You are using an outdated browser. Please upgrade to the latest version for the best experience. Upgrade your browser now.

Skip Navigation

Quarterly report filed by small businesses

10QSB

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.

     For the quarterly period ended June 30, 2004


[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934.
  
     For the transition period from _______ to ______


                        Commission file number 001-15673


                            PROVO INTERNATIONAL, INC.
        (Exact name of small business issuer as specified in its charter)


         Delaware                                           13-3950283
(State or other jurisdiction                              (I.R.S employer
of incorporation or organization)                     identification number)


One Blue Hill Plaza, P.O. Box 1548, Pearl River, New York             10965
   (Address of principal executive offices)                         (Zip code)

                                 (845) 623-8553
                (Issuer's telephone number, including area code)

                      Frontline Communications Corporation
                      ------------------------------------
                   (Former name, if changed since last report)

Indicate by a check mark whether the Issuer:  (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding  twelve months (or for such shorter period that the registrant was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the last 90 days.

Yes X             No___
    -


As of August 10, 2004 there were outstanding  41,600,602  shares of the Issuer's
common stock, $ .01 par value.






                                      INDEX

                                                                            Page



Part I   Financial Information


Item 1   Financial Statements (Unaudited)

         Condensed Consolidated Balance Sheets                                 1

         Condensed Consolidated Statements of Operations                       2

         Condensed Consolidated Statements of Cash Flows                       3

         Notes to Condensed Consolidated Financial Statements                  4


Item 2   Management's Discussion and Analysis of Financial Condition And
         Results Of Operations                                                10


Item 3   Controls and Procedures                                              17


Part II  Other information                                                    18

         Signatures                                                           19






                    PROVO INTERNATIONAL, INC. AND SUBSIDIARIES
                       Condensed Consolidated Balance Sheets





                                                         JUNE 30,      DECEMBER 31,
                                                           2004            2003
                                                       ------------    ------------
                                                       (Unaudited)       (Audited)
                                                                 
ASSETS
Current:
   Cash and cash equivalents                           $     47,395    $    106,025
   Accounts receivable:
     Trade, net of allowance for doubtful accounts        2,784,247       5,775,010
     Related parties                                        467,119         564,397
     Other                                                  418,231         521,766
                                                       ------------    ------------
Total accounts receivable                                 3,669,597       6,861,173

  Value-added tax recoverable                                43,351         531,711
  Inventory                                                 501,360         811,934
  Prepaid expenses                                          878,452         348,172
  Deferred income taxes                                                     125,941
                                                       ------------    ------------
Total current assets                                      5,140,155       8,784,956

Property and equipment, net                                 230,610         406,387
Investment in nonproductive properties                                    1,955,012
Deferred income taxes                                       297,217          28,299
Goodwill                                                  5,343,741       5,343,741
Other assets                                                546,161         388,473
                                                       ------------    ------------
                                                       $ 11,557,884    $ 16,906,868
                                                       ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current maturities of long-term debt                   $    974,816    $  1,548,837
Payable under supplier credit facility                                    6,940,363
Related parties                                             864,997         901,267
Accounts payable and accrued expenses                     2,601,719       2,795,528
Income taxes payable                                        171,850         193,835
Deferred taxes                                              210,748
Deferred revenue                                            402,234         463,370
                                                       ------------    ------------
Total current liabilities                                 5,226,364      12,843,200


Long-term debt, less current maturities                   1,076,899         685,772
                                                       ------------    ------------
Total liabilities                                         6,303,263      13,528,972
                                                       ------------    ------------

Minority Interest                                                49              49

Stockholder's Equity
    Series E Preferred stock, $.01 par value,
     2,000,000 shares authorized, issued and
     outstanding 30,555 and 86,555, respectively 
     Liquidation prefererence                                   306             866
     $306 and 866, respectively 
    Common Stock, $.01 par value, 100,000,000 shares
     authorized, 41,529,747    and 28,960,449  issued,
     respectively, 41,099,446 and 28,530,148
     outstanding, respectively                              415,297         289,604

   Additional paid-in capital                            48,951,600      46,904,232

   Accumulated deficit                                  (43,105,734)    (42,715,222)
   Unamortized deferred consulting costs                    (16,644)       (145,191)
   Accumulated other comprehensive loss                    (118,837)        (85,026)
   Treasury stock, at cost, 430,301 shares                 (871,416)       (871,416)
                                                       ------------    ------------
                 Total stockholders'
                   equity                                 5,254,572       3,377,847

                                                       ------------    ------------
                                                       $ 11,557,884    $ 16,906,868
                                                       ============    ============




             See notes to condensed consolidated financial statements.


                                        -1-








                                   PROVO INTERNATIONAL, INC. AND SUBSIDIARIES
                                 Condensed Consolidated Statements of Operations
                                                   (Unaudited)



                                                      FOR THE THREE MONTHS ENDED      FOR THE SIX  MONTHS ENDED
                                                     ----------------------------    ----------------------------
                                                       JUNE 30          JUNE 30        JUNE 30         JUNE 30
                                                         2004             2003           2004            2003
                                                     ------------    ------------    ------------    ------------
                                                                                         
Revenues                                             $ 10,065,742    $ 20,571,986    $ 32,901,029    $ 21,638,113

Costs and expenses:
      Cost of revenues (excludes costs $19,050,
       $42,677 $37,954 and $ 85,633 included
       in depreciation and amortization)                9,405,641      19,125,583      31,268,840      19,621,304

      Selling, general and administrative               3,875,829       1,568,953       5,014,939       2,172,232
        (excludes equity related noncash
        compensation of $359,494, $0, $431,048 and $0)

      Depreciation and amortization                        80,909         152,758         170,759         296,131
      Noncash compensation                                359,494                         431,048
                                                     ------------    ------------    ------------    ------------
                                                       13,721,873      20,847,294      36,885,586      22,089,667
                                                     ------------    ------------    ------------    ------------
Loss from operations                                   (3,656,131)       (275,308)     (3,984,557)       (451,554)

Other income (expense):
   Interest income                                         11,420          13,359          16,599          13,666
   Interest expense                                      (156,967)       (193,931)       (256,209)       (215,819)
   Amortization of deferred debt discount and
    conversion benefit                                    (47,374)       (189,413)       (906,872)       (189,413)
   Gain on assets transferred in settlement
    of supplier payables                                4,808,298                       4,808,298
   Gain on debt settlement                                                449,850                         449,850
   Other income (expense)                                                  95,097                          95,097
                                                     ------------    ------------    ------------    ------------
Net income (loss)  before income tax and
   minority interest                                      959,246        (100,346)       (322,741)       (298,173)
                                                     ------------    ------------    ------------    ------------

