<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 FORM 10-QSB/A1

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark one)

[X]  Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934 for the quarterly period ended March 31, 2000.

[ ]  Transition report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934.



                      GLOBAL TELEPHONE COMMUNICATION, INC.
              (Exact name of Small Business Issuer in Its Charter)


                NEVADA                                   87-0285729
    (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                 Identification Number)

SUITE 1800, 10 SOUTH RIVERSIDE PLAZA, CHICAGO, IL            60606
(Address of principal executive offices)                   (Zip Code)

                              1-877-901-4824 (GTCI)
                           (Issuer's Telephone Number)

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

<TABLE>
<CAPTION>

         Title of Each Class                  Name of Each Exchange on Which
         To be so Registered                  Each Class is to be Registered
         -------------------                  ------------------------------
         <S>                                  <C>
                n/a                                         n/a

</TABLE>

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

                          COMMON STOCK, PAR VALUE $.001
                                (Title of Class)


<PAGE>


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

         Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: As of May 11, 2000,
there were 18,488,275 shares of common stock outstanding.


<PAGE>


                      GLOBAL TELEPHONE COMMUNICATION, INC.
                                   FORM 10-QSB
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

No.                 Title                                                                                     Page No.
<S>               <C>                                                                                         <C>
                                                      PART I

Item 1.           Financial Statements............................................................................1
Item 2.           Management's Discussion and Analysis or Plan of Operation......................................15


                                                      PART II

Item 1.           Legal Proceedings..............................................................................18
Item 2.           Changes in Securities..........................................................................18
Item 3.           Defaults upon Senior Securities................................................................18
Item 4.           Submission of Matters to a Vote of Security
                  Holders........................................................................................18
Item 5.           Other Information..............................................................................18
Item 6.           Exhibits and Reports on Form 8-K...............................................................18
                  Signatures.....................................................................................19

</TABLE>


<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS.










                      GLOBAL TELEPHONE COMMUNICATION, INC.
                                AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                      MARCH 31, 2000 AND DECEMBER 31, 1999














                                       1
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                            ASSETS

                                                                             March 31,            December 31,
                                                                               2000                   1999
                                                                         -----------------     -----------------
                                                                           (Unaudited)
<S>                                                                      <C>                   <C>
CURRENT ASSETS

   Cash                                                                  $         917,503     $       1,485,896
   Restricted cash                                                                 850,000               850,000
   Notes receivable - related party, net                                            50,500                50,500
   Investments                                                                       3,443                 2,657
                                                                         -----------------     -----------------

     Total Current Assets                                                        1,821,446             2,389,053
                                                                         -----------------     -----------------


FIXED ASSETS, NET                                                                   39,498                36,825
                                                                         -----------------     -----------------

OTHER ASSETS

   Goodwill                                                                      1,466,667                     -
   Deposits                                                                          1,495                 1,495
                                                                         -----------------     -----------------

     Total Other Assets                                                          1,468,162                 1,495
                                                                         -----------------     -----------------

     TOTAL ASSETS                                                        $       3,329,106     $       2,427,373
                                                                         =================     =================

</TABLE>

                                        2
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                     Consolidated Balance Sheets (Continued)


                        LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                             March 31,            December 31,
                                                                               2000                   1999
                                                                         -----------------     -----------------
                                                                           (Unaudited)
<S>                                                                      <C>                   <C>
CURRENT LIABILITIES

   Accounts payable                                                      $          39,889     $         143,883
   Accrued expenses                                                                167,945               166,811
   Notes payable                                                                   365,328               543,631
   Shareholder payable                                                               1,289                 1,289
                                                                         -----------------     -----------------

     Total Current Liabilities                                                     574,451               855,614
                                                                         -----------------     -----------------

LONG-TERM DEBT                                                                           -                     -
                                                                         -----------------     -----------------

     TOTAL LIABILITIES                                                             574,451               855,614
                                                                         -----------------     -----------------

