<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

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

For the fiscal year ended December 31, 1996
                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ______________ to _____________

                         Commission file number: 0-15818

                      GLOBAL TELEMEDIA INTERNATIONAL, INC.
          -------------------------------------------------------------
            (Name of small business issuer specified in its charter)
             FLORIDA                                           64-0708107
---------------------------------                         --------------------
  (State or other jurisdiction                              (I.R.S. Employer
of incorporation or organization)                          Identification No.)

            1121 ALDERMAN DRIVE, SUITE 200, ALPHARETTA, GEORGIA 30202
          ------------------------------------------------------------
          (Address of principal executive offices, including zip code)

                                  770-667-6088
                 -----------------------------------------------
                (Issuer's telephone number, including area code)

         Securities registered under Section 12(b) of the Exchange Act:

                                                  Name of each exchange
         Title of each class                       on which registered
         --------------------                     ---------------------
                None                                      None

         Securities registered under Section 12(g) of the Exchange Act:

                    Common Stock, $0.004 par value per share
              ----------------------------------------------------
                                (Title of Class)

Check whether the issuer: (i) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (ii) has been
subject to such filing requirements for the past 90 days.  Yes   X    No
                                                               -----      -----

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.  [ ]

The issuer's revenues for the fiscal year ended December 31, 1996 were
$ 1,391,759.


The number of shares outstanding of the issuer's common stock as of April 7,
1997, was 18,301,907 shares. The aggregate market value of the common stock
(16,726,877 shares) held by non-affiliates, based on the average of the bid and
asked prices  ($0.515) of the common stock as of April 7, 1997 was $8,614,342.

Transactional Small Business Disclosure Format (Check one): Yes       No   X
                                                                -----    -----

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                       DOCUMENTS INCORPORATED BY REFERENCE

     The Company is currently subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission").  Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington
D.C. 20549; at its New York Regional Office, Room 1400, 7 World Trade Center,
New York, New York, 10048; and at its Chicago Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2411, and copies of such materials
can be obtained from the Public Reference Section at prescribed rates.  The
Company intends to furnish its stockholders with annual reports containing
audited financial statements and such other periodic reports as the Company may
determine to be appropriate or as may be required by law.

     Portions of the following documents filed by the Company with the
Commission are incorporated by reference in Parts I-IV of this Report:  Current
Report on Form 8-K dated June 13, 1996 and Quarterly Report on Form 10-QSB for
the quarter ended June 30, 1996.


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                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS.

     BUSINESS OF THE COMPANY

     Global TeleMedia International, Inc. (the "Company"), is engaged in five
related business operations, (i) the provision of long-distance
telecommunications services, especially Enhanced Services (defined below)  to
both commercial and individual purchasers (the "Telecommunications Business");
(ii) the network marketing of certain telecommunication products and services,
provided by agents and brokers for the Company and by unrelated parties (the
"Vision 21 Business"); (iii)  the purchase from and resale, to other carriers,
of long distance time, especially for international telephone communications
(the "Carrier Sales Business"); (iv) the design, production and distribution of
collectible trading cards and prepaid telephone calling cards depicting the
licensed marks of personalities in NASCAR Winston Cup Racing and other sports
related items (the "Collectible Calling Cards Business"); and (v) the marketing
of Internet services directly to businesses and individuals (the "Internet
Services Business").  Of the five above referenced businesses, only the
Telecommunications Business and the Vision 21 Business were conducted during all
of the year ended December 31, 1996.  Since most of the revenue generated by the
Telecommunications Business derives from the independent distributors of the
Vision 21 Business, these may be thought of as a single business.   The
Collectible Calling Cards Business was acquired by the Company as of November
15, 1996, the Carrier Sales Business was started by the Company in early
January, 1997, and the Internet Services Business was acquired by the Company as
of January 2, 1997.

     HISTORY OF THE COMPANY


     The Company was incorporated as a Florida corporation on December 31, 1984,
under the name Phoenix Hi-Tech, Inc.  The Company completed its initial public
offering of its equity securities on May 23, 1986.  On October 22, 1994, the
Company changed its name to Global TeleMedia International, Inc.

     In September, 1993, the Company acquired all of the equity securities of
Global Wats One, Inc. and TeleFriend, Inc. (collectively, "Global") of which
Roderick A. McClain, the Company's Chief Executive Officer and its Chairman of
the Board of Directors and Geoffrey F. McClain, a director of the Company, were
the principal shareholders.  Roderick and Geoffrey McClain are brothers. See
"Certain Relationships and Related Transactions."

     In October, 1994, the Company licensed the nutritional division of the
Company (its former business) and sold the Company's nutritional marketing
company, Marketshare International, a wholly-owned subsidiary to L&M Group, L.C.
("L&M"), an unaffiliated third party.  On January 31, 1995, the Company entered
into a sales and license agreement with L&M pursuant to which L&M acquired the
rights to the Company's nutritional products line for royalties from sales of
the nutritional products based on a percentage of gross sales.  In 1996 the
Company received a total of approximately $115,000 in royalties.  Since the
culmination of these transactions, the Company has devoted all of its resources
to its telecommunications business.

     In June, 1995, the Company entered into an agreement  (the "Stock Purchase
Agreement"), with an unaffiliated group of investors for the purchase of
10,000,000 shares of the Company's Common Stock.  As part of this transaction,
the investment group lent the Company $250,000 in an obligation secured by the
Company's stock in Global TeleMedia, Inc. a wholly-owned subsidiary of the
Company and the entity which held the Company's telecommunication licensing
rights.  In August, 1995, the Company and an assignee of the $250,000 obligation
agreed (the "Foreclosure Agreement") to cancel the obligation, in part, by the
Company's transfer to the assignee of: (i) the customer list to all its
customers who were serviced on behalf of the Company by various
telecommunications carriers, (ii) certain warehouse property and land in
Gainesville, Florida, and (iii) all of the outstanding and issued shares of
Global TeleMedia, Inc.


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     The Company spent the balance of 1995 and all 1996 restructuring and
rebuilding the Company's business.

     THE COMPANY'S BUSINESS PLAN FOR A NATIONWIDE TELECOMMUNICATIONS BUSINESS

     The Company aspires to become a full-service, facilities-based
telecommunications carrier.  The Company's business plan to achieve this goal
involves moving through three stages of the telecommunications services
business:  (i) reseller, (ii)  licensed carrier, and (iii) facilities-based
carrier.  In August, 1995, because of the Foreclosure Agreement, all of the
Company's Certificates of Public Convenience and Necessity were transferred, and
the Company could no longer provide either intrastate or interstate
telecommunications services directly to customers.  Instead, the Company had to
hire unaffiliated third parties to provide such services and the Company acted
solely in a marketing capacity, as a reseller of telecommunications services. A
reseller markets services to customers and then lays off the business
("Outsourcing"), for a percentage of the revenue, to a licensed carrier
("Carrier").  Such Carrier then bills the customer for the services provided.
Since the execution of the Foreclosure Agreement, the Company has made
applications in the 48 continental states and with the federal government in
order to become a Carrier, enabling the Company to provide and bill for
telecommunications services directly to customers.  This licensing process is
largely complete, although the Company still has applications pending in seven
states.  A Carrier, in contrast to a reseller, obtains customers, bills them
directly and provides service thereto.  However, unless such Carrier owns its
own long-distance equipment, it must route its customers' calls through lines
and equipment provided by other companies.  The cost of such routing is a
function of the volume of the calls routed and, especially, the amount of
minimum monthly commitment which the Carrier is prepared to reserve from such
other companies, for a minimum monthly fee.  A facilities-based Carrier
("Facilities-Based Carrier") owns or leases its own telecommunications switching
equipment ("switches") and lines  and can route its customers' calls through
such switches.  It can also sell the excess capacity of its switches, if any, to
other Carriers.  See "Business-Telecommunication Business - Licensing
Requirements."

     The Company believes that the development of it own  telecommunications
network of switches and dedicated transmission lines will reduce its dependence
on other Carriers, protect the Company from future network disruption, provide
additional services to its subscribers and ultimately reduce expenses associated
with the transmission of long distance calls. The Company may incur substantial
indebtedness and fixed operating costs in acquiring or leasing the switches and
dedicated transmission lines needed to develop a telecommunications network,
which is a departure from historical operations. In addition, the U.S. Federal
Communications Commission ("FCC") is in the process of repricing the local
transport component of the access charges paid to local exchange carriers
("LECs") to complete a long distance call, and such repricing could affect the
economies associated with developing a telecommunications network. As a result,
while the development of a telecommunications network is an important part of
the Company's business plan, there can be no assurance that development of a
telecommunications network will be completed or, if completed, will be
beneficial to the Company.

     To achieve its goal of becoming a Facilities-Based Carrier, the Company
needs to acquire, (i) all of the licenses required to be a full-service
telecommunications Carrier, and (ii) the required switches, ancillary equipment
and lines. Management of the Company recognizes that due to a change in the
regulatory environment, that the increased competition among telecommunications
service providers, due to recently enacted federal statutes which have
deregulated the telecommunications industry, gives significant advantage to very
large, well financed companies.  At the same time, however, management also
believes that competition based strictly on volume and price may yield lower
profit margins and require packaging of a wide variety of sophisticated
telecommunications services ("Enhanced Services") with programs offering
straight local and long-distance calls.  Such services may include voice-
activated dialing, more sophisticated paging systems, international callback,
enhanced debit cards, e-mail services, and locator and "follow-me" services.
Management believes that these Enhanced Services will play an important part in
achieving and retaining


                                        4
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market share, and the Company has formulated its plan accordingly.  See
"Business - Government Regulation" and "Business - Competition."

     In carrying out its business plan, the Company has purchased three switches
from IEX Corporation ("IEX"), two of which have been delivered, although only
one is operating (the other is in the testing stage) and the Company has entered
into sharing, or "joint venture" agreements with US One Communications Corp.
("US One") to use that company's switches.  The US One arrangement offers the
advantage of providing the Company access to switches without the need for
significant capital expenditure on equipment.  US One maintains a number of
switches in the United States, and the Company may seek to share other switches
as appropriate. No assurance can be given that the Company will be able to bear
even the cost of expansion into other US One switches.

     Switches manufactured and installed by IEX (the "IEX Switches") are
anticipated to provide the Company with the critical competitive edge that
management believes will yield a share of the telecommunications market, the
ability to handle, within the switch itself, a wide variety of sophisticated
additional services.  No assurance can be given that such services will prove to
be the important competitive feature envisioned by management.  Even if they do,
no assurance can be given that the Company will ever earn revenue from the
provision of such services.

     Fulfillment of the Company's business requires two other critical assets,
management by a group of personnel highly skilled in the telecommunications
business and availability of substantial financing.  Management believes that it
has assembled a skilled team of personnel capable of turning the Company into a
major participant in the telecommunications industry, although no assurance can
be given to that effect.  Further, the Company needs to obtain a significant
portion of the financing which it believes will be essential to carry out its
business plan.  No assurance can be given that the Company will be able to
procure such financing at terms acceptable to the Company or at all.  See
"Business - Management Team" and "Management's Discussion and Analysis or Plan
of Operation."

     TELECOMMUNICATIONS BUSINESS

      The Company is engaged in the provision of information and
telecommunications services, which include, but are not limited to, residential
and commercial long distance, prepaid calling cards, interactive voice mail and
other enhanced voice recognition services.  There are many established companies
providing telecommunications services, including AT&T, MCI, Sprint and WorldCom
(the "Major Competitors").  The Company endeavors to compete in the market by
offering a greater variety of services at lower prices.  See "Business -
Competition."

     During first three quarters of 1996, the Company offered long distance
telecommunications services to individuals and small business subscribers.  The
Company marketed its services through direct sales to independent agents acting
for groups of customers and through the Company's network marketing arm, Vision
21.  Because the Company had not acquired the necessary federal and state
licenses, it could not sell such services directly to its customers.  During the
first three quarters of 1996, the Company provided such services to its
customers, largely by means of its arrangements with unrelated Carriers.  Such
arrangements required the Company to Outsource the provision of
telecommunication service, customer service, billing and collection.
Essentially, the Company acted as a marketer and reseller of services provided
by others.  As of March 31, 1997,  the Company is entitled to operate as a
Carrier for both interstate and international traffic and is approved to operate
interstate traffic in forty-one states.  Applications are pending in the
remaining seven states where appropriate, and the Company hopes to have approval
by the end of 1997, although no assurance can be given to that effect.

     Although any Carrier may provide services directly to customers,
Facilities-Based Carriers can offer such services utilizing their own switching
equipment and dedicated transmission lines.  Such services enable


                                        5
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such Carriers to offer service at a more competitive price than otherwise,
although the acquisition or lease of such facilities involves either a
significant capital expenditure or the commitment to lease large blocs of
capacity on the switches of another company.

     The cost to the end-user of providing telecommunications services is a
function of: (i) the quantity of long-distance services used by the end-user at
any given time; (ii) the number of switches through which a telephone call may
be routed; (iii) the amount and type of additional services provided to the end-
user by its principal provider; and (iv) the market competition for such end-
user's business.


     The Company's pricing structure is regularly reviewed so that subscribers
of the Company's long distance service generally pay less than they would for
major competitors' long distance service. In addition, the Company currently
provides value-added services to its subscribers, such as calling cards and
international telecommunications service.  Management of the Company believes
that the achievement of Carrier status and the acquisition of its own switches
will enable the Company to offer services at lower prices than those of many of
its competitors although no assurance can be given to that effect.  See
"Business - Telecommunications Business - Licensing Requirements."

     COMPANY'S PRODUCTS AND SERVICES

     The Company offers a variety of long distance and value-added services and
products to its long distance subscribers, which currently include residential
service, 1-plus service consisting of local, intrastate, interstate and
international service, commercial service, 800 service, customized voice mail,
prepaid calling cards and cellular service and a variety of wireless products.
All of these services are offered by means of the Company's premium enhanced
service platform, Workhorse (defined below).  In addition, management believes
that the Company's proprietary software, coupled with its premium enhanced
service network, will enable the Company to offer its subscribers "single bill
convenience" for its bundling of telecommunications services, although no
assurance can be given to that effect.

     The Company currently offers a residential flat rate service which the
Company believes competes favorably against flat rate programs offered by other
major long distance service providers. The Company also offers an 800 service
product to its residential subscribers which allows subscribers to call home on
an 800 number or provide a toll-free number for family members to call home.

     The Company's commercial services include 1-plus and toll-free 800 services
designed for businesses of all sizes. The commercial service may also include
volume discounts and separate billing information for the different telephones
within the same business.

     The Company's tariffed rates, coupled with its discounts and six-second
(after the initial thirty seconds) incremental billing for many of its products,
result in the Company's long distance subscribers generally paying less than
they would for competitors' long distance service, although no assurance can be
given that such price advantage can be maintained by the Company.  To achieve
and maintain a significant share of the long-distance communication market, the
Company must constantly expand and refine its capacity for delivery of
telecommunications service.  Such capacity may, for a particular package
marketed to a particular type of customer, consist of resale of long-distance
time purchased in a bloc, provision of certain Enhanced Services directly by the
Company and provision of other Enhanced Services acquired from third parties.
If the actual or potential volume of long-distance service so justifies, the
Company may make certain capital investments to acquire or lease additional
long-distance equipment in particular locations.  Such an acquisition involves a
significant capital cost, which may not be recovered unless the Company is able
to utilize the capacity thereof in a timely manner.  The Company's operating
expenses are greater than operating revenues, and this negative cash flow must
be financed.  No assurance can be given that the Company will be able to obtain
such financing on terms favorable to the Company, or on any terms.  The
Company's inability to obtain such financing could result in the contraction of
the Company's share of the telecommunication market or an inability to continue


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in business at all.  See "Business - IEX Agreement-Workhorse" and "Business -
Vision 21 Business" and "Management's Discussion and Analysis or Plan of
Operation."

     To provide these services, the Company has primarily utilized network
switching and transmission facilities provided by other companies.  The Company
is in the process of implementing, on a nationwide basis, its Workhorse Enhanced
Services Platforms ("Workhorse"). Workhorse platforms are initially planned for
three cities.  Management believes that Workhorse will enable the Company to
offer many of its information and telecommunication services directly to its
customers instead of Outsourcing these services, although no assurance can be
given to this effect. The Company operates its own switch located at 55 Marietta
Street, Atlanta, Georgia (the "Atlanta Switch").  In addition, the Company has
taken delivery of a switch located at 60 Hudson Street in New York, New York
(the "First New York Switch"), which is the telecommunications switching hub of
the United States.  Both the First New York Switch and the Atlanta Switch were
acquired pursuant to the IEX Agreement (defined below) and are intended not only
to perform all of the usual functions to route telecommunications traffic, but
also to provide a number of Enhanced Services (defined below) to the Company's
customers.  Finally, pursuant to its agreement with US One, the Company shares
the use of a second switch at 60 Hudson Street in New York, New York (the
"Second New York Switch").  See "Business - IEX Agreement - Workhorse."

     The Atlanta Switch does not yet work to transmit Company's planned Enhanced
Services.  Both the Company and the designer of the IEX Switches have been
working to correct the problems and believe that the IEX Switches will be
operational by May 15, 1997,  although no assurance can be given to that effect.
The First New York Switch is to serve as a test station to correct the problems
with the IEX Switches.  The Company hopes to have both the First New York Switch
and the Atlanta Switch fully operational as to the Enhanced Services by May 15,
1997, although no assurance can be given that such testing procedure will
succeed.  The IEX Agreement provides for the installation of a total of three
switches with Enhanced Services.  When and if the First New York Switch and the
Atlanta Switch are tested and operational to the satisfaction of the Company,
the Company intends to have the third IEX Switch installed, probably at a site
in Los Angeles, California. See "Business - Relationship with Carriers - IEX
Agreement - Workhorse."

     If the Company is unable to have such Enhanced Services facility
operational on the IEX Switches, then it intends to obtain such facility from
outside sources.  It is probable that such Outsourcing will increase the cost to
the Company of providing such services to its customers.

     The Company primarily utilizes independent representatives, (through its
Vision 21 Business) to market its long distance service to residential and small
business subscribers throughout the United States.  Essentially, the Company
offers to subscribers the option of using the Company's long distance service
instead of that of its principal competitors.

     THE COMPANY'S MANAGEMENT TEAM

     The most important element of the Company's plan to expand its
Telecommunications Business is its complement of skilled personnel.  In addition
to the Company's executive officers, as of March 31, 1997, the Company has
identified and hired a group of skilled telecommunications business
professionals.  See "Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act."  These business
professional includes:

     BOB BLAIR, VICE PRESIDENT, BUSINESS DEVELOPMENT.  Mr. Blair is responsible
for operations, sales, planning, product development, contract and mergers and
acquisitions for the Company.  Mr. Blair brings 15 years of experience in
management, sales, marketing, product development and negotiating with other
Carriers within the telecommunications industry.  Most recently, Mr. Blair was
with Premiere Communications as a senior director and was responsible for
Premiere's Worldlik division.  Prior to Premiere, Mr. Blair was with


                                        7
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WilTel for their first seven years of operations, successfully negotiating
carrier agreements and helping WilTel increase their revenues prior to their
acquisition by LDDS, the nation's fourth-largest long-distance company.

     GLYNN GOSSETT, VICE PRESIDENT, CARRIER SALES.  Mr. Gossett is responsible
for direct sales to all domestic and international telecommunications Carriers.
He has over ten years of experience in telecommunications and sales management
that includes both computer telephony integration sales, and long distance
network sales.  Prior to joining the Company, Mr. Gossett was Southwest Region
Manager for Harris Digital Telephone Systems and Vice President of Sales for
International Telemanagement Group/Greenstar Telecom.