Income tax expense                                         67,066          89,996          67,771          89,996

Minority interest                                                             580                             580
                                                     ------------    ------------    ------------    ------------
Net  income (loss)                                        892,180        (190,922)       (390,512)       (388,749)
                                                     ------------    ------------    ------------    ------------

Preferred dividends                                            --          74,467              --         148,934
                                                     ------------    ------------    ------------    ------------
Net income (loss) available to common shareholders   $    892,180       ($265,389)      ($390,512)      ($537,683)
                                                     ============    ============    ============    ============

Earnings (Loss)  per common share-basic              $       0.02          ($0.04)         ($0.01)         ($0.08)
                                                     ============    ============    ============    ============

Earnings (Loss)  per common share-diluted            $       0.02          ($0.04)         ($0.01)         ($0.08)
                                                     ============    ============    ============    ============

Weighted average number of  common shares
   outstanding- basic                                  39,941,021       6,760,751      36,034,948       6,480,257
                                                     ============    ============    ============    ============

Weighted average number of  common shares
   outstanding- diluted                                43,254,885       6,760,751      36,034,948       6,480,257
                                                     ============    ============    ============    ============


                            See notes to condensed consolidated financial statements.





                                                       -2-









                           PROVO INTERNATIONAL, INC. AND SUBSIDIARIES
                        Condensed Consolidated Statements of Cash Flows
                                          (Unaudited)


                                                                       FOR THE SIX MONTHS ENDED 
                                                                      --------------------------
                                                                        JUNE 30,       JUNE 30,
                                                                          2004          2003
                                                                      -----------    -----------
                                                                               
Cash flow from operating activities:
   Net loss                                                             ($390,512)     ($388,749)
   Adjustments to reconcile net loss to net cash provided by
    (used in) operating activities:
      Minority interest                                                       580
      Depreciation and amortization                                       170,759        296,131
      Debt discount amortization and conversion benefit                   906,872        201,911
      Gain on debt settlement                                          (4,808,298)      (449,850)
      Noncash compensation charge                                         431,048
      Deferred income taxes                                                67,771       (129,447)
      Changes in operating assets and liabilities
         Accounts receivable                                            2,990,763        494,882
         Value-added tax recoverable                                      488,360        (29,009)
         Inventory                                                        310,574        178,948
         Prepaid expenses and other                                      (530,280)       (91,980)
         Other assets                                                     (59,406)        (4,406)
         Accounts payable and accrued expenses                            (29,266)      (366,605)
         Deferred revenue                                                 (61,136)       (11,471)
         Income taxes payable                                             (21,985)       217,973

                                                                      -----------    -----------
Net cash  provided  by (used in) operating activities                    (534,736)       (81,092)
                                                                      -----------    -----------


Cash flows from investing activities:
     Acquisition of property and equipment                               (159,297)       (14,830)
     Acquisition of Provo Mexico, net of cash acquired $345,137                         (154,863)
                                                                      -----------    -----------
Net cash used in  investing activities                                   (159,297)      (169,693)
                                                                      -----------    -----------


Cash flows from financing activities:
   Principal payments on long-term debt                                  (622,223)       (42,268)
   Proceeds from sale of convertible notes                                924,987
   Proceeds from issuance of common stock upon exercise of warrants       568,000
   Supplier credit facility                                                               84,094
   Proceeds (repayment) of bridge loan                                   (203,461)       465,587
   Seller note settlement                                                               (200,000)
                                                                      -----------    -----------
Net cash provided by (used in)  financing activities                      667,303        307,413
                                                                      -----------    -----------

Effects of changes in foreign currency
    exchange rate changes on cash                                         (31,900)        58,848
                                                                      -----------    -----------
Net increase (decrease)  in cash and cash equivalents                     (58,630)       115,476
                                                                      -----------    -----------

Cash and cash equivalents, beginning of period                            106,025        208,502

Cash and cash equivalents, end of period                              $    47,395    $   323,978
                                                                      ===========    ===========
Supplemental information:
  Interest paid during the period                                     $   211,000    $   185,000
                                                                      ===========    ===========
 Dividends on Series B Preferred stock accrued                                       $   149,000
                                                                                     ===========
  Supplier credit payable settled by transfer
    of properties                                                     $ 6,900,000
  Net book amounts of properties transferred to
     supplier credit settlement                                       $ 2,100,000
                                                                      ===========






                   See notes to condensed consolidated financial statements.


                                               -3-




                           PROVO INTERNATIONAL, INC.

        Notes to Condensed Consolidated Financial Statements (Unaudited)
                                 June 30, 2004


NOTE A- BASIS OF PRESENTATION

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the instructions to Form 10-QSB and Item 310 (b)
of Regulation S-B.  Accordingly,  they do not include all of the information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring  accruals)  considered  necessary for fair presentation have
been  included.  The  results  for  the  interim  periods  are  not  necessarily
indicative  of the results that may be attained for an entire year or any future
periods.  For  further  information,  refer  to  the  Financial  Statements  and
footnotes  thereto in the Company's  annual report on Form 10-KSB for the fiscal
year  ended  December  31,  2003.  There  have been no  significant  changes  in
accounting policies since December 31, 2003.

         The condensed consolidated financial statements include the accounts of
the Company and its  subsidiaries.  All  significant  intercompany  accounts and
transactions have been eliminated.

         In December 2003, the Company's  stockholders  approved a two-for-three
reverse split of the Company's  common stock. All data relating to the number of
shares and per share amounts  presented in these financial  statements have been
retroactively adjusted in order to reflect the reverse split.

NOTE B- ACQUISITION

         In April 2003,  the Company  entered into an amended and restated stock
purchase   agreement  with  the  two   stockholders  of  Proyecciones  y  Ventas
Organizadas, S.A de C.V., a corporation organized under the laws of the Republic
of Mexico ("Provo Mexico"),  to acquire from them all the issued and outstanding
shares of Provo  Mexico.  The results of operations of Provo Mexico are included
from the date of acquisition.

         The accompanying pro forma operating statements are presented as if the
Provo Mexico acquisition  occurred on January 1, 2003. The pro forma information
is unaudited and is not  necessarily  indicative  of what the actual  results of
operations  of the Company  would have been  assuming the  acquisition  had been
completed as of January 1, 2003 and neither is it necessarily  indicative of the
results of operations for future periods.

         Six months ended June 30, 2003
         -----------------------------------------
         Revenues                                             $ 41,187,403
         Net loss available to common shareholders              (2,346,640)
         Net loss per share- basic and diluted.                     ($0.07)


       The  weighted  average  number used to  calculate  the net loss per share
includes  22,000,000  shares of common  stock to be issued  upon  conversion  of
220,000 shares of Series E Preferred issued for the Provo Mexico acquisition and
3,550,000  shares of common stock to be issued upon  conversion of 35,500 shares
of Series D  Preferred  issued to  officers,  employees,  brokers and finders in
connection with the Provo Mexico acquisition.


