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As filed with the Securities and Exchange Commission on July 13, 2001
Registration No. _____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM SB-2
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
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TELYNX, INC.
(Name of Small Business Issuer as specified in its charter)

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

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

Class A Common Stock, $.01
par value 317,500,000 shares(2) $0.028 $8,890,000 $2,347.00

(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 and is $0.028, 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 July 11, 2001.

(2) Includes 317,500,000 shares of Class A common stock issuable pursuant to the
terms of an equity credit line pursuant to which the registrant can 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.

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.

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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 JULY 13, 2001

TELYNX, INC.

317,500,000 SHARES OF CLASS A COMMON STOCK

The 317,500,000 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, Libra Finance, or the selling stockholders, who purchased
the shares from us pursuant to our equity line extension with these entities as
described in detail later in this prospectus. We receive the proceeds of the
securities sold by us under the 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. may
purchase up to 35,000,000 shares, Talbiya B. Investments Ltd. may purchase up to
4,500,000 shares, Esquire Trade & Finance, Inc. may purchase up to 75,000,000
shares, Laurus Master Fund may purchase up to 200,000,000 shares, and Libra
Finance may purchase up to 3,000,000 shares. The selling stockholders may resell
the underlying shares of Class A common stock pursuant to this prospectus.

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 July 11, 2001, the closing sale price of our Class A common stock on
the OTC Bulletin Board was $0.029 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 7 OF THIS PROSPECTUS.

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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.

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The date of this Prospectus is , 2001.

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TABLE OF CONTENTS

PAGE
----

Summary ........................................................................ 6
Risk Factors ................................................................... 7
Forward-Looking Statements ..................................................... 11
Use Of Proceeds ................................................................ 11
Dividend Policy ................................................................ 11
Market For Common Equity And Related Stockholder Matters ....................... 12
Selected Consolidated Financial Data ........................................... 13
Management's Discussion And Analysis Of Financial Condition And Results Of
Operations ..................................................................... 14
Business ....................................................................... 21
Management ..................................................................... 24
Related Party Transactions ..................................................... 27
Principal Stockholders ......................................................... 28
Description Of Capital Stock ................................................... 29
Selling Stockholders ........................................................... 31
Plan of Distribution ........................................................... 32
Legal Matters .................................................................. 33
Disclosure Of Commission Position On Indemnification ........................... 33
Experts ........................................................................ 33
Where You Can Find More Information ............................................ 34
Consolidated Financial Statements .............................................. F-1 - F-16

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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 7 of this prospectus. Our fiscal year ends
October 31.

TELYNX, INC.

We deliver services to our customers by designing and maintaining accurate
models which allow visual tracking of each customer's unique network, resources
and bandwidth capacity. These services address the mission-critical needs of
telecommunication and wireless communication networks by reducing our customer's
time in maintaining the network and their cost of operation, while improving
quality of service provided by their networks. Our products and services are
custom designed to enhance network operating support by reducing network related
costs associated with a variety of business needs including network changes,
relocations, mergers, acquisitions and network outsourcing such as backup and
disaster recovery planning. Network documentation is an essential business
information system allowing network support professionals the ability to create,
maintain and access a centralized graphic blueprint of the entire network
operation including all technical components and their relationships. We also
provide our customers a broad range of network integration, consulting, training
and implementation services.

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...... 317,500,000 shares(2)

Class A common stock to be outstanding after this offering.... 509,643,409 shares(3)

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 receive, however, the net
sale price of any convertible notes or
warrants that are issued to the subscribers
under the equity line agreement if, and to
the extent, we elect to put such securities
to these entities. All such proceeds are
used by us for general corporate purposes.

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

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(1) We are not directly selling any shares under this prospectus. However, with
respect to the 317,500,000 shares registered on behalf of the subscribers under
the 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) Pursuant to our equity line extension with the selling stockholders. Of
these shares, 269,375,000 shares may be sold upon conversion of our equity
securities proposed to be purchased by the selling stockholders under the equity
line, including approximately 1,866,250 shares issuable upon conversion of
outstanding warrants held by certain of the stockholders.

(3) Based on 192,143,409 shares outstanding as of June 30, 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 June
30, 2001, and 500 shares of preferred stock outstanding as of June 30, 2001,
which are convertible into shares of Class A common stock.

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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 SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, 2000 JUNE 30, 1999 OCT. 31, 2000(1) OCT. 31, 1999(1) APRIL 30, 2001 APRIL 30, 2000
------------- ------------- ---------------- ---------------- -------------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS
DATA:
Total revenue .............. $ 983,000 $ 823,000 $ 352,000 $ 272,000 $ 285,000 $ 401,000
Gross profit ............... 719,000 537,000 245,000 152,000 257,000 258,000
Loss from continuing
operations ............... (5,385,000) (9,002,000) (1,686,000) (1,594,000) (3,909,000) (2,077,000)
Loss from discontinued
operations ................. -- (1,013,000) -- -- -- --
Basic and diluted net loss
per common share(2) ........ (0.76) (5.60) (0.07) (0.80) (0.08) (0.27)
Weighted average shares
Outstanding(2) ............. 7,095,483 1,787,230 22,502,458 1,993,015 48,800,405 7,761,954

APRIL 30, 2001
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(UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents.... $ 4,000
Working capital deficit...... (4,805,000)
Total assets................. 328,000
Total stockholders' deficit.. (4,928,000)

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(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.

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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 HAVE A LIMITED AMOUNT OF CASH AND ARE LIKELY TO REQUIRE ADDITIONAL CAPITAL TO
CONTINUE OUR OPERATIONS.

We have a limited amount of available cash and we will likely require
additional capital. 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. In
addition, we cannot be certain that the subscribers under the equity line
agreement will have the ability to purchase our convertible notes and warrants
put to them, pursuant to our equity line of credit. Also, our ability to require
securities to be purchased under our equity line is contingent on several
factors, including the underlying Class A common stock being included on an
effective registration statement and that no material adverse change has
occurred in our business. Accordingly, we may not be able to raise necessary
capital in the manner we expect pursuant to the equity line of credit.

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. 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 TO BE ISSUED TO THE SUBSCRIBERS UNDER THE EQUITY LINE
AGREEMENT IS BASED ON A FLOATING CONVERSION RATE, AND THE ISSUANCE OF SOME OR
ALL OF THE SECURITIES 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 amount of securities to be issued to the subscribers under the
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 drawdown,
issuance of some or all of the securities allowed 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 the average trading price of our securities at the time
of the drawdown, the greater the number of securities that can be
issued to the subscribers under the equity line agreement;

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

o the perceived risk of dilution may cause the subscribers under the
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

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.

THE RECEIPT OF PAYMENTS TO THE FINDERS IN CONNECTION WITH THE 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 subscribers under the equity line of credit agreement. 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 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;

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o the subscribers 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.

WE HAVE EXPERIENCED AND CONTINUE TO EXPERIENCE OPERATING LOSSES, AND OUR FUTURE
PROFITABILITY IS UNCERTAIN.

We do not know whether or when our business will be profitable. We have
generated some revenue to date, but we have experienced operating losses since
our inception. As of April 30, 2001, our accumulated deficit was approximately
$35,552,000. As a result of these factors, 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.

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.

THE HIGH LEVEL OF COMPETITION WE FACE IN THE TELECOMMUNICATIONS INDUSTRY FROM
COMPETITORS WHO OFTEN HAVE GREATER RESOURCES THAN WE DO MAY ADVERSELY AFFECT OUR
PROFITABILITY.