     DAVID PAOLO. Mr Paolo is the president of the Company's affiliate which
owns the Internet Services Business.  Mr. Paolo is responsible for the
management and growth of the Internet Services Business.  Prior to joining the
Company, Mr. Paolo operated that same business and acquired a significant market
share of the Internet services market with universities, hospitals and
governmental agencies in Rhode Island, Massachusetts and Florida through the use
of high-speed access lines.  Mr. Paolo is the Chairman of the Nynex Advisory
Board.

     MICHAEL PATEY, VICE PRESIDENT OF MARKETING.   Mr. Patey is responsible for
the Company's advertising, marketing communications and special events.  Mr.
Patey has over 20 years of experience in marketing and advertising, and his work
has won numerous awards from the Advertising Federation of America.  Prior to
joining the Company, Mr. Patey was the marketing Vice President for Passport
International, a national catalog company.

     ROB PURKS, CHIEF INFORMATION OFFICER.  Mr. Purks is responsible for all
internal Management Information Systems of the Company.  Prior to joining the
Company, Mr. Purks served as President of Discount Long Distance ("DLD"), a
regional long distance Carrier from 1990 through September 1994.  Prior to
working with DLD, Mr. Purks was Manager of Information Systems for the
Institutional Jobbers Company headquartered in Knoxville, Tennessee.

     TAMMY RICH, SENIOR DIRECTOR OF OPERATIONS.  Ms. Rich is responsible for the
management of customer service, Distributor support, executive administration
support and sales support. Prior to joining the Company, Ms. Rich was Vice
President of Voyager Networks, Inc., a facilities based Carrier in New York,
where she was responsible for carrier/vendor relations, cost management,
financial reporting and management of customer service, provisioning, billing, 
technical operations and sales support.

     RAY TANNER, DIRECTOR OF PLANNING.  Mr. Tanner manages specific project
needs of the Company, including its switch network and local service
specifications.  Mr. Tanner had extensive operational and management experience
in the telecommunications industry with InComm, a prepaid calling card company,
as Vice President responsible for all day to day operations, and with Winstar
Gateway Network, a subsidiary of Winstar Communications, as National Sales
Manager overseeing residential and major account sales.

     ARTHUR WEST.  Mr. West is the president of the Company's affiliate which
owns the Collectible Calling Cards Business.  Mr. West is responsible for the
management and growth of the Collectible Calling Cards Business.  Prior to
joining the Company, Mr. West founded that business in 1991 and was a pioneer in
the development of licensed prepaid phone cards and built the business to become
a full-service reseller of long distance telephone time by means of prepaid
cards.  Mr. West then produced and distributed collectible cards of leading
NASCAR and NHRA drivers to the point where the business had licensing
arrangements with over 300 racing personalities.


                                        8
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     RELATIONSHIPS WITH CARRIERS.

     On June 28, 1996, while the Company was still a reseller of
telecommunications services, the Company entered into a non-exclusive agreement
(the "ProCom Agreement") with Professional Communications Management Services,
Inc. ("ProCom"), pursuant to which ProCom agreed to provide non-exclusive
telecommunication services to the Company for a term of at least 24 months,
which term is renewable by the parties on a month-to-month basis. While the
agreement is in effect, the Company is obligated to pay certain minimum monthly
amounts for such services.  No assurance can be given that the Company will be
able to generate enough telecommunication business to permit it to make a profit
on the services provided by ProCom.

     On October 1, 1996, at the point when the Company had become certified as a
Carrier in a number of jurisdictions, the Company entered into a 45-month
agreement with WilTel Communications, Inc. ("WilTel") pursuant to which WilTel
has agreed to provide the Company with certain telecommunications services.
WilTel is able to supply the Company with unlimited capacity to transmit calls
both domestically and overseas.  WilTel is one of the major long distance
Carriers in the United States and is currently the principal provider to the
Company of long distance service.

      WilTel also provides, among other things, transmission services for
customers' calls which the customer initiates by transmitting calls through the
Company's switches.  WilTel also provides special 800 access lines, dedicated
lines for high volumes of traffic and other services, which are designed to
permit the Company to package its services competitively in the market.  The
Company's minimum monthly commitment to WilTel of $250,000 starts at the end of
June, 1997.

     In certain areas, the Company has made separate arrangements for the
transmission and termination of long distance calls, but even in these cases,
the Company's agreement with WilTel provides it with critical capacity to cover
those circumstances where the customers of the Company wish to process
communications above the minimum amounts that the Company has agreed to in such
separate arrangements.

     On October 2, 1996, the Company entered into an agreement with US One
pursuant to which US One will provide the Company with switching and switch
partition services for a period of six years.  In return the Company will be
entitled to communications processing services of approximately 18,000,000
minutes per month.  After the first year of the agreement, the Company is
obligated to pay certain minimum monthly amounts.  No assurance can be given
that the Company will be able to generate enough telecommunications business,
and revenue therefrom, to cover such minimum monthly payment, or to earn a
profit thereon.  The Company intends to enter into further such co-tenancy
agreements with US One in various locations in the United States for the purpose
of enabling the Company to provide Enhanced Services.

     IEX AGREEMENT-WORKHORSE.  On July 15, 1996, the Company entered into an
agreement (the "IEX  Agreement") to acquire the IEX Switches for the Company's
initial three phased nationwide implementation of the Company's Workhorse
platform.  As of March 31, 1997, two of the IEX Switches have been used
successfully by the Company, but only to deliver services on its prepaid debit
calling cards and for switching calls made by subscribers, not for providing
Enhanced Services.  If IEX is unable to provide an operating Workhorse by May
15, 1997, the Company may consider acquiring similar equipment and software from
alternative sources.  The cost charged by such alternate sources may be greater
than that charged by IEX.  Also, no assurance can be given that equipment from
such alternative sources will perform to the Company's satisfaction.  Even if
the Company is able to obtain a fully operational Enhanced Services Platform, no
assurance can be given that it will be able to generate any revenue therefrom.

     The IEX Agreement provides for IEX to supply the Company with hardware,
software and installation and training services for platforms for a total
consideration of $2.6 million, of which $650,000 has been paid.  The remainder
of the purchase price is due in stages, based on delivery of equipment,
customized according


                                        9
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to the Company's specifications, and successful testing thereof and the Company
is relying on obtaining a source of outside financing to make such payment.  No
assurance can be given that the Company will be able to obtain such financing on
terms acceptable to the Company or at all.

     The Company began marketing the Enhanced Services through its network of
independent Distributors (defined below), brokers and other agents as well as
through direct sales, on a wholesale basis, from the Company's own sales force.
Based on the expected delivery of an operating IEX Switch in 1996, the Company
encouraged its Distributors to market its anticipated Enhanced Services
immediately.  The inability of the Company to deliver such Enhanced Services
through Workhorse during the last quarter of 1996 and the first quarter of 1997
meant that the Company failed to fulfill such commitments and accordingly has
not generated anticipated revenue.  See "Business - Vision 21 Business."

     VISION 21 BUSINESS

     The Vision 21 Business is both a stand-alone business and the principal
method of marketing of the Company's telecommunications products.  The Vision 21
Business consists of a network of independent distributors ("Distributors") who
market telecommunications services and products of the Company and of third
parties.  These Distributors are independent contractors who are not employees
of the Company.  Management of the Company believes that this "network
marketing" of the Company's products, especially its Enhanced Services, will
provide a solid and growing customer base for the Company.  However, no
assurance to this effect can be given.  This network marketing system has been
selected by the Company because the Company believes it reduces marketing costs,
subscriber acquisition costs and subscriber attrition and that subscribers will
be more likely to remain with the Company because they have been enrolled with
the Company by someone with whom they have an ongoing relationship.  Management
of the Company believes that its network marketing system will continue to build
a base of potential subscribers for additional services and products, although
no assurance can be given to that effect. The Company does not require a person
to be a Distributor in order to be a subscriber.

     The Company compensates all of its Distributors directly, and commissions
and bonuses paid thereto are computed on the basis of the long distance usage of
customers acquired by such Distributors.  Further,  Distributors receive
commissions on the long distance usage of customers that are signed up by
Distributors introduced to the program by particular Distributors.  Distributors
receive commissions on sales volume of the Company's Enhanced Services.  While
the Company does not pay a commission to Distributors for introducing new
Distributors to the Company, Distributors do receive subscriber acquisition
commissions and long distance usage commissions for subscribers signed up by
certain other Distributors they have recruited directly themselves or
indirectly. Certain performance criteria must be maintained in order to qualify
to receive all such commissions.  An important element of the Vision 21 network
marketing program is the requirement of a minimum purchase of $75 by each
Distributor (or his downline) each month in order to remain qualified to earn
commissions.   See "Business - Collectible Calling Cards Business."

     The Company encourages Distributors to enroll subscribers with whom the
Distributors have an ongoing relationship such as family members, friends,
business associates, neighbors or other acquaintances. The Company also
encourages, but does not require, the Distributors to use the Company's products
and services and to communicate the results of their use of such products and
services to their subscribers. The sales efforts of Distributors are supported
through various means, including Company-sponsored training sessions  held
periodically throughout the year.  Management believes that the Vision 21
Business, as currently operated, will provide the Company with a marketing tool
and a distribution network in its efforts to compete in the telecommunications
industry against larger and better-financed companies, although no assurance can
be given to that effect.  See "Business - Government Regulation - Network
Marketing."

     After a period of test marketing in 1995 and 1996, the Company, based on
the marketplace's response, believed that it had successfully refined the
business, especially the compensation plan, for nationwide


                                       10
<PAGE>

launching.   As of March 31, 1997, there are approximately 3,000 Distributors in
the Vision 21 Business.  During the first quarter of 1997, the Company's
Distributors have generated revenue each month to the Company.  Revenue for the
first quarter of 1997 totaled approximately $1 Million.  No assurance can be
given that the growth in the number of Distributors or revenues will continue at
this rate or at all.  No assurance can be given that the Vision 21 Business will
prove successful or, that if it does prove successful, that such success will
result in the generation of significant revenue for the Company.

     The Company seeks to limit the statements that Distributors make about the
Company's business by requiring Distributors giving presentations to potential
subscribers or new Distributors to do so in accordance with material approved by
the Company.   Each Distributor also receives policies and procedures that must
be followed in order to maintain Distributor status in the organization.
Distributors are expressly forbidden from making any representation as to the
possible earnings of any Distributor from the Company, other than a statement
prepared by the Company indicating the range of actual earnings by all
Distributors.  Distributors are also prohibited from creating any marketing
literature that has not been pre-approved by the Company.  The Company regularly
enforces these policies and procedures by either suspending or terminating
violators.  However, because the Distributors are classified as independent
contractors, the Company is unable to provide them with the same level of
direction and oversight as Company employees.  While the Company has these
policies and procedures in place governing the conduct of the Distributors, it
is difficult to enforce such policies and procedures for the Distributors.
Violations of these policies and procedures may reflect negatively on the
Company, which may occur in the future and which could have a material adverse
effect on the Company's results of operations.

     The Company provides training to all Distributors that have purchased the
optional Distribution Kit.  The training includes a detailed explanation of the
Company's products, the Distributor compensation plan and the use of the various
marketing tools available to the Distributor.   All payments for training fees
also carry a mandatory number of customers which must be reached by the
Distributor.  The Company also offers for sale through its catalogs a wide
variety of marketing tools, audio and videotapes, visual aids, desk accessories
and clothing and novelty items designed to assist Distributors in their
marketing efforts and to promote name recognition of the Company.  The Company
regularly updates its marketing material to reflect the Company's available
services and products and timely information about the Company.

     CARRIER SALES BUSINESS

     The Carrier Sales Business, which was started in January, 1997, consists of
the purchase of long-distance services from unrelated Carriers and the resale of
such services to third-party "interexchange" Carriers.  The Company's business
plan involves the purchase of large amounts of long-distance services at
favorable rates.  This business is intended to (i) provide the Company with
large amounts of long-distance services which the Company can resell through its
own switches to its own customer base, and (ii) enable the Company to resell
some or all of such services, in wholesale transactions, to other Carriers, also
through the Company's own switches. In order to make a profit on the Carrier
Sales Business, however, the Company will have to secure the availability of
large amounts of long distance capacity, at a favorable price, from larger
Carriers then the Company.  Such arrangements will require the Company to
provide such Carriers with a cash deposit, letter of credit, or other form of
security to assure the payment for such long-distance service since such
Carriers will not provide such services on the basis of unsecured credit
arrangements of companies without strong financial resources.  Thus, the Company
is completely at risk for the resale of such long-distance service at a price
greater than the long-distance service is purchased for.  The Company does not
have the financial resources to obtain such  commitments, nor does the Company
anticipate being able to generate such financial resources as a result of its
cash flow from operations.  The Company is seeking sources of financing so that
the Company may implement this part of its business plan.  No assurance can be
given that the Company will obtain the sought after financing or will ever be
able to bring its Carrier Sales Business to a profitable operational level.


                                       11
<PAGE>

     Anticipated sales in the Carrier Sales Business are made by salespeople
hired and trained by the Company who receive base salaries and commissions based
upon actual sales volumes.  With the implementation of the Company's nationwide
Enhanced Services network, the Company believes it will be able to attract, as
customers,  a number of second and third tier Carriers for these services.  In
addition, the Company believes there exists an opportunity to provide
international traffic for certain foreign countries through existing and future
business relationships.  No assurance can be given, however, that the Company
will ever make a profit on the Carrier Sales Business.  See "Business-
Telecommunications Business."

     COLLECTIBLE CALLING CARDS BUSINESS

     As of November 15, 1996, the Company acquired substantially all of the
assets of the business of Finish Line Collectibles, Inc. and two related
corporations ("Finish Line"), pursuant to the terms of an asset purchase
agreement (the "Finish Line Agreement").  The consideration was the assumption
of liabilities related to the business equal to $694,000.   In addition, the
Company agreed to pay Arthur West ("West"), the former owner of Finish Line, a
contingent sum equal to twenty percent (20%) of the value of the Collectible
Calling Cards Business after three years from the acquisition date.  At the
Company's sole option, up to fifty percent (50%) of this contingent sum may be
paid in the form of shares of Common Stock of the Company which have certain
registration rights.   Further, West entered into a three-year employment
agreement at an annual base salary of $78,000, plus other benefits.  The Company
has also agreed to pay a bonus to West equal to 1.5% of the gross sales of the
Collectible Calling Cards Business during each quarterly period of his
employment agreement.  However, the annual bonus pay may not exceed $42,000,
$54,000 or $67,000 during the first, second and third years, respectively, of
the term of the employment agreement.

     The Collectible Calling Card Business markets collectibles related to
various sports personalities; designs, produces and distributes collectible
trading cards and prepaid calling cards depicting the licensed marks of
personalities in NASCAR Winston Cup Racing, and operates a membership club for
racing fans. Finish Line obtained the licenses from the sanctioning bodies of
motor racing, key sponsors and other leading sports personalities.

     The production of revenue from the Collectible Calling Card Business rests
upon the belief by the calling card collector that the real value of the cards
is not the built-in number of calling minutes, but rather the picture and
information on the card of the race driver.  Cards are typically sold in small
packages, much like baseball cards.  Each card has a PIN number, but, from the
point of view of the collector, the card is more valuable if the tab over the
PIN number is not removed.  There is a perception on the part of the calling
card collector that these cards appreciate in value and are treated as
collectors items.

     Before November 15, 1996, Finish Line sold its calling cards through
unrelated agents and mail order (advertising in racing magazines). For those
Distributors who are just starting out or those who are only marginally active,
the purchase of prepaid calling cards is perceived by the Company and such
Distributors as a convenient method of meeting this requirement and remaining an
"active" Distributor.

     The Company anticipates that Finish Line cards will feature the
Enhanced Services available through the Company's Workhorse platforms.  In
addition, the Finish Line product line will offer an added collectible feature
to the Enhanced Services Program of Vision 21.  However, no assurance can be
given that this acquisition will generate any profits to the Company.

     INTERNET SERVICES BUSINESS

     As of January 2, 1997, the Company acquired substantially all of the assets
and assumed certain liabilities related to the Internet service provider
business of Log On America, Inc. ("LOA"). The consideration for the acquisition
was assumption of liabilities of approximately $241,000.  Further, David Paolo
("Paolo"),


                                       12
<PAGE>

entered into a three-year employment agreement at an annual base salary of
$75,000, plus other benefits.  In addition to the consideration as provided
above, the Company agreed to pay Paolo a contingent sum equal to either fifteen
percent (15%) or twenty percent (20%) (such percentage being based on the gross
profit of the Internet Services Business for the year ended December 31, 1997)
of the value of the Internet Services Business after three years from the
acquisition date.  At the Company's sole option, up to fifty percent (50%) of
the contingent sum may be paid in the form of shares of common stock of the
Company which have certain registration rights.

     LOA provides a variety of Internet-related services to large business
organizations, including leased lines, web page hosting, web page design,
Internet set-up and sales of DEC Alpha web servers, primarily to customers in
the State of Rhode Island.  LOA  has developed a base of corporate and
institutional customers for its Internet services, and has built the necessary
network infrastructure for an Internet service network.  However, very few
Internet service providers have been able to make a profit, and there can be no
assurance that the Internet Services Business will ever generate profits for the
Company.

     The Company's revenues from its Internet related business are intended to
be derived from providing Internet services to business and individual
subscribers. The Company may choose to adopt strategies designed to continue
growth in its subscriber base, such as aggressive promotional programs and the
implementation of new pricing programs to accomplish this objective. Such
strategies may result in an increase in costs and a decrease in margins as a
percentage of revenue.  In addition, in order to continue to realize subscriber
growth, the Company must replace terminating subscribers and attract additional
subscribers. However, the sales and marketing expenses and subscriber
acquisition costs associated with attracting new subscribers are substantial.
The Company does not have sufficient resources to finance such costs, and there
can be no assurance that the Company will be able to obtain such financing.  The
Company's ability to improve operating margins in its Internet related business
will depend in part on its ability to retain its subscribers, and there can be
no assurances that any such investments in its telecommunications
infrastructure, customer support capabilities, new services offerings and
software releases will ensure subscriber retention, or if it does, that it will
result in revenue to the Company.

     Acceleration in the growth of the Company's subscriber base or changes in
usage patterns among subscribers may also increase costs as a percentage of
revenues, the Company's need to hire additional personnel, and the Company's
expenses related to product development, marketing, network infrastructure and
customer support.  An increase in peak time usage or an overall increase in
usage by subscribers could adversely affect the Company's ability to
consistently meet the demands for its services. As a result, the Company may
need to hire additional personnel and increase expenses related to network
infrastructure capacity with minimal corresponding increases in revenue on a per
subscriber basis.  No assurance can be given that the Company will have
sufficient resources with which to meet such increased demand.

     Sales to institutions (such as hospitals and universities), businesses and
individuals represents a majority of the Company's revenues from the Internet
Services Business. Revenues are comprised primarily of recurring dial-up  and
leased line revenues. The Company's dial-up accounts are either billed directly,
or billed monthly pursuant to a pre-authorized credit card account. The Company
currently provides unlimited usage of the Company's service for most accounts.

     The Company also receives revenues from non-dial-up services, primarily
related to business and institutional customers. These revenues include
dedicated connections, virtual web server hosting and domain name services.
Revenues from dedicated connections include recurring revenue, usage charges,
web site storage charges and equipment sales. The Company charges set-up fees on
most of these services.