COMMITMENTS

STOCKHOLDERS' EQUITY

   Preferred stock: 5,000,000 shares authorized of
    $1.00 par value, -0- shares issued and outstanding                                   -                     -
   Common stock: 25,000,000 shares authorized of
    $0.001 par value, 18,488,275 and 16,788,275 shares issued
    and outstanding, respectively                                                   18,488                16,788
   Additional paid-in capital                                                   11,382,965             8,834,665
   Other comprehensive income (loss)                                                (4,242)               (1,402)
   Deficit accumulated during the development stage                             (8,642,556)           (7,278,292)
                                                                         -----------------     -----------------

     Total Stockholders' Equity                                                  2,754,655             1,571,759
                                                                         -----------------     -----------------

     TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY                                                             $       3,329,106     $       2,427,373
                                                                         =================     =================

</TABLE>

                                        3
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                     From
                                                                         For the                 Inception on
                                                                   Three Months Ended              March 10,
                                                                        March 31,                 1970 Through
                                                              -------------------------------       March 31,
                                                                  2000              1999               2000
                                                              -------------     -------------    ---------------
<S>                                                           <C>               <C>              <C>
REVENUES                                                      $      -          $       1,000    $         4,705
                                                              -------------     -------------    ---------------

OPERATING EXPENSES

   General and administrative                                     1,232,159           231,781          5,220,660
   Depreciation and amortization expense                            135,782               854          2,620,044
                                                              -------------     -------------    ---------------

     Total Operating Expenses                                     1,367,941           232,635          7,840,704
                                                              -------------     -------------    ---------------

OPERATING LOSS                                                   (1,367,941)         (231,635)        (7,835,999)
                                                              -------------     -------------    ---------------

OTHER INCOME (EXPENSE)

   Interest income                                                    7,290                 -             14,293
   Interest expense                                                  (3,613)           (5,512)           (20,961)
                                                              -------------     -------------    ---------------

     Total Other Income (Expense)                                     3,677            (5,512)            (6,668)
                                                              -------------     -------------    ---------------

        Loss Before Discontinued Operations                      (1,364,264)         (237,147)        (7,842,667)

(LOSS) FROM DISCONTINUED OPERATIONS                                       -                 -           (251,441)

GAIN (LOSS) ON DISCONTINUED OPERATIONS                                    -            56,083           (548,448)
                                                              -------------     -------------    ---------------

   NET LOSS                                                   $  (1,364,264)    $    (181,064)   $    (8,642,556)
                                                              =============     =============    ===============

OTHER COMPREHENSIVE INCOME (LOSS)

   Foreign currency translation adjustments                          (2,840)             (351)            (4,242)
                                                              -------------     -------------    ---------------

     Total Other Comprehensive Income (Loss)                  $  (1,367,104)    $    (181,415)   $    (8,646,798)
                                                              =============     =============    ===============

   Continuing Operations                                      $       (0.08)    $       (0.02)
   Discontinued operations                                                -              0.01
                                                              -------------     -------------

   NET LOSS PER SHARE OF COMMON STOCK                         $       (0.08)    $       (0.01)
                                                              =============     =============

WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING                                          17,599,264        12,265,078
                                                              =============     =============

</TABLE>

                                        4
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                                                                                                                 Deficit
                                                                                               Other           Accumulated
                                                   Common Stock             Additional     Comprehensive        During the
                                          -------------------------------    Paid-in           Income           Development
                                              Shares            Amount       Capital           (Loss)              Stage
                                          --------------   --------------  --------------   -----------------  ----------------
<S>                                       <C>              <C>             <C>              <C>               <C>
Balance, March 10, 1970                                -   $            -   $           -    $         -       $              -

Common stock issued for cash at
   $16.00 per share during 1970                    1,906                2          30,498              -                      -

Common stock issued for services
   rendered at $6.40 per share
   during 1970                                     1,578                1          10,099              -                      -

Common stock issued for cash
   at $32.00 per share during 1971                 4,075                4         130,396              -                      -

Common stock issued for services
   rendered at $15.52 per share during
   the period of inception through 1983           11,641               12         180,581              -                      -