The markets in which we operate are competitive, highly fragmented and
rapidly changing. 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 customer's requirements, or be able
to devote greater resources to the promotion and sale of their products and
services.

OUR 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 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 enhanced
our main product further and introduced it under the Telynx brand name.
Development included major enhancements and consistent additions to the product
as well as increased standard capabilities that our customers and potential
customers were asking us to provide. 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 customer's expectations or that we will be successful in
our efforts.

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WE DEPEND ON A SMALL CUSTOMER BASE 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.
While this segment is dynamic and rapidly growing, it does represent a limited
number of installed customer bases. This concentration of 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. In addition recently there has been a general
reduction in capital spending in the telecommunication market which 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 RELY ON OUR INTERNATIONAL OPERATIONS AND IF WE DO NOT SUCCESSFULLY ADDRESS
ISSUES RELATED TO INTERNATIONAL SALES, OUR REVENUES MAY DECREASE.

Our customer base consists of telecommunications service providers around
the world. Telecommunications and the requirement for related services are ever
increasing around the world especially due to the increased demand for wireless
and internet services. International sales, however, also involve possible
longer account receivable payment cycles and unexpected changes in regulatory
requirements, including royalty and withholding taxes. Any possible world event,
cancellation of orders, delay of orders or possible restriction of import/export
by governments may negatively impact us and may lead to loss of revenue.

WE ARE DEPENDENT ON A SMALL NUMBER OF PRODUCTS TO GENERATE REVENUES TO FUND OUR
BUSINESS AND OPERATIONS.

Because we have limited resources, we must restrict our product development
efforts to a relatively small number of 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. 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.

WE ARE DEPENDENT ON KEY OFFICERS AND EMPLOYEES AND THE LOSS OF THESE PERSONNEL
WOULD HARM OUR ABILITY TO INCREASE REVENUES.

We are dependent on the principal members of our management staff, including
Ali Al-Dahwi, our Chairman, President and Chief Executive Officer, and Scott
Munden, Chief Operating Officer and Chief Technology Officer, the loss of whose
services could harm our ability to increase revenues and could materially
adversely affect our results of operations. We have entered into an employment
agreement with Mr. Al-Dahwi. We currently have no key personnel life insurance.

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

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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 June 30, 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 June 30, 2001, there were
outstanding no shares of Series C convertible preferred stock. Additionally, as
of June 30, 2001, employee options to purchase 15,050,000 shares were
outstanding. As of June 30, 2001, there are also warrants to purchase up to
1,866,250 shares of our Class A common stock exercisable at ranges between $1.80
to $0.024 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.

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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 and will receive, however, the
sale price of any convertible notes or warrants that are issued to the
subscribers under the equity line agreement if, and to the extent, we elect to
further put such securities to the selling stockholders pursuant to the equity
line of credit. 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.

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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our Class A common stock is traded in the OTC Bulletin Board Market. On July
11, 2001, the closing sales price of the Class A common stock was $0.029 per
share.

Prices below may not be actual representations of daily trading ranges. 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 July 5, 2001:

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

YEAR ENDED OCTOBER 31, 2001(2)
Transition period 7/1/00-10/31/00 .... $ 0.400 $ 0.150 $ 0.800 $ 0.300
First quarter ........................ 0.160 0.024 0.320 0.048
Second quarter ....................... 0.034 0.010 0.068 0.020
Third quarter through 7/5/01 ......... 0.025 0.012 0.050 0.024

YEAR ENDED JUNE 30, 2000

First quarter ........................ $ 1.437 0.625 2.875 1.250
Second quarter ....................... 0.875 0.187 1.750 0.375
Third quarter ........................ 3.250 0.187 6.500 0.375
Fourth quarter ....................... 1.156 0.281 2.312 0.570

YEAR ENDED JUNE 30, 1999

First quarter ........................ $ 1.060 $ 0.500 $ 2.125 $ 0.875
Second quarter ....................... 0.630 0.250 2.250 0.500
Third quarter ........................ 0.500 0.130 1.000 0.250
Fourth quarter ....................... 2.440 0.190 5.750 0.375

*As of June 30, 2001, there were approximately 270 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.

In April 2000, we consummated a private placement of Class A common stock
pursuant to which we issued 400,000 shares of Class A common stock at $0.50
a share for an aggregate consideration of $200,000. In May 2000, we
consummated a private placement of Class A common stock pursuant to which we
issued 1,390,000 shares of Class A common stock at $0.50 a share for an
aggregate consideration of $695,000. We believe that such issuance or sale
was exempt from registration pursuant to Section 4(2) of the Securities Act
of 1933, as amended.

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. The
decision to engage BDO Seidman, LLP as our accountants was approved by our Board
of Directors.

During the last two fiscal years and the subsequent interim period to the
date of this prospectus, we did not consult BDO Seidman, LLP regarding any of
the matters or events set forth in Item 304(a)(2) of Regulation SB-2.

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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 June 30, 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, 2000
and 1999, along with the six month period ending April 30, 2001 and 2000, and
the selected balance sheet date as of April 30, 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 six months ended April 30, 2001 and 2000 and the four months
ended October 31, 2000 and 1999 may not be indicative of the results for the
full year.

STATEMENT OF OPERATIONS
DATA:
Total revenue............... $ 983,000 $ 823,000 $ 352,000 $ 272,000 $ 285,000 $ 401,000
Gross profit................ 719,000 537,000 245,000 152,000 257,000 258,000
Loss from continuing
operations................ (5,385,000) (9,002,000) (1,686,000) (1,594,000) (3,909,000) (2,077,000)
Loss from discontinued
operations.................. -- (1,013,000) -- -- -- --
Basic and diluted net loss
per common share(2)....... (0.76) (5.60) (0.07) (0.80) (0.08) (0.27)
Weighted average shares
Outstanding(2)............ 7,095,483 1,787,230 22,502,458 1,993,015 48,800,405 7,761,954

APRIL 30, 2001
--------------
(UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents $ 4,000
Working capital deficit....... (4,805,000)
Total assets.................. 328,000
Total stockholders' deficit... (4,928,000)

- ----------
(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.

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

OVERVIEW

Acquisition of Cambio Networks, Inc. On September 14, 1998, we acquired
Cambio Networks, Inc. Under the terms of the Agreement, 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 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 finance and accounting functions into existing
capabilities in Emeryville, California and subsequently to El Paso, Texas. We
maintained our sales and service offices domestically 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 with 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 remain a guarantor of the subsidiaries'
outstanding indebtedness consisting of amounts loaned to us and these
subsidiaries by Imperial, which approximates $678,000 as of April 30, 2001. We
are entitled to receive one-half of any amounts remaining after payment of the
Imperial loans and expenses. We consider the realization of the remaining assets
to be unlikely and the assets have been fully written off. All other material
obligations of the subsidiaries have been settled except for the Imperial loans.

RESULTS OF OPERATIONS

SIX MONTHS ENDED APRIL 30, 2001 AS COMPARED TO SIX MONTHS ENDED APRIL 30, 2000

In fiscal year 2000, we fashioned a business plan whereby our products were
available for production, delivery and sale. The business model was based on
increased funding to us, the proceeds of which would provide for the increased
cash flow required to cover additional expenses of human resource and operating
capital in the future. The increases in expenses for the six months ended April
30, 2001, versus the six months ended April 30, 2000, is a direct correlation to
the funding model of growing the business that had been planned for the past
year.