                                       13
<PAGE>

     COMPETITION

     The Company's telecommunications business is highly competitive. The
principal competitive factors affecting the Company's market share are pricing,
customer service, diversity of products, services and features. The Company's
ability to compete effectively will depend on its ability to maintain high
quality, market-driven services at prices generally equal to or below those
charged by its competitors.

     Most of the Company's competitors are substantially larger and have
substantially greater financial and technical resources. As the Company grows,
it expects to face increased competition, particularly from the Major
Competitors. The Company also competes with regional IXCs and resellers for
inter-LATA long distance services and with local exchange Carriers for inter-
LATA and intra-LATA long distance services. The Company's pricing strategy is to
keep its rates generally below those of the Major Competitors.  Competition
within the industry is expected to increase as a result of LECs being permitted
to provide long distance service as a result of the passage of the 1996 Act. See
"Government Regulation-Telecommunications Business."

     Legislative, judicial and technological factors have helped to create the
foundation for smaller long distance providers to emerge as viable competitive
alternatives to the Major Competitors for long distance telecommunication
services. The FCC has required that all IXCs allow the resale of their services,
and the AT&T Decree substantially eliminated different access arrangements as
distinguishing features among long distance Carriers. In recent years, national
and regional network providers have substantially upgraded the quality and
capacity of their domestic long distance networks, resulting in significant
excess transmission capacity for voice and data communications. Due to
anticipated advances in telecommunications transmission technology, the Company
expects the resale of excess transmission capacity to continue to be an
important factor in long distance telecommunications.

     EMPLOYEES

     As of March 31, 1997, the Company had 43 full time employees, including
seven executive personnel (of which one is allocated to the  Collectible Calling
Cards Business and two are allocated to the Internet Services Business).  See
"Business - Management Team" and "Management's Discussion and Analysis or Plan
of Operation."

     The Company intends to hire additional personnel as the development of the
Company's business makes such action appropriate.  The loss of the services of
key personnel could have a material adverse effect on the Company's business.
Since there is intense competition for qualified personnel knowledgeable of the
Company's industry, no assurance can be given that the Company will be
successful in retaining and recruiting needed key personnel.  The Company does
not have key-man life insurance for any of its employees.

     The Company's employees are not represented by a labor union and are not
covered by a collective bargaining agreement.  The Company believes that its
employee relations are good.

     GOVERNMENT REGULATION

     The Company provides telecommunications services subject to the rules and
regulation of both state and federal regulatory agencies.  Interstate
telecommunications services are governed by the rules and regulations of the
FCC, while intrastate telecommunications services (or services provided within a
state's geographic boundaries) are governed by the particular state regulatory
authorities having jurisdiction within that state.

     During the last quarter of 1995 and the first three quarters of 1996, the
Company applied for and received authority to act as a Carrier for domestic and
international telecommunications.  The Company's interstate tariff permits it to
provide and bill for telecommunications services between the states.  The


                                       14
<PAGE>

Company's FCC International 214 authority enables the Company to provide
telecommunications services from the United States to termination points outside
the country.

     INDUSTRY OVERVIEW

     Since the break-up of AT&T in 1984, the domestic long distance market has
roughly doubled to on estimated $67 billion in annual revenues in 1994 and
AT&T's share has declined to approximately 56% of the market.  The other Major
Competitors increased their market shares.  The Major Competitors constitute
what generally is regarded as the first tier in the U.S. long distance market.
The remainder of the market share is held by several large regional long
distance companies.

     The present long distance telecommunications marketplace was principally
shaped by the 1984 divestiture by AT&T of its BOCs (defined below).  As part of
the AT&T Divestiture Decree (the "AT&T Decree"), the United States was divided
into geographic areas known as Local Access Transport Areas ("LATAs"). The local
exchange carriers ("LECs"), which include the Bell Operating Companies ("BOCs")
and independent LECs, provide local telephone service, local access services and
short-haul toll service. Interexchange carriers ("IXCs"), including the Company,
and certain independent local exchange carriers provide long distance service
between LATAs (inter-LATA traffic) and within LATAs. The current structure of
the industry is subject to change as the impact of recently enacted legislation
is realized.

     The long distance market has also been affected by a separate court decree
(the "GTE Decree") entered in 1984 that required the local exchange operations
of the GTE Operating Companies ("GTOCs") to be structurally separated from the
competitive operations of GTE, their parent company.  The GTE Decree also
prohibited the GTOCs from providing inter-LATA services.


     In November, 1995, the FCC terminated AT&T's status as a "dominant" Carrier
for the following domestic services; residential, operator, 800, directory
assistance and analog private line services.  Like other non-dominant Carriers
such as the Company, AT&T is now allowed to file tariffs for all of its domestic
services on one day's notice, and such tariffs are presumed lawful.  The FCC
deferred taking action on AT&T's status in the international market, although
there can be no assurance that the FCC will not similarly terminate AT&T's
status as a dominant Carrier in the international market in the future.  The FCC
has recently proposed to regulate 22 BOCs providing out-of-region interstate
long distance services as "non-dominant" Carriers as long as such long distance
services are provided by an affiliate of the BOC and certain structural
separation requirements are met, which may make it easier for the BOCs to
compete directly with the Company for long distance subscribers.

     THE 1996 TELECOMMUNICATIONS ACT

     The 1996 Telecommunications Act (the "1996 Act") includes certain
prohibitions on the Major Competitors and any other long distance Carrier
serving more that five percent of the nations's presubscribed access lines from
jointly marketing their long distance services with resold local phone services
acquired from the Regional Bell Operating Companies ("RBOC") for a specified
period ending on the earlier of BOC receipt of in-region long distance authority
or February 8, 1999.  Because the Company does not meet such threshold, such
prohibition does not currently apply to the Company.  Consequently, during the
time period that the prohibition is in effect in a particular state, the
Company, upon receipt of all necessary regulatory approvals to provide local
resale services, will be able to resell the local phone service products of the
RBOCs and jointly market those products with its long distance service.
However, if during that time period a company were to build a facilities-based
network that could compete with the BOCs in providing local residential phone
service, the Major Competitors and any long distance Carrier serving more than
five percent of the nations's presubscribed access lines could jointly market
that company's local phone service with their long distance service.  According
to a 1995 FCC report, the U.S. local basic phone service market was estimated by
the FCC


                                       15
<PAGE>

to be in excess of $40 billion in 1994, and the domestic intra-LATA long
distance market was estimated by the FCC to be in excess of $11 billion in 1994,
although no assurance can be given to that effect.

     As required by the 1996 Act, in August 1996, the FCC adopted new rules
implementing certain provisions of the 1996 Act (the "Interconnection Orders").
These rules are designed to implement the pro-competitive, deregulatory national
policy framework of the new statute by removing or minimizing the regulatory,
economic and operational impediments to competition for facilities-based and
resold local services, including switched local exchange service. Although
setting uniform national rules, the Interconnection Orders also rely on states
to apply these rules in implementing a pro-competitive regime in their local
telephone markets. The Interconnection Orders are primarily important to the
Company at this time insofar as they affect the cost to the Company of providing
resold local services.  Consistent with the 1996 Act, the Interconnection Orders
require incumbent LECs to offer their telecommunications services at retail
prices minus avoided costs. The Interconnection Orders also require, among other
things, that intra-LATA presubscription (pursuant to which LECs must allow
customers to choose different Carriers for intra-LATA toll service without
having to dial extra digits) be implemented no later than February 1999.
Petitions seeking reconsideration of one or more aspects of the Interconnection
Orders have been filed with the FCC and are pending. Also, the Interconnection
Orders have been appealed to various U.S. Court of Appeals. These appeals have
been consolidated into proceedings currently pending before the U.S. Eighth
Circuit Court of Appeals. Certain of the rules adopted in the Interconnection
Orders, including rules that concern the pricing of local services such as
resold local service, have been stayed by the Court. The Company believes the
trend toward increased competition and deregulation of the telecommunications
industry will be accelerated by the 1996 Act and subsequent developments.

     The 1996 Act also addresses a wide range of other telecommunications issues
that may affect the Company's operations, including a sunset provision
pertaining to when safeguards designed to prevent BOCs from capitalizing on
their local exchange monopolies will cease to apply; provisions pertaining to
regulatory forbearance by the FCC; the imposition of additional liability for
the unauthorized switching of subscribers' long distance Carriers; the creation
of new opportunities for competitive local service providers; provisions
pertaining to interconnection; provisions pertaining to universal service and
access charge reform; and requirements pertaining to the treatment and
confidentiality of subscriber network information. The legislation requires the
FCC to conduct a large number of proceedings to adopt rules and regulations to
implement the new statutory provisions and requirements. It is unknown at this
time precisely the nature and extent of the impact that the legislation and
regulatory developments will have on the Company.

     The 1996 Act opens the local phone services market to competition by
requiring LECs to permit interconnection to their networks and establishing,
among other things, LEC obligations with respect to unbundled access, resale,
number portability, dialing parity, access to rights-of-way and mutual
compensation. The legislation also codifies the LECs' equal access and
nondiscrimination obligations and preempts inconsistent state regulation. In
addition, the legislation contains special provisions that eliminate the AT&T
Decree and the GTE Decree, thereby eliminating certain restrictions on the BOCs
and GTOCs from providing long distance services and engaging in
telecommunications equipment manufacturing. These new statutory provisions
permit the BOCs to enter the long distance market. As of the date of enactment
of the legislation, a BOC is no longer restricted from providing inter-LATA long
distance service outside of those markets in which it provides local exchange
service (referred to as "out-of-region" long distance service). A BOC may
provide long distance service within the regions in which it also provides local
exchange service (referred to as "in-region" service) if it satisfies certain
procedural and substantive requirements and upon obtaining FCC approval. The
GTOCs are permitted to enter the long distance market as of the date of
enactment without regard to limitations by region, although the necessary state
and/or federal regulatory approvals that are otherwise applicable to the
provision of intrastate and/or interstate long distance service will need to be
obtained, and the GTOCs are subject to the provisions of the 1996 Act that
impose interconnection and other requirements on incumbent LECs.


                                       16
<PAGE>

     Because AT&T is no longer classified as a dominant Carrier, certain pricing
restrictions that formerly applied to AT&T have been eliminated, which should
make it easier for AT&T to compete with the Company for low volume long distance
subscribers.  International Carriers may also be classified as dominant if they
exercise market power or are considered to be affiliated with foreign Carriers,
as defined under the FCC's rules.  Non-dominant Carriers are currently required
to file interstate and international tariffs.  The FCC generally does note
exercise direct oversight over costs justification and the level of charges for
service of non-dominant Carriers, such as the Company, although it has the
statutory power to do so.  The FCC has the jurisdiction to act upon complaints
filed by third parties or brought on the FCC's own motion against any common
Carrier, including non-dominant Carriers for failure to  comply with its
statutory obligations.  The FCC also has the authority to impose more stringent
regulatory requirements on the Company and change its regulatory classification
from non-dominant to dominant.  In the current regulatory environment, the
Company believes, however, that the FCC is unlikely to do so.  The 1996 Act
grants explicit authority to the FCC to "forbear" from regulating any
telecommunications services provider in response to a petition and if the agency
determines that the public interest will be served.  On February 15, 1996,
Hyperion Telecommunications, Inc., a competition access provider, filed a
petition with the FCC requesting that the FCC adopt a forbearance policy with
regarding to tariff filing requirements for non-dominant Carriers.  If the
petition is granted, the Company and other non-dominant Carriers would no longer
be required to maintain tariffs on file at the FCC.  On March 21, 1996, the FCC
adopted a Notice of Proposed Rule making that proposes, pursuant to the
forbearance authority granted to the FCC by the 1996 Act, that non-dominant
domestic IXCs should no longer file tariffs.  If finally adopted, the FCC's
proposal would not allow domestic non-dominant Carriers to maintain tariffs on
file with the FCC.  The Notice of Proposed Rule Making also initiates a review
of other FCC regulations currently applicable to domestic interstate
interexchange services to determine how such regulations should be changed
consistent with the deregulatory goals of the 1996 Act.

     On October 29, 1996, the FCC adopted an order deciding to forbear from
tariff filing requirements for non-dominant IXCs.  Under that order, non-
dominant IXCs would no longer be required to file tariffs for their interstate
long distance service.  Tariffs would still be required for international long
distance service.  However, the FCC's order was appealed by a number of parties,
and as a result the appellate court reviewing the matter granted a stay of the
order.  The FCC issued a statement clarifying that the tariffing rules in price
are still considered in effect.

     EFFECT OF AT&T DECREE ON LOCAL SERVICE

     To encourage the development of competition in the long distance market,
the AT&T Decree requires the BOCs to provide all IXCs with access to local
exchange services for inter-LATA calls that is "equal in type, quality and
price" to that provided to AT&T and to maintain a subscription process that
gives telephone subscribers the right to designate a primary IXC (i.e., a "1-
plus" long distance Carrier) of their choice for inter-LATA and interstate
calls.  These so-called "equal access" and related provisions were intended to
prevent preferential treatment of AT&T and to level the access charges that the
BOCs could charge IXCs, regardless of their volume of traffic.  Similar equal
access requirements have been imposed upon the GTOCs by the GTE Decree and upon
other independent telephone companies by the FCC.  However, there remain a few
limited "non-equal access" areas in the United States that are yet to be
converted to "equal access," and the Company's services are not available in
those areas.  As a result of the equal access obligations imposed on the BOCs,
the GTOCs, and the independent telephone companies, subscribers of all inter-
LATA long distance companies were eventually allowed to initiate their calls by
utilizing simple "1-plus" dialing (i.e. by dialing "1") plus the area code and
telephone number of the person being called), rather than having to dial access
or identification numbers and codes in order to be routed to the IXC preselected
by the subscribers.

     Largely as a result of the AT&T and GTE Decrees, an inter-LATA long
distance telephone call begins with the LEC transmitting the call by means of
its local network to a point of connection with an IXC.  The IXC, through its
switching and transmission network, transmits the call to the LEC serving the
area where the recipient of the call is located, and the receiving LEC then
completes the call over its local facilities.  For each


                                       17
<PAGE>

long distance call, the originating LEC charges an access fee and the
terminating LEC charges a terminating fee to the IXC.  The IXC charges a fee for
its transmission of the call, a portion of which covers the costs of the access
and terminating fees charged by the LECs, which are regulated by the FCC and
state utility commission.  As competition emerges in the local service market,
end users will have the ability to choose among incumbent LECs and competitive
local service providers based upon price, quality of service, and other relevant
factors.


     The 1996 Act has removed the restrictions in the AT&T Decree and the GTE
Decree concerning the provision of inter-LATA service and telecommunications
equipment manufacturing by the BOCs and GTOCs.  If the regulations governing
such access and related charges change, and when the BOCs and the GTOCs are
permitted to participate in inter-LATA long distance service, then the BOCs or
the GTOCs might, through control of such charges, obtain a competitive advantage
over the Company and other IXC's.

     STATUTORY AND REGULATORY CHANGES

     There are currently numerous regulatory changes under consideration,
including the pricing of access charges paid to the LECs by the IXCs.  In
addition, changes have been made to the terms of the AT&T Decree since it was
entered.  The 1996 Act codifies the LECs' equal access and nondiscriminating
obligations and preempts inconsistent state regulation.  In addition, the
legislation contains special provisions that eliminate the AT&T Decree and the
GTE Decree, thereby eliminating certain restrictions on the BOCs and GTOCs,
respectively, providing long distance services and engaging in
telecommunications equipment manufacturing.  These new statutory provisions
permit the BOCs to enter the long distance market.  As of the date of enactment
of the legislation, a BOC is no longer restricted from providing inter-LATA long
distance service outside of those markets in which it provides local exchange
service (referred to as "out-of-region" long distance service).  A BOC may
provide long distance service within the regions in which it also provides local
exchange service (referred to as "in-region" service) if it satisfies several
procedural and substantive requirements, including obtaining the FCC's approval
for the BOC's application for each state.  The BOC may meet the 1996 Act's
requirements for a particular state in two different ways.  The BOC could meet
these requirements upon a showing that in certain situations facilities - based
competition is present in its market; that the BOC is providing access and
interconnection approved pursuant to the 1996 Act in that particular state; that
the approved interconnection agreements satisfy a 14-point "checklist" of
competitive requirements; and that the BOC's entry into in-region long distance
markets is in the public interest.  In the alternative, if no request for access
or interconnection has been made to the BOC within a specified time, the BOC may
meet the requirements of the 1996 Act by having a statement of the terms and
conditions that the BOC generally offers to provide such access and
interconnection that has been approved or permitted to take effect by the state
commission; that the BOC is generally offering access and interconnection
pursuant to that state - approved statement and such access and interconnection
meets the requirements of the 14-point competitive checklist; and that the BOC's
entry into in-region long distance markets is in the public interest.  Before
making its ruling, the FCC is instructed to consult with the U.S. Department of
Justice (the "DOJ"), but the FCC is not bound by the recommendations of the DOJ.
The FCC is also required to consult with the state commission of any state that
is the subject of the BOC's application to verify the compliance of the BOC with
certain requirements of the Act.  The GTOCs are permitted to enter the long
distance market as of the date of enactment without regard to limitations by
region, although the necessary state and/or federal regulatory approvals that
are otherwise applicable to the provision of intrastate and/or interstate long
distance service will need to be obtained, and the GTOCs are subject to the
provisions of the 1996 Telecommunications Act that impose interconnection and
other requirements on LECs.

     Prior to the passage of the 1996 Act, certain of the BOCs and the GTOCs
were seeking this same kind of permission through the courts.  Because the 1996
Act has removed the restrictions in the AT&T Decree and the GTE Decree, court
actions to remove the restrictions are no longer necessary.  On April 11, 1996
the District Court for the


                                       18
<PAGE>

District of Columbia issued an order formally terminating the AT&T Decree.  In
addition, the GTOCs have filed motions to withdraw all motions pending before
the District Court for the District of Columbia involving the GTE Decree,
including GTE's previously filed request to terminate the decree.

     The BOCs thus are permitted to enter the out-of-region long distance market
as of the date of enactment of the legislation, although a BOC seeking to
provide long distance services must obtain any necessary state and/or federal
regulatory approvals that are otherwise applicable to the provision of
intrastate long distance service.  The BOCs will be able to enter the in-region
long distance market,  among other things, upon specific FCC approval and a
finding by the FCC that the BOC satisfies the checklist and has satisfied the
other applicable procedural and substantive requirements.  The legislation
defines in-region service to include every state, in its entirety, in which the
BOC provides local exchange service, even if the BOC is not the incumbent local
exchange service provider in all portions of that state.  The Company will be
facing competition from the BOCs and the GTOCs that are able to obtain the
necessary state and/or FCC approvals to provide out-of-region and/or in-region
long distance service.  The new legislation provides for certain safeguards to
protect against anti-competitive abuse by the BOCs.  Among other things, the
legislation limits the ability of the BOCs to market jointly inter-LATA long
distance service, equipment and certain information services together with local
services.  The BOCs must pursue such activities only through separate
subsidiaries with separate books and records, financing, management and
employee.  All affiliate transactions must be conducted on an arm's length and
non-discriminatory basis.  The BOCs are also prohibited from jointly marketing
local and long distance services, equipment, and certain information services
unless they permit competitors to offer similar packages of local and long
distance services.  Further, the BOCs must obtain in-region long distance
authority before jointly marketing local and long distance service in a
particular state.  It is unknown whether these safeguards will provide adequate
protection, and the impact of anti-competitive conduct on the Company, if such
conduct occurs, in uncertain.  In addition, IXCs such as the Company will be
significantly affected by the implementation and enforcement of statutory and
regulatory provisions designed to prevent the BOCs and the GTOCs from
capitalizing on their monopolistic provision of local services to existing
subscribers in inter-LATA business.