                                      -4-




NOTE C- LOSS PER SHARE

         The Company follows SFAS No. 128,  "Earning per Share",  which provides
for the calculation of "basic" and "diluted"  earnings per share ("EPS").  Basic
EPS includes no dilution and is computed by dividing income or loss available to
common   shareholders  by  the  weighted  -  average  number  of  common  shares
outstanding  for the period.  Diluted  earnings per share  reflect the potential
dilution  that could occur  through the effect of common  shares  issuable  upon
exercise of stock options and warrants and  convertible  securities.  Except for
the three  months  ended June 30, 2004,  potential  common  shares have not been
included  in  the  computation  of  diluted  loss  since  the  effect  would  be
antidilutive.

         The  following  table sets forth the  computation  of basic and diluted
earnings (loss) per share:





                                                  THREE MONTHS ENDED                SIX MONTHS ENDED
                                                       JUNE 30,                          JUNE 30,
                                             ---------------------------      --------------------------
                                                 2004             2003           2004            2003
                                             ------------      ---------      ----------       ---------
                                                                                   
Numerator:
   Numerator for basic and
      diluted  earning (loss)
        per share- net income (loss)         $    892,180      ($265,389)     ($ 390,512)      ($537,683)
                                             ============      =========      ==========       =========
Denominator
  Weighted average common shares
    denominator for  basic earnings
       (loss) per share                        39,941,021      6,760,751      36,034,948       6,480,257

   Effect of dilutive securities:
     Convertible Series E Preferred Stock-      3,055,500
     Stock warrants                               258,334

                                             ------------      ---------      ----------       ---------
  Denominator for diluted
   earnings (loss) per share                   43,254,855      6,760,751      36,034,948       6,480,257
                                             ============      =========      ==========       =========

Basic earnings (loss) per share              $       0.02      ($   0.04)     ($    0.01)      ($   0.08)
                                             ============      =========      ==========       =========
Diluted earnings (loss) per share            $       0.02      ($   0.04)     ($    0.01)      ($   0.08)
                                             ============      =========      ==========       =========





         At  June  30,  2004,  there  were  outstanding  3,193,200  options  and
warrants,  preferred stock  convertible into an aggregate of 3,055,500 shares of
common stock and  promissory  notes  convertible  into an aggregate of 2,800,000
shares of common stock that could potentially dilute basic EPS in the future.


                                      -5-




NOTE D- ADOPTION OF NEW ACCOUNTING LITERATURE

         In January 2003, FASB issued  Interpretation No. 46,  "Consolidation of
Variable   Interest   Entities,   an   interpretation   of  ARB  No.  51".  This
interpretation  addresses the consolidation by business  enterprises of variable
interest entities as defined in the Interpretation.  The Interpretation  applies
immediately to variable  interest in variable  interest  entities  created after
January 31, 2003 and to variable interest in variable interest entities obtained
after  January 31,  2003.  The  adoption of this  Interpretation  did not have a
material effect on the Company's financial statements.

         In May 2003,  the FASB  issued  SFAS No.  150,  Accounting  for Certain
Financial  Instruments with Characteristics of Both Liabilities and Equity. SFAS
150 establishes standards on classification and measurement of certain financial
instruments with  characteristics of both liabilities and equity. The provisions
of SFAS 150 are  effective for  financial  instruments  entered into or modified
after May 31, 2003 and to all instruments  that exist as of the beginning of the
first interim  financial  reporting  period  beginning  after June 15, 2003. The
adoption of SFAS 150 did not have a material  impact on the Company's  financial
statements.

NOTE E- STOCK OPTIONS

         Statement of Financial Accounting Standard No. 123 requires the Company
to provide pro forma information regarding net loss and net loss per share as if
compensation  cost for the stock options had been  determined in accordance with
the  fair-value  based method  prescribed in SFAS No. 123. For the three and six
months  ended June 30, 2004 and 2003,  the pro forma net loss and loss per share
calculated under the provisions of SFAS No. 123, would have been the same as the
reported numbers.

NOTE F- DEBT

         In January 2004, the Company borrowed an aggregate  principal amount of
$1,050,000 pursuant to the terms of five convertible promissory notes. The notes
are due in January of 2006 and bear an interest  rate of 8% per annum.  The note
holders  have the option to convert  the balance due under the notes into shares
of the  Company's  common  stock at a  conversion  price of $0.38 per share.  In
connection  with the  borrowing,  the  Company  issued the note  holders and the
placement  agent  warrants to acquire an  aggregate  of  1,600,000  shares at an
exercise price of $0.51 per share. The Company incurred  approximately  $145,000
(including  $20,000 paid in shares of common stock to the placement  agent prior
to December 31, 2003).  The expenses are treated as deferred  financing cost and
amortized  over the term of the notes.  Based on the fair value of the Company's
common stock and warrants at the date of issuance,  approximately $1,017,000 was
allocated as the value of the conversion  feature and debt discount.  The amount
attributable  to the  conversion  feature was charged to  operations  during the
three  months  ended  March 31, 2004 and the debt  discount is being  charged to
operations over the term of the note.

         In January 2004,  the Company  repaid  $203,461 due under a bridge loan
payable.  The  balance of  $125,000  due on the  bridge  loan was  satisfied  by
issuance of 500,000 shares of the Company's  common stock. The fair market value
of the shares issued exceeded the balance due under the bridge loan by $160,000.
The  excess is treated as expense  and  charged to  operations  during the three
months ended March 31, 2004.


                                      -6-




NOTE G- STOCKHOLDERS EQUITY

      In January and February of 2004, the Company issued 4,400,000 shares of
common stock upon exercise of warrants and received gross proceeds of $620,000
(net proceeds of $568,000).

         During the six months ended June 30, 2004, the Company issued 5,600,000
shares of common stock upon  conversion  of 56,000  shares of Series E Preferred
and 52,631 shares of common stock upon exercise of warrants.

         In May and June 2004, the Company issued 2,016,667 shares of its common
stock  to  its  directors,  employees  and  officers.   Accordingly,   $302,500,
representing the fair value of the shares issued, was charged to operations as a
noncash compensation charge.

NOTE H- TELMEX SETLLMENT AGREEMENT

      In April 7, 2004, Provo Mexico entered into a settlement agreement with
Telmex, whereby Provo Mexico transferred eight non-revenue generating real
estate properties and certain vehicles carried at a net book value of
approximately $2.1 million to Telmex in full satisfaction and release of the
$6.9 million credit balance to Telmex. The gain resulting from the reduction of
indebtedness approximated $4.8 million, and has been recorded during the three
months ended June 30, 2004.