Common stock issued for services
   rendered at $6.40 per share
   during 1988                                     2,817                3          18,027              -                      -

Net loss from inception on
   March 10, 1970 through
   December 31, 1991                                   -                -               -              -               (369,623)
                                          --------------   --------------  --------------   -----------------  ----------------

Balance, December 31, 1991                        22,017               22         369,601              -               (369,623)

Net loss for the year ended
   December 31, 1992                                   -                -               -              -                   (552)
                                          --------------   --------------  --------------   -----------------  ----------------

Balance, December 31, 1992                        22,017               22         369,601              -               (370,175)

Net loss for the year ended
   December 31, 1993                                   -                -               -              -                   (100)
                                          --------------   --------------  --------------   -----------------  ----------------

Balance, December 31, 1993                        22,017               22         369,601              -               (370,275)

Common stock issued for services
   rendered at $6.40 per share on
   August 1, 1994                                 43,750               44         279,956              -                      -

Net loss for the year ended
   December 31, 1994                                   -                -               -              -               (280,100)
                                          --------------   --------------  --------------   -----------------  ----------------

Balance, December 31, 1994                        65,767   $           66  $      649,557   $          -       $       (650,375)
                                          --------------   --------------  --------------   -----------------  ----------------

</TABLE>


                                       5
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
           Consolidated Statements of Stockholders' Equity (Continued)

<TABLE>
<CAPTION>
                                                                                                                 Deficit
                                                                                               Other           Accumulated
                                                   Common Stock             Additional     Comprehensive        During the
                                          -------------------------------    Paid-in           Income           Development
                                              Shares            Amount       Capital           (Loss)              Stage
                                          --------------   --------------  --------------   -----------------  ----------------
<S>                                       <C>              <C>             <C>              <C>               <C>
Balance, December 31, 1994                        65,767   $           66  $      649,557   $          -       $       (650,375)

Net loss for the year ended
   December 31, 1995                                   -                -               -              -                 (4,053)
                                          --------------   --------------  --------------   -----------------  ----------------

Balance, December 31, 1995                        65,767               66         649,557              -               (654,428)

Expenses paid on the Company's
   behalf by a shareholder                             -                -             716              -                      -

Common stock issued for cash at
   $0.04 per share on July 23, 1996            1,000,000            1,000          39,000              -                      -

Fractional shares issued in
   conjunction with a 1-for-80 reverse
   stock split                                        33                -               -              -                      -

Fractional shares issued in conjunction
   with a 3-for-1 forward stock split                 34                -               -              -                      -

Net loss for the year ended
   December 31, 1996                                   -                -               -              -               (347,222)
                                          --------------   --------------  --------------   -----------------  ----------------

Balance, December 31, 1996                     1,065,834            1,066         689,273              -             (1,001,650)

Common stock issued to acquire
   Chow's Consulting Corporation
   on April 30, 1997 recorded at
   predecessor cost of $0.00                      90,000               90             (90)             -                      -

Fractional shares canceled in
   conjunction with a 1-for-6
   reverse stock split                               (41)               -               -              -                      -

Common stock issued for cash
   at $0.01 per share                          3,000,000            3,000          28,000              -                      -

Net loss for the year ended
   December 31, 1997                                   -                -               -              -               (134,071)
                                          --------------   --------------  --------------   -----------------  ----------------

Balance, December 31, 1997                     4,155,793   $        4,156  $      717,183   $          -       $     (1,135,721)
                                          --------------   --------------  --------------   -----------------  ----------------

</TABLE>

                                        6
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
           Consolidated Statements of Stockholders' Equity (Continued)

<TABLE>
<CAPTION>
                                                                                                                 Deficit
                                                                                               Other           Accumulated
                                                   Common Stock             Additional     Comprehensive        During the
                                          -------------------------------    Paid-in           Income           Development
                                              Shares            Amount       Capital           (Loss)              Stage
                                          --------------   --------------  --------------   -----------------  ----------------
<S>                                       <C>              <C>             <C>              <C>               <C>
Balance, December 31, 1997                     4,155,793   $        4,156  $      717,183   $          -       $     (1,135,721)