Revenues. For the six months ended April 30, 2001, revenues were down 29%
from $401,000 in 2000 to $285,000 in 2001. The decrease for the six months was
mainly attributable to a lag of sales revenues of our main products and services
sold in the first quarter this year versus the first quarter last year. We
anticipate the trend of the second quarter to increase as customers book
additional sales for the balance of the year.

Sales and Marketing. For the six months ended April 30, 2001, sales and
marketing costs were up 36% from $479,000 in 2000 to $652,000 in 2001. The
increase for the six months was related to additional sales and marketing people
and travel related expenses related to sales in the first quarter. We anticipate
that a strategic restructuring of the sales and marketing focus will result in
increased sales with minimal costs thereby increasing operational efficiency.

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Services. For the six months ended April 30, 2001, services expenses costs
were up 61% from $202,000 in 2000 to $326,000 in 2001. This increase is
attributable to additional personnel costs related to servicing new order
installations this year versus the prior year period. Revenues recognized for
these services are recognized as the services are rendered and based on
contractual milestones. Some of our employees within the services area provide
some sales and marketing benefit for our core product.

Research and Development. For the six months ended April 30, 2001, research
and development costs were up 142% from $195,000 in 2000 to $472,000 in 2001.
For the six month period, the increase was attributable to increased personnel
costs in the development and engineering of our recently released product
"Telynx Version 2". Also consistent with the services department, selected
employees within the research and development area provide some sales and
marketing benefit for our core product.

General and Administrative. For the six months ended April 30, 2001, general
and administrative costs were up 34% from $1,414,000 in 2000 to $1,892,000 in
2001. For the six month period, the increase was attributable to additional
costs for added personnel, recruitment of those personnel, and additional costs
for consulting and outside services. Also included was the cost of settling open
payable litigation issues for approximately $170,000. 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. Interest expense increased $772,000 for the six month period ended
April 30, 2001 versus April 30, 2000. The increase is attributable to the
beneficial conversion feature of the convertible notes issued July 27, 2000, 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. The increase in revenues is
primarily attributable to increased sales and services of the Company's main
product line. 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.
The decrease is attributable to higher cost incurred in product sales for the
four months ended October 31, 2000 versus lower cost incurred in system support
for the four months 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.
Consistent with the month, the decrease was related to reduced travel related
costs in October 2000 versus October 1999.

Services. For the four month period ending October 31, 2000, services
increased 28% from $142,000 for the four months ended October 31, 1999 to
$181,000 for the four months ended October 31, 2000. Consistent with the month,
the increase was attributable to increased manpower costs related to servicing
order installation mostly in October 2000 versus October 1999.

Research and Development. For the four month period ending October 31,
2000, research and development costs decreased slightly by 3% from $262,000 for
the four months ended October 31, 1999 to $253,000 for the four months ended
October 31, 2000.

General and Administrative. For the four month period ending October 31,
2000, general and administrative costs increased 17% from $897,000 for the four
months ended October 31, 1999 to $1,050,000 for the four months ended October
31, 2000. The increase represents additional costs for added personnel in the
current four month period versus the four month period last year.

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16

Interest. For the four month period ending October 31, 2000, interest
expense increased 58% from $38,000 for the four months ended October 31, 1999 to
$60,000 for the four months ended October 31, 2000. These increases are
representative of additional financing by the Company this year versus last
year.

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 of
approximately $800,000. 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
and Command products.

Because netRunner is a new product, and because of liquidity difficulties,
the launch and marketing activities of the netRunner product were severely
constrained which resulted in poor sales and market penetration for the twelve
months ended June 30, 2000 consistent with the twelve months ended June 30,
1999.

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 manpower and
sales and marketing activity of our product.

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 service costs is represented in additional
staff for the Services Department associated with providing services for our
customer base.

Research & Development. Research and development costs increased $314,000 or
112% 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.

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. 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 at reduced
offering prices compared to current market price.

General and Administrative. General and administrative costs remained
consistent, from fiscal year 2000 to 1999. Sales and marketing increased
$876,000 in fiscal year 2000 as a direct result of activities geared at
increasing market exposure and generating revenue. These included partner
participation activity and sales staffing activity. Services increased $207,000
in fiscal year 2000 as a direct result of staffing increased to accommodate
deliver of customer project. Research and development costs increased
approximately $314,000 from $280,000 for the twelve months ended June 30, 1999
to $594,000 for the twelve months ended June 30, 2000 as a direct result of
modification to the netRunner product.

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.

LIQUIDITY AND CAPITAL RESOURCES

The use of cash of $1,634,000 for the six months ended April 30, 2001
was composed of a net loss of $3,909,000, partially offset by expenses settled
by payments in Class A common stock of $229,000, interest expense on beneficial
conversion of debt of $745,000, increases in accounts payable and accrued
liabilities of $1,102,000. This use of cash in operating activities of
$1,634,000 for the six months ended April 30, 2001 is comparable to $1,952,000
for the six months ended April 30, 2000, which was composed of net losses of
$2,077,000 for the six months ended April 30, 2000, with a slight cash flow
increase in operating assets over liabilities of approximately $78,000 for the
six months ended April 30, 2000.

During the six months ended April 30, 2001, consistent with the six
months ended April 30, 2000, we invested in software and computer/network
equipment with purchases totaling $15,000 and $9,000, respectively.

The financing activities during the six months ended April 30, 2001
consisted of proceeds from the issuance of our Class A common stock of
approximately $145,000 versus $1,369,000 for the six months ended April 30,
2000. We had proceeds from notes

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payable to stockholder of $67,000 for the six months ended April 30, 2001 versus
$245,000 for the six months ended April 30, 2000. We had proceeds from the
issuance of convertible debt debentures of $1,400,000 for the six months ended
April 30, 2001 of which there were no convertible debt issuances in the
comparable prior year. During the six month period, we recorded the redemption
of convertible debt debentures and related interest of approximately $1,835,000
which was converted into our Class A common stock.

On July 27, 2000, we issued $1,000,000 in principal amount of
convertible notes bearing interest at 6% which are convertible into our Class A
common stock at the option of the holders. We received $880,000 in proceeds
after deducting offering costs and finder's fees. On December 19, 2000, our
registration statement on Form SB-2 was declared effective by the SEC thereby
allowing for the conversion of the notes and raising of additional funding
proceeds. On December 29, 2000 and January 12, 2001, we issued additional
$150,000 convertible notes each month at 6% interest under this financing. In
February and March 2001, we issued additional convertible debt of $250,000 each
month in principal amount of convertible notes bearing interest at 6% per annum.
We anticipate continuing to draw down on the credit line, to the extent
permitted, as the funds become necessary.

On January 19, 2001, we issued $350,000 in principal amount of
convertible notes bearing interest at 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.

We believe that our current negative operational cash flow is temporary
and will be alleviated by increased sales of our products. However, there can be
no assurance that sales will increase or additional capital other than provided
in the paragraph above will be available on terms favorable to us. If adequate
funds are not available, our liquidity could be impaired, which would have a
negative impact on 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.

In the first three months of fiscal year 2001, we entered into a $17,000,000
equity line financing for the next three years. The subscribers under the equity
line agreements have agreed to purchase from us these convertible notes
exercisable at our option. The holders are bound to honor the loans in the
subscription agreement and cannot withhold monies from drawdown by Telynx except
for reason of default. Notes bear interest at 6% and are convertible into Class
A common stock at the option of the note holder. See the discussion under the
section entitled "Equity Line of Credit" later in this prospectus.