         The Telmex  agreement  required  Provo Mexico to stop  distribution  of
Telmex  prepaid cards from May of 2004. In addition,  the  settlement  agreement
requires that for a period of 15 years from the date of the  agreement,  certain
affiliates of Provo Mexico can not  participate in any companies or transactions
involving the wholesale distribution of Telmex issued prepaid calling cards.

       Nothing in the settlement agreement restricts the Company or Provo Mexico
from  continuing  to  distribute  cellular  cards  issued by  Telcel or  prepaid
telecommunications cards issued by other telecommunications  carriers in Mexico,
other than Telmex.  For the year ended  December 31, 2003,  Telcel airtime sales
represented  about 48.3% of Provo Mexico's total annual sales, up  significantly
from 10% in 2000.  All  purchases  of  Telcel  cards  are made in cash and Provo
Mexico  has no lines of  credit  with  Telcel.  As a  result  of the  settlement
agreement, Provo Mexico is currently distributing only Telcel cards in Mexico.

NOTE I - SEGMENT INFORMATION

         We report our  operations  in two  segments:  Internet  business in the
U.S.A and sale and distribution of prepaid phone cards in Mexico

         The Company's  Internet business provides Internet access, web hosting,
website design and related services to residential and business customers.

         The Company's Mexican subsidiary,  Provo Mexico,  sells and distributes
prepaid  phone  cards in Mexico  for  Telcel.  Until May of 2004,  Provo  Mexico
distributed  prepaid  phone cards in Mexico for Telmex.  Telmex is the  dominant
telecommunications  provider  in Mexico and Telcel is the  dominant  provider of
cellular airtime in Mexico.  Prepaid phone cards are distributed  through a vast
network  of  retail  outlets,   including   convenience   stores,  drug  stores,
restaurants,  lottery  stands,  newspaper and magazine  stands and other general
stores.


                                      -7-




 Segment information for the three and six months ended June 30 is as follows:





                                                  THREE MONTHS ENDED                SIX MONTHS ENDED
                                                        JUNE 30,                       JUNE 30,
                                              ----------------------------    ----------------------------
                                                 2004            2003              2004            2003
                                              ------------    ------------    ------------    ------------
                                                                                  
Revenues:
  Internet business                           $    783,928    $    987,218    $  1,632,596    $  2,053,345
  Sale and distribution of phone cards           9,281,814      19,584,768      31,268,433      19,584,768
                                              ------------    ------------    ------------    ------------
                               Consolidated   $ 10,065,742    $ 20,571,986    $ 32,901,029    $ 21,638,113
                                              ------------    ------------    ------------    ------------

Operating profit (loss):
  Internet business                               (640,543)       (282,507)       (978,742)       (458,753)
  Sale and distribution of phone cards          (3,015,588)          7,199      (3,005,815)          7,199
                                              ------------    ------------    ------------    ------------
                               Consolidated   ($ 3,656,131)   ($   275,308)   ($ 3,984,557)   ($   451,554)
                                              ------------    ------------    ------------    ------------




         For the three months and six ended June 30, 2004 the Internet  business
includes approximately $151,000 and $374,000,  respectively, of common corporate
expenses.  For the three  months and six months ended June 30, 2003 the Internet
business includes approximately $210,000 of common corporate expenses

NOTE J- FOREIGN CURRENCY TRANSLATION

         The Company has  determined  that for its  subsidiary's  operations  in
Mexico,  the Mexican peso is the  functional  currency.  Assets and  liabilities
denominated in the Mexican peso are translated  into U.S dollars at the rates in
effect at the balance  sheet date.  Revenues  and  expenses  are  translated  at
average rates for the reported  period.  The net exchange  difference  resulting
from  these   translations   are  recorded  as  a  separate   component  of  the
stockholders'  equity  as  accumulated  other  comprehensive  income,  which  is
excluded  from net income.  For the six months ended June 30, 2004,  the Company
recorded a translation loss of $34,000 to its stockholders equity as accumulated
other comprehensive income.

NOTE K-SUBSEQUENT EVENTS


         In July 2004,  the Company  entered into an  agreement  with the former
shareholders  of Provo  Mexico to sell back Provo Mexico to them in exchange for
them returning back to the Company  substantially all of the Company's shares of
common stock and preferred stock issued to them (the  "Unwind").  For the Unwind
to take effect,  the Company has to comply with several  requirements  including
acquiring  another  line of  business.  Upon  the  Company  complying  with  the
requirements  and  when  the  likelihood  of the  unwind  is  more  likely,  the
measurement  date for disposal of Provo Mexico will be established for financial
reporting purposes.  Once the measurement date is established,  the Company will
recognize  the loss on  disposal  of Provo  Mexico and the  Company's  financial
statements of periods that include results of Provo Mexico  operations  prior to
the measurement date will be reclassified as results of discontinued operations.
However, there can be no assurance that the Company will complete the Unwind.


                                      -8-




         In July 2004, the Company entered into an agreement with the holders of
secured  convertible  notes  (aggregate  face amount of $1,000,000)  whereby the
noteholders have agreed to release their security  interest in Provo Mexico.  In
connection  therewith,  the Company has agreed to sell  certain of its  customer
bases to fund the  partial  repayment  of the  convertible  notes by a specified
date.  The  agreement  with the  noteholders  also  provides  for payment of the
balance due on the notes in shares of the Company's common stock at a conversion
price specified in the agreement.  The Company is in negotiation  with potential
buyers to sell certain of its customer  bases,  however,  there is no definitive
agreement  and there can be  assurance  that the Company will be  successful  in
selling its customer bases by the specified date or on terms that are acceptable
to the Company.

                  In August 2004, the Company entered into a letter of intent to
acquire a company in employee leasing and recruitments services. The transaction
is subject to, among other things,  satisfactory  completion of due diligence by
both parties,  an execution of a definitive  agreement  with  customary  closing
conditions, including regulatory and shareholder approval. However, there cannot
be any  assurance  that  the  Company  will be able to  successfully  close  the
transaction.


