ----------------------------- ---- ---- ----

7% convertible secured promissory notes -
payable on demand and secured by first
position on all assets of the Company ................ $250,000 $151,000 $151,000

8% unsecured promissory notes payable upon demand ..... 228,000 245,000 312,000
-------- -------- --------
Notes payable to stockholders ......................... $478,000 $396,000 $463,000
======== ======== ========

Convertible Notes
- -----------------

In July 2000, the Company entered into a Subscription Agreement, whereby up
to $17,000,000 principal amount of 6% convertible notes were offered for sale,
as well as associated stock purchase warrants (the "Warrants"). The notes have
various maturities from July 1, 2003 to July 18, 2004. The notes are subject to
certain performance covenants and registration rights, as defined in the
Subscription Agreement. The notes are convertible into the Company's Class A
common stock on a conversion price that is the lower of (1) 85% of the average
of the three lowest closing prices for the Company's common stock quoted on
principal market for the last 30 trading days but not including the issue date
of the note or (2) 78% of the average of the three lowest closing prices for the
Company's common stock quoted on the principal market for the last 90 trading
days prior to but not including the conversion date. Through July 31, 2001,
$3,000,000 has been funded pursuant to this agreement. Through July 31, 2001,
$1,672,000 of principal and accrued interest has been converted to common stock.
The Notes convert at the option of the holder and subject to certain mandatory
and optional redemption, as defined. The Warrants grant certain put provisions
to the holder, as defined in the Subscription Agreement. The Warrants are valued
at $373,000 using the Black-Scholes valuation model. The agreement has been
terminated and no further investments will be made to the Company under this
line.

F-15

Convertible Notes Payable to Investors June 30, 2000 October 31, 2000 July 31, 2001
-------------------------------------- ------------- ---------------- -------------
(UNAUDITED)

Gross proceeds ........................................ $ -- $1,000,000 $ 2,000,000

Conversion of debt to common stock .................... -- -- (1,672,000)
Value of attached warrants based on Black-Scholes
model ............................................... -- (373,000) --
Amortization of warrants .............................. -- 23,000 350,000
Beneficial conversion feature ......................... -- -- (1,758,000)
Discount amortized .................................... -- -- 40,000
Charge through to interest expense .................... -- -- 850,000
Balance beginning period .............................. -- -- 650,000
----- ---------- -----------
Total convertible notes payable to investors .......... $ -- $ 650,000 $ 460,000
===== ========== ===========

Consistent with Financial Accounting Standard Board Emerging Issues Task
Force Issue 98-5 and 00-27 on convertible instruments, the Company recorded a
discount against notes based on a beneficial conversion feature relative to a
fixed percentage conversion price of 78%, versus an alternative 80% which was
not as beneficial to the investor, based on a range of stock prices at date of
issuance. After consideration of the value of warrants attached, this discount
is calculated by, dividing the fair value at date of issuance divided by the
conversion price applicable on the issue date giving the number of shares
available at that period of time. This number of shares at note issuance is
multiplied by the difference of stock price at issuance less the exercise price
to derive the discount value to be booked. The Company records discounts as
charges against Notes Payable and credits to Additional Paid In Capital, after
considering allocations to Warrants, for both the value of the Warrants and the
beneficial conversion feature of the notes. The discounts are amortized against
interest expense using the effective interest method over the term of the note.
Unamortized portions of the discounts are charged against interest expense as
the notes are converted. The beneficial conversion feature of the first
$1,000,000 in convertible notes was measured at the agreement date, but not
recorded until December 2000 due to the contingent nature of the conversion.
The contingency was resolved in December 2000.

From July 2000 through July 31, 2001, the Company raised cash by issuance
of $3,000,000 of notes payable and applied discounts of $373,000 for Warrants
and $1,758,000 relative to the beneficial conversion feature on the notes. The
Company has amortized interest expense $23,000 and $40,000 of the discounts
associated with the Warrants in the four months ending October 2000 and the
notes for the nine months ended July 31, 2001, respectively. The Company
recorded conversions of $1,672,000 against which $350,000 and $850,000 of
unamortized discounts from warrants and beneficial conversion, respectively,
were charged as interest expense. This resulted in the Company reporting a
$460,000 net book value on the notes at July 31, 2001.