Our sales activities have grown as the pipeline of active accounts have
grown. We have increased our active prospect list by over 400% and our pipeline
has increased by over 1,200%. While these increases provide no guarantees
relative to revenue production, they are positive indicators of our prospects
for the balance of the fiscal year. In fiscal year ended June 30, 1999, we had
no U.S. customers and in fiscal 2000, we had two U.S. customers, Broadband Now
and Avista (symbol AVA), one of which we delivered our products for in fiscal
year ended June 30, 2000 and the other delivered product in the month ending
January 31, 2001. We anticipate further orders from the same two customers.

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 Japan, Korean and
Mainland China markets. The product should be ready by mid 2001 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.

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

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appears that Imperial has liquidated only $80,000 of the $1,300,000 in assets
transferred to it. Our requests for information documenting why the liquidation
process has not been more successful have been ignored.

Imperial is required under the agreement to use its "best efforts" to
liquidate the assets transferred to Imperial. To date, Imperial has provided no
documentation that would explain why the assets transferred to Imperial have not
been liquidated. We believe that Imperial is in breach of the agreement due to
the failure of Imperial to provide the required quarterly reports and Imperial's
apparent failure to use its best efforts to collect on the accounts receivable
transferred from Telynx to Imperial. Therefore, we believe that it is not in
default of its obligations under the agreement by not paying the otherwise
required payment of the outstanding principal balance of the loans.

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.

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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAB") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000 (July 1, 2000
for the Company). SFAS 133 requires that all derivative instruments be recorded
on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and the type of hedge transaction. Management of the Company has
determined that the adoption of SFAS 133 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, 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.

Pursuant to this equity line of credit and subject to satisfaction of the
conditions set forth below, we may sell and issue to the subscribers under the
equity line agreement, from time to time, up to an aggregate of $17 million of
convertible notes. Beginning on the date that the registration statement, of
which this prospectus is a part, is declared effective by the SEC and continuing
for 36 months thereafter, we may, from time to time, in our sole discretion,
sell or "put" convertible notes to the subscribers under the equity line
agreement. These notes 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. If the maximum amount
under the equity line agreement is not "put" to the investors, they will be
entitled to receive warrants to purchase our Class A common stock.

Our ability to put convertible notes to the subscribers under the equity
line agreement is subject to the following conditions and limitations:

o The Class A common stock issuable upon conversion of a Put Note and
exercise of Put Warrants must be included in an effective registration
statement.

o We will be a reporting company with the class of shares registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934.

o No material adverse change in our business or business prospects shall
have occurred and there shall not have been a material negative
restatement of our financial statements.

o An Event of Default as described in Article III of the Note shall not
have occurred.

o Our listing on, and compliance with the listing requirements of the and
our not having received notice from the OTC Bulletin Board, (or any
Principal Market) that we are not in compliance with the requirements
for continued listing.

We cannot assure you that we will satisfy all of the conditions required
under the equity line of credit or that the subscribers under the equity line
agreement will have the ability to purchase all or any of the convertible notes
and warrants put to it thereunder.

The subscribers under the equity line agreement, or other underwriters of
the securities, have the right to review the registration statement and our
records and properties to obtain information about us and the accuracy of the
information contained in this prospectus and the remainder of the registration
statement. The subscribers under the equity line agreement are not entitled to
reject a put by us based on such review.

In conjunction with the equity line of credit, we issued to some of the
subscribers under the equity line agreement warrants to purchase up to 1,718,500
shares of Class A common stock, at an exercise price ranging from $0.024 to
$0.44 per share. These warrants may be exercised with various expirations
through June 26, 2006. The warrant contains provisions that adjust the purchase
price and number of shares issuable to subscribers 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 subscribers under
the 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.

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Under the equity line of credit, we agreed to register the underlying Class
A common stock for resale by the subscribers, 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 equity line of credit remains in effect or the
subscribers 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 $297,000 in fees and commissions and
issued approximately 300,000 shares of Class A common stock in connection with
the equity line agreement to Alon Enterprises Ltd., Bodie Investment Group,
Libra Finance S.A. and Yakov Bodenstein. Mr. Bodenstein is a consultant for
Telynx for general investor and business introductions and receives commissions
for services performed.

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BUSINESS

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 1,238,842 shares of
our Class A common stock representing approximately 32.3% of the outstanding
Class A and Class B common stock. Telynx is a global provider of highly
specialized software technology to the telecommunications industry.

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.

Our goal is to become the premier provider of mission-critical software
solutions providing the telecommunications and wireless communication industries
with the highest utilization of their capital, 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.

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 carriers. 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 set the stage
for Telynx v2 in March of 2001 and was very well received in the market. The
product is based on the open CORBA (Common Object Request Broker) standard and
provides direct interfaces from other applications or interfaces through the
Java standard for web-development. Telynx v2 expanded the product to more
precisely support next generation networks for carriers and was a move towards
support for both CORBA and Java. The intent is to offer customers the option of
using Telynx as a complete inventory/provisioning solution, or integrating it
into their existing Operations Support System (OSS) environment. A complete Java
API is now available with the product as well as an Adaptor based on Enterprise
Application Integration (EAI) architecture of WebMethods. EAI is rapidly gaining
acceptance in the market as the primary vehicle for automating systems and
processes. Telynx has been very active in the Telemanagement Forum in moving
this technology forward to the market. In addition, Telynx has always maintained
its focus on its core competency in inventory/provisioning and has continued to
add functionality to the interface of the product, making it one of the fastest
to implement and easiest to use on the market.

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 validates that it is billing
for services provided, accurately rating plans for billing, and assuring that
service is properly provisioned. Industry estimates indicate that somewhere
between 2-12% of revenue is lost due to one of these factors. In times of
increasing competition and the need to show clear value differentiation, the
Telynx Revenue Assurance offering is an excellent solution.

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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 telecommunication 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 this growth potential can be attributed to. 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 pipeline by 1,200% and its business forecast by over 400%. These
numbers are based on the number of active accounts currently qualified and being
targeted and those that have indicated Telynx v2 is a viable solution for their
requirements. 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.

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. The Company believes 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.
The Company is already seeing the demand for products and services in this
regard, and has begun to develop solutions to address them. The Company is also
being engaged in professional services to help carriers address these issues.

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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. 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.

EMPLOYEES

As of June 30, 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, 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 in Dallas, Texas; the Washington, D.C.
area; London, United Kingdom; and representative offices 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.

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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, President, Chief Executive Officer and
Director

Scott Munden 38 Chief Operating Officer and Chief Technology Officer

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 President
and Chief Executive Officer since January 1999. From September 1998 to January
1999, Mr. Al-Dahwi was 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 Chief Operating Officer since February 2001. Mr.
Munden had previously been the Chief Technology Officer and Executive Vice
President of Product and Technology since January 2000. Mr. Munden joined the
Company in 1998 as Director of Product Marketing and Development. Mr. Munden
held various positions at Accugraph Corporation from 1987 to 1996, including
Solutions Architect and Product Manager. Prior to that, 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 the Telynx Board of Directors in January
2001, and joined the Company as Executive Vice President In January 2001.

Kent J. Van Houten has served as Executive 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 Mfg. 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, she was Director of
Corporate Logistics and Support. From June 1999 to December 2000, she was the
Logistics and Support Manager.

Lin Meyer has served as Executive Vice President of Strategic Partners and
Alliances since February 2001. Ms. Meyer was hired in April 1999 as 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 Telynx, Ms. Meyer served as Regional Manager for Beechwood
Consulting from 1998 to April 1999. From 1989 to 1998, Ms. Meyer held various
positions with American Telephone & Telegraph. Ms. Meyer holds a B.S. degree
from Coe College.