                                      -9-




I
TEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

         Safe Harbor Statement under the Private  Securities  Litigation  Reform
Act of 1995: The statements  contained in this Item 2 and elsewhere in this Form
10-QSB that are not historical facts are "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the  Securities  Exchange Act of 1934,  as amended.  These  "forward  looking
statements"  are subject to a number of known and unknown  risks,  uncertainties
and other factors that may cause our actual results, performance or achievements
to be materially different from any future results,  performance or achievements
expressed  or implied by such  forward  looking  statements.  Such risk  factors
include,  but are not  limited  to, the  following:  risks  associated  with our
ability  to attract  and retain new  subscribers  to  integrate  newly  acquired
subscribers and business entities into our operations,  and to manage any future
growth;  uncertainties regarding our future operating results; risks relating to
changes  in the market  for  internet  services,  regulatory  and  technological
changes,  our  possible  inability  to protect  proprietary  rights,  changes in
consumer   preferences  and  demographics,   competition  and  our  reliance  on
telecommunication  carriers; risks relating to our ability to expand our network
structure  and to obtain any  necessary  future  financing;  risks  relating  to
unfavorable  general economic  conditions,  uncertainty of customer and supplier
plans and commitments; risks related to our acquisition of Provo and our ability
to maintain the American Stock  Exchange  listing of our  securities;  and other
risks  detailed  in  this  report  and  in our  other  Securities  and  Exchange
Commission filings. The words "believe",  "expect",  "anticipate",  "intend" and
"plan" and similar expressions identify forward-looking statements,  which speak
only as of the date they were made.  We  undertake no  obligation  to update any
forward-looking statements contained in this report.

PROVO ACQUISITION

         On April 3, 2003, we completed the acquisition of all of the issued and
outstanding  stock  of  Proyecciones  y Ventas  Organizadas,  S.A.  de  C.V.,  a
corporation organized under the laws of the Republic of Mexico ("Provo Mexico").
Provo Mexico and its  subsidiaries  are engaged in the  distribution  of prepaid
calling  cards and  cellular  phone  airtime  in  Mexico.  The  acquisition  was
accounted for using the purchase  method of  accounting  with the results of the
acquisition   included  in  the  consolidated   financial  statements  from  the
acquisition date.

OVERVIEW

         Prior to acquiring Provo in 2003 and during 2002, a significant part of
our revenues were derived from providing Internet access services to individuals
(Residential  ISP) and businesses  (Business ISP). These revenues were comprised
principally  of  recurring   revenues  from  our  customer  base,   leased  line
connections and various ancillary  services.  We charge subscription fees, which
are billed monthly,  quarterly,  semi-annually or annually in advance, typically
pursuant to  pre-authorized  credit card  accounts.  The balance of our revenues
during those periods were derived from website  design,  development and hosting
services.

         Monthly  subscription service revenue for Internet access is recognized
over the period in which services are provided. Fee revenues for website design,
development  and hosting  services are  recognized  as services  are  performed.
Deferred revenue represents prepaid access fees by customers.


                                      -10-




         Provo Mexico's primary business is the sale and distribution of prepaid
PCS cellular  airtime for Telcel in Mexico.  Telcel is the dominant  provider of
cellular airtime in Mexico.  Until May 2004, Provo sold and distributed  Ladatel
payphone calling cards and Multifon prepaid telephone time for Telmex. As a part
of Provo Mexico's  settlement  agreement with Telmex,  it has stopped  wholesale
distribution of Ladatel and Multifon time from May 2004 (See Note H).

         Prepaid  phone cards are  distributed  through a vast network of retail
outlets, including convenience stores, drug stores, restaurants, lottery stands,
newspaper and magazine  stands and other general  stores.  Provo purchases large
volumes of prepaid  cards from Telcel and sells the cards in smaller  quantities
to retailers either directly or through agents or distributors.

         Provo Mexico purchases  prepaid cards at a discount from the face value
of the card, and resells them to retailers or  distributors  at a slightly lower
discount.  The difference  between the two discount rates,  typically from 1% to
7%,  represents the gross margin Provo Mexico  retains.  Cash (C.O.D)  purchases
result in a higher  discount to Provo  Mexico  compared to  purchases  on credit
terms from Telmex. In addition,  the discount obtained by Provo Mexico varies by
the type of card, face value of the card and volume levels met.  Similarly,  the
discount offered by Provo Mexico to retailers or distributors varies by the type
of  card,  face  value  of  the  card  and  volume  levels  of the  retailer  or
distributor.  Accordingly,  the gross  margin  attained  by Provo  Mexico in any
period is impacted by several  factors.  In addition,  Telmex and Telcel provide
Provo Mexico with  additional  discounts  and rebates  based on certain  special
programs.  Provo Mexico's  management tries to optimize the gross margins earned
by balancing volume levels with its working capital availability,  and from time
to time has scaled back volume levels due to working capital constraints.

RESULTS OF OPERATIONS

Comparison of three and six months ended June 30, 2004 and 2003:

Revenues.  Our  revenues  decreased  for the three months ended June 30, 2004 by
$10,506,244  or 51.0% over the same  period of the prior year.  The  decrease in
revenues was principally due to the discontinuation of wholesale distribution of
Ladatel and Multifon cards for Telmex in May of 2004. Our revenues increased for
the six months  ended June 30, 2004 by  $11,262,916  or 52.1%.  The  increase in
revenues was due to the Provo Mexico  acquisition.  Excluding  the  acquisition,
revenues  decreased for the six months by $420,749 or 20.5% over the same period
of the  prior  year.  The  decrease  in  revenues  was in part  due to  customer
attrition and due to the reduced amount of website development work we performed
in 2004.  Pursuant to a  settlement  agreement  with  Telmex,  Provo  Mexico has
discontinued the wholesale distribution of Ladatel and Multifon time. Therefore,
we anticipate that our revenues for the rest of 2004 will decrease.


                                      -11-




Cost of Revenues. For the three months ended June 30, 2004, our cost of revenues
decreased by $9,719,942 to $9,405,641.  The decrease in cost of revenues was due
to  decreased  revenues  in 2004  compared to the same period of the prior year.
Cost of revenues as a percentage of revenues for the three months ended June 30,
2004 was 93.4%  compared  to 93.0% in 2003.  For the six  months  ended June 30,
2004, our cost of revenues increased by $11,647,536 to $31,268,840. The increase
in cost of revenues was due to the Provo Mexico acquisition. In percentage terms
of revenues,  the cost of Provo Mexico's products are generally higher than that
of our U.S.  operations,  and with a greater mix of Provo  Mexico's share in our
consolidated  revenues,  cost of revenue as a percentage of revenues is expected
to increase. We anticipate that our cost of revenues in absolute dollars for the
rest of 2004 will decrease in line with the anticipated decrease in revenues.