     Depending on the exact nature and time of GTOC and BOC out-of-region and
in-region entry into the long distance market, such entry and the ability of the
Company's competitors to market jointly local and long distance services could
have a material adverse effect upon the Company's results of operations.  It is
expected by the Company that most or all of the BOCs will file applications for
out-of-region long distance service.  Certain of the BOCs have already taken
steps to provide out-of-region long distance services in multiple states.  It is
not known when, and under what specific conditions, other applications will be
granted by the state utility commissions in those states.

     Other regulatory changes being considered by state and federal regulatory
authorities derive from completion that has developed in many areas for the
provision of local access services.  Competitive access providers have installed
local networks that allow subscribers to route their long distance traffic
directly to the designated IXC, and that allow end users to be connected to IXC
points of presence, thereby bypassing the LEC.  In certain instances, the LECs
also have been afforded a degree of pricing flexibility in differentiating among
markets and carriers in setting access charges and other rates in areas where
adequate competition has emerged.  The LECs have yet to elect to provide volume
discounts on access and terminating charges.  See "Business - Government
Regulation."

     SPECIFIC LICENSING REQUIREMENTS

     The terms and conditions of the Company's telecommunications services are
subject to government regulation. Federal laws and FCC regulations generally
apply to interstate telecommunications, while intrastate services are regulated
by the relevant state authorities.

     FEDERAL REGULATION. The Company is classified by the FCC as a non-dominant
Carrier, and therefore is subject to minimal federal regulation.  The FCC
generally does not exercise direct oversight over cost


                                       19
<PAGE>

justification and the level of charges for service of non-dominant Carriers,
such as the Company, although it has the statutory power to do so. Non-dominant
Carriers are required by statute to offer interstate and international services
under rates, terms and conditions that are just, reasonable and not unduly
discriminatory. The FCC imposes only minimal reporting requirements on
non-dominant Carriers, although the Company is subject to certain reporting,
accounting and record keeping obligations.

     The Company is also subject to the FCC's prior approval requirements for a
transfer of control or assignment of its international authority.

     At present, the FCC exercises its regulatory authority to set rates
primarily with respect to the rates of dominant Carriers, and it has
increasingly relaxed its control in this area.  Similarly, the FCC is in the
process of repricing the local transport component of access charges (i.e., the
fee for use of the LEC transmission facilities connecting the LEC's central
offices and the IXCs' access points).  In addition, the LECs have been afforded
a degree of processing flexibility in settling interstate access charges where
adequate competition exists.  The impact of such repricing and pricing
flexibility on IXCs, such as the Company, cannot be determined at this time.

     In addition, the 1996 Act adds a new provision that imposes liability upon
all telecommunications Carriers, including the Company, to the Carrier
previously selected by the subscriber for unauthorized switching of subscribers'
long distance carriers.  Liability is imposed in an amount equal to all charges
paid by the subscriber after the  unauthorized conversion, which is in addition
to other remedies available by law.  The FCC is required to adopt new rules to
implement this new statutory requirement.  The impact that this statutory
provision will have on the Company cannot be determined at this time.

     The Company currently has two tariffs on file with the FCC, one covering
its domestic interstate services and one covering international services.
Although the tariffs of non-dominant Carriers, and the rates and charges they
specify, are subject to FCC review, they are presumed to be lawful and are
seldom contested.  As a domestic non-dominant Carrier, the Company is permitted
to make domestic tariff filings on a single day's notice and without costs
support to justify specific rates.  As an international non-dominant Carrier,
the Company has been required to include, and has included, detailed rate
schedules in its international tariffs, which are filed on 14 days notice
without costs support to justify rates.  Resale carriers, like all other
interstate Carriers, are also subject to variety of miscellaneous regulations
that, for instance, govern the documentation and verifications necessary to
change a subscriber's long distance Carrier, limit the use of "800" numbers for
pay-per-call services, require disclosure of certain information if operator
assisted services are provided, and govern interlocking directors and
management.

     STATE REGULATION.  The Company is subject to varying levels of regulation
in the states in which it is currently authorized to provide intrastate
telecommunications services. The vast majority of the states require the Company
to apply for certification to provide intrastate telecommunications services, or
to register or to be found exempt from regulation, before commencing intrastate
service. The vast majority of states also require the Company to file and
maintain detailed tariffs listing their rates for intrastate service. Many
states also impose various reporting requirements and/or require prior approval
for transfers of control of certified Carriers, and/or for corporate
reorganizations; acquisitions of telecommunications operations; assignments of
Carrier assets, including subscriber bases; Carrier stock offerings; and the
incurring by Carriers of significant debt obligations. Certificates of authority
can generally be conditioned, modified, canceled, terminated or revoked by state
regulatory authorities for failure to comply with state law and/or the rules,
regulations and policies of the state regulatory authorities. Fines and other
penalties, including the return of all monies received for intrastate traffic
from residents of a state, may be imposed for such violations. If state
regulatory agencies conclude that the Company has taken steps without obtaining
the required authority, they may impose one or more of the sanctions listed
above.


                                       20
<PAGE>

     The Company has applied to all states for requisite authority to act as a
Carrier for intrastate telecommunications service.  As of March 31, 1997, the
Company has received Certificates of Public Convenience and Necessity or is
otherwise authorized to operate in 41 states.  The Company currently is not
authorized to operate in the following states: North Carolina (pending), New
Mexico (pending), Nebraska, Minnesota, New Hampshire, Rhode Island and West
Virginia (application withdrawn due to adequacy of the Company's financial
statements).  The Company intends to make reapplication in those states
beginning second quarter 1997.  In addition, the Company intend to begin its
application to offer local service in the second quarter of 1997 and expects to
have approvals in all states where required by year-end 1997.

     In addition, informal complaints are lodged from time to time against the
Company before the FCC and various state agencies for various reasons, to which
the Company has timely responded.  In 1996 the Company received two state
inquiries and no FCC inquiries with respect to the Company's operation as a
telecommunications provider.  Both inquiries were answered, and, to the best
knowledge of the Company,  no further action was taken by any regulatory body.

     In September 1996, the governor of the State of California signed into law
a statute affecting the manner in which Carriers such as the Company can effect
a change in a residential subscriber's local or long distance service. Under
this new law, which became effective on January 1, 1997, a residential
subscriber's decision to change his or her telephone service provider must be
confirmed by an independent third-party verification company. This law appears
to conflict with the FCC's rules governing changes in Carriers, which allow
Carriers to confirm a subscriber's choice through several different mechanisms
including obtaining the subscriber's written authorization, which is the method
currently employed by the Company. It is possible that this law will be
challenged as being inconsistent with the FCC's existing rules. The Company is
in the process of evaluating the effect of the California statute upon its opera
tions. In addition, a number of states are considering adopting their own
third-party verification rules which, like California, may be inconsistent with
the FCC's rules.

     REGULATION OF NETWORK MARKETING.

     The Company's network marketing system is or may be subject to or affected
by extensive government regulation, including, without limitation, state
regulation.  Among the types of regulation are those on marketing practices
generally, on business franchises, business opportunities and securities.  The
Company believes that it is in compliance with and from time to time has
modified its network marketing system to comply with interpretations of various
requirements of federal and state regulatory authorities and maintains
communications regularly with the various regulatory authorities in each
jurisdiction.  In addition, an adverse determination by any one state could
influence the decisions of regulatory authorities in other jurisdictions.
Management endeavors to monitor the activities of its Distributors and the
development of the law in the various areas described above and believes that it
is in compliance with the requirements thereof, although no assurance can be
given to that effect.  Any or all of such factors could adversely affect the way
the Company does business and could affect the Company's ability to attract
potential Distributors. While the regulations governing network marketing are
complex and vary from state to state, the Company believes that it is in
compliance with and has from time to time modified its network marketing system
to comply with interpretations of various regulatory authorities.

     The Internal Revenue Service and state taxing authorities in any of the
states where the Company has Distributors could classify the Distributors as
employees of the Company (as opposed to independent contractors). A final
determination by any other jurisdiction that the Distributors are employees
could cause the Company to be subject to penalties and interest for taxes not
withheld, require the Company to withhold taxes in the future and require the
Company to pay for unemployment insurance.  Such classification would result in
a significant increase in the Company's cost of carrying on its network
marketing business.  No assurance can be given that the Distributors will be
treated in the future as independent contractors.


                                       21
<PAGE>

     As of March 31, 1997, the Company has received no notice of any complaint
from any state regulatory body regarding the Company's network marketing
business.  No assurance can be given, however, that the Company will not receive
such complaints in the future.

     RISK FACTORS

     THERE IS A LIMITED PUBLIC MARKET FOR THE COMPANY'S COMMON STOCK.  PERSONS
WHO MAY OWN OR INTEND TO PURCHASE SHARES OF COMMON STOCK IN ANY MARKET WHERE THE
COMMON STOCK MAY TRADE SHOULD CONSIDER THE FOLLOWING RISK FACTORS, TOGETHER WITH
OTHER INFORMATION CONTAINED ELSEWHERE IN THE COMPANY'S REPORTS, PROXY STATEMENTS
AND OTHER AVAILABLE PUBLIC INFORMATION, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION"), PRIOR TO TRADING IN THE SHARES OF THE
COMPANY:

     IMPAIRED FINANCIAL CONDITION.  Although the Company was formed in 1984, it
has many of the characteristics of a development stage company, and is subject
to all of the risks inherent in the establishment of new businesses  The Company
has generated only minimal revenues from operations since the beginning of 1995.
The likelihood of the success of the Company must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with the operation of a new business.  Revenues
generated from the Company's operations are not adequate to meet the Company's
operating expenses. The Company has generated losses of approximately $5.7
million and approximately $2.3 million during the years ended December 31, 1996
and December 31, 1995, respectively.  The Company is liable for payment on
$6,683,333 to redeem certain 3% convertible debentures due August 17, 1998.
There can be no assurances that the Company will ever achieve profitable
operations.  See "Management's Discussion and Analysis or Plan of Operations."

     QUALIFIED FINANCIAL STATEMENTS. The Company's auditors have included an
explanatory paragraph in their Report of Independent Certified Public
Accountants to the effect that recovery of the Company's assets is dependent
upon future events, the outcome of which is undeterminable, and that the
successful completion of the Company's development program and its transition,
ultimately, to the attainment of profitable operations is dependent upon
obtaining adequate financing to fulfill its development activities and achieving
a level of sales adequate to support the Company's corporate infrastructure.
There can be no assurances that such a financing can be completed on terms
favorable to the Company or at all, or that the business of the Company will
ever achieve profitable operations.  See "Management's Discussion and Analysis
or Plan of Operations - Liquidity and Capital Resources."

     NEED FOR ADDITIONAL CAPITAL. The Company's successful transition to
profitable operations is dependent upon obtaining adequate financing to fund
current operations and to develop and maintain a market share in an industry
characterized by explosive growth.   The Company's ability to operate the
Carrier Sales Business is dependent on substantial and immediate financing.  In
the event the Company fails to raise additional funds from such financing, and
fails to generate any adequate revenues from operations, the Company may be
unable to compete in the telecommunications industry.  There can be no
assurances that any sources of financing will be available from existing
stockholders or external sources on terms favorable to the Company, or at all,
or that the business of the Company will ever achieve profitable operations.
Further, any additional financing, may be senior to the Company's Common Stock
or result in significant dilution to the holders of the Common Stock.  In the
event the Company does not receive any such financing or generate profitable
operations, management may have to suspend or discontinue its business activity
or certain components thereof in its present form or cease operations
altogether.  See "Management's Discussion and Analysis or Plan of Operations -
Liquidity and Capital Resources."

     NEED FOR CAPITAL: CARRIER SALES BUSINESS.  The Carrier Sales Business was
started in January, 1997, and has had only limited operations.  It is designed
to serve not only as a separate source of revenue for the Company, but, more
importantly, as a basis for the general expansion of the Company's overall
Telecommuni-


                                       22
<PAGE>

cation Service Business.  In order to obtain large blocs of long-distance
services from other Carriers, however, the Company must provide such Carriers
with cash deposits or irrevocable letters of credit, and the Company does not
now have the necessary cash or financing resources for either.  If the Company
is unable to obtain such financing for its Carrier Sales Business, such business
will never become operational.  This may also have the effect of significantly
retarding or even blocking the growth of the Company's core Telecommunications
Business.  No assurance can be given that the Company will be able to obtain
such financing on terms favorable to the Company, or at all.  See "Business -
Carrier Sales Business" and "Management's Discussion and Analysis or Plan of
Operations - Liquidity and Capital Resources."

     RISK RELATED TO THE IEX AGREEMENT. Much of the Company's growth during 1997
will depend on its ability to deliver to the market its Enhanced Services.  The
Company will be unable to deliver such Enhanced Services unless and until the
Workhorse platform is successfully installed at the Company's Atlanta and New
York sites and other sites to be determined.  As of March 31, 1997, no such
successful installation has been accomplished.  Although both the Company and
IEX believe that operational platforms will be established by May 15, 1997, no
assurance can be given to that effect, nor can assurance be given that Workhorse
can be installed at all.  If IEX is unable to provide the Company with
operational platforms pursuant to the terms of the IEX Agreement, the Company
may have to seek to acquire similar products and services from other sources,
which sources may be more costly than those contacted for by IEX.  See "Business
- IEX Agreement."

     STRONG COMPETITION. The telecommunications industry is  characterized by
strong competition from companies of all sizes and capacities for technological
and marketing innovation.  Most of the Company's competitors have more
significant operating histories, larger and more varied customer bases, better
known names in the marketplace, greater technical resources, longer
relationships with licensed Carriers and far better financial resources.  The
Company endeavors to identify or create niches in the marketplace where its
combination of packages of communications services, direct marketing techniques
and careful selection of areas in which to make capital investments in switches
and high-capacity lines will permit the Company to offer attractive services at
lower prices than its competition.  Even if the Company were able to carve out a
modest market by the above described means, of which no assurance can be given,
larger competitors might adapt the Company's ideas and sell the same services at
lower prices than those of the Company, with the effect that the Company's own
market might disappear.  In such circumstance the Company would be forced to
curtail its operations or close them down entirely.  See "Business -
Competition."

     NEW TECHNOLOGICAL DEVELOPMENTS; MARKETING IMPLICATIONS.  The
telecommunications business has been characterized by rapid and striking
technological change.  In addition, many companies in the industry have
prospered by anticipating the needs and desires of consumers and successfully
offering amounts and types of telecommunications services which not only took
advantage of technological change, but provided them in a attractive form to
such consumers.  Management of the Company believes that the industry will
continue to undergo frequent technological change and that there will be
constant challenges to revise existing marketing strategies and create new ones.
Management believes that the Company's personnel has far less experience in
these areas than those employed by competitors of the Company.  Accordingly, no
assurance can be given that the Company will be able to adapt new technological
developments to its existing switches, leased lines and business relationships,
or, even if it can, that the Company will be able to capitalize on such
technological developments in a manner that generates revenue to the Company.
See "Business - the Company's Management Team."

     ABILITY TO MANAGE NEW BUSINESSES.  All of the Company's businesses are new.
With respect to the Telecommunications Business, the Company has only recently
been able to move beyond that of a mere reseller of another Carrier's services.
The Vision 21 Business started generating revenue only at the very end of 1996.
The Collectible Calling Cards Business was acquired as of November, 1996.  The
Internet Services Business was acquired in January, 1997.  The Carrier Sales
Business was started in January, 1997.  The ability of the Company to generate
revenue in 1997 and future years, depends on its ability to manage its new


                                       23
<PAGE>

businesses, each with its own problems of growth, management, response to
technical changes, pressures of competition, need for financing and recruitment
and retention and key personnel.  No assurance can be given that the management
of the Company will be capable of handling the many problems and issues
attendant to the operation and projected growth of such businesses.  See
"Business."

     DEPENDENCE ON KEY PERSONNEL.  The Company is dependent upon the skills of
its management team.  There is strong competition for qualified personnel in the
telecommunications industry, and the loss of key personnel or an inability to
continue to attract, retain and motivate key personnel could adversely affect
the Company's business.  As of March 31, 1997, the Company is dependent for its
success on certain key executive officers, especially Roderick McClain.  The
loss of the services of Roderick McClain would have an immediate adverse
material effect on the business of the Company.  There can be no assurances that
the Company will be able to retain its existing key personnel or to attract
additional qualified personnel.  The Company does not have key-man life
insurance on any employees of the Company.    See "Business - the Company's
Management Team" and "Management."

     RISKS OF NETWORK MARKETING-GROWTH OF BUSINESS.  The network marketing of
the Company's services by its Vision 21 Business is a critical factor in the
generation of revenue for the Company's core business, providing of
telecommunication services directly to end-users, both on a current basis and,
especially, as projected for the remainder of 1997.  This business, however,
involves reliance on Distributors who are independent contractors and,
therefore, not subject to supervision and control, as are employees of the
Company.  The Company has set up what it believes to be an attractive
compensation package for Distributors, which it hopes will encourage more people
to become Distributors and, more importantly, to work actively in the business
of marketing the Company's telecommunications services.  However, no assurance
can be given that such measures will be effective in attracting, retaining and
encouraging such Distributors.  If the Company is unable to motivate its
Distributors to market such services in sufficient quantities, then the Company
may suffer a significant reduction in revenue and may be forced to restructure
its entire business plan.  No assurance can be given that the Company would be
able to develop and implement such an alternate business plan in an effective
and timely manner, and failure to do so could cause the Company to restrict its
operations significantly, or altogether.  See "Business - Vision 21 Business."

     RISKS OF NETWORK MARKETING-LIABILITY.  The Company's network marketing
business may be subject to governmental regulation by a number of jurisdictions
in a number of different manners.  While the Company endeavors to supervise the
activities of its Distributors insofar as they could create liability to private
parties or violations of government restrictions, such Distributors are
independent contractors of the Company, and, as such, are not subject to the
same measure of control as are Company employees.  The Company endeavors to
limit the types of statements and written material provided by Distributors to
the public, and regularly informs Distributors about Company policies and
procedures which are designed to protect both the Company and the Distributors
themselves.  In addition, the Company has implemented policies to insure that
the Distributors are treated for income tax purposes as independent contractors,
not employees.  If, notwithstanding these policies, the Internal Revenue Service
or the taxing authority of any state were to assert that the Distributors were
employees and such assertion were upheld by a Court, then the Company would
immediately become liable for withholding and payment of substantial amounts of
payroll taxes.  Such liability could be retroactive.  No assurance can be given
that the Company's policies will avoid such liability to payroll taxes.  The
Company sanctions Distributors who violate any of its policies and procedures.
Nevertheless, because of the great number and variety of situations in which the
Company's activities may be subject to regulation and because of the inherent
difficulty in supervising and controlling persons who are independent
contractors, no assurance can be given that the Company will not be accused of
violating the rights of private persons or rules promulgated by governmental
agencies in connection with the Vision 21 Business.  No assurance can be given
that sanctions, if any, which might be imposed on the Company as a result of
such accusations would not have a material, adverse effect on the Company's
business, including causing the Company to make major restructuring changes.  No
assurance can be given that the Vision 21 Business would be able to survive such


                                       24
<PAGE>

restructuring and continue to provide revenue to the Company.  See "Business -
Regulation of Network Marketing."