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BOARD OF DIRECTORS

We currently have authorized two directors. The current directors are Ali
Al-Dahwi and Dr. Ziad El-Dukair. 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 SECURITIES
FISCAL 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 0 125,000 --
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.

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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 310,886 12.0% $ 0.40 09/14/04
Chief Executive Officer

Steve Dong 168,187 6.0% $ 0.40 03/05/05
Vice President

Anas El-Mahdi 257,292 10.0% $ 0.40 10/01/04
Vice President of Sales

Scott Munden 272,250 10.0% $ 0.40 10/26/04
Chief Operating Officer

Lin Meyer 75,000 2.0% $ 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

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o Mr. Al-Dahwi, in the event of termination of the agreement, is entitled
to a severance payment of 6 months base salary payable semi-monthly over
6 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 June 30, 2001.
Shares of Class A common stock subject to options or warrants currently
exercisable, or exercisable within 60 days after June 30, 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 remain a
guarantor of the Subsidiaries' outstanding indebtedness, which approximates
$677,808 as of September 30, 2000, and are entitled to receive one-half of
proceeds received after payment of all expenses. In connection with this
transaction, we recorded a charge to write-off the remaining net assets from
discontinued operations.

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PRINCIPAL STOCKHOLDERS

The following table sets forth information as relating to the beneficial
ownership of our Class A common stock as of June 30, 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 PERCENT OF SHARES OF
COMMON STOCK BENEFICIALLY CLASS A COMMON STOCK
NAME OWNED(1) BENEFICIALLY OWNED
---- --------------------------- --------------------

Trenton Development Ltd. 44,880,000 23.3%
13 Avenue da Bude
Geneva, Switzerland 1202

Parsons Project Management and 38,400,000 20.0%
Engineering Consultancy Group Ltd.
13 Avenue da Bude
Geneva, Switzerland 1202

Laurus Master Fund 31,250,000 16.3%
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Esquire Trade & Finance 10,625,000 5.5%
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Lamya Al-Ali 10,080,000 5.2%

Ali Al-Dahwi(2) 5,047,795 2.6%

Dr. Ziad El-Dukair 2,560,000 1.3%

Scott Munden(3) 729,535 *

Kent Van Houten(4) 427,417 *

Naglaa Marzouk(5) 674,167 *

Lin Meyer(6) 342,333 0.4%

All directors and executive officers
as a group (6 persons) 9,781,247 5.1%

- ----------
*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) Includes 1,925,000 options.
(3) Includes 666,667 options.
(4) Includes 250,000 options.
(5) Includes 666,667 options.
(6) Includes 333,333 options.

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DESCRIPTION OF CAPITAL STOCK

Effective as of June 4, 2001, 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 June 30, 2001, there were 192,143,409 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 June 30, 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 June 30, 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 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.

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.

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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 June 30, 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 317,500,000 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.

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SELLING STOCKHOLDERS

This prospectus relates to the registration of 317,500,000 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(1)
-------------- ------------- -------------

The Keshet Fund L.P. (2) 6,250,000(7) 35,000,000 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Talbiya B. Investments(3) 2,190,000(7) 4,500,000 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Esquire Trade & Finance(4) 10,625,000(7) 75,000,000 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Laurus Master Fund(5) 31,250,000(7) 200,000,000 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

Libra Finance(6) 1,247,500(7) 3,000,000 0
Regnall House, 18 Peal Road
Douglas
Isle of Man
1M1 4L2 United Kingdom

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

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

(1) The selling stockholders may offer and sell, all or a part, of the Class A
common stock pursuant to this prospectus. No estimate can be made as to the
amount of shares of Class A common stock that will be held by the selling
stockholders after completion of this offer.

(2) These shares are issuable pursuant to the equity line of credit agreement.
This selling stockholder, who is a subscriber under the equity line agreement,
may not be required to purchase more than 4.9% 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 The Keshet Fund L.P.

(3) These shares are issuable pursuant to the equity line agreement. 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.

(4) These shares are issuable pursuant to the equity line of credit agreement.
This selling stockholder, who is a subscriber under the equity line agreement,
may not be required to purchase more than 4.9% 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.

(5) These shares are issuable pursuant to the equity line of credit agreement.
This selling stockholder, who is a subscriber under the equity line agreement,
may not be required to purchase more than 4.9% of the issued and outstanding
shares of Telynx pursuant to the terms of their agreements with Telynx.

(6) These shares are issuable pursuant to the equity line agreement. 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.

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

31
32

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 subscribers under the 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 subscribers under the 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 subscribers under the 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;

32
33

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 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.

33
34

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.

34
35

INDEX TO FINANCIAL STATEMENTS

PAGE
----

CAMBIO, INC. AND SUBSIDIARIES 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-7
Notes to Financial Statements...................................... F-8

F-1
36

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders of Cambio, Inc.

We have audited the accompanying consolidated balance sheet of Cambio, Inc. (a
Delaware corporation) and subsidiaries as of June 30, 2000, and the related
consolidated statements of operations, stockholders' deficit and cash flows for
the year then ended. 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 audit.

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

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

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 during the
year ended June 30, 2000, and, as of that date, the Company's liabilities
exceeded its current assets and total assets by $3,179,000 and $3,117,000,
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
September 22, 2000, except for the
information in the third paragraph
in Note 3, as to which the date
is June 4, 2001.

F-2
37
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders of Cambio, Inc.

We have audited the accompanying consolidated statements of operations, changes
in stockholders' deficit and cash flows of Cambio, Inc. (a Delaware corporation)
and subsidiaries 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.

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 audit provides a
reasonable basis for our opinion.

In our opinion such financial statements present fairly, in all material
respects, the results of their operations and their cash flows of Cambio, 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

CAMBIO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

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

Current Assets
Cash and cash equivalents .............................. $ 302,000 $ 42,000 $ 4,000
Accounts receivable .................................... 161,000 398,000 216,000
Deposits and prepaid expenses .......................... 25,000 85,000 33,000
------------ ------------ ------------
Total Current Assets ................................ 488,000 525,000 253,000

Deferred financing cost, net ............................... -- 110,000 35,000

Property and equipment, net ................................ 62,000 70,000 40,000
------------ ------------ ------------
$ 550,000 $ 705,000 $ 328,000
============ ============ ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts payable and accrued liabilities ............... $ 2,496,000 $ 2,418,000 $ 3,520,000
Liabilities of discontinued operations ................. 678,000 678,000 678,000
Notes payable to stockholders .......................... 478,000 479,000 562,000
Payable to investor .................................... -- -- 250,000
Deferred revenue ....................................... 15,000 70,000 48,000
------------ ------------ ------------
Total current liabilities ........................... 3,667,000 3,645,000 5,058,000
------------ ------------ ------------

Convertible notes payable to investors ..................... -- 1,000,000 198,000

Commitments and contingencies

Stockholders' deficit (Note 3)
Preferred stock, $.01 par value - 1,000,000 shares
Authorized ................................................. -- -- --
Common stock, $.01 par value - 1,005,000,000 shares
authorized ............................................. 197,000 249,000 873,000
Paid-in capital ........................................ 26,643,000 27,454,000 29,751,000
Accumulated deficit .................................... (29,957,000) (31,643,000) (35,552,000)
------------ ------------ ------------
Total stockholders' deficit ......................... (3,117,000) (3,940,000) (4,928,000)
------------ ------------ ------------
Total liabilities and stockholders' deficit ......... $ 550,000 $ 705,000 $ 328,000
============ ============ ============