Selling, General and Administrative. For the three months and six months ended
June 30, 2004, selling, general and administrative expenses increased by
$2,306,876 and $2,842,707, respectively, compared to the same periods of the
prior year. The increase in selling, general and administrative expenses was
principally due to the addition of $2.7 million to allowance for doubtful
accounts during the three months ended June 30, 2004. Due to the discontinuation
of the wholesale distribution for Telmex, Provo Mexico has lost the continuity
of the relationship with many of its customers. Therefore, Provo Mexico's
management evaluated its accounts receivable situation and increased the
allowance for doubtful accounts.

Depreciation  and  Amortization.  For the  three  months  ended  June 30,  2004,
depreciation  and  amortization  decreased  by $71,849 to  $80,909.  For the six
months ended June 30, 2004,  depreciation and amortization decreased by $125,372
to $170,759.  Depreciation and amortization  decreased as many of our long-lived
assets are fully depreciated or amortized over their estimated useful lives.

Interest  Expense.  Interest  expense for three  months  ended June 30, 2004 was
$156,967  compared to an  interest  expense of  $193,931  during the  comparable
period in 2003.  Interest  expense  for the six months  ended June 30,  2004 was
$256,209  compared to an  interest  expense of  $215,819  during the  comparable
period in 2003.  Interest  expense  for the three  months  ended  June 30,  2004
decreased compared to the same period of the prior year,  principally due to the
decreased  debt level that  resulted  from the  settlement  of  supplier  credit
payable to Telmex in April 2004.  Interest expense for the six months ended June
30, 2003  increased  compared to the same period of the prior year,  principally
due to the increased debt level that resulted from the Provo Mexico acquisition.

Noncash Compensation  Charges. In 2004, we issued 2,016,667 shares of its common
stock  to  its  directors,  employees  and  officers.   Accordingly,   $302,500,
representing the fair value of the shares issued, was charged to operations as a
noncash compensation charge. In 2003, we entered into consulting agreements with
five consultants and issued them an aggregate of 426,117 shares of common stock,
and warrants to acquire 100,000 shares of common stock.  Based on the fair value
of the common shares and warrants,  the aggregate  consulting costs approximated
$294,750 and is being  charged to  operations  over the terms of the  respective
consulting agreements.


                                      -12-




Income Taxes.  Represent  Provo  Mexico's tax, as determined in accordance  with
Mexico's  income tax laws.  The  effective tax rate was lower than the statutory
rate of 34% due to certain revised  estimates on deferred taxes.  Tax benefit of
tax loss carryforward was previously offset by a valuation  allowance due to the
uncertainty of its realization.  For both 2004 and 2003, our U.S. operations did
not incur any income tax expense due to losses.  The tax benefit of these losses
has been  completely  offset by a valuation  allowance due to the uncertainty of
its realization.

Net loss. As a result of the foregoing and after recognizing a $4.8 million gain
on settlement of supplier payable, for the three months ended June 30, 2004, net
loss deceased by  $1,157,569  to a profit of $892,180  compared to a net loss of
$265,389 for the corresponding period in 2003. For the six months ended June 30,
2004,  net loss  decreased  by $147,171 to a loss of $390,512  compared to a net
loss of $537,683 for the corresponding period in 2003.

LIQUIDITY AND CAPITAL RESOURCES

         Our working  capital  deficiency at June 30, 2004 was $ 86,209 compared
with a working  capital  deficiency  of  $4,058,244  at December 31,  2003.  The
increase in working capital was primarily due to  approximately  $1.6 million of
additional  financing completed in the six months ended June 30, 2004 and due to
the settlement of the supplier payable to Telmex.

         Our recent  primary  capital  requirements  were to fund Provo Mexico's
working capital.  To date, we have financed our capital  requirements  primarily
through the issuance of debt and equity securities.  The availability of capital
resources  is  dependent  upon many  factors,  including,  but not  limited  to,
prevailing market conditions, interest rates, and our financial condition.

         In 2004,  we  borrowed  an  aggregate  principal  amount of  $1,050,000
through the sale of five  convertible  promissory  notes and we issued 4,400,000
shares of common stock upon exercise of warrants and received  gross proceeds of
$620,000 (net proceeds of $568,000).

       At June 30, 2004,  Provo Mexico had  aggregate  borrowings  of $1,025,564
under four lines of credit with two Mexican banks. The lines are secured by real
estate owned by family members of Provo Mexico's former  majority  stockholders.
At June 30, 2004,  the current  interest  rates on the lines range between 10.8%
and 11.3%.  The lines expire at various dates between July 2004 and September of
2005 and one line requires a monthly payment of approximately $17,858 in 2004.


       Historically,  Provo  Mexico  relied on Telmex to finance  its  inventory
purchases  with a line of credit.  In April 2004,  Provo  Mexico  entered into a
settlement  agreement  with  Telmex,  whereby  Provo  Mexico  transferred  eight
non-revenue  generating real estate  properties and certain  vehicles with a net
book value of $2.1  million to Telmex in full  satisfaction  and  release of the
$6.9 million credit balance to Telmex.  The gain resulting from the reduction of
indebtedness  approximated $4.8 million,  and has been recorded during the three
months ended June 30, 2004.


                                      -13-




       The Telmex agreement required Provo Mexico to stop distribution of Telmex
prepaid cards from May of 2004.  Nothing in the settlement  agreement  restricts
the Company or Provo Mexico from continuing to distribute  cellular cards issued
by Telcel or prepaid telecommunications cards issued by other telecommunications
carriers in Mexico,  other than  Telmex.  For the year ended  December 31, 2003,
Telcel  airtime sales  represented  about 48.3% of Provo  Mexico's  total annual
sales, up significantly from 10% in 2000. All purchases of Telcel cards are made
in cash and Provo Mexico has no lines of credit with Telcel.  As a result of the
settlement agreement,  Provo Mexico is currently  distributing only Telcel cards
in Mexico.

       As a result of the  settlement  agreement  with Telmex,  Provo Mexico has
scaled  back and  continues  to scale  back its  operations  in Mexico to reduce
costs.  Management  believes that it can  successfully  restructure  its Mexican
operations  and  reduce  costs  to  mitigate  the  loss  of  margin  due  to the
discontinuation of Ladatel sales.  However there is no assurance that we will be
successful  in completing  our  restructuring  on a timely basis.  A significant
amount  of  our  working  capital  in  Mexico  is not  required  since  we  have
discontinued  Ladatel card sales.  We anticipate that the collection of existing
receivables  will provide us with  substantial  liquidity.  However  there is no
assurance that we will be successful in collecting  the  receivables in a timely
manner.

         In July 2004, we entered into an agreement with the former shareholders
of Provo Mexico to sell back Provo Mexico to them in exchange for them returning
back to us  substantially  all of the  Company's  shares  of  common  stock  and
preferred stock issued to them (the "Unwind"). For the Unwind to take effect, we
have to comply with several  requirements  including  acquiring  another line of
business. However, there can be no assurance that we will complete the Unwind.