Investor Notes
- --------------

On January 19, 2001, the Company issued $350,000 in principal amount of
convertible notes bearing interest at 8% which were converted into 8,000,000
shares of The Company's common stock at the holder's option during the three
months ended April 30, 2001. Also, during the nine months ended July 31, 2001,
the Company received advances from the same subscriber of $250,000 which will be
converted into approximately 5,714,000 shares of the Company's common stock.

The following is a roll-forward of the payable to investors:

July 31,
2001
----

Issuance of 8% convertible note January 2001 ..... 350,000
Cash advances received from subscriber ........... 250,000
Conversion of 8% convertible notes ............... (350,000)
-------
Payable to investors ............................. 250,000
=======

F-16

INTEREST EXPENSE

The Company has incurred interest expense of $98,000 and $66,000 for the fiscal
years ending June 30, 2000 and 1999 respectively, and $84,000 and $38,000 for
the four month period ending October 31, 2000 and 1999 respectively. The Company
has also incurred interest expense of $1,299,000 and $79,000 for the nine month
period ending July 31, 2001 and 2000 respectively.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases its office and service facilities and certain equipment under
noncancellable and month-to-month operating lease agreements, which expire at
various dates through 2005. Future minimum lease payments under these agreements
for the fiscal years ending October 31, are as follows:

2001 ........ $185,000
2002 ........ 130,000
2003 ........ 104,000
2004 ........ 104,000
2005 ........ 70,000
--------
$593,000

Rent expense for the four months ended October 31, 2000 was $89,000. Rent
expense for the fiscal years ended June 30, 2000 and 1999 was $309,000 and
$419,000, respectively.

CONTINGENCIES

The Company is subject to Value Added Tax in the United Kingdom resulting
from the acquisition of Networks and is currently in the process of finalizing
the tax liability for all years since 1995. Management believes any liability
the Company may owe will not be material to the financial statements.

The Company is involved in certain claims and lawsuits occurring in the
normal course of business. Management, after consultation with outside legal
counsel, does not believe that the outcome of these actions would have a
material impact on the financial statements of the Company.

The Company is late on filings and payments of certain payroll taxes.
Management plans to meet with the Internal Revenue Service and establish a plan
to correct the deficiency and stay current.

NOTE 7 - EMPLOYEE BENEFIT PLANS

The Company has a defined contribution savings plan (401(k)) covering
substantially all employees who have completed three months of service. At the
discretion of the Board of Directors, the Company can match 50% of employee
contributions up to a total contribution of 3% of each employee's annual salary.
There were no employer contributions during the four months ended October 31,
2000 or in the twelve months ended June 30, 2000 and 1999.

NOTE 8 - STOCKHOLDERS' EQUITY

COMMON STOCK

In July 2000, the Company increased its authorized Class A common shares
from 50,000,000 shares to 200,000,000 shares. Effective June 4, 2001, the
Company has authorized 1,000,000,000 shares of Class A and 5,000,000 shares of
Class B Common Stock. During 1999, all shares of Class B Common Stock were
converted into Class A Common Stock.

On February 1, 2000, the Company consummated a private placement of common
stock pursuant to which the Company issued 333,333 shares of common stock at
$0.30 a share for an aggregate consideration of $100,000. Since February 2000
warrant holders have exercised all of their warrants pursuant to which the
Company issued 999,999 shares of common stock at $0.30 a share for an aggregate
consideration of $300,000. In April 2000, the Company consummated a private
placement of common stock pursuant to which the Company issued 400,000 shares
of common stock at $0.50 a share for an aggregate consideration of $200,000. In
May 2000, the Company consummated a private placement of common stock pursuant
to which it issued 1,390,000 shares of common stock at $.50 a share for an
aggregate consideration of $695,000. Also during the fiscal year ended June 30,
2000, the Company sold 1,147,718 shares of stock at approximately $0.16 for an
aggregate consideration of $188,000. The Company also received $233,000 for the
purchase of warrants and options of the Company's Class A common stock.

The Company issued 1,167,000 shares of stock for outside professional
services and employee expenses incurred at various dates during the year ended
June 30, 2000. The shares were issued at a weighted average grant-date fair
value of $1.16 for a total of approximately $1,361,000 charged against income
for the 12-month period ending June 30, 2000. The fair value used for each issue
is the daily market closing price of our publicly traded stock on the
Over-The-Counter Bulletin Board Market.