See accompanying notes to consolidated financial statements

F-4

39
CAMBIO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

FOUR MONTHS ENDED
JUNE 30, OCTOBER 31,
-------- -----------
2000 1999 2000 1999
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)

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

Operating expenses
Sales and marketing .................. 1,121,000 245,000 387,000 422,000
Services ............................. 421,000 214,000 181,000 142,000
Research and development ............. 594,000 280,000 253,000 262,000

Administrative and general expenses... 3,894,000 3,912,000 1,050,000 897,000
------------ ------------ ------------ ------------
Total operating expenses ........ 6,030,000 4,651,000 1,871,000 1,723,000
------------ ------------ ------------ ------------

Loss from operations ............ (5,311,000) (4,114,000) (1,626,000) (1,571,000)
------------ ------------ ------------ ------------

Other income (expense)
Interest income ...................... 24,000 13,000 -- 15,000
Interest expense ..................... (98,000) (66,000) (60,000) (38,000)
Write-off of goodwill ................ -- (4,850,000) -- --
Other, net ........................... -- 15,000 -- --
------------ ------------ ------------ ------------
Total other expense ............. (74,000) (4,888,000) (60,000) (23,000)
------------ ------------ ------------ ------------
Loss from continuing operations ...... (5,385,000) (9,002,000) (1,686,000) (1,594,000)
------------ ------------ ------------ ------------

Discontinued operations
Loss from disposal of discontinued
operations ........................... -- (1,013,000) -- --
------------ ------------ ------------ ------------

Loss from discontinued operations .... -- (1,013,000) -- --
------------ ------------ ------------ ------------

Net loss ................................ $ (5,385,000) $(10,015,000) $ (1,686,000) $ (1,594,000)
============ ============ ============ ============

Basic and diluted net loss per
common share-continued operations
Note 3 .................................. $ (0.76) $ (5.04) $ (0.07) $ (0.80)
Basic and diluted net loss per
common share-discontinued operations
(Note 3) ................................ $ -- $ (0.56) $ -- $ --
------------ ------------ ------------ ------------
Basic and diluted net loss per
common share ............................ $ (0.76) $ (5.60) $ (0.07) $ (0.80)
============ ============ ============ ============
Weighted average shares outstanding
(Note 3) ................................ 7,095,483 1,787,230 22,502,458 1,993,015
============ ============ ============ ============

SIX MONTHS ENDED
APRIL 30
--------
2001 2000
------------ ------------
(UNAUDITED) (UNAUDITED)

Net revenues ............................ $ 285,000 $ 401,000
Cost of revenue ......................... 28,000 143,000
------------ ------------
Gross profit .................... 257,000 258,000
------------ ------------

Operating expenses
Sales and marketing .................. 652,000 479,000
Services ............................. 326,000 202,000
Research and development ............. 472,000 195,000

Administrative and general expenses... 1,892,000 1,414,000
------------ ------------
Total operating expenses ........ 3,342,000 2,290,000
------------ ------------

Loss from operations ............ (3,085,000) (2,032,000)
------------ ------------

Other income (expense)
Interest income ...................... -- 7,000
Interest expense ..................... (824,000) (52,000)
Write-off of goodwill ................ --
Other, net ........................... -- --
------------ ------------
Total other expense ............. (824,000) (45,000)
------------ ------------
Loss from continuing operations ...... (3,909,000) (2,077,000)
------------ ------------

Discontinued operations
Loss from disposal of discontinued
operations ........................... -- --
------------ ------------

Loss from discontinued operations .... -- --
------------ ------------

Net loss ................................ $ (3,909,000) $ (2,077,000)
============ ============

Basic and diluted net loss per
common share-continued operations
(Note 3) ................................ $ (0.08) $ (0.27)
Basic and diluted net loss per
common share-discontinued operations
(Note 3) ................................ -- --
------------ ------------
Basic and diluted net loss per
common share ............................ $ (0.08) $ (0.27)
============ ============
Weighted average shares outstanding
(Note 3)................................. 48,800,405 7,761,954
============ ============

See accompanying notes to consolidated financial statements

F-5
40

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

PAID-IN ACCUMULATED
PREFERRED STOCK CLASS A CLASS B CAPITAL DEFICIT
----------------- ----------------- -------------------- ----------- ------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------ ------ ------

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

Net Loss -- -- -- -- -- -- -- (10,015,000)

Issuance of Common
Stock in
connection
with Cambio
Networks,
Inc. acquisition -- -- 619,421 6,000 -- -- 613,000 --

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

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

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)

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

Issuance of
Common Stock
including
7,186,000 shares
issued for
proceeds
of $1,483,000 -- -- 6,136,969 62,000 -- -- 3,188,000 --

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

TOTAL
STOCKHOLDERS'
DEFICIT
-------------

Balance June 30,
1998 $ 3,074,000

Net Loss (10,015,000)

Issuance of Common
Stock in
connection
with Cambio
Networks,
Inc. acquisition 619,000

Conversion of
debt into
preferred stock 1,407,000

Issuance of
Preferred Stock 3,700,000

Conversion of
Class B to Class A
stock --
------------
Balance, June 30,
1999 (1,215,000)

Net Loss (5,385,000)

Issuance of
Common Stock
including
7,186,000 shares
issued for
proceeds
of $1,483,000 3,250,000

Conversion of
Preferred Stock
into Class A
stock --

Options Granted
and Warrants
Issued 233,000
------------
Balance, June 30,
2000 (3,117,000)

See accompanying notes to consolidated financial statements

F-6
41
CAMBIO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE YEARS
ENDED JUNE 30, 1999 & 2000
(Note 3) (continued)

PREFERRED STOCK CLASS A CLASS B
---------------------------- --------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------ ------------ ------------

Balance, July 1,
2000 4,567 -- 19,679,675 197,000 -- --

Net Loss
(unaudited) -- -- -- -- -- --

Issuance of Common
Stock (unaudited) -- -- 4,138,802 41,000 -- --

Conversion of
Preferred
Stock to Class A
Stock (unaudited) (4,067) -- 1,050,000 11,000 -- --
------------ ------------ ------------ ------------ ------------ ------------
Balance, October
31, 2000
(unaudited) 500 -- 24,868,477 249,000 -- --

Net Loss
(unaudited) -- -- -- -- -- --

Beneficial
Conversion Costs -- -- -- -- -- --

Issuance of
Common Stock
(unaudited) -- -- 62,452,950 624,000 -- --
------------ ------------ ------------ ------------ ------------ ------------
Balance, April
30, 2001 (unaudited) 500 $ -- 87,321,427 $ 873,000 -- --
============ ============ ============ ============ ============ ============

TOTAL
PAID-IN ACCUMULATED STOCKHOLDERS'
CAPITAL DEFICIT DEFICIT
------------ ------------ -------------

Balance, July 1,
2000 26,643,000 (29,957,000) (3,117,000)

Net Loss
(unaudited) -- (1,686,000) (1,686,000)

Issuance of Common
Stock (unaudited) 822,000 -- 863,000

Conversion of
Preferred
Stock to Class A
Stock (unaudited) (11,000) -- --
------------ ------------ ------------
Balance, October
31, 2000
(unaudited) 27,454,000 (31,643,000) (3,940,000)

Net Loss
(unaudited) -- (3,909,000) (3,909,000)

Beneficial
Conversion Costs 895,000 -- 895,000

Issuance of
Common Stock
(unaudited) 1,402,000 -- 2,026,000
------------ ------------ ------------
Balance, April
30, 2001 (unaudited) $ 29,751,000 $(35,552,000) $ (4,928,000)
============ ============ ============