Common stock issued to acquire
 subsidiaries at $0.50 per share               6,950,000            6,950       3,468,050              -                      -

Common stock issued for cash
 at $0.50 per share                            1,140,142            1,140         568,931              -                      -

Net loss for the year ended
 December 31, 1998                                     -                -               -              -               (422,625)
                                          --------------   --------------  --------------   -----------------  ----------------

Balance, December 31, 1998                    12,245,935           12,246       4,754,164              -             (1,558,346)

Common stock issued to acquire
 subsidiaries at $1.40 per share                 600,000              600         839,400              -                      -

Common stock issued for cash from $0.50
  to $2.00 ($0.78 average) per share           5,483,433            5,483       4,204,017              -                      -

Stock offering costs paid                          6,383                6         (56,753)             -                      -

Rescinded acquisitions                        (2,000,000)          (2,000)     (1,998,000)             -                      -

Debt converted to equity at
  $1.65 per share                                 52,524               53          86,612              -                      -

Discount on options                                    -                -         505,625              -                      -

Common stock issued for services at
 $1.25 per share                                 400,000              400         499,600              -                      -

Foreign currency translation
 adjustment                                            -                -               -         (1,402)                     -

Net loss for the year ended
  December 31, 1999                                    -                -               -              -             (5,719,946)
                                          --------------   --------------  --------------   -----------------  ----------------

Balance, December 31, 1999                    16,788,275   $       16,788  $    8,834,665   $     (1,402)      $     (7,278,292)
                                          --------------   --------------------------------------------------  ----------------

</TABLE>

                                        7
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
           Consolidated Statements of Stockholders' Equity (Continued)

<TABLE>
<CAPTION>
                                                                                                                 Deficit
                                                                                               Other           Accumulated
                                                   Common Stock             Additional     Comprehensive        During the
                                          -------------------------------    Paid-in           Income           Development
                                              Shares            Amount       Capital           (Loss)              Stage
                                          --------------   --------------  --------------   -----------------  ----------------
<S>                                       <C>              <C>             <C>              <C>               <C>
Balance, December 31, 1999                    16,788,275   $       16,788  $    8,834,665   $     (1,402)      $     (7,278,292)

Common stock issued to acquire
 subsidiary valued at $2.50 per
 share (unaudited)                               500,000              500       1,249,500              -                      -

Common stock issued for cash at
 $1.25 per share (unaudited)                     400,000              400         499,600              -                      -

Common stock issued for cash at
 $1.00 per share (unaudited)                     800,000              800         799,200              -                      -

Foreign currency translation
 adjustment (unaudited)                                -                -               -         (2,840)                     -

Net loss for the three months
 ended March 31, 2000 (unaudited)                      -                -               -              -             (1,364,264)
                                          --------------   --------------  --------------   -----------------  ----------------

Balance, March 31, 2000 (unaudited)           18,488,275   $       18,488  $   11,382,965   $     (4,242)      $     (8,642,556)
                                          ==============   ==============  ==============   =================  ================

</TABLE>

                                        8
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                     From
                                                                         For the                 Inception on
                                                                   Three Months Ended              March 10,
                                                                        March 31,                 1970 Through
                                                              -------------------------------       March 31,
                                                                  2000              1999               2000
                                                              -------------     -------------    ---------------
<S>                                                           <C>               <C>              <C>
 OPERATING ACTIVITIES

   Net loss                                                   $  (1,364,264)  $      (181,064)   $    (8,642,556)
   Adjustments to reconcile net loss to net cash used by
    operating activities:
     Depreciation expense                                           135,782               854            202,692
     Allowance for bad debts                                              -                 -             49,500
     Common stock and options
      issued for services and expenses
      paid on behalf of the Company                                       -                 -          1,495,064
     Goodwill expensed                                                    -                 -          3,475,000
     Foreign currency translation adjustment                         (2,840)             (351)            (4,242)
   Changes in operating assets and liabilities:
     Increase (decrease) in restricted stock                              -                 -           (850,000)
     Increase (decrease) in inventories                                (786)                -             (3,443)
     (Increase) decrease in accounts
        receivable                                                        -                 -           (105,928)
     (Increase) decrease in other assets                                  -                 -           (180,873)
      Increase (decrease) in deposits for 504                             -                 -               (785)
     Increase (decrease) in accounts payable                       (103,994)          131,794             42,496
     Increase (decrease) in accrued expenses                          1,134            (8,296)           178,374
                                                              -------------     -------------    ---------------