During the year ending June 30, 2000, the Company issued 699,000 shares of
stock for settlement of notes and accounts payable. The shares were issued at a
weighted average grant-date fair value of $0.58 for a total of approximately
$406,000. The fair value used for each issue is the daily market closing price
of our publicly traded stock on the Over-The-Counter Bulletin Board Market.

During the four months ended October 31, 2000, the Company consummated
various private placements of Class A common stock pursuant to which the Company
issued 2,740,000 shares for an aggregate consideration of $675,000.

F-17

During the four months ended October 31, 2000, the Company entered into
various agreements for consulting services to third parties and compensation
expense to Company employees paid for by the Company's Class A common stock.
Total shares issued for these services were 679,000 shares of the Company's
Class A common stock for a total consideration of $349,000. One employee
purchased 59,000 shares of stock through the exercise of vested options
purchased at $0.40 per share for consideration of $24,000. The Company also
issued 694,000 shares of the Company's Class A common stock as cost of capital.

During the nine months ended July 31, 2001, the Company consummated various
private placements of Class A common stock pursuant to which the Company issued
2,900,000 shares for an aggregate consideration of $145,000.

During the nine months ended July 31, 2001, the Company entered into
various agreements for consulting services to third parties and compensation
expense to Company employees paid for by the Company's Class A common stock.
Total shares issued for these services were 3,133,519 for an aggregate
consideration of $53,000. The Company also issued 6,820,000 shares of the
Company's Class A common stock as cost of capital.

During the nine months ended July 31, 2001, certain shareholders converted
convertible debt and interest of approximately $2,057,000 into 66,065,967 shares
of the Company's Class A common stock at a weighted average share price of
$0.031.

SALE OF PREFERRED STOCK

During 1999, the Company's Board of Directors approved the issuance of up to
62,500 shares of a newly created Convertible Preferred Stock designated as
Series B (the "Preferred Stock") for $100 per share. Each share of Preferred
Stock is convertible into 250 shares of the Company's Class A Common Stock and
is entitled to receive dividends in an amount equal to the equivalent per share
dividend declared on the Class A Common Stock when and as declared by the Board
of Directors.

On February 3, 1999, the following shares of preferred stock were issued
when the market price of common stock was $0.50, as adjusted for the 1-for-2
reverse stock split:

i. 7,548 shares were issued for the conversion of debt owing to Frederick
Adler in the amount of $754,800 and an additional 3,034 shares were
issued to Mr. Adler for $303,400 in cash; and

ii. 3,025 shares were issued for the conversion of debt owing to
Euro-America II, L.P. in the amount of $302,500 and an additional
1,216 shares were issued to Euro-America II, L.P. for $121,600 in
cash.

At various dates from May 1 to May 18, 1999, additional preferred stock was
issued when the market price of common stock was between $1.75 and $5.75, as
adjusted for the 1-for-2 reverse stock split:

i. 3,500 shares were issued for the conversion of debt in the amount of
$350,000; and

ii. 32,750 shares were issued for $3,275,000 in cash.

In all, 51,073 shares of Series B preferred stock have been issued from
February 3, 1999 to May 18, 1999 for the conversion of $1,407,300 in debt and
$3,700,000 for cash.

During 2000, certain preferred shareholders elected to convert 46,506 shares
of Preferred Stock into 11,626,500 shares of Class A Common Stock.

Also during the four months ended October 31, 2000, Series B preferred
stockholders presented 4,067 shares of Series B preferred stock for conversion
into 1,016,750 shares of Class A common stock.

On March 6, 2001, the Company's Board of Directors approved the issuance of
up to 100,000 shares of a newly created Series C convertible preferred stock
(the "Preferred C Stock") at $0.01 par value, issue price of $3,500.00 per
share. Each share of Preferred C Stock is convertible into 80,000 shares of our
Class A common stock, as adjusted to reflect a 1-for-2 reverse stock split
effected June 4, 2001. In May 2001, the Company issued a total of 1,260 shares
of Preferred C Stock to a group of investors in exchange for the Company's Class
A common stock. In June 2001, 1,260 shares of Preferred C Stock were converted
to shares of the Company's Class A common.

F-18

CONVERSION OF DEBT TO EQUITY

During fiscal year 2000, the Company converted notes payable of $178,000
into 395,000 shares of the Company's Class A Common Stock. Also during fiscal
year 2000, the Company converted trade payables and other liabilities of
$228,000 into 304,000 shares of the Company's Class A Common Stock. All of the
debt was converted based on the then current fair market value of our Class A
common stock on the date of issue.