See accompanying notes to consolidated financial statements

F-7
42
CAMBIO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

FOUR MONTHS ENDED
JUNE 30, OCTOBER 31,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)

Cash flows from operating activities:
Net loss ............................................. $(5,385,000) $(10,015,000) $(1,686,000) $(1,594,000)
Adjustments to reconcile net loss to cash used
in operating:
Depreciation and amortization .................... 97,000 195,000 41,000 38,000
Write-off of goodwill ............................ -- 4,850,000 -- --
Expenses and settlements paid with equity and
beneficial conversion costs of convertible debt .. 1,594,000 -- 164,000 17,000
Gain on sale of equipment ........................ -- (2,000) -- --
Loss from discontinued operations ................ -- 1,013,000 -- --
Changes in assets and liabilities:
Receivables .................................... 42,000 (5,000) (237,000) (76,000)
Prepaid expenses ............................... 10,000 60,000 (60,000) 9,000
Other assets ................................... 12,000 (25,000) -- --
Net assets of discontinued operations .......... -- (211,000) -- --
Accounts payable and accrued liabilities ....... 214,000 974,000 (78,000) (296,000)
Deferred revenue ............................... (77,000) (123,000) 55,000 (89,000)
----------- ------------ ----------- -----------
Net cash used in operating activities ........ (3,493,000) (3,289,000) (1,801,000) (1,991,000)
----------- ------------ ----------- -----------

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)
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)
----------- ------------ ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of convertible debt ........... -- -- 880,000 378,000
Proceeds from issuance of stock and warrants ......... 1,483,000 3,700,000 675,000 --
Proceeds from exercise of stock options .............. -- -- 24,000 36,000
Borrowings on debt ................................... 407,000 64,000 -- --
Net proceeds of loans collateralized by assets of
discontinued operations ............................ -- 678,000 -- --
Decrease in restricted cash .......................... -- 302,000 -- --
Other ................................................ -- -- 1,000 (1,000)
----------- ------------ ----------- -----------
Net cash provided by financing
activities ................................. 1,890,000 4,744,000 1,580,000 413,000
----------- ------------ ----------- -----------
Net increase (decrease) in cash and cash
equivalents .......................................... (1,621,000) 599,000 (260,000) (1,587,000)
Cash and cash equivalents, beginning of period ......... 1,923,000 1,324,000 302,000 1,923,000
----------- ------------ ----------- -----------
Cash and cash equivalents, end of period ............... $ 302,000 $ 1,923,000 $ 42,000 $ 336,000
=========== ============ =========== ===========
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 ................... $ 406,000 -- -- --
Conversion of preferred stock into common stock ........ $ 232,000 -- -- --

SIX MONTHS ENDED
APRIL 30,
--------------------------
2001 2000
----------- -----------
(UNAUDITED) (UNAUDITED)

Cash flows from operating activities:
Net loss ............................................. $(3,909,000) $(2,077,000)
Adjustments to reconcile net loss to cash used
in operating:
Depreciation and amortization .................... 45,000 47,000
Write-off of goodwill ............................ -- --
Expenses and settlements paid with equity and
beneficial conversion costs of convertible debt .. 974,000 --
Gain on sale of equipment ........................ -- --
Loss from discontinued operations ................ -- --
Changes in assets and liabilities:
Receivables .................................... 182,000 192,000
Prepaid expenses ............................... 52,000 (134,000)
Other assets ................................... (58,000) 1,000
Net assets of discontinued operations .......... -- --
Accounts payable and accrued liabilities ....... 1,102,000 20,000
Deferred revenue ............................... (22,000) (1,000)
----------- -----------
Net cash used in operating activities ........ (1,634,000) (1,952,000)
----------- -----------

Cash flows from investing activities:
Proceeds from sale of equipment ...................... -- --
Additions to property and equipment .................. (15,000) (9,000)
Cash advanced to acquired company .................... -- --
Costs related to acquisition ......................... -- --
----------- -----------
Net cash used in investing activities ........ (15,000) (9,000)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of convertible debt ........... 1,400,000 --
Proceeds from issuance of stock and warrants ......... 145,000 1,369,000
Proceeds from exercise of stock options .............. 67,000 245,000
Borrowings on debt ................................... -- --
Net proceeds of loans collateralized by assets of
discontinued operations ............................ -- --
Decrease in restricted cash .......................... -- --
Other ................................................ (1,000) --
----------- -----------
Net cash provided by financing
activities ................................. 1,611,000 1,614,000
----------- -----------
Net increase (decrease) in cash and cash
equivalents .......................................... (38,000) (347,000)
Cash and cash equivalents, beginning of period ......... 42,000 381,000
----------- -----------
Cash and cash equivalents, end of period ............... $ 4,000 $ 34,000
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid .................................... $ -- $ 12,000
Income taxes paid ................................ $ -- $ --

Supplemental disclosure of non-cash investing and
financing activities:

Purchase of Cambio Networks, Inc.
Common stock issued to seller .......................... -- --
Liabilities assumed (including cash advanced
prior to acquisition of $1,513,000) .................... -- --
Non-cash financing activity:
Acquisition costs ...................................... -- --
Assets acquired (incl. goodwill of $4,875,000) ......... -- --
Conversion of debt into preferred stock ................ -- --
Conversion of debt into common stock ................... $ 1,835,000 --
Conversion of preferred stock into common stock ........ -- --

See accompanying notes to consolidated financial statements

F-8

43
CAMBIO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND OPERATIONS

Cambio, Inc. ("Cambio" or the "Company"), formerly Meadowbrook
Rehabilitation Group, 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 netRunner(TM). The Company's
corporate headquarters is in Dallas, 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, Cambio transferred all of the issued and outstanding
stock of the discontinued healthcare subsidiaries (the "Subsidiaries") to
Imperial Loan Management Corporation ("Imperial"), an affiliate of the Company's
former Chairman and CEO, Harvey Wm. Glasser M.D. Dr. Glasser, who in February
1999 resigned his position as CEO and in March 1999 resigned from the Board of
Directors, is overseeing the liquidation of the Subsidiaries on behalf of
Imperial. The Company received no proceeds from the transfer. Prior to the
transfer, Imperial loaned $900,000 to the Subsidiaries and Cambio, represented
by 10% notes payable. Imperial will use its best efforts to liquidate each of
the Subsidiaries, settle outstanding obligations and collect all amounts
receivable. Cambio remains a guarantor of the Imperial loans, amounting to
$678,000 as of June 30, 2000. Upon liquidation of the Subsidiaries and
settlement of the outstanding indebtedness, Cambio is entitled to receive
one-half of the proceeds remaining after payment of Imperial's expenses. At June
30, 2000, the assets and liabilities of the discontinued businesses consist
primarily of the accounts receivable and the Imperial loans. The Company
considers the realization of the remaining assets to be unlikely and the assets
have been fully provided for. All other material obligations of the Subsidiaries
have been settled except for the Imperial loans.

Results of discontinued operations are as follows:

2000 1999
----------- -----------

Net revenues......................................... $ -- $ --
----------- -----------
Net expenses......................................... -- --

Net loss from operations of discontinued businesses.. $ -- $ --
=========== ===========

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

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-9
44

NOTE 2 - GOING CONCERN

In addition to the subscription agreement mention below, the Company
continues to seek additional funding through various financing arrangements. The
Company plans to fund its operations for the next twelve months from additional
proceeds, as discussed in Note 11, and ongoing operations. If the investors in
the subscription agreement default, the Company's liquidity will be impaired,
which could have a material adverse effect on its business.