       Net Cash (Used) by Operating Activities                   (1,334,968)          (57,063)        (4,344,701)
                                                              -------------     -------------    ---------------

CASH FLOWS FROM INVESTING ACTIVITIES

   Purchase of subsidiary                                          (350,000)                -           (350,000)
   Cash paid out of discontinued operations                               -                 -         (1,205,413)
   Purchase of fixed assets                                          (5,122)                -           (253,845)
                                                              -------------     -------------    ---------------

       Net Cash (Used) by Investing Activities                     (355,122)                -         (1,809,258)
                                                              -------------     -------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Repayment of notes payable                                      (178,303)                -           (178,303)
   Increase in notes payable                                              -           284,111            995,101
   Common stock issued for cash                                   1,300,000           940,000          6,254,664
                                                              -------------     -------------    ---------------

     Net Cash Provided by Financing Activities                $   1,121,697     $   1,224,111    $     7,071,462
                                                              -------------     -------------    ---------------

</TABLE>

                                        9
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Continued)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                     From
                                                                         For the                 Inception on
                                                                   Three Months Ended              March 10,
                                                                        March 31,                 1970 Through
                                                              -------------------------------       March 31,
                                                                  2000              1999               2000
                                                              -------------     -------------    ---------------
<S>                                                           <C>               <C>              <C>
NET INCREASE (DECREASE ) IN CASH AND
 CASH EQUIVALENTS                                             $    (568,393)    $   1,167,048    $       917,503

CASH AND CASH EQUIVALENTS
 AT BEGINNING OF PERIOD                                           1,485,896            16,390                  -
                                                              -------------     -------------    ---------------

CASH AND CASH EQUIVALENTS
 AT END OF PERIOD                                             $     917,503     $   1,183,438    $       917,503
                                                              =============     =============    ===============

CASH PAID FOR:

   Interest                                                   $       3,613     $       5,512    $        79,195
   Income taxes                                               $           -     $           -    $             -

NON-CASH FINANCING
 ACTIVITIES:

   Common stock and options issued for
     services rendered and expenses
     paid on behalf of the Company                            $           -     $           -    $     1,495,064
   Common stock issued for subsidiaries                       $   1,250,000     $     840,000    $     5,565,000
   Common stock rescinded for subsidiaries                    $           -     $           -    $    (2,000,000)
   Common stock issued for debt                               $           -     $           -    $        86,665

</TABLE>

                                       10
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      March 31, 2000 and December 31, 1999


NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         The accompanying consolidated financial statements have been prepared
         by the Company without audit. In the opinion of management, all
         adjustments (which include only normal recurring adjustments) necessary
         to present fairly the financial position of operations and cash flows
         at March 31, 2000 and 1999 and for all periods presented have been
         made.

         Certain information and footnote disclosures normally included in
         consolidated financial statements prepared in accordance with generally
         accepted accounting principles have been condensed or omitted. It is
         suggested that these condensed consolidated financial statements be
         read in conjunction with the financial statements and notes thereto
         included in the Company's December 31, 1999 audited consolidated
         financial statements. The results of operations for periods ended March
         31, 2000 and 1999 are not necessarily indicative of the operating
         results for the full years.

NOTE 2 - MATERIAL EVENTS

         COMMON STOCK ISSUANCE

         On January 14, 2000, the Company issued 500,000 shares of common stock
         at $2.50 per share for a total of $1,250,000 as part of the
         consideration for 3000 shares of Nano. On February 9, 2000, the Company
         issued 400,000 shares of common stock at $1.25 per share for a total
         consideration of $500,000. During March 2000, the Company issued
         800,000 shares of common stock at $1 per share for a total
         consideration of $800,000.