In February 1999 and May 1999, the Company converted debt and accrued
interest of $1,057,000 and $350,000 into 10,573 and 3,500 shares of the
Company's Preferred Stock. The conversion is based on the current fair value of
our Class A common stock on the date of issue as converted to Series B
convertible preferred stock.

STOCK PLAN

The Company has in place the 1994 Stock Incentive Plan which has 511,250
shares available for grant. No options are outstanding from this plan.
Nonqualified stock options granted to employees in 2000 and 1999 outside the
1994 plan generally vest within three years and terminate ten years from the
date of grant.

Employee stock option activity is summarized as follows:

WEIGHTED
AVERAGE
EXERCISE
PRICE
SHARES PER SHARE
------ ---------

Balance at June 30, 1998 ....... 15,000 $ 5.46
Granted ................... 1,283,500 0.40
Exercised ................. --
Cancelled ................. (15,000) 5.46
--------- ------
Balance at June 30, 1999 ....... 1,283,500 $ 0.40
Granted ................... 1,842,000 0.40
Exercised ................. (864,000) 0.40
Cancelled ................. (644,000) 0.40
--------- ------
Balance at June 30, 2000 ....... 1,617,500 $ 0.40
Granted ................... -- 0.40
Exercised ................. (59,000) 0.40
Cancelled ................. (219,000) 0.40
--------- ------
Balance at October 31, 2000 .... 1,339,500 $ 0.40
========= ======

The following table summarizes information about stock options outstanding
as of October 31, 2000:

WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE NUMBER EXERCISE REMAINING NUMBER
PRICE OUTSTANDING PRICE LIFE (YEARS) EXERCISABLE
----- ----------- ----- ------------ -----------

$.40 1,339,500 $.40 5 623,000

F-19

The following table depicts the Company's pro forma results had compensation
expense for employee stock options been determined based on the fair value at
the grant dates as prescribed in SFAS No. 123:

Year Ended Year Ended 4 Months Ended
2000 1999 October 31, 2000
------------ --------- ----------------

Net loss applicable to common shareholders
As reported .............................. $(5,385,000) $(10,015,000) $(1,645,000)
Pro forma ................................ (5,594,000) (10,329,000) (1,645,000)

Basic and diluted net loss per share
As reported .............................. $ (0.76) $ (5.60) $ (0.07)
Pro forma ................................ (0.78) (5.78) (0.07)

The fair value of each option grant was determined using the Black-Scholes
model. The weighted average fair value of options granted to employees was $.48
and $.40 in 2000 and 1999, respectively. During the four months ended October
31, 2000, there were no grants issued. The following weighted average
assumptions were used to perform the calculations: expected life of 5 years;
interest rate of 6%; volatility of 205% in 2000 and 390% in 1999; and no
dividend yield. The pro forma disclosures above may not be representative of pro
forma effects on reported financial results for future years.

During the year ended June 30, 2000, the Company issued 125,000 shares of
Class A Common Stock to an employee of the Company. Compensation expense of
$90,000 has been recognized in connection with this issuance.

WARRANTS/OPTIONS

On May 3, 1999, the Company sold 19,500 shares of preferred stock and issued
628,000 warrants to purchase 628,000 shares of Class A common stock of the
Company at $0.40 per share for an average value of $251,200. The warrants were
issued as a fee for the sale of the preferred stock. Each warrant was valued at
$0.40, which was the cost of the stock issued in the offering. The warrants
expire May 6, 2004. During 2000, the holders of these warrants exercised 542,500
warrants under a cashless exercise feature of the grant. At October 31, 2000,
85,500 warrants remain outstanding.

During February 2000, the Company issued 1,000,000 warrants to purchase
Class A Common Stock in connection with the sale of 333,500 shares of Class A
Common Stock. These warrants are exercisable into 1,000,000 shares of the Class
A Common Stock at $0.30 per share for an average value of $300,000. Of these
warrants 250,000 were issued as a fee for the sale of the common stock. Each
warrant was valued at $0.30 which was the cost of the stock issued in the
offering. The warrants were valued at $185,000. The warrants were exercised
during 2000.