     DEPENDENCE ON SWITCHING EQUIPMENT.  The Company currently has its own
switching facilities located in Atlanta, Georgia and New York, New York, and a
shared switch in New York, New York.  The ability to route telecommunications
through one of its switches is a critical factor to the Company's ability to
provide services at competitive prices.  If all of those switches were not
operational at the same time, the Company would be forced to engage the services
of an unrelated Carrier, thus increasing the cost of providing service to its
customers.  The Company maintains emergency generators to insure continuation of
power regardless of a break in municipal power.  The buildings in which the
switches are housed are high-security buildings used by a number of
telecommunications companies.  No assurance can be given, however, that a
disruption would not have a material adverse effect on the Company's business.
See "Business - The Company's Products and Services."

     DEPENDENCE ON UNRELATED CARRIERS FOR PROVISION OF LONG DISTANCE CAPACITY.
Although the Company is licensed as a Carrier in most U.S. jurisdictions, it
does not now possess a full network through which it can process communications.
Thus, it must rely on unrelated Carriers to transmit portions of calls made by
the Company's subscribers.  In addition, the Company relies on local exchange
Carriers for origination and termination of certain calls.  A failure, whether
from a power outage or otherwise, in a line or switch operated by one of such
unrelated Carriers could adversely affect the Company's ability to service the
calls placed by its customers.  Even if the Company were able to reroute such
calls so that its customers suffered no loss in service, the Company might incur
additional costs to do so.  Although the Company has not yet incurred
significant delays or other problems in this regard, no assurance can be given
to this effect prospectively.  Moreover, any extended delay or other problem
suffered by customers of the Company could adversely affect the reputation of
the Company for provision of timely and efficient telecommunications service.
See "Business-Telecommunications Business - Relationships with Carriers."

     TELECOMMUNICATIONS SERVICES; MINIMUM COMMITMENTS.  The Company has entered
into a number of agreements with unrelated telecommunications Carriers to
provide transmission capacity for calls made by customers of the Company.  In
certain of these agreements, the Company, in return for receiving the benefits
of lower rates, has committed for a minimum monthly usage of long distance
capacity.  No assurance can be given that the Company will generate sufficient
revenue to pay for such minimum obligations.   See "Business -
Telecommunications Business."

     GOVERNMENT REGULATION OF BUSINESS.  The Company is subject to regulation by
various government authorities in respect of its telecommunication activities
and its network marketing.  As of March 31, 1997, the Company is authorized as a
Carrier in forty-one  states and has its FCC Interstate license and FCC 214
International Tariff.  Carrier status allows the Company to deal directly with
its underlying Carriers and enables the Company to provide direct
telecommunications service to its customers, that is, without processing its
telecommunications customer provisioning and billing through unrelated licensed
Carriers.  If the Company were to lose its Carrier status in a particular
jurisdiction, it would no longer be able to provide direct telecommunication
service to customers and to bill therefor; instead, the Company would be able
only to recruit customers and pass them off to an unrelated Carrier. Such
activity, even if profitable to the Company, would offer little possibility for
growth in the industry.  Although management of the Company believes that the
Company has generally remained in compliance with the regulations in the
jurisdictions in which it operates, no assurance can be given to that effect.  A
loss of Carrier status in several jurisdictions would have a material adverse
effect on the Company's operations.  See "Business - Government Regulation."

     RBB-KHALIFA LITIGATION.  The Company is engaged in a dispute with certain
purchasers of the principal amount of $5,333,333 of certain 3% Convertible
Debentures, due August 15, 1998. The Debentures were issued in reliance on an
exemption from registration pursuant to Regulation S under the Securities Act of
1933, as


                                       25
<PAGE>

amended (the "Securities Act").  The  Debentures are convertible into shares of
the Company's Common Stock based on the per share conversion price for the
Debentures of the lesser of: (i) $4.00, or (ii) the average closing bid price of
the Company's Common Stock for the five (5) trading days immediately preceding
the date of notice of conversion.  The entire obligation underlying the
Debentures is currently convertible into Common Stock under the terms of the
Debentures.  The Company has received requests for conversion of a total of
$583,000 principal amount of Debentures (plus accrued interest thereon) into
unrestricted shares of Common Stock.  The Company has taken the position that
the Debentureholders have not complied with the terms of the subscription
documents executed in connection with the issuance of the Debentures, and that
until the Debentureholders are in such compliance, the Debentureholders have not
fulfilled their obligations under the Subscription Documents, and no shares may
be issued pursuant to the purported conversion requests.  No assurance can be
given, however, that the Company will prevail on this point.  If the above
requested conversions, and thereafter, other conversions, are permitted to take
place and unrestricted shares of Common Stock are issued therefor, the
Debentureholders could become significant holders of the Company's Common Stock,
diluting the interests of existing holders of Common Stock.  See "Legal
Proceedings - RBB Bank/Khalifa Litigation."

     LIMITED PUBLIC MARKET FOR COMMON STOCK.  There is currently a limited
public market for the Common Stock. Holders of the Company's Common Stock may,
therefore, have difficulty selling their Common Stock, should they decide to do
so.  In addition, there can be no assurances that such markets will continue or
that any shares of Common Stock which may be purchased may be sold without
incurring a loss.  Further, the market price for the Common Stock may be
volatile depending on a number of factors, including business performance,
industry dynamics, news announcements or changes in general economic conditions.

     DISCLOSURE RELATING TO LOW-PRICED STOCKS.  The Company's Common Stock is
currently listed for trading in the over-the-counter market on the NASD
Electronic Bulletin Board or in the "pink sheets" maintained by the National
Quotation Bureau, Inc., which are generally considered to be less efficient
markets than markets such as NASDAQ or other national exchanges, and which may
cause difficulty in conducting trades and difficulty in obtaining future
financing.   The Company's securities are subject to the "penny stock rules"
adopted pursuant to Section 15 (g) of the Exchange Act.  The penny stock rules
apply to non-NASDAQ companies whose common stock trades at less than $5.00 per
share or which have tangible net worth of less than $5,000,000 ($2,000,000 if
the company has been operating for three or more years).  Such rules require,
among other things, that brokers who trade "penny stock" to persons other than
"established customers" complete certain documentation, make suitability
inquiries of investors and provide investors with certain information concerning
trading in the security, including a risk disclosure document and quote
information under certain circumstances.  Many brokers have decided not to trade
"penny stock" because of the requirements of the penny stock rules and, as a
result, the number of broker-dealers willing to act as market makers in such
securities is limited.

     CERTAIN REGISTRATION RIGHTS.  The Company has entered into various
agreements pursuant to which certain holders of the Company's outstanding Common
Stock have been granted the right, under various circumstances, to have Common
Stock that is currently outstanding registered for sale in accordance with the
registration requirements of the Securities Act upon demand or "piggybacked" to
a registration statement which may be filed by the Company.  Of the currently
issued and outstanding Common Stock,  2,779,500 shares may be the subject of
future registration statements pursuant to the terms of such agreements.  In
addition, there are warrants to acquire 897,500 shares of Common Stock which may
be exercised through June 30, 1997, and which carry certain piggyback
registration rights.  Any such registration statement may have a material
adverse effect on the market price for the Company's Common Stock resulting from
the increased number of free trading shares of Common Stock in the market.
There can be no assurances that such registration rights will not be enforced or
that the enforcement of such registration rights will not have a material
adverse effect on the market price for the Common Stock.


                                       26
<PAGE>

     LACK OF DIVIDENDS ON COMMON STOCK.  The Company has paid no dividends on
its Common Stock as of March 31, 1997 and there are no plans for paying
dividends on the Common Stock in the foreseeable future.  The Company intends to
retain earnings, if any, to provide funds for the expansion of the Company's
business.

     SHARES ELIGIBLE FOR FUTURE SALE; ISSUANCE OF ADDITIONAL SHARES.  Future
sales of shares of Common Stock by the Company and its stockholders could
adversely affect the prevailing market price of the Common Stock.  There are
currently 15,522,407 shares of Common Stock which are free trading shares or are
eligible to have the restrictive legend removed pursuant to Rule 144(k)
promulgated under the Securities Act.  Further, 2,779,500 shares may be the
subject of future registration statements pursuant to the terms of certain
agreements between the Company and certain of its stockholders.  Sales of
substantial amounts of Common Stock in the public market, or the perception that
such sales may occur, could have a material adverse effect on the market price
of the Common Stock.  Pursuant to its Articles of Incorporation, the Company has
the authority to issue additional shares of Common Stock.  The issuance of such
shares could result in the dilution of the voting power of the currently issued
and outstanding Common Stock.

ITEM 2.   DESCRIPTION OF PROPERTIES.

     The Company owns, through an affiliate of which the Company is the 100%
beneficial owner, a building located at 1121 Alderman Drive, Alpharetta, Georgia
30202, which space serves as the Company's headquarters.  The Company paid for
this property and has a total mortgage obligation of approximately $1.8 million
in respect thereof.  See "Certain Relationships and Related Transactions."

     The Company has an operating lease at 55 Marietta Street, Atlanta, Georgia
for office space containing the Company's long distance switching equipment.
This lease is with an unaffiliated third party. The lease term is five (5) years
from the commencement date of November 1, 1996, and monthly rental is $2,154.

     The Company has an operating lease at 60 Hudson Street, New York, New York
for office space containing the Company's long distance switching equipment.
This lease is with an unaffiliated third party. The lease term is six (6) years
from the commencement date of October 24, 1996, and monthly rental is $120.

ITEM 3.   LEGAL PROCEEDINGS.

     WALSH LITIGATION.  On June 11, 1996, a complaint was filed against the
Company by John Walsh, a former employee in the Superior Court of Fulton County,
Georgia (Civil Action No. E494660), alleging certain claims and seeking
compensation in the form of common shares of the Company's common stock pursuant
to an employment agreement between the Company and the former employee.  The
Company has further filed a counter-claim against the former employee, alleging
breach of contract, breach of fiduciary responsibility under the terms of the
aforementioned agreement as well as action for tortious interference with
employment relations, violations of trade secrets and fraudulent transfer of
assets.

     Management of the Company believes that there are valid defenses to each of
the claims and intends to vigorously defend this action.

     TJC LITIGATION. On September 23, 1996, a complaint was filed against the
Company by TJC Communications in the State Court of Fulton County, Georgia,
Civil Division (Civil Action No. 96VS0118421) alleging default on a promissory
note associated with the prior asset purchase of TJC Communications.  On October
28, 1996, the Company filed a consolidated answer, counterclaim and third party
complaint against R. Wayne Johns, an Individual, and Charles Colclasure, an
Individual, both principals of TJC Communications, alleging fraudulent
inducement, material misrepresentation, fraud and deceit.  Both Johns and
Colclasure


                                       27
<PAGE>

individually failed to answer the Company's counterclaim, and on January 15,
1997, the Company, filed for a Motion for Default as to Third Party Defendants
with Proposed Default Judgment and Request for Hearing. On February 19, 1997,
the Company filed a complaint against Johns, Colclasure and TJC in Superior
Court, Fulton County (#55839) and on March 3, 1997, made a motion to combine the
first action with its February 19, 1997 suit.  A response has not been received
to this motion.

     Management of the Company believes that there are valid defenses to each of
the claims asserted by TJC and intends to prosecute its rights in both actions
vigorously.

     CAM-NET LITIGATION.  On February 20, 1997, a complaint was filed by CAM-NET
Communications Network, Inc. ("CN") in federal court for the Northern District
of Georgia, (197-CV-0448).  The complaint  seeks recovery on two promissory
notes in the total principal amount of $250,000, together with interest thereon
to February 17, 1997 of $21,071.70, additional interest to date of payment,
attorney's fees, costs and expenses.

     The claim by CN relates to an original letter of intent for the merger of
the two entities in or about April, 1996, pursuant to which money was advanced
by CN to the Company.  The Company contends that the promissory notes executed
with respect thereto were merely to document such advances, with no intention
that such advances be repaid.  Subsequently, in or about July, 1996, the Company
contends that a revised letter of intent was entered into between the parties
that included, among other things, changes in the terms of the promissory notes.
The Company contends that CN thereafter elected to exercise its option to
convert the promissory notes to the exclusive right to the Company's software
utilized to manage Vision 21 for the Canadian market.  As a result, the Company
contends there are no sums due on the promissory notes.

     The Company has filed an answer with affirmative defenses and setoff and
recoupment against CN. The Company has raised claims of material misstatements
and nondisclosures, as well as improper action, against CN with respect to such
letters of intent.  The Company believes these constitute defenses to any claim
of CN, as well as the basis of a claim for affirmative relief against CN.
Because CN is currently a corporation continuing federally under the Canada
Business Corporations Act and is thus protected from affirmative claims being
asserted against it without leave of the Canadian Court, the Company has limited
its claims at this time against CN to setoff and recoupment and has not sought
further damages which it believes it sustained as a result of the actions of CN.

     Management of the Company believes that there are valid defenses to each of
the claims and intends to vigorously defend this action.

     RBB BANK-KHALIFA LITIGATION.   On or about July 30 and August 28, 1996, the
Company issued the aggregate par principal amount of $6,683,333 of certain 3%
Convertible Debentures, due August 15, 1998 (the "Debentures"), as follows: (i)
RBB Bank Aktiengesselschaft ("RBB Bank") ($4,000,000), (ii) Mohammed Ghaus
Khalifa ("Khalifa") ($1,333,333), and (iii) Canadian Imperial Bank of Commerce.
("CIBC") ($1,350,000) (collectively, the "Debentureholders"). The Company
received cash from the Debentureholders in the aggregate amount of approximately
$5,012,500, or 75% of the par principal amount of the Debentures.  The
Debentures were issued in reliance on an exemption from registration pursuant to
Regulation S under the Securities Act.

     The terms of the Debentures provide that the Debentures are convertible
into shares of the Company's Common Stock based on the per share conversion
price for the Debentures of the lesser of: (x) $4.00, or (y) the average closing
bid price of the Company's Common Stock for the five (5) trading days
immediately preceding the date of notice of conversion.  The entire obligation
underlying the Debentures, as of January 23, 1997, is convertible into Common
Stock under the terms of the Debentures pursuant to the formula set forth above.
See "Security Ownership of Certain Beneficial Owners and Management."


                                       28
<PAGE>

     During the period from November 15, 1996 to January 3, 1997, the Company
received requests for conversion of the par principal amount of Debentures set
forth below (plus accrued interest thereon) into unrestricted shares of Common
Stock, as follows:  (i) Khalifa ($333,000 to be converted at the conversion
price of $0.332 per share), (ii) RBB Bank ($250,000 to be converted at the
conversion price of $0.324 per share and $250,000 to be converted at the
conversion price of $0.354 per share), and (iii) CIBC ($50,000 to be converted
at $0.3832 per share and $50,000 to be converted at the conversion price of
$0.396 per share).  CIBC's conversion requests have been withdrawn, as discussed
below.

     The Company received notices, dated January 10 and 14, 1997, on behalf of
the Debentureholders asserting that the failure by the Company to issue shares
of Common Stock pursuant to said conversion notices constituted an event of
default under the Subscription Documents.  CIBC has advised the Company that the
attorneys purporting to give said notice of default on its behalf were not
retained by it and did not have authority to so act on its behalf. CIBC has
withdrawn its conversion requests and said unauthorized notice of default.

     The Company has taken the position that RBB Bank and Khalifa have not
complied with the terms of the subscription documents (the "Subscription
Documents") executed in connection with the issuance of the Debentures, and that
until RBB Bank and Khalifa are in such compliance, RBB Bank and Khalifa have not
fulfilled their obligations under the Subscription Documents, and no shares may
be issued pursuant to the purported conversion requests.

     The Company has not received a copy of a Schedule 13D with respect to RBB
Bank.  Further, the Company has not received a copy of any filing which may be
required pursuant to Section 16 of the Exchange Act for either RBB Bank or
Khalifa, and believes that the information set forth in Khalifa's Form 13D does
not correctly reflect his beneficial ownership of Common Stock.

     The Company has requested RBB Bank and Khalifa to provide satisfactory
evidence that they are not subject to, or have met, the filing requirements of
Sections 13(d) and 16, the Regulation S exemption remains available and any
shares which may be issued in connection with a conversion request are not
subject to resale restrictions for "affiliates" of an issuer under Rule 144
promulgated under the Securities Act.  RBB Bank and Khalifa have failed and
refused to provide the requested evidence.

     The Company has expressed its willingness, at this stage, to issue the
conversion shares to RBB Bank and Khalifa with a restrictive legend, at such
time as RBB Bank and Khalifa are in compliance with the terms of the
Subscription Documents.   The Company does not believe that the Company is in
default with respect to the conversion notices or the Debentures.

     On January 22, 1997, RBB Bank and Khalifa (collectively, "Plaintiffs")
filed a complaint in the United States District Court for the Northern District
of Georgia, Atlanta Division (Civil Action No. 1 97-CV-0179) against the
Company.  Subsequently, RBB Bank and Khalifa filed a first amended complaint
("Complaint"). The Complaint alleges claims for declaratory and injunctive
relief, breach of contract and attorneys fees, with respect to the request of
RBB Bank and Khalifa to convert $333,000 and $500,000, respectively, par
principal amount of Debentures into shares of the Company's Common Stock
pursuant to the Subscription Documents.  The complaint seeks injunctive relief
against the Company to issue the shares to Plaintiffs in accordance with the
conversion requests, injunctive relief declaring the full principal amount of
the Debentures to be due and owing in the amount of more than $1,250,000 and
$1,333,333 to RBB Bank and Khalifa, respectively, with interest, and for an
unstated amount of compensatory damages, attorney's fees, costs and expenses.

     The Company has filed an answer with affirmative defenses and counterclaims
to the above action. The Company alleges claims for violation of the Securities
Exchange Act of 1934 and fraud against RBB Bank and Khalifa in connection with
alleged misrepresentations and omissions and violations of the Federal
Securities Laws by RBB Bank and Khalifa in representations made by them in the
Subscription Documents


                                       29
<PAGE>

and their subsequent conduct, which caused the Company damage in a presently
undetermined amount.  The Company also asserts a claim for rescission in
connection therewith.  The Company also seeks  exemplary and punitive damages,
attorney's fees, costs and expenses.

     Management of the Company believes that there are valid defenses to each of
the claims and intends to vigorously defend this action and pursue the Company's
affirmative claims for relief and rescission.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.
                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     As of April 7, 1997, the authorized capital stock of the Company consisted
of 25,000,000 shares of common stock, par value $0.004 per share (the "Common
Stock").  As of April 7, 1997, there were issued and outstanding 18,301,907
shares of Common Stock options and warrants to purchase 3,647,500 shares of
Common Stock at prices ranging from $0.41 to $5.00.