         In July 2004, we entered into an agreement  with the holders of secured
convertible notes (aggregate face amount of $1,000,000)  whereby the noteholders
have agreed to release their  security  interest in Provo Mexico.  In connection
therewith,  we have  agreed to sell  certain of our  customer  bases to fund the
partial  repayment of the  convertible  notes by a specified date. The agreement
with the  noteholders  also provides for payment of the balance due on the notes
in shares of the Company's  common stock at a conversion  price specified in the
agreement.  We are in negotiation  with potential  buyers to sell certain of our
customer  bases,  however,  there is no  definitive  agreement  and there can be
assurance  that we will be  successful  in  selling  our  customer  bases by the
specified date or on terms that are acceptable to us.

         In August 2004, we entered into a letter of intent to acquire a company
in employee  leasing and  recruitment  services.  The transaction is subject to,
among other things, satisfactory completion of due diligence by both parties, an
execution of a definitive agreement with customary closing conditions, including
regulatory and shareholder approval. However, there cannot be any assurance that
we will be able to successfully close the transaction.


                                      -14-




       Our plans are to complete  the Provo Mexico  unwind,  sell certain of our
customer  bases to  satisfy  our debt  obligation  and to  acquire a company  in
employee leasing and recruitment  services.  In addition,  we will continue with
our Business ISP operations.  In order to continue our  operations,  execute our
plans and satisfy our debt obligations,  we need to secure additional financing.
We are  currently  pursuing  additional  sources of  financing.  There can be no
assurance,  however,  that such  financing  will be  available on terms that are
acceptable to us, or on any terms. If we cannot obtain the additional funding we
require, or raise money by selling some of our assets, we will have to negotiate
with our lenders to extend the repayment dates of our indebtedness. There can be
no assurance, however, that we will be able to successfully restructure our debt
obligations in the event we fail to obtain additional financing.

       In order to continue  our  operations,  execute our plans and satisfy our
debt  obligations,  we need to secure  additional  financing.  We are  currently
pursuing  additional sources of financing.  There can be no assurance,  however,
that such  financing will be available on terms that are acceptable to us, or on
any terms. If we cannot obtain the additional funding we require, or raise money
by selling  some of our assets,  we will have to  negotiate  with our lenders to
extend  the  repayment  dates of our  indebtedness.  There can be no  assurance,
however,  that we will be able to successfully  restructure our debt obligations
in the event we fail to obtain additional financing.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Our discussion  and analysis of our financial  condition and results of
operations is based upon our financial  statements,  which have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP").  The preparation of these financial  statement  requires us to
make  estimates  and  judgments  that  affect  the  reported  amounts of assets,
liabilities,  revenues and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, we evaluate our estimates, including those
related to  revenue  recognition,  accounts  receivable,  long-lived  assets and
income  taxes.  We base our estimates on  historical  experience  and on various
other   assumptions   that  we  believe  to  be  reasonable  under  the  current
circumstances,  the results of which form the basis for making  judgments  about
the carrying values of assets and liabilities that are not readily apparent from
other sources.  Actual results may differ from these  estimates  under different
assumptions or conditions.

         We  believe  the  following  critical  accounting  policies  affect our
significant  judgment and  estimates  used in  preparation  of our  consolidated
financial statements.

Revenue Recognition.  A part of our revenues are derived from providing Internet
access to individuals  and  businesses.  These revenues  consist  principally of
recurring  revenues from our customer base,  leased line connections and various
ancillary  services.  We charge  subscription  fees,  which are billed  monthly,
quarterly,  and  semi-annually  or annually in  advance,  typically  pursuant to
pre-authorized  credit card accounts.  Monthly subscription revenue for Internet
access is recognized over the period in which services are provided. Fee revenue
for website design,  development and hosting services are recognized as services
are  performed.   Deferred  revenue  represents  prepaid  access  fees  paid  by
customers.


                                      -15-




         We recognize  prepaid phone card revenues in accordance  with generally
accepted  accounting  principles as outlined in SAB No. 101, which requires that
four basic  criteria be met before  revenue can be  recognized:  (1)  persuasive
evidence of an arrangement  exists;  (2) product  delivery,  including  customer
acceptance,  has  occurred;  (3) the  price is fixed  or  determinable;  and (4)
collectibility is reasonably  assured.  We believe that our revenue  recognition
policy is  critical  because  revenue  is a very  significant  component  of our
results  of   operations.   Decisions   relative  to  criteria   (4)   regarding
collectibility  are based upon  management's  judgments  and  should  conditions
change in the future and cause  management to determine  these  criteria are not
met; our recognized results may be affected.

ACCOUNTS  RECEIVABLE.  Accounts  receivable  are  reported at their  outstanding
unpaid  principal  balances  reduced by an allowance for doubtful  accounts.  We
estimate  doubtful  accounts based on historical bad debts,  factors  related to
specific  customers'  ability to pay, and current economic trends.  We write off
accounts  receivable  against the  allowance  when a balance is determined to be
uncollectible.

         With respect to the prepaid phone cards  business,  we perform  ongoing
credit  evaluations  of our  customers  and adjust  credit limits based upon our
customers'  payment  history and current credit  worthiness,  as determined by a
review of their current credit information.  We continuously monitor collections
and an  allowance  for  estimated  credit  losses is  maintained  based upon our
historical   experience  and  any  specific   customer  issues  that  have  been
identified.  While such credit losses have historically been within management's
expectation and the allowances that have been  established,  there cannot be any
guarantee that the credit loss rates will not change in the future. In this line
of business,  we have a limited  number of  customers  with  individually  large
amounts due at any balance sheet date. Any unanticipated  change in one of those
customers'  credit  position  could  have a  material  effect on our  results of
operations in the period in which such changes or events occur.

LONG-LIVED ASSETS. We assess the impairment of long-lived assets,  which include
property and equipment, intangibles and customer bases when events or changes in
circumstances  indicate  that  the  carrying  amount  of the  assets  may not be
recoverable through the estimated undiscounted future cash flows from the use of
those  assets.  When any such  impairment  exists,  the  related  assets will be
written down to fair value.

INVENTORY.  Inventory  consists of prepaid  phone cards,  purchased  for resale.
Inventory is valued at the lower of cost ("first-in, first-out") or market. On a
periodic  basis,  management  compares the amount of inventory on hand and under
commitment  with  our  latest  forecasted   requirements  to  determine  whether
write-downs for excess inventory are required. Although management considers the
amounts on hand to be  realizable,  there can be no assurance that these amounts
will prove to be realizable over time.