During July 2000, the Company issued 625,000 warrants to purchase 625,000
shares of Class A common stock of the Company. The warrants were issued as a fee
for the sale of convertible notes payable. The exercise price is the lowest
closing price of the Company's common stock for the prior 10 days trading before
issuance. The warrants are valued at $373,000. The warrants expire July 27,
2005.

There are a total of 772,500 warrants outstanding at October 31, 2000 at an
exercisable weighted average price of $0.61 per share.

DELISTING OF CLASS A COMMON STOCK FROM NASDAQ

On October 20, 1998, the Company received notice of a decision by the NASDAQ
Stock Market to delist the Company's Class A Common Stock from the NASDAQ
National Market effective with the close of business on October 20, 1998.
Additionally, at that time, the Company did not meet, and currently does not
meet, the requirements to transfer its listing to the NASDAQ SmallCap Market.
Accordingly, trading in the Company's Class A Common Stock is being conducted on
the OTC Bulletin Board.

NOTE 9 - INCOME TAXES

No provision for taxes was made in the four months ended October 31, 2000 or
years ended June 30, 2000 or 1999 due to the losses in each year. The Company
increased the valuation allowance on net deferred tax assets by $559,000 for the
four months ended October 31, 2000 and $1,073,000 and $3,085,000 in fiscal years
2000 and 1999.

The primary differences between the statutory federal tax rate and the
effective rate are the change in the valuation allowance provided against
deferred tax assets and a change in the effective tax rate of the Company as a
result of the discontinuation of

F-20

rehabilitation operations and the acquisition of Networks. The Company has
$25,041,000 of net operating loss carryforwards for federal purposes and
associated state net operating loss carryforwards, which expire at various dates
through 2020. Current federal and state tax law includes certain provisions
limiting the annual use of net operating loss carryforwards in the event of
certain defined changes in stock ownership. The annual use of the Company's net
operating loss carryforwards are limited according to these provisions.

Deferred income taxes are comprised of the following:

June 30, October 31,
2000 2000
----------- -----------
Accruals not currently deductible .. $ 201,000 $ 201,000
Tax loss carry forwards ............ 7,955,000 8,707,000
----------- -----------
Total deferred income tax assets ... 8,156,000 8,908,000
Less valuation allowance ........... (8,156,000) (8,908,000)
----------- -----------
Net deferred income tax assets ..... $ -- $ --
=========== ===========

NOTE 10 - MAJOR CUSTOMERS

For the four months ended October 31, 2000, the Company had sales in excess
of 10% to three customers amounting to $220,000, $65,000 and $36,000. The
customers accounted for 63%, 18% and 10% of net revenues, respectively.

For the twelve months ended June 30, 2000, the Company had sales in excess
of 10% to two customers amounting to $665,000 and $147,000. The customers
accounted for 68% and 15% of net revenues, respectively.

In 1999, the Company had sales in excess of 10% to three customers amounting
to $429,000, $117,000 and $96,000. The customers accounted for 52%, 14% and 12%,
respectively, of net revenues.

F-21

PART II INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may, in advance of the final disposition of any civil, criminal,
administrative or investigative action, suit or proceeding, pay the expenses
(including attorneys' fees) incurred by any officer, director, employee or agent
in defending such action, provided that the director or officer undertakes to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the corporation. A corporation may indemnify such
person against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.

A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under the
same conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him or
her against the expenses (including attorneys' fees) which he or she actually
and reasonably incurred in connection therewith. The indemnification provided is
not deemed to be exclusive of any other rights to which an officer or director
may be entitled under any corporation's by-law, agreement, vote or otherwise.

In accordance with Section 145 of the DGCL, Article VI of the Company's
Restated Certificate of Incorporation (the "Certificate") provides that the
Company shall indemnify each person who is or was a director, officer, employee
or agent of the Company (including the heirs, executors, administrators or
estate of such person) or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, to the fullest extent permitted. The
indemnification provided by the Certificate shall not be deemed exclusive of any
other rights to which any of those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person. Expenses (including attorneys' fees) incurred in defending a
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Company in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
indemnified person to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by the Company. Article VI of
the Certificate further provides that a director of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit. The
By-laws of the Company provide that, to the fullest extent permitted by
applicable law, the Company shall indemnify any person who is a party or
otherwise involved in any proceeding by reason of the fact that such person is
or was a director or officer of the Company or was serving at the request of the
Company.