     The Company's Common Stock has been listed for trading in the Over-The-
Counter Bulletin Board ("OTCB") market since July, 1995 and is quoted on the
OTCB or in the "pink sheets" maintained by the National Quotation Bureau, Inc.
under the symbol "GTMI." The number of shares of Common Stock issued and
outstanding as of April 7, 1997, was approximately 18,301,907.  The bid and
asked sales prices of the Common Stock, as traded in the OTCB market, on April
7, 1997, were approximately $ 0.49 and $0.54, respectively.  The quarterly range
of high and low bid prices for the past two years were as follows:

                                       BID PRICES             ASKED PRICES
                                       ----------             ------------
                                    HIGH       LOW           HIGH      LOW
                                    ----       ---           ----      ---
YEAR ENDED DECEMBER 31, 1995

1st Quarter                        1 3/4       1            1 7/8      1 1/8
2nd Quarter                        1 7/16      13/16        1 5/8      1
July 3-July 6                      1 1/16      3/4          1 1/8      1
July 7-September 29                1           1/4          1 5/32     9/32
4th Quarter                        1 3/16      5/8          1 1/4      3/4

YEAR ENDED DECEMBER 31, 1996
1st Quarter                        1 3/16      5/8          2          7/10
2nd Quarter                        3         1 13/16        3 1/4     1 15/16
3rd Quarter                        2 7/16      1/2          2 5/8      9/16
4th Quarter                        19/32       5/16           5/8      11/32

QUARTER ENDED MARCH 31, 1997       15/16       13/32         31/32     29/64

     These prices are based upon quotations between dealers, without adjustments
for retail mark-ups, mark-downs or commissions, and therefore may not represent
actual transactions.

     No dividend has been declared or paid by the Company since inception.  The
Company does not anticipate that any dividends will be declared or paid in the
future.

     The transfer agent for the Company is American Stock Transfer and Trust
Company.


                                       30
<PAGE>

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.


          OVERVIEW OF PRESENTATION.

     The following discussion and analysis should be read in conjunction with
the Selected Consolidated Financial Data and the Consolidated Financial
Statements and Notes thereto included elsewhere herein.

     The Company, which was formed on December 31, 1984 and primarily engages in
the provision of telecommunications services to individuals and small
businesses.  Such telecommunications services include, but are not limited to,
domestic and international long distance, prepaid calling cards, interactive
voice mail and other enhanced voice recognition services.  The Company operates
five separate, though related,  businesses: (i) the Telecommunications Business;
(ii) Vision 21 Business; (iii)  the Carrier Sales Business; (iv) the Collectible
Calling Cards Business; and (v) the Internet Services Business.  As of March 31,
1997, the Company served approximately 4,400 subscribers, who were primarily
obtained through a direct sales approach by a network of Distributors.

     All five of the Company's businesses are new.  With respect to the
Telecommunications Business, the Company has only recently been able to move
beyond that of a mere reseller of another Carrier's services.  The Vision 21
Business became operational and started generating revenue only at the end of
1996.  The Collectible Calling Cards Business was acquired as of November 15,
1996.  The Internet Services Business was acquired as of January 2, 1997.  The
Carrier Sales Business was started in January, 1997.  The ability of the Company
to generate revenue in 1997 and future years, depends on its ability to manage
five distinct businesses, each with its own problems of growth, management,
response to technical changes, pressures of competition, need for financing and
recruitment and retention of key personnel.  No assurance can be given that the
management of the Company will be capable of handling many problems and issues
attendant to the operations and projected growth of such businesses.

     The Company introduced its network marketing system in 1996.  The Company's
strategy has been to build a subscriber base without committing capital or
management resources and to construct its own network and transmission
facilities.  This strategy has allowed the Company to add subscribers without
being limited by the capacity, geographic coverage or configuration of any
particular network that the Company might have developed.  As the volume of the
Company's traffic has reached sufficient levels in certain markets, the Company
now intends to seek other Carriers providing long distance service and to
develop its own long distance network in those markets to reduce its dependence
upon such Carriers, provide additional services to its subscribers and reduce
expenses associated with the transmission of long distance calls. There can be
no assurance, however, that development of a long distance network will be
completed or, if completed, will be beneficial to the Company.

     The following discussion reflects the financial condition and results of
operations of the Company for the years ended December 31, 1996 and 1995.
Because of these material changes, annual results may not be indicative of
future performance.

     RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995.  The
Company's revenues decreased from $2,884,000 in 1995 to $1,391,789 in 1996, a
decline of  52%.  This decrease in sales was largely attributable to the
inability to repay a $250,000 note when due, which, in turn, led to a
foreclosure loss of the Company's affiliate which held all of its Certificates
of Public Convenience and Necessity to act as a licensed telecommunications
Carrier.  The effect of this loss was that the Company could no longer provide
either intrastate or interstate telecommunications services directly to
customers.

     During 1996, as compared with 1995,  the cost of services sold increased
from $1,293,000 to $1,712,275, and the Company's operating loss increased from
$1,456,000 to $5,635,028.   The increase in cost of services,


                                       31
<PAGE>

in spite of the sharp decline in revenues in the same periods, was due primarily
to the inability of the Company to act as a licensed telecommunications Carrier
and various costs associated with developing the portfolio of services for the
Vision 21 Business.  In order to maintain some portion of its customer base, the
Company had to hire unaffiliated third parties to provide such services, with
the Company essentially acting as an agent for licensed Carriers.

     Selling, general and administrative expenses increased to $5,314,511 in
1996 as compared to $3,027,000 for 1995.  The increase during 1996 in absolute
dollars of such expenses was primarily the result of expenditures of
approximately $1.5 million to test market the Company's Vision 21 network
marketing program, as well as the implementation of the initial phase of the
Company's Enhanced Services platform.

     Interest expense for 1996 was $211,837 as compared to $59,000 for 1995.
This increase of $152,837 relates directly to interest paid on debt financing
obtained during 1996.

     In September, 1995, the Company entered into a purchase agreement (the
"Purchase Agreement") with QCC, Inc. ("QCC") pursuant to which the Company
agreed to sell to QCC its customer accounts and accounts receivable related
thereto.  The total purchase price for such assets was $200,000 plus a share of
monthly revenues, the total of which has approximated $267,000 as of March 31,
1997.

     As a result of the foregoing, a net loss of $5,702,366 was reflected in
1996 as compared to a net loss of $2,321,000 in 1995.

     As a result of the Company's cumulative operating losses, the Company has
not paid income tax since inception.  As of December 31, 1996, the Company had
net operating loss carry forward totaling approximately $5,334,000.  Utilization
of the Company's net operating loss may be subject to limitation under certain
circumstances and accordingly the Company has elected to fully reserve against
these deferred tax assets.

     LIQUIDITY AND CAPITAL RESOURCES.  The Company has historically financed its
operations principally through the sale of equity and debt securities and
through funds provided by operating activities.

     After a period of test marketing in 1995 and 1996, the Company, based on
the marketplace's response, believed that it had successfully refined the
business, especially the compensation plan, for nationwide launching.   As of
March 31, 1997, there are approximately 3,000 Distributors in the Vision 21
Business.  During the first quarter of 1997, the Company's Distributors have
generated revenue each month to the Company.  Revenue for the first quarter of
1997 totaled approximately $1 Million.  No assurance can be given that the
growth in the number of Distributors or revenues will continue at this rate or
at all.  No assurance can be given that the Vision 21 Business will prove
successful or, that if it does prove successful, that such success will result
in the generation of significant revenue for the Company.

     On April 3, 1996, the Company sold $2,500,000 of certain 10% convertible
debentures, of which $350,000 has been received as of March 31, 1997.  Such
debentures are payable in full two years after the sale, and holders thereof
were able to convert principal and accrued interest into shares of Common Stock
after April 3, 1996.  On January 10, 1997, the debentures were amended to
reflect a total amount of $350,000, convertible into shares of Common Stock at a
revised conversion price of $0.50, plus piggyback registration rights.

     From July 30, 1996, through August 28, 1996, the Company offered for sale
$6,683,333 of certain 3% convertible debentures at a discount, which yielded an
effective interest rate of 14.5%.  Such convertible debentures are due August
15, 1998, and may be paid in cash or in shares of Common Stock.  In the fourth
quarter of 1996, the Company received requests for conversion of some of the par
principal amount, plus accrued interest, of such debentures into unrestricted
shares of Common Stock.  The Company has taken the


                                       32
<PAGE>

position that the holders of such debentures have not complied with the terms of
the subscription documents therefor and accordingly have not issued such shares
of Common Stock.  See "Legal Proceedings."

     As of December 31, 1996, the Company had notes and interest payable
totaling $7,986,195,  accrued but unpaid expenses totaling $540,041, and current
accounts payable totaling $1,110,570.

     For 1996 the Company's negative cash flow from operations was $4,312,668,
up from $995,000 in 1995.  As of March 31, 1997, the Company's negative cash
flow is approximately $450,000 per month.  Although management of the Company
anticipates an improvement in the Company's cash flow position from increased
revenues from one or more of its five businesses, no assurance can be given to
that effect.  Even if such increases were to occur, management believes that the
Company can sustain operations only by the infusion of substantial amounts of
financing.  No assurance can be given that such financing will be available at
terms acceptable to the Company, or at all.  Inability to obtain such financing
could force the Company to cease all business operations.

     The Company's auditors have included an explanatory paragraph in their
Report of Independent Certified Public Accountants to the effect that recovery
of the Company's assets are dependent upon future events, the outcome of which
is undeterminable, and that the successful completion of the Company's
development program and its transition, ultimately, to the attainment of
profitable operations is dependent upon obtaining adequate financing to fulfill
its development activities and achieving a level of sales adequate to support
the Company's cost corporate infrastructure.  There can be no assurances that
such a financing can be completed on terms favorable to the Company or at all,
or that the business of the Company will ever achieve profitable operations.

     NEW ACCOUNTING STANDARDS

     In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation," which requires additional
disclosures related to stock based compensation plans. The Company adopted this
statement effective January 1, 1996, which did not have a material effect on the
Company's results of operations or financial position. The Company also adopted
the provisions of SFAS No. 121, "Accounting for the Impairment of Long-lived
Assets," which did not have a material effect on the Company's results of
operations or financial position.

ITEM 7.  FINANCIAL STATEMENTS.

     The financial statements required by this Item 7 are attached hereto as
Exhibit "A" and incorporated herein by this reference.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     None.


                                       33
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

     The directors of the Company currently have terms which will end at the
next annual meeting of the stockholders of the Company or until their successors
are elected and qualify, subject to their prior death, resignation or removal.
Officers serve at the discretion of the Board of Directors.  Roderick A. McClain
and Geoffrey F. McClain are brothers.

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

Roderick A. McClain          Chairman of the Board of                   49
                             Directors, Chief Executive
                             Officer and President

Geoffrey F. McClain          Executive Vice President                   52
                             and Director

Herbert S. Perman            Chief Financial Officer,                   59
                             Executive Vice-President and
                             Director

Melissa D. Hart              Secretary                                  31


     Roderick A. McClain is Chairman of the Board, Chief Executive Officer and
President of the Company and has been a Director of the Company since 1993.  Mr.
McClain attended the University of Tennessee.  Mr. McClain, in 1991, founded the
Company, Mr. McClain has become a highly respected executive in the
telecommunications industry and represented the industry in their lobbying
efforts with respect to the Telecommunications Act of 1996 in Washington, D.C.
He was recently invited to be a guest speaker at the 1996 National Prepaid
Wireless and Prepaid Cellular meetings held in San Francisco, one of the
industry's most prestigious organizations, the Telecommunications Resellers
Association, asked Mr. McClain to represent them in conversations with
international companies at its recent conference in Acapulco, Mexico.

     Geoffrey F. McClain is Senior Vice-President and has been a Director of the
Company since August 1995.  Mr. McClain is the brother of the Company's Chief
Executive Officer, Roderick A. McClain.  Mr. McClain received a BBA in Finance
from the University of Miami. Mr. McClain was an original founder of Global Wats
One, Inc., which was acquired by the Company in September, 1993.

     Herbert S. Perman has served as Chief Financial Officer since 1995 and was
appointed as Director of the Company in 1995.  Mr. Perman received a BS from the
City College of New York and J.D. from Brooklyn Law School.  From 1994 through
October 1995, Mr. Perman was a consultant to the long distance and prepaid
telephone industry.  From 1989 to 1994, Mr. Perman was director of marketing for
PDQ Notes, Inc. a medical software company.  Mr. Perman was licensed as a
certified public accountant and attorney in the state of New York but is not
active as either.

     Melissa D. Hart has been Corporate Secretary of the Company since December,
1994.  Ms. Hart has been employed by the Company's telecommunications subsidiary
since 1991, serving as Manager of Regulatory Affairs and Executive
Administrator.  Prior to 1991, Ms. Hart was employed with Tenneco, Inc., in the
areas of Federal Reporting, Major Project Management and Engineering.


                                       34
<PAGE>

     Compliance with Section 16 of the Securities Exchange Act of 1934 (the
"Exchange Act").  Section 16(a) of the Exchange Act requires the Company's
directors and executive officers and beneficial holders of more than 10% of the
Company's Common Stock to file with the Commission initial reports of ownership
and reports of changes in ownership and reports of changes in ownership of such
equity securities of the Company.  Based solely upon a review of such forms, or
on written representations from certain reporting persons that no other reports
were required for such persons, except for those reports discussed in the next
paragraph, the Company believes that all reports required pursuant to Section
16(a) with respect to its executive officers, directors and 10% beneficial
stockholders for the ended December 31, 1996 were timely filed.

     To the Company's knowledge, during the year ended December 31, 1995, (i)
McClain, the president and director failed through administrative error, to
timely file three transactions, which has since been corrected by the filing of
two reports; (ii) Mr. Geoffrey McClain, a director and executive officer, failed
through administrative error, to timely file one transaction which has since
been corrected by the filing of two reports; (iii) Mr. Herbert Perman, chief
financial officer and director, failed through administrative error to timely
file one transaction which has since been corrected by the filing of two
reports; (iv) Ms. Melissa Hart, an executive officer, failed through
administrative error, to timely file one transaction, which has since been
corrected by the filing of two reports.  To the Company's knowledge, all other
filing requirements were timely complied with.

     On January 30, 1996, the Company issued to Geoffrey McClain, a director of
the Company, 25,000 shares of Common Stock as bonus compensation pursuant to his
employment agreement and warrants to purchase 50,000 shares of Common Stock at
an exercise price of $1.00 per share.  The warrants expired on January 30, 1997.
During the six months beginning on January 30, 1996, Geoffrey McClain sold
shares of Common Stock on a number of occasions.  During such six month period,
the highest prices received for such sales for a total of 25,000 shares totaled
$20,072.50.  The purchase price for the 25,000 shares based on their stated
value of $0.07 was $1,750.00.  The total theoretical profit was, therefore,
$18,322.50, and such full amount has been repaid to the Company.

     CIBC and Khalifa have filed Form 13D in respect of their acquisition of
certain 3% debentures issued by the Company, but the Company has not received
copies of any filings by CIBC, Khalifa or RBB Bank of any filings which may be
required under Section 16 of the Exchange Act.  See "Legal Proceedings."

ITEM 10.  EXECUTIVE COMPENSATION.

     Effective January 27, 1997, the Company entered into a revised and restated
employment agreement with McClain, as the Chief Executive Officer of the
Company, the terms of which are as follows:  (a) the term of the employment
agreement is ten years from the effective date, which term is automatically
renewed by one month at the end of each month; (b) the base salary is $125,000
annually, increased by ten percent each year; (c) a performance bonus equal to
7.5% of the net income before taxes of the Company for any year; (d) a revenue
bonus equal to 10,000 shares of the Company's Common Stock for each increment of
$250,000 by which the Company's gross monthly revenues exceed those of the prior
month, starting from a base of $450,000; (e) 1,000 shares of a class of
convertible preferred stock to be authorized by the Company, subject to terms of
such class of preferred stock as are agreed to by the parties hereto; (f) any
other bonus, supplemental or incentive compensation as may be approved by the
Board of Directors; (g) nonqualified options to acquire up to 1,600,000 shares
of the Company's Common Stock at an exercise price of $0.41 per share; and (h) a
trigger to receive all unpaid compensation, whether or not earned, upon the
occurrence of a change in control of the Company.  For purposes of the
employment agreement, change in control (25%) of either the outstanding shares
of Common Stock or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally, or (ii) the approval by the
stockholders of the Company of a reorganization, merger or consolidation, in
which persons who were stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own or


                                       35
<PAGE>


control more than fifty percent (50%) of the combined voting power entitled to
vote generally in the election of directors of the surviving corporation of such
reorganization merger or consolidation, or a liquidation or dissolution of the
Company or of the sale of all or substantially all of the Company's assets,

     The Company entered into an employment agreement with Herbert S. Perman
("Perman"), dated October 1, 1995, and amended February 1, 1996.  Pursuant to
the Perman Agreement, which has a term of three years, Perman is employed as the
Company's Chief Financial Officer and is compensated  with an annual salary of
$85,000, a one-time grant of 150,000 shares of the Company's Common Stock and a
one-time grant of options to acquire 50,000 shares of the Company's Common Stock
at an exercise price of $1.00 per share.  In addition, Mr. Perman shares in the
Company's Executive Stock Bonus Plan, which provides for the issuance of shares
of Common Stock upon increase of gross monthly revenues over a base of $450,000.

     The Company entered into an employment agreement with Geoffrey McClain,
dated May 25, 1995, amended February 1, 1996, and amended February 1, 1997.
Pursuant to the Geoffrey McClain Agreement, which has a term of three years,
Geoffrey McClain is employed as the Company's Senior Vice-President and is
compensated with an annual salary, as of February 1, 1997, of $98,000.  In
addition, Geoffrey McClain shares in the Company's Executive Stock Bonus Plan,
which provides for the issuance of shares of Common Stock upon increase of gross
monthly revenues over a base of $450,000.

     The Company entered into an employment agreement with Melissa Hart
("Hart"), dated May 25, 1995, and amended November 1, 1995, and amended February
1, 1996, and amended February 1, 1997.  Pursuant to the Hart Agreement, which
has a term of three years, Ms. Hart is employed as the Company's Regulatory
Affairs Director and is compensated  with an annual salary of $52,000, the
granting of 50,000 shares of the Company's Common Stock.  In addition, Ms. Hart
shares in the Company's Executive Stock Bonus Plan, which provides for the
issuance of shares of Common Stock upon increase of gross monthly revenues over
a base of $450,000.

     As of November 15, 1996, the Company entered into a three-year employment
agreement with Arthur West at an annual base salary of $78,000, plus other
benefits.  The Company has also agreed to pay a bonus to West equal to 1.5% of
the gross sales of the Collectible Calling Cards Business during each quarterly
period of his employment agreement.  However, the annual bonus pay may not
exceed $42,000, $54,000 or $67,000 during the first, second and third years,
respectively, of the term of the employment agreement.

     As of January 2, 1997, the Company entered into entered into a three-year
employment agreement with David Paolo at an annual base salary of $75,000, plus
other benefits.  In addition, the Company agreed to pay Paolo a contingent sum
equal to either fifteen percent (15%) or twenty percent (20%) (such percentage
being based on the gross profit of the Internet Services Business for the year
ended December 31, 1997) of the value of the Internet Services Business after
three years from the acquisition date.  At the Company's sole option, up to
fifty percent (50%) of the contingent sum may be paid in the form of shares of
common stock of the Company which have certain registration rights.