As discussed in Note 11, subsequent to year-end 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 September 22, 2000, the Company sold $1,000,000
in Notes with proceeds, net of fees, of $880,000.

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 STOCK SPLIT

The consolidated financial statements as of October 31, 2000 and April 30,
2001, for the four months ended October 31, 2000 and 1999 and for the six months
ended April 30, 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.

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.

In November 2000, the Company adopted an October 31 year-end.

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. Revenue from products licensed to
customers directly is recorded when the software has been delivered. Maintenance
revenue is recognized ratably over the contract period. Revenue from
professional services are recorded monthly when the services are performed and
invoiced. Provisions are recorded for returns and bad debts.

CONSOLIDATION

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

F-10
45
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 to date, 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 per share is computed using the
weighted average number of common and dilutive potential common shares
outstanding during the period. Potential common shares, consist of options and
warrants, have not been included in computing diluted EPS for 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.

F-11
46

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 $665,000 and
$147,000, primarily in Egypt and Malaysia, respectively, in 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 ("SFAS 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 101B 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) 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

F-12
47

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.

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,
2000
--------

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

NOTE 5 - NOTES PAYABLE TO STOCKHOLDERS

The Company has promissory notes payable to common stockholders of $250,000,
bearing interest at 7% per annum, due on demand, collateralized by first
position on all assets of the Company.

In addition, during fiscal 2000 the Company entered into an unsecured
promissory note agreement with an executive officer of the Company in the amount
of $245,000. This note, bearing interest at 8% per annum, is due on demand. At
June 30, 2000 the balance due under this note was $228,000.

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 June 30, are as follows:

2001 $241,000
2002 126,000
2003 111,000
2004 104,000
2005 104,000
--------
$686,000
========

Rent expense for the years ended June 30, 2000 and 1999 was $309,000 and
$419,000, respectively.

F-13
48

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.

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 in 2000 and 1999.

NOTE 8 - STOCKHOLDERS' EQUITY

COMMON STOCK

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.

During 2000, the Company exchanged 1,174,000 shares of Class A Common Stock
as compensation for services. Expenses of $1,504,000 have been recognized in
connection with these issuances.

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

CONVERSION OF DEBT TO EQUITY

During 2000, the Company converted notes payable of $178,000 into 395,000
shares of the Company's Class A Common Stock. Also during 2000, the Company
converted trade payables and other liabilities of $228,000 into 304,000 shares
of the Company's Class A Common Stock.

F-14
49

In February 1999 and May 1999, the Company converted debt and accrued
interest of $1,057,000 and $350,000 into 5,287 and 1,750 shares of the Company's
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 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 .40
Exercised ............... --
Cancelled ............... (15,000) 5.46
---------- ----------

Balance at June 30, 1999 ..... 1,283,500 $ .40
Granted ................. 1,842,000 .40
Exercised ............... (864,000) .40
Cancelled ............... (644,000) .40
---------- ----------

Balanced at June 30, 2000 .... 1,617,500 $ .40
========== ==========

The following table summarizes information about stock options outstanding
as of June 30, 2000:

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

$ .40 1,617,500 $ .40 5 662,500

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:

2000 1999
------------ -------------

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

Basic and diluted net loss per share...........
As reported............................... $ (.76) $ (5.60)
Pro forma................................. (.78) (5.78)

F-15
50

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. 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 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. The warrants were issued as a fee for the sale of
the preferred stock. 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.

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. Of these warrants 125,000 were issued as a
fee for the sale of the common stock. The warrants were exercised during 2000.

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 2000 or 1999 due to the losses in each
year. The Company increased the valuation allowance on net deferred tax assets
by $1,073,000 and $3,085,000 in 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 rehabilitation operations and the acquisition
of Networks. The Company has $23,396,000 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 at June 30, 2000:

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

F-16
51

NOTE 10 - MAJOR CUSTOMERS

In 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.

NOTE 11 - SUBSEQUENT EVENTS

In June 2001, the Company increased its authorized Class A common shares
from 200,000,000 shares to 1,000,000,000 shares. Also, the Company effected a
1-for-2 reverse stock split as of June 4, 2001.

During the month ended October 31, 2000, three employees received
compensation from commissions as paid in common stock. Total shares issued for
these expenses were 10,221 shares of the Company's Class A common stock.

During the three months ended September 30, 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 1,403,017 shares of the Company's
Class A common stock. Additionally, one employee purchased 58,814 shares of
stock through the exercise of vested options purchased at $0.40 per share.

Also during the three months ended September 30, 2000, the Company
consummated various private placements of Class A common stock pursuant to
which the Company issued 2,700,000 shares at $0.125 a share for an aggregate
consideration of $675,000.

Additionally, Series B preferred stock shareholders presented 4,067 shares
of Series B preferred stock for conversion into Class A common stock. That
resulted in 1,016,750 shares of Class A common stock being issued subsequent to
September 30, 2000 and the date of this filing.

In July 2000, the Company increased its authorized Class A common shares
from 50,000,000 shares to 200,000,000 shares.

The Company settled certain litigation with a vendor for 37,147 Class A
common shares in July 2000.

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 maturity
date of the Notes is July 1, 2003. The Notes are subject to certain performance
covenants and registration rights, as defined in the Subscription Agreement.
Through April 30, 2001, $1,600,000 have been funded pursuant to this agreement.
Through April 30, 2001, $1,485,000 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.

F-17
52

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.

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.

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.

Finally, in July 2000, we issued $1 million in principal amount of
convertible notes. In connection with this financing, we issued warrants to
purchase 625,000 shares of common stock. The subscribers in this financing have
agreed to purchase from us convertible notes up to the principal amount of $17
million. This right is exercisable at our option. In connection with this right,
we are obligated to issue additional warrants to the subscribers.

In the first three months of fiscal year 2001, we entered into a $17,000,000
equity line financing for the next three years. The subscribers under the equity
line agreements have agreed to purchase from us these convertible notes
exercisable at our option. The holders are bound to honor the loans in the
subscription agreement and cannot withhold monies from drawdown by Telynx except
for reason of default. Notes bear interest at 6% and are convertible into Class
A common stock at the option of the note holder. Through April 30, 2001,
$1,600,000 have been funded pursuant to this agreement. Through April 30, 2001,
$1,485,000 of notes have been converted to common stock.

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

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 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.

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.

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).

- -------------
* To be filed by amendment.

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.

(3) 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.

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 13th
day of July, 2001.

TELYNX INC.

By: /s/ Ali Al-Dahwi
--------------------
Ali Al-Dahwi
Chairman of the Board, President and
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Kent Van Houten, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement and to file the same with all exhibits thereto and all documents in
connection therewith, with the Securities and Exchange Commission, granting said
attorney-in-fact and agent and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

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:

/s/ Ali Al-Dahwi Chairman of the Board, July 13, 2001
------------------ President and Chief Executive
Ali Al-Dahwi Officer
(Principal Executive Officer)

/s/ Kent Van Houten Chief Financial Officer July 13, 2001
------------------- (Principal Financial and
Kent Van Houten Accounting Officer)

/s/ Dr. Ziad El-Dukair Director July 13, 2001
----------------------
Dr. Ziad El-Dukair

INDEX TO 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.

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

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

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 Opinion of Fulbright & Jaworski L.L.P. *

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.

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).

- -------------
* To be filed by amendment.