II-1

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the Company's estimates (other than of the
SEC registration fee) of the expenses in connection with the issuance and
distribution of the shares of common stock being registered:

SEC registration fee ........................ $ 2,400
Legal fees and expenses ..................... $ 30,000
Accounting fees and expenses ................ $ 6,000
Miscellaneous expenses ...................... $ 1,000
---------
Total: ...................................... $ 39,400*
=========

- --------------

* estimated. None of these expenses are being paid by the selling stockholders.

II-2

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

Sale of Preferred Stock

On January 31, 1999 our Board of Directors authorized for issuance 37,500
shares of Series B Convertible Preferred Stock. The Board on April 29, 1999
amended its earlier resolution to allow authorization of the issuance of up to
62,500 shares of Preferred Stock. The Preferred Stock was issued at $100 per
share and is convertible into 250 shares of common stock.

On February 3, 1999 the following shares of Preferred Stock were issued:

i. 7,548 shares were issued for the conversion of debt owing to Frederick
Adler in the amount of $754,800 and an additional 3,034 shares were
issued to Mr. Adler for $303,400 in cash; and

ii. 3,025 shares were issued for the conversion of debt owing to
Euro-America II, L.P. in the amount of $302,500 and an additional 1,216
shares were issued to Euro-America II, L.P. for $121,600 in cash.

In the fourth quarter additional Preferred Stock was issued as follows:

i. 3,500 shares were issued for the conversion of debt in the amount of
$350,000; and

ii. 32,750 shares were issued for $3,275,000 in cash.

In all, 51,073 shares of Series A Preferred Stock have been issued for the
conversion of $1,407,300 in debt and $3,700,000 for cash.

Sale of Additional Securities

On February 1, 2000, we consummated a private placement of common stock
pursuant to which we issued 333,333 shares of common stock at $0.30 a share for
an aggregate consideration of $100,000. Since February 2000 warrant holders have
exercised all of their warrants pursuant to which we issued 999,999 shares of
common stock at $0.30 a share for an aggregate consideration of $300,000. In
April 2000, we consummated a private placement of common stock pursuant to which
the Company issued 400,000 shares of common stock at $0.50 a share for an
aggregate consideration of $200,000. In May 2000, we consummated a private
placement of common stock pursuant to which we issued 1,390,000 shares of common
stock at $.50 a share for an aggregate consideration of $695,000. During the
fiscal year ended June 30, 2000, option holders have exercised 1,147,718 options
to purchase 1,147,718 shares of stock at approximately $0.16 for an aggregate
consideration of $188,000.

On July 27, 2000, we entered into a $17,000,000 equity line financing for
the next three years. The equity line has been terminated. The investors under
our former equity line agreement have agreed to purchase from us these
convertible notes exercisable at our option. Notes bear interest at 6% and are
convertible into Class A common stock at the option of the note holder. Through
July 13, 2001, $2,750,000 has been funded pursuant to this agreement which had
1,995,000 warrants attached to purchase 1,995,000 shares of Class A common
stock. Through July 13, 2001, $1,707,000 of notes have been converted to common
stock. On July 19, 2001, an additional $250,000 was drawn down pursuant to the
terms of our former equity line agreement which had an additional 250,000
warrants attached to purchase 250,000 shares of Class A common stock. The shares
underlying the convertible notes and warrants put to the investors on July 19,
2001 have not been registered pursuant to this registration statement.

We believe that these issuance and sales were exempt from registration
pursuant to Section 4(2) of the Securities Act.

II-3

ITEM 27. EXHIBITS.

EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT

2.1 Agreement and Plan of Merger, dated April 3, 1998, between Meadowbrook
Rehabilitation Group, Inc., Interset, Inc., Cambio Networks, Inc., and
the securityholders named therein, filed as Exhibit 2.1 to the Company's
current report on Form 8-K dated April 22, 1998, and incorporated by
reference in this registration statement.

2.2 Agreement of Amendment, dated July 27, 1998, between Meadowbrook
Rehabilitation Group, Inc., Interset, Inc., Cambio Networks, Inc., and
the securityholders named therein, filed as Annex A to the Company's
Joint Information/Consent Solicitation Statement on Schedule 14C dated
August 14, 1998, and incorporated by reference in this registration
statement.

2.3 Secured Bridge Financial Note dated April 3, 1998, between Meadowbrook
Rehabilitation Group, Inc., and Cambio Networks, Inc., filed as Exhibit
2.2 to the Company's current report on Form 8-K dated April 22, 1998,
and incorporated by reference in this registration statement.