                                       36
<PAGE>

     SUMMARY COMPENSATION TABLE.  The following table sets forth certain
information concerning compensation of certain of the Company's executive
officers, including the Company's Chief Executive Officer and all executive
officers whose total annual salary and bonus exceeded $100,000, for the years
ended December, 1996 and 1995:

<TABLE>
<CAPTION>

                                                                                     Long Term Compensation
                                                                                     -----------------------------
                                              Annual Compensation                     Awards             Payouts
                                      ----------------------------------            -------------------  -------
(a)                         (b)      (c)          (d)        (e)            (f)     (g)       (h)           (i)
Name and                                                                            Other     Restricted      LTIP    All Other
Principal                            Salary       Bonus      Compen-                Awards     Options/     Payouts    Compen-
Position                    Year      ($)          ($)        sation        ($)     SARS (#)                  ($)      sation ($)
---------                   ----     ------       ------     --------      -----    --------  -----------  ---------  -----------
<S>                         <C>      <C>          <C>        <C>           <C>      <C>       <C>          <C>        <C>
Roderick A. McClain         1996    137,000
CEO

Roderick A. McClain         1995    125,000
CEO
</TABLE>


     OPTION/SAR GRANTS TABLE DURING LAST FISCAL YEAR.  The following table 
sets forth certain information concerning grants of stock options to certain 
of the Company's executive officers, including the Company's Chief Executive 
Officer and all executive officers whose total annual salary and bonus 
exceeded $100,000, for the year ended December 31, 1996:


<TABLE>
<CAPTION>

                                                                                                         Potential Realizable
                                                                                                          Value at Assumed
                                                                                                           Annual Rates of
                                                                                                       Stock Price Appreciation
                                                     Individual Grants                                    For Option Term(1)
---------------------------------------------------------------------------------------------------------------------------------
(a)                           (b)                 (c)                 (d)            (e)                   (f)          (g)
                              Number of           % of
                              Securities          Total
                              Underlying          Options/
                              Options/            SARs                Exercise
                              SARs                Granted to          or Base
                              Granted             Employees           Price          Expiration
Name                          (#)                 in Fiscal Year      ($/Share)      Date                  5% ($)       10%($)
---------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>                 <C>                  <C>            <C>                <C>            <C>
Roderick A..
McClain.(2)                   1,600,000           100%                $0.41          1/02/07               $145,825     $221,647
</TABLE>

     (1)  This chart assumes a market price of $0.46875  for the Common Stock,
the average of the bid and asked prices for the Company's Common Stock in the
Over-The-Counter Market as of December 31, 1996, as the assumed market price for
the Common Stock with respect to determining the "potential realizable value" of
the shares of Common Stock underlying the options described in the chart, and
does not give effect to any reduction for the payment of the exercise price for
such options.  Each of the options reflected in the chart was granted at
exercise prices which the Company believes to have been determined at the fair
market value as of the date of grant.  Further, the chart assumes the annual
compounding of such assumed market price over the relevant periods, without
giving effect to commissions or other costs or expenses relating to potential
sales of such securities.  The Company's Common Stock has been listed for
trading on the OTC Electronic Bulletin Board maintained by the National
Association of Securities Dealers, Inc. ("NASD") or in the "pink sheets"
maintained by the National Quotation Bureau, Inc. (the "Over-The-Counter
Market") since approximately July 7, 1995 under the symbol "GTMI."  Prior to
such time, the Company's Common Stock was listed for trading in the NASDAQ
Small-Cap Market until being delisted on or about July 6, 1995. See Item 5 -
"Market Price of Common Equity and Related Stockholder Matters."


                                       37
<PAGE>

     (2)  Mr. McClain has been granted an option to acquire up to 1,600,000
shares of Common Stock at an exercise price of $0.41 per share.   The option has
vested with respect to all 1,600,000 shares.  All such options expire on January
2, 2007.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     As of April 7, 1997, the Company had issued and outstanding 18,301,907
shares of Common Stock.  The following table reflects, as of April 7, 1997, the
beneficial Common Stock ownership of:  (a) each director of the Company, (b)
each current executive officer named in the summary compensation table in this
Form 10-KSB, (c) each person known by the Company to be a beneficial owner of
five percent (5%) or more of its Common Stock, and (d) all executive officers
and directors of the Company as a group:


NAME AND ADDRESS OF BENEFICIAL OWNER         NUMBER OF SHARES           PERCENT
-------------------------------------        ----------------          --------
Roderick A. McClain (1,2)                         2,690,568              13.52

Allyson Rodriguez (1,2)                           2,690,568              13.52

Geoffrey F. McClain (1)                             280,820               1.53

Herbert S. Perman (1)                               150,000               0.82

Melissa Hart (1)                                     52,100               0.28

Neil Berman (3)                                     979,406               5.28

RBB Bank Aktiengesellschaft (4,5)                 7,895,161              25.84

Mohammed Ghaus Khalifa (5,6)                      2,688,171              11.96

Canadian Imperial Bank of Commerce (5,7)          2,721,774              12.09

All Directors and Officers as a Group (8)         3,173,488              15.95

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

#    Pursuant to the rules of the Commission, shares of Common Stock which an
     individual or group has a right to acquire within 60 days pursuant to the
     exercise of options or warrants are deemed to be outstanding for the
     purpose of computing the percentage ownership of such individual or group,
     but are not deemed to be outstanding for the purpose of computing the
     percentage ownership of any other person shown in the table.

(1)  The address for each of these persons is the Company's principal executive
     office, located at 1121 Alderman Drive, Suite 200, Alpharetta, Georgia
     30202.

(2)  Includes spouse's shares (1,090,568) and options to acquire 1.6 million
     shares of Common Stock pursuant to Mr. McClain's employment agreement with
     the Company.

(3)  Mr. Berman's address is 21346 St. Andrews Boulevard, #421, Boca Raton,
     Florida 33433.  His shareholdings include options and warrants to acquire
     244,050 shares of Common Stock.


                                       38
<PAGE>

(4)  Includes 155,194 shares of Common Stock and up to 7,895,161 shares of
     Common Stock which may be convertible, as of April 7, 1997, from $3,916,000
     par principal amount of 3% Convertible Debentures, issued in the name of
     RBB Bank Aktiengellschaft.  The address for RBB Bank Aktiengesellschaft
     provided to the Company is Burgring 16, 8010 Groz, Austria.  See "Legal
     Proceedings - RBB Bank-Khalifa Litigation."

(5)  The per share conversion price for purposes of the number of shares
     calculated as beneficially owned by the named person, as of April 7, 1997,
     is based on the average closing bid price of the Common Stock ($0.496)
     during the five (5) trading days preceding April 7, 1997.   See "Legal
     Proceedings - RBB Bank-Khalifa Litigation."

(6)  Includes up to 2,688,171 shares of Common Stock which may be convertible,
     as of April 7, 1997, from $1,333,333 par principal amount of 3% Convertible
     Debentures issued in the name of Mr. Khalifa.  The address for Mr. Khalifa
     provided to the Company is 3671 Sunswept Drive, Studio City, California
     91604.   See "Legal Proceedings - RBB Bank-Khalifa Litigation."

(7)  Includes up to 2,721,774 shares of Common Stock which may be convertible,
     as of April 7, 1997, from $1,350,000 par principal amount of 3% Convertible
     Debentures issued in the name of Canadian Imperial Bank of Commerce.  The
     address for Canadian Imperial Bank of Commerce provided to the Company is
     Cottons Centre, Cottons Lane, London SE12QL, England.   See "Legal
     Proceedings - RBB Bank-Khalifa Litigation."

(8)  Includes 1,573,488 shares of Common Stock and options to purchase up to
     1,600,000 shares of Common Stock.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     In March 1995, the Company was advised by the former shareholders of the
Company, including  Roderick and Geoffrey McClain, of a dispute and their intent
to seek issuance of certain shares of Common Stock. Under the terms of the
acquisition, the former owners  were entitled to receive shares of the Company's
common stock equal to a percentage (not greater than 100%) of 461,250 shares. In
settlement of the dispute between the former shareholders of the Company,
including Roderick McClain (in connection with a further dispute over the terms
of his employment agreement), and the Company, the Company's Board of Directors,
excluding Roderick McClain, approved the terms of a settlement of the dispute.
The settlement provided that the former Company shareholders be issued an
aggregate of 450,000 shares of common stock and that 850,000 shares of common
stock were issued to Roderick McClain pursuant to the terms of his employment
agreement.  Furthermore, the Board of Directors agreed to enter into a new long-
term employment agreement with Roderick McClain as President and Chief Executive
Officer, which was finalized as of June 15, 1995.  This employment agreement was
amended as of January 27, 1997.

     In September 1995, the Company reached a settlement agreement with  certain
employees and issued an aggregate of 119,148 shares of its restricted Common
Stock to such employees for previous deferred compensation payment owed as
follows:  Geoffrey F. McClain - 55,200 shares; McClain - 39,948 shares; Melissa
D. Hart -12,000 shares; Michael Rogers - 12,000 shares.

     On January 30, 1996, the Company issued 200,000 shares of its Common Stock
to Roderick McClain, purportedly pursuant to a "change in control" provision
contained in Roderick McClain's employment agreement, dated May 15, 1995.  On
October 7, 1996, the disinterested members of the Board of Directors of the
Company determined that such shares had been improperly issued, and such shares
were canceled as of the date of purported issuance.


                                       39
<PAGE>

     The Company owns, through an affiliate of which the Company is the 100%
beneficial owner, a building located at 1121 Alderman Drive, Alpharetta, Georgia
30202, which space serves as the Company's headquarters.   In connection with
obtaining financing for the purchase of the building, the Company formed a
Georgia limited liability company ("LLC") to take title to the building.  In
order to meet a requirement of the limited liability company statute, each of
three individuals, including Roderick McClain and Geoffrey McClain, took title
to 25% of the stock of the LLC.  All such stock is held in trust for the benefit
of the Company, and all equitable interest in the LLC, including the rights to
current profits and proceeds from the sale of assets, belongs to the Company.

     On December 31, 1996, open account advances made by the Company to Roderick
McClain totaled $209,979.00.  Effective December 31, 1996, Roderick A. McClain
executed a demand promissory note, bearing interest at eight percent PER ANNUM
for such amount.  Management of the Company believes that the ability of
Roderick McClain to repay this obligation depends on the financial success of
the Company itself.  No assurance can be given that such obligation will ever be
repaid to the Company.

     The Company believes that the above-described transactions are as fair to
the Company as could have been made with unaffiliated parties.  The Company
requires that transactions between the Company and its officers,  directors,
employees or stockholders or persons or entities affiliated with officers,
directors, employees or stockholders be on terms no less favorable to the
Company than it could reasonably obtain in arms-length transactions with
independent third parties.  Such transactions are approved by a majority of the
disinterested directors of the Company.


                                       40
<PAGE>

                                     PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

A.   FINANCIAL STATEMENTS

     Consolidated balance sheet of Global TeleMedia International, Inc. and
     subsidiaries as of December 31, 1996, and the related statements of
     operations, stockholders' equity (deficiency) and cash flows for the years
     ended December 31, 1996, and 1995.

B.   REPORTS ON FORM 8-K

     Current Reports on Form 8-K dated December 2, 1996, January 24, 1997 and
     January 30, 1997.

C.   OTHER EXHIBITS

     10.1 Amendment Number One, effective February 1, 1996, to Employment
          Agreement,  dated May 26, 1995, between  Geoffrey F. McClain and the
          Company.

     10.2 Amendment Number One, effective February 1, 1996, to Employment
          Agreement,  dated October 1, 1995, between  Herbert S. Perman and the
          Company.

     10.3 Amendment Number Two, effective February 1, 1997, to Employment
          Agreement,  dated May 26, 1995, between  Geoffrey F. McClain and the
          Company.

     10.4 Amendment Number Two, effective February 1, 1997, to Employment
          Agreement,  dated May 26, 1995, between Melissa D. Hart and the
          Company.

     10.5 Employment Agreement effective January 27, 1997, between Roderick A.
          McClain and the Company.

     10.6 Agreement dated July 15, 1996, with IEX Corporation.(1)

     10.7 Settlement Agreement with Neil Berman for Rights to Common Stock,
          dated May 18, 1996. (2)

     27   Financial Data Schedule.


---------------------------
          (1)   Filed as part of the Company's Quarterly Report on Form 10-QSB
for the quarter ended June 30, 1996.

          (2)   Filed as part of the Company's Current Report on Form 8-K, dated
June 13, 1996.


                                       41
<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     Certain documents listed above as exhibits to this Report on Form 10-KSB
are incorporated by reference from other documents previously filed by the
Company with the Commission as follows:

           Previous Filing                   Exhibit Number
       Incorporated by Reference             in Form 10-KSB
       -------------------------            ------------------
1. Quarterly Report on Form 10-QSB               10.6
   for the quarter ended June 30, 1996

2. Current Report on Form 8-K                    10.7
   dated as of June 13 1996



                                       42
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated: April 15, 1997              GLOBAL TELEMEDIA INTERNATIONAL, INC.



                                   By:  /s/ Roderick A. McClain
                                       --------------------------------------
                                         Roderick A. McClain
                                         Chief Executive Officer



     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated below.

                                   GLOBAL TELEMEDIA INTERNATIONAL, INC.



Dated: April 15, 1997              By:  /s/ Roderick A. McClain
                                       ------------------------------------
                                       Roderick A. McClain
                                       Chief Executive Officer and Director




Dated: April 15, 1997              By: /s/ Herbert S. Perman
                                       -------------------------------------
                                        Herbert S. Perman
                                        Chief Financial Officer and Director




Dated: April 15, 1997              By:  /s/ Geoffrey F. McClain
                                      --------------------------------------
                                        Geoffrey F. McClain
                                        Executive Vice-President and Director



                                       43
<PAGE>







                          Independent Auditors' Report



Board of Directors
Global Telemedia International, Inc.
Atlanta, Georgia

We have audited the accompanying consolidated balance sheet of Global Telemedia
International, Inc. and the subsidiaries as of December 31, 1996, and the
related consolidated statements of operations, and stockholders' equity
deficiency and cash flows for the years ended December 31, 1996 and 1995.  These
consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Global Telemedia
International, Inc. and subsidiaries as of December 31, 1996, and the
consolidated results of their operations and their consolidated cash flows for
the years ended December 31, 1996 and 1995, in conformity with generally
accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 15 to
the consolidated financial statements, the Company's recurring losses from
operations and limited capital resources raise substantial doubt about its
ability to continue as a going concern.  The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


Atlanta, Georgia
April 8, 1997


<PAGE>


                      GLOBAL TELEMEDIA INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1996

                                     ASSETS

CURRENT ASSETS
   Cash                                                             $   69,770
   Accounts Receivable, net of Allowance of $63,885                    178,326
   Inventory                                                           479,322
   Other Current Assets                                                150,317
                                                                  ------------
          Total Current Assets                                         877,735

Property & Equipment, net of Accumulated
     Depreciation of $111,628                                        3,092,821

Other Assets                                                         1,405,044
                                                                  ------------
TOTAL ASSETS                                                      $  5,375,600
                                                                  ------------
                                                                  ------------

                 LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIENCY

CURRENT LIABILITIES
   Accounts Payable                                               $  1,110,570
   Accrued Expenses                                                    709,559
   Current portion of  Capital Lease Obligations                         8,194
   Notes Payable                                                       523,467
                                                                  ------------
          Total Current Liabilities                                  2,351,790
                                                                 -------------
LONG-TERM LIABILITIES
   Notes Payable                                                     7,293,210
   Long-term Capital Lease Obligations, net of current portion          30,586
                                                                  ------------
          Total Long-term liabilities                                7,323,796
                                                                  ------------
          Total Liabilities                                          9,675,586
                                                                  ------------
STOCKHOLDERS' EQUITY DEFICIENCY
   Common Stock, $.004 par value; authorized 25,000,000
      shares; issued and outstanding 16,242,386 shares                  64,953
   Additional Paid in Capital                                        1,971,700
   Accumulated Deficit since October 1, 1995, net of
      $13,188,000 eliminated in quasi-reorganization               (6,336,639)
                                                                  ------------
   Total  Stockholders' Equity Deficiency                          (4,229,986)
                                                                  ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIENCY             $  5,375,600
                                                                  ------------
                                                                  ------------



The accompanying notes are an integral part of these consolidated financial
statements.



<PAGE>

                      GLOBAL TELEMEDIA INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995




                                                     1996              1995
                                                  ----------        ----------

TOTAL REVENUES                                    $1,391,759        $2,864,000
                                                  ----------        ----------
OPERATING EXPENSES:
   Communication and Marketing Services            1,712,276         1,293,000
   General and Administrative                      5,314,511         3,027,000
                                                  ----------        ----------
          Total Operating Expenses                 7,026,787         4,320,000
                                                  ----------        ----------
          Operating Loss                          (5,635,028)       (1,456,000)

OTHER INCOME (EXPENSES):
   Interest Expense                                 (211,837)          (59,000)
   Interest Income                                    27,563                -
   Other Expense                                           -        (1,653,000)
   Other Income                                      116,936           847,000
                                                  ----------        ----------
NET LOSS                                         $(5,702,366)      $(2,321,000)
                                                 ------------      ------------
                                                 ------------      ------------
NET LOSS PER SHARE                                  $  (0.50)         $  (0.30)
                                                 ------------      ------------
                                                 ------------      ------------
WEIGHTED AVERAGE NUMBER OF SHARES
   OUTSTANDING                                    11,517,942         7,629,987
                                                 ------------      ------------
                                                 ------------      ------------

The accompanying notes are an integral part of these consolidated financial
statements.


<PAGE>

                      GLOBAL TELEMEDIA INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                     CONSOLIDATING STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995


                                                     1996               1995
                                                 ------------      ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Loss                                       $(5,702,366)      $(2,321,000)
                                                 ------------      ------------
  Adjustments:
    Depreciation and Amortization                    333,752           580,000
    Stock Issued for Services                        269,355           187,000
    Loss on Disposal of Equipment and Investments     14,327             2,000
    Foreclosure Loss                                       -         1,230,000
    Changes in:
        Accounts Receivable                         (178,326)          370,000
        Inventory                                   (440,228)                -
        Other Current Assets                         (54,317)           63,000
        Accounts Payable                             789,654        (1,106,000)
        Accrued Expenses                             655,481                 -
                                                 ------------      ------------
              Total Adjustments                    1,389,698         1,326,000
                                                 ------------      ------------
Net cash used in operating activities             (4,312,668)         (995,000)
                                                 ------------      ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of Property and Equipment          (1,166,888)          (60,000)
   Deposit for Purchase of Equipment                (650,000)                -
   Goodwill                                         (327,150)                -
   Proceeds from Sale of Equipment                     3,000                 -
                                                 -----------       ------------

Net cash used in investing activities             (2,141,038)          (60,000)
                                                 ------------      ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Borrowings on Notes Payable                     6,396,015           310,000
   Proceeds from Sale of Common Stock                468,728           676,000
   Payments on Notes Payable                         (60,000)           (3,000)
   Payments on Capital Lease Obligations             (28,666)
   Borrowings from Officer                                 -            10,000
   Advances from Factor                                    -           223,000
   Debt Acquisition Costs                           (445,601)                -
                                                 ------------      ------------
Net cash provided by financing activities          6,330,476         1,216,000
                                                 ------------      ------------

NET (DECREASE) INCREASE IN CASH                     (123,230)          161,000

CASH BEGINNING OF YEAR                               193,000            32,000
                                                 ------------      ------------
CASH END OF YEAR                                     $69,770          $193,000
                                                 ------------      ------------
                                                 ------------      ------------
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION:
    Cash Paid for Interest                           $66,319           $35,000
                                                 ------------      ------------
                                                 ------------      ------------



The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>

                      GLOBAL TELEMEDIA INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995



     SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

                                                     1996              1995
                                                   ---------        ----------
Assets and Liabilities transferred in foreclosure:
     Accounts Receivable                           $    -           $  622,000
     Property and Equipment                             -              769,000
     Accounts Payable and Accrued Expenses              -            1,625,000
     Notes Payable                                      -              534,000
                                                   ---------        ----------
                                                   $    -           $3,550,000
                                                   ---------        ----------
                                                   ---------        ----------

Details of acquisition:
   Fair value of assets acquired                    $480,000
   Liabilities assumed                              $694,000


Debt of $1,830,000 was incurred to purchase a building in 1996.