INCOME  TAXES.  Income  taxes are  accounted  for under the asset and  liability
method.  Deferred  tax  assets and  liabilities  are  recognized  for future tax
consequences  attributable  to  differences  between  the  financial  statements
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases and operating loss and tax credit carry forwards.  Deferred tax assets and
liabilities  are  measured  using the  enacted  tax rates  expected  to apply to
taxable  income  during  the period in which  those  temporary  differences  are
expected  to be  recovered  or  settled.  Deferred  tax assets are  periodically
evaluated  to  determine  their  recoverability,  and where the  recovery is not
likely, a valuation  allowance is established.  In the event that actual results
differ from  management's  estimates or  assumptions  change,  the provision for
income taxes could be materially impacted.


                                      -16-





I
TEM 3.  CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures 


Our  management,  including  our chief  executive  officer  and chief  financial
officer,  have carried out an evaluation of the  effectiveness of our disclosure
controls  and  procedures  as of June 30,  2004,  pursuant to Exchange Act Rules
13a-15(e)  and  15(d)-15(e).  Based upon that  evaluation,  our chief  executive
officer and chief  financial  officer have  concluded  that as of such date, our
disclosure  controls and  procedures  in place are  adequate to ensure  material
information  and  other  information  requiring  disclosure  is  identified  and
communicated on a timely basis.


Changes in Internal Control Over Financial Reporting 

During the  period  covered  by this  report,  there have been no changes in our
internal control over financial  reporting that have materially  affected or are
reasonably  likely to  materially  affect our internal  control  over  financial
reporting.


                                      -17-




                                     PART II
                                OTHER INFORMATION


Item 2.  Changes in Securities and Use of Proceeds

         Recent Sales of Unregistered Securities

         During  the three  months  ended  June 30,  2004,  the  Company  issued
         2,016,667  shares of its common stock to its  directors,  employees and
         officers.

         The  foregoing   shares  were  issued   pursuant  to  exemptions   from
         registration  under Sections  3(a)(9) and 4(2) of the Securities Act of
         1933.



Item 6.  Exhibits and Reports on Form 8-K

         a)   Exhibits:

              31 (a)   Certification of the Chief Executive  Officer pursuant to
              Section 302 of the Sarbanes-Oxley Act of 2002

              31(b)    Certification of the Chief Financial  Officer pursuant to
              Section 302 of the Sarbanes-Oxley Act of 2002

              32 (a)   Certification  of  Periodic  Financial  Report  by  Chief
              Executive   Officer Pursuant to Section 906 of the  Sarbanes-Oxley
              Act of 2002 and 18 U.S.C Section 1350, furnished herewith

              32 (b)   Certification  of  Periodic  Financial  Report  by  Chief
              Financial  Officer  Pursuant to Section 906 of the  Sarbanes-Oxley
              Act of 2002 and 18 U.S.C Section 1350, furnished herewith

         b)   Reports on Form 8-K:

              During the three months ended June 30, 2004, the Company filed:

              (1)   an 8-K for the event  dated  April 7, 2004  under  Item 5 to
                    report the Settlement Agreement with Telmex.

              (2)   An 8-K for the event  dated  April 14,  2004 under Item 5 to
                    report the delay in filing its annual report in Form 10-KSB.


                                      -18-





                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


August 16, 2004
                                              Provo International, Inc.


                                              By:  /s/Stephen J. Cole-Hatchard
                                                --------------------------------
                                                Stephen J. Cole-Hatchard
                                                Chief Executive Officer



                                              By: /s/Vasan Thatham
                                                --------------------------------
                                                Vasan Thatham
                                                Principal Financial Officer 
                                                and Vice President



                                      -19-







EXHIBIT 31(a)

                                 CERTIFICATION

I, Stephen J. Cole- Hatchard certify that:

1.   I  have   reviewed   this   quarterly   report  on  Form  10-QSB  of  Provo
     International, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to

          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (c)  Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting. 


Date: August 16 , 2004

                                               /s/ Stephen J. Cole- Hatchard
                                             -----------------------------------
                                             Chief Executive Officer






EXHIBIT 31(b)


                                 CERTIFICATION


I, Vasan Thatham, certify that:

1.   I  have   reviewed   this   quarterly   report  on  Form  10-QSB  of  Provo
     International, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others
 within those entities,  particularly during the period in
          which this report is being prepared;

     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (c)  Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting. 

Date: August 16, 2004

                                             /s/Vasan Thatham
                                             -----------------------------------
                                             Chief Financial Officer






EXHIBIT 32(a)



                 CERTIFICATION OF PERIODIC FINANCIAL REPORT BY
                      CHIEF EXECUTIVE OFFICER PURSUANT TO
                 Section 906 of the Sarbanes-Oxley Act of 2002
                              and 18 U.S.C.ss.1350

     I,  Stephen  J.  Cole-Hatchard,   Sr.  Chief  Executive  Officer  of  Provo
International, Inc. (the "Company"), certify that:

     (1)  The Company's Quarterly Report on Form 10-QSB for the quarterly period
          ended  June  30,  2004  (the   "Report")   fully   complies  with  the
          requirements of section 13(a) or 15(d) of the Securities  Exchange Act
          of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.



                                             /s/ Stephen J. Cole-Hatchard
                                             -----------------------------------
                                             Stephen J. Cole-Hatchard
                                             Chief Executive Officer
                                             Provo International, Inc.
                                             August 16, 2004



     A signed  original of this  written  statement  required by Section 906 has
been  provided  to  Provo  International,  Inc.  and will be  retained  by Provo
International,  Inc. and furnished to the Securities and Exchange  Commission or
its staff upon request.






EXHIBIT 32(b)


                 CERTIFICATION OF PERIODIC FINANCIAL REPORT BY
                      CHIEF FINANCIAL OFFICER PURSUANT TO
                 Section 906 of the Sarbanes-Oxley Act of 2002
                              and 18 U.S.C.ss.1350

     I, Vasan  Thatham,  Vice  President  and Chief  Financial  Officer of Provo
International, Inc. (the "Company"), certify that:

     (1)  The Company's Quarterly Report on Form 10-QSB for the quarterly period
          ended  June  30,  2004  (the   "Report")   fully   complies  with  the
          requirements of section 13(a) or 15(d) of the Securities  Exchange Act
          of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.


                                             /s/Vasan Thatham
                                             -----------------------------------
                                             Vasan Thatham
                                             Vice President and
                                             Chief Financial Officer
                                             Provo International, Inc.
                                             August 16, 2004



     A signed  original of this  written  statement  required by Section 906 has
been  provided  to  Provo  International,  Inc.  and will be  retained  by Provo
International,  Inc. and furnished to the Securities and Exchange  Commission or
its staff upon request.