3.1 Amended and Restated Certificate of Incorporation of the Company, filed
as Exhibit 3.1 to the Company's Registration Statement on Form S-1
(Commission File No. 33-44197), and incorporated by reference in this
registration statement.

3.2 Amended and Restated By-Laws of the Company, filed as Exhibit 3.2 to the
Company's Registration Statement on Form S-1 (Commission File No.
33-44197), and incorporated by reference in this registration statement.

3.3 Certificate of the Designations, Powers, Preferences, and Rights of the
Series B Convertible Preferred Stock, filed as Exhibit 10.4 to the
Company's Quarterly Report on Form 10-QSB for the quarter ended March
31, 1999, and incorporated by reference in this registration statement.

3.4 Certificate of the Designations, Powers, Preferences, and Rights of the
Series C Convertible Preferred Stock.**

3.5 Certificate of Amendment of Certificate of Incorporation, dated November
28, 2000, filed a Exhibit 3.4 to the Company's Registration Statement on
Form SB-2 on December 20, 2000, and incorporated by reference in this
registration statement.

3.6 Certificate of Amendment of Certificate of Incorporation, dated June 4,
2001.**

4.1 Form of Convertible Note, dated as of July 27, 2000, filed as Exhibit
4.1 to the Company's current report on Form 8-K dated July 27, 2000, and
incorporated by reference in this registration statement.

4.2 Form of Warrant, dated as of July 27, 2000, filed as Exhibit 4.2 to the
Company's current report on Form 8-K dated July 27, 2000, and
incorporated by reference in this registration statement.

5.1 Form of Opinion of Fulbright & Jaworski L.L.P.

10.1 1994 Stock Incentive Plan of the Company filed as Exhibit 10.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1995, and incorporated by reference in this registration statement.

10.2 Agreement dated February 2, 1999 by and between Harvey Glasser, the
Company and certain security holders, filed as Exhibit 10.2 to the
Company's Quarterly Report on Form 10-QSB for the quarter ended December
31, 1998, and incorporated by reference in this registration statement.

10.3 Agreement dated February 2, 1999 by and between Imperial Loan Management
Corporation, Telynx, Inc. and Medbrook Home Health, Inc., filed as
Exhibit 10.3 to the Company's Quarterly Report on Form 10-QSB for the
quarter ended December 31, 1998, and incorporated by reference in this
registration statement.

10.4 Form of Subscription Agreement, dated as of July 27, 2000, between the
Company and the subscribers named therein, filed as Exhibit 10.1 to the
Company's current report on Form 8-K dated July 27, 2000, and
incorporated by reference in this registration statement.

II-4

10.5 Modification Agreement dated June 12, 2001 between Telynx, Inc. and the
subscribers named therein.**

10.6 Addendum to Put Subscription Agreement, dated June 14, 2001.**

10.7 Letter Agreement dated October 4, 2001 between the Company and the
subscribers under the Put Subscription Agreement, as amended.**

21.1 Subsidiaries of the Company, as filed as Exhibit 21.1 to the Company's
Annual Report on Form 10-KSB for the year ended June 30, 1999, and
incorporated by reference in this registration statement.

23.1 Consent of BDO Seidman, LLP.

23.2 Consent of Grant Thornton LLP.

23.3 Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1 above)

24.1 Power of Attorney (included on signature page).**

- -------------
**Previously filed.

II-5

ITEM 28. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(b) insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective by the Securities and
Exchange Commission.

(2) For the purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has duly caused this amendment
to the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of El Paso and State of Texas on the
day of December 7, 2001.

TELYNX INC.

*
--------------------
Ali Al-Dahwi
Chairman of the Board, President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

* Chairman of the Board and Chief December 7, 2001
---------------------- Executive Officer
Ali Al-Dahwi

/s/ Kent Van Houten Chief Financial Officer December 7, 2001
---------------------- (Principal Financial and
Kent Van Houten Accounting Officer)

* Director December 7, 2001
----------------------
Dr. Ziad El-Dukair

/s/ Scott A. Munden Director, President, Chief Operating December 7, 2001
---------------------- Officer, Chief Technology Officer
Scott Munden

* By /s/ Kent Van Houten (Kent Van Houten) as attorney-in-fact to power pursuant
-------------------
to power of attorney filed July 13, 2001.

II-7