A capital lease obligation of $63,669 was incurred in 1996 when the Company
entered into a lease for new equipment.


The accompanying notes are an integral part of these consolidated financial
statements.




<PAGE>

                      GLOBAL TELEMEDIA INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>

                                        Common Stock Issued        Additional       Common Stock                           Total
                                     -------------------------      Paid-In          Issued for                       Shareholders'
                                       Shares     Par Value         Capital        Future Services       Deficit         Equity
                                     ----------------------------------------------------------------------------------------------
<S>                                  <C>           <C>            <C>              <C>               <C>              <C>
BALANCE, DECEMBER 31, 1994            4,893,933     $19,735       $12,542,363        ($43,000)       ($11,501,273)     $1,017,825

Sale of Stock                         1,301,410       5,000           671,000               -                   -         676,000
Shares issued to Directors            1,345,148       6,000            62,000               -                   -          68,000
Shares Issued to Consultants            800,000       3,000            37,000               -                   -          40,000
Shares Issued to Employees for
   compensation                         547,500       2,000            25,000               -                   -          27,000
Shares Issued in connection with
   contingent fee                     1,050,000       4,000            48,000               -                   -          52,000
Compensation Earned                           -           -                 -          43,000                   -          43,000
Deficit Reclassification in
   connection with quasi-
   reorganization as of
   October 1, 1995                            -           -       (13,188,000)              -          13,188,000               0
Net Loss                                      -           -                 -               -          (2,321,000)     (2,321,000)
                                    -----------  ----------        ----------     -----------         -----------     -----------
BALANCE, DECEMBER 31, 1995            9,937,991      39,735           197,363               0            (634,273)       (397,175)

Sale of Stock                            12,500          50             6,178               -                   -           6,228
Shares Issued to Consultants          1,964,000       7,856           219,899               -                   -         227,755
Shares Issued to Employees for
   Compensation                         642,300       2,569            29,546               -                   -          32,115
Shares Issued in Connection with
   Settlement                           929,406       3,718            52,767               -                   -          56,485
Cancellation of Shares Issued
   to Director                         (200,000)       (800)           (9,200)              -                   -         (10,000)
Exercise of Warrants                    450,000       1,800           460,700               -                   -         462,500
Conversion of Notes Payable           2,506,189      10,025         1,097,403               -                   -       1,107,428
Conversion of Debt Financing Cost             -           -           (82,956)              -                   -         (82,956)
Net Loss                                      -           -                 -               -          (5,702,366)     (5,702,366)
                                    -----------  ----------        ----------     -----------         -----------     -----------
BALANCE DECEMBER 31, 1996            16,242,386     $64,953        $1,971,700         $     0         ($6,336,639)    ($4,299,986)
                                    -----------  ----------        ----------     -----------         -----------     -----------
                                    -----------  ----------        ----------     -----------         -----------     -----------

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



<PAGE>

                      GLOBAL TELEMEDIA INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

The Company is primarily engaged in the marketing of long distance telephone and
related services.  The Company sells its services to individuals and other
customers throughout the United States.

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements include the accounts of the Company and
its wholly owned subsidiaries, as well as a less than majority owned entity
which it controls.  Significant intercompany accounts and transactions have been
eliminated in consolidation.

PROPERTY AND EQUIPMENT

Purchased property and equipment are recorded at cost, and depreciated using the
straight-line method over the estimated useful lives of the assets, commencing
when the assets are installed or placed in service.  The estimated useful lives
are 18 years for buildings, 10 years for furniture and fixtures, 7 years for
office equipment, and 5 years for computer equipment.  The cost of installed
equipment includes expenditures for installation.  Capital leases are recorded
at lower of fair market value or the present value of future minimum lease
payments.  Assets recorded under capital leases and leasehold improvements are
depreciated over the shorter of their useful lives or the term of the related
lease.

INVENTORY

Inventory consists of promotional and training materials used in the Vision 21
marketing program and products sold through the Company's Collectible Calling
Card Business.  These amounts are recorded at the lower of cost (first-in,
first-out) or market value.

GOODWILL

The Company has classified as goodwill the cost in excess of fair value of the
net identifiable assets acquired from the Collectible Calling Card Business
acquisition in November 1996.  Goodwill is currently being amortized over three
years using the straight-line method.

ADVERTISING EXPENSE

The advertising expense includes the cost of sales brochures, print advertising
in trade publications and trade shows.  The cost of advertising is expensed as
incurred.  The Company incurred $147,966 and $17,758 in advertising costs during
1996 and 1995, respectively.



<PAGE>

STOCK-BASED COMPENSATION

In October 1995, the Financial Accounting Standards Board issued SFAS 123
"Accounting for Stock Based Compensation," which the Company elected to adopt as
of January 1, 1996.  Under SFAS 123, the Company recognizes compensation and
other expense using a fair value methodology.  This policy is consistent with
the Company's prior accounting.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles (GAAP) requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results may differ from these estimates.
Significant estimates in the financial statements include the assumption the
Company will continue as a going concern.  This assumption could change in the
near term.

NET LOSS PER SHARE

Net loss per share is based on the weighted average number of common shares
outstanding during each period.  Common stock equivalents include stock
warrants.  For 1996 and 1995, common stock equivalents were not considered in
the calculation of net loss per share as they were anti-dilutive.

2. OTHER ASSETS

Other assets consist of the following at December 31, 1996:

Deposit for purchase of equipment                                   $   650,000
Prepaid debt acquisition costs, net of accumulated amortization         445,601
Goodwill, net of amortization of $17,707                                309,443
                                                                   ------------
                                                                     $1,405,044
                                                                   ------------
                                                                   ------------

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 1996:

Building                                                           $  2,596,772
Furniture and fixtures                                                  132,719
Equipment                                                               340,799
Leasehold improvements                                                  134,159
                                                                   ------------
                                                                      3,204,449
Less accumulated depreciation                                           111,628
                                                                   ------------
                                                                   $  3,092,821
                                                                   ------------
                                                                   ------------

Depreciation expense for the years ended December 31, 1996 and 1995 was $55,597
and $46,070.



<PAGE>

4. NOTES PAYABLE AND LITIGATION

Notes payable consist of the following at December 31, 1996:

Current:
   18 % note payable, due on demand                                 $   273,467
   Floating rate notes, due on demand.                                  250,000
                                                                   ------------
                                                                    $   523,467
                                                                   ------------
                                                                   ------------

Long Term:
   10% convertible debentures, due on April 3, 1998                $    250,000
   12% note payable, due February, 1999                               1,830,000
   Floating rate convertible debentures                               5,213,210
                                                                   ------------
                                                                   $  7,293,210
                                                                   ------------
                                                                   ------------

During April 1996, the Company sold $250,000 of various floating rate notes.
These notes are payable on demand and have been secured by the Company's rights
under a long distance service agreement entered into in the prior year.

On April 3, 1996, the Company sold $2,500,000 of 10% convertible debentures to a
group of investors, of which $250,000 has been received to date. The convertible
debentures are payable in full two years from the date of sale. Holders of the
convertible debentures may convert principal and accrued interest all or in part
into Common Stock after April 1996.  On January 10, 1997, the debentures were
amended to reflect a total amount of $350,000, convertible into shares of Common
Stock at a revised conversion price of $0.50, plus piggyback registration
rights.

From July 30, 1996 through August 28, 1996, the Company sold $6,683,333 of 3%
convertible debentures at a discount with an effective interest rate of
approximately 14.5%.  The convertible debentures are due August 15, 1998 and may
be paid in cash or in common stock.

During the period from November 15, 1996 through January 3, 1997, the Company
received a number of requests for conversion of the par principal amount plus
accrued interest of the 3% convertible debt into unrestricted shares of Common
Stock.  The Company has taken the position that the debenture holders have not
complied with the terms of the Subscription Documents and accordingly has not
issued shares pursuant to the requests.

On January 22, 1997, two of the three debenture holders, (collectively,
"Plaintiffs") filed a complaint in the United States District Court for the
Northern District of Georgia, Atlanta Division (Civil Action No. 1 97-CV-0179)
against the Company.  The complaint alleges claims for breach of contract and
for declamatory and injunctive relief with respect to the requests of the
Plaintiffs to convert $333,000 and $500,000, respectively, par principal amount
of Debentures into shares of the Company's Common Stock pursuant to the
Subscription Documents.  The complaint seeks injunctive relief against the
Company to issue the shares to Plaintiffs in accordance with the conversion
requests, and for an unstated amount of compensatory damages, attorney's fees,
costs and expenses.  If the plaintiffs are successful, they could become
significant holders of the Company's common stock, diluting the interest of
existing common shareholder.



<PAGE>

The Company has filed an answer with affirmative defenses and counterclaims to
the above action.  There can be no assurances as to the resolution of these
matters.

During February, 1997, the Company re-negotiated the $1,830,000 short-term debt
on the building which houses its corporate headquarters.  The new note bears
interest at 12%.  Interest only is payable monthly through February, 1998.
Monthly principal and interest payments are due commencing March, 1998.  The
note is due February, 1999, with an optional extension of 11.5 months.

Maturities of long-term debt are as follows:


          1997           $        -
          1998            5,482,562
          1999            1,810,648
                         ----------
                         $7,293,210
                         ----------
                         ----------

5. INCOME TAXES:

Deferred income taxes and the related valuation allowances result from the
potential tax benefits of tax carry forwards. The Company has recorded a
valuation allowance to reflect the uncertainty of the ultimate utilization of
the deferred tax assets as follows:


                                                     1996              1995
                                                  ----------        ----------
Deferred tax assets                               $5,334,000        $3,053,000
Less valuation allowance                           5,334,000         3,053,000
                                                  ----------        ----------
Net deferred tax assets                           $    -            $    -
                                                  ----------        ----------
                                                  ----------        ----------

Following is a reconciliation of applicable U.S. federal income tax rates
(credits) to the effective tax rates included in the Consolidated Statements of
Operations:

                                                      1996            1995
                                                    -------         -------
U.S. federal income tax rate                         (34.0)%         (34.0)%
State income tax rate, net of federal tax
   benefit                                            (3.6)           (3.6)
Tax loss carryforwards                                37.6            37.6
                                                     ------          ------
                                                        -  %            -  %
                                                     ------          ------
                                                     ------          ------



<PAGE>

At December 31, 1996, the Company had available net operating loss carryforward
for income tax reporting purposes as follows:

                               Net Operating
        Arose In               Loss Carry             Expiring in Year
       Year Ended                Forward                   Ended
       ----------             --------------          ----------------

          1987                $  107,000                    2002
          1988                   906,000                    2003
          1989                 1,320,000                    2004
          1990                 2,280,000                    2005
          1991                   619,000                    2006
          1992                   309,000                    2007
          1993                    22,000                    2008
          1994                 1,315,000                    2009
          1995                   867,000                    2010
          1996                 5,702,000                    2011
                             -----------
     Total                   $13,447,000
                             -----------
                             -----------

In addition the Company has $1,244,327 of capital loss carry forward, which
expires in 2000 and  can be used to offset capital gains, if any.

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

Significant financial instruments consist of notes payable that are either
demand or due through 1998.  The Company does not have the funds required to
settle these amounts currently. As a result, the Company is unable to estimate
the timing and ultimate form of the settlement of these liabilities.  It
believes that if the current holders were to sell such instruments to other
parties, the sales price would be substantially less that the carrying value.

7. RELATED PARTY TRANSACTIONS

On January 30, 1996, the Company issued 200,000 shares of its Common Stock to
its President/CEO, purportedly pursuant to a "change in control" provision
contained in his employment agreement, dated May 15, 1995.  On October 7, 1996,
the disinterested members of the Board of Directors of the Company determined
that such Shares had been improperly issued, and such Shares were canceled as of
the date of purported issuance.

Separately, the Company has a note receivable from its President/CEO in the
amount of $209,979 at December 31, 1996.  The note bears interest at 8% and is
due on demand.  His ability to repay this debt is currently dependent upon the
success of the Company.  As a result, the receivable has been reserved.

The Company leases its headquarters from a limited liability company ("LLC").
The Company contributed capital of $850,000 and was issued 25% of the equity in
the LLC.  The Company's President was issued 25%, another officer was issued 25%
and the remaining 25% was issued to an unaffiliated mortgage broker.  The
building, related mortgage and operations of the LLC have been included in the
1996 consolidated financial statements.



<PAGE>

8. ACQUISITIONS

During 1996, the Company acquired substantially all of the assets and assumed
certain liabilities of a company that produces and markets collectible trading
cards and prepaid calling cards.  The value of assets transferred to the Company
in connection with this purchase was approximately $480,000, and liabilities of
approximately $694,000 were assumed.  The Company also agreed to offset $120,000
of indebtedness owed by the Sellers to the Company and paid an obligation of
$65,000 owed by the seller to an unaffiliated third party.  Effective November
6, 1996, the acquired Company's operations were included in the consolidated
financial statements.

In addition to the consideration above, the Company has agreed to pay the Seller
a contingent sum equal to 20% of the value of the business three years from the
acquisition date.

The following table reflects unaudited (1996) and audited (1995) pro-forma
combined results of operations of the Company and the acquiree on the basis that
the acquisition had taken place at the beginning of the fiscal year for each of
the periods presented.


                                           1996                     1995
                                       -----------              -----------
          Revenues                     $ 2,760,025              $ 5,195,627
          Net loss                     $(5,317,015)             $(3,353,043)
          Loss per share               $      (.46)             $      (.30)

The pro-forma results do not purport to be indicative of the results of
operations which actually would have been in effect on January 1, 1995, or of
future results of operations of the consolidated entities.

9. LICENSE AGREEMENT

On January 23, 1995 the Company licensed its former food products business, sold
the inventory and assigned the rights to the distribution network used in the
sale of the products.  The contract provides for various royalties based on type
of sale and product. The agreement also has provisions for minimum quarterly
royalties beginning the third quarter of 1995 and continuing for seven quarters.
During the first quarter of 1995, the Company recognized the initial $275,000
license fee, as all the initial services required under the terms of the
agreement were performed.  The Company received $115,000 in royalties during
1996.

10. FORECLOSURE LOSS

During 1995, in connection with an agreement to sell restricted stock, the
Company entered into a loan agreement with the potential investor.  The loan was
secured by the Company's list of customers on a certain long-distance carrier
and certain other assets.  The loan agreement required the Company to maintain
its NASDAQ listing until the closing of the stock sale agreement.  Prior to the
closing date, the Company was delisted from NASDAQ and was, therefore, in
default of the loan agreement.  As part of the foreclosure proceedings, the
Company agreed to transfer all the shares of stock of its subsidiary, Global
TeleMedia, Inc.  In addition, the Company transferred certain other assets not
included among the assets of the subsidiary but which were also pledged as
security.



<PAGE>

Included in the consolidated statement of loss are the operating results of a
foreclosed subsidiary (which are substantially all revenues of the Company) for
the period January 1, through June 30, 1995 as follows:

          Sales                   $  2,747,678
          Costs and expenses        (4,323,413)
                                  -------------
          Operating Loss          $ (1,575,735)
                                  -------------
                                  -------------

Since the Company remains in the business of marketing long distance telephone
services, the foregoing does not qualify as the disposal of a business segment.

In connection with the foreclosure of its interest in the subsidiary, the
acquiring entity made a claim that the Company did not transfer all the assets
required under the terms of the security agreement.  Subsequent to December 31,
1995, the parties reached a settlement of approximately $135,000.

11.  CORPORATE READJUSTMENT

In view of significant changes in the Company's marketing and other operating
practices, and its management, the Board of Directors of the parent and its
wholly-owned subsidiaries approved at a special meeting on April 12, 1996 a
corporate readjustment of stockholders' equity accounts as of October 1, 1995,
effected in accordance with accounting principles applicable to quasi-
reorganizations. Under Florida law (the state of incorporation of the parent),
this action does not require shareholder approval.  The adjustment was effected
by offsetting the accumulated deficit as of September 30, 1995, of $13,188,000,
against additional paid-in capital.

Because the carrying amounts of the Company's assets and liabilities approximate
their fair or net realizable values, no further valuation adjustments were
necessary in connection with the readjustment.

12.  COMMITMENTS

The Company has employment agreements with certain officers and key employees,
which expire at various times through 2007.

The Company's long distance and marketing activities are subject to certain
federal and state regulations.  The Company is involved in various regulatory
matters as well as lawsuits incidental to its business.  In the opinion of
management, these regulatory matters and lawsuits in the aggregate will not have
a material adverse effect on the Company's financial position or the results of
operations of future periods.

On July 15, 1996, the Company entered into an agreements to purchase enhanced
telephone switching equipment for $2,600,000.  As of December 31, 1996, $650,000
has been paid.



<PAGE>

During 1996, the Company entered into various agreements for communication
services which commit approximately $16,860,000 over the next five years as
follows:

               1997                     $2,115,000
               1998                      4,620,000
               1999                      4,500,000
               2000                      3,000,000
               2001 and thereafter       2,625,000
                                       -----------
                                       $16,860,000
                                       -----------
                                       -----------

13. WARRANTS

The Company has granted warrants to its employees and to non-employees for
services to acquire its common stock at various times and under various
agreements at prices that approximated or exceeded fair value at the date of
issue.  The following table represents the roll forward of warrants for Fiscal
Year Ended December 31, 1996 and 1995:


                                                     1996            1995
                                                  ----------     ----------
Outstanding, beginning of year                       897,500      1,349,500
Granted (1996 - $1.00 to $2.40 per share           2,025,500         55,000
Exercised (1996 - $.50 to $5.00 per share)          (450,000)         ---
Expired or Forfeited during the year
   (1996 $1.00 to $1.25 per share)                   (80,000)      (507,000)
                                                  ----------     ----------
Outstanding and exercisable, end of year
   (1996 - $1.00 to $5.00 per share)               2,393,000        897,500
                                                  ----------     ----------
                                                  ----------     ----------

The Company measures compensation cost using the fair value-based accounting
method.

14.  SUBSEQUENT EVENTS

As of January 2, 1997, the Company acquired substantially all of the assets and
assumed certain liabilities related to the Internet service provider business of
Log On America, Inc.

15. GOING CONCERN

The Company's financial statements for the years ended December 31, 1996 and
1995 have been prepared on the assumption that the Company will continue as a
going concern which contemplates the realization of assets and the settlement of
liabilities in the normal course of business.  The Company incurred a net loss
of $5,702,366 for the year ended December 31, 1996, and has a working capital
deficiency of $3,304,055 and an equity deficiency of $4,299,986.  In addition,
as discussed in Note 4, there is ongoing litigation that potentially could
affect the Company's financial position.  Also, the Company is in arrears on
their payroll tax liabilities.  The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.



<PAGE>

Management is actively involved in attempting to sell debt and equity securities
as well as looking for other sources of funding.  However, no assurance can be
given that the Company will be successful in raising additional capital.
Further, there can be no assurance, assuming the Company successfully raises
additional funds that the Company will achieve profitability or positive cash
flow.

16. FOURTH QUARTER RESULTS:

Significant adjustments made in the fourth quarter of 1996:

   Write off deposits                                         $336,000
   Reserve for note receivable, President/CEO                  209,979
   Expenses associated with purchase of building               154,700
                                                              --------
                                                              $700,679
                                                              --------
                                                              --------