         ACQUISITION OF NANO TECHNOLOGY LTD.

         On January 28, 2000, the Company's wholly owned subsidiary, Global
         Telephone Communication (BVI) Inc., GTCI (BVI), a British Virgin
         Islands company, arranged to acquire 70% of the shares of Nano
         Technology Ltd. (Nano), a British Virgin Islands company. Nano owns
         100% of the issued and outstanding capital stock of Cyber 2000 Ltd.
         (Cyber 2000), a Hong Kong company. Nano's only activity is to hold the
         ownership interest in Cyber 2000.

              -   3,000 shares of Nano were acquired from existing shareholders
                  in exchange for $350,000 cash and 500,000 shares of the
                  Company's common stock valued at $2.50 per share for a total
                  consideration of $1,600,000 which is allocated to goodwill and
                  is amortized over a three-year life using the straight-line
                  method;
              -   A further 4,000 shares of Nano were acquired by way of a share
                  subscription agreement whereby GTCI (BVI) would pay $1,000,000
                  to Nano for 4,000 new shares.

         As of March 31, 2000, $500,000 of the subscription is unpaid. Such
         unpaid amount is due to an affiliate and is eliminated in
         consolidation.

         The purchase price will be allocated as follows:

<TABLE>

                  <S>                                         <C>
                  Purchase price                              $         1,600,000
                  Subscription for new shares                           1,000,000
                                                              -------------------
                  Total cost of shares                        $         2,600,000
                                                              ===================

                  Allocated as to cash held by Nano           $         1,000,000
                  Goodwill                                    $         1,600,000

</TABLE>

                                       11
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      March 31, 2000 and December 31, 1999

NOTE 2 - MATERIAL EVENTS (Continued)

         ACQUISITION OF NANO TECHNOLOGY LIMITED (Continued)

         This Hong Kong based company is developing voice over internet protocol
         (VOIP) and is to become a provider of VOIP re-sale services with major
         international telephone carriers, and also intends to build its own
         internet provider backbone network.

         Cyber 2000 has established arrangements with major carriers to
         implement VOIP in Hong Kong and the Peoples Republic of China. The
         Company acquired 70% of Nano for investment of approximately $2.6
         million in cash and stock.

         Cyber 2000 will be a facilities-based provider that will own or lease a
         substantial portion of the property, plant and equipment necessary to
         offer a broad range of integrated communication services. Cyber 2000
         will focus on international wholesale telecommunication requirements
         and will sell both origination and termination services.

         RECISSION OF PACIFIC ASSET INTERNATIONAL, LTD.

         A Mutual Rescission Agreement to rescind the acquisition of PAI was
         effective on January 13, 2000, however, the Company did not receive the
         signed agreement until April 2000. And thus, it could not assume on
         January 13, 2000 that the acquisition was rescinded. Although the
         Mutual Rescission Agreement has been signed, the Company is awaiting
         the return of the 600,000 shares of common stock. Until those shares
         are returned, the Company has placed a stop on the shares and has shown
         PAI as a loss from discontinued operations on its December 31, 1999
         financial statements.

         UNSECURED PROMISSORY NOTE

         The Company is currently negotiating the placement of a subordinated
         debt facility ("Subordinated Loan") in the principal amount of
         $10,000,000 that the Company expects to close after the Company has
         satisfied all applicable requirements for listing the common stock and
         its common stock has been accepted for trading on the NASDAQ bulletin
         board. There is no assurance that the Company will be successful on a
         timely basis in meeting these contingencies. In connection with the
         Subordinated Loan, the Company will be required to deliver a 9%
         Subordinated Debenture ("Debenture") and a Warrant to Purchase Common
         stock ("Warrant").

         The same lender that proposes to make the Subordinated Loan has also
         extended a bridge loan facility to the Company in the original
         principal amount of $800,000 (the "Bridge Loan"). The Bridge Loan was
         initially evidenced by a 15% Convertible Promissory Note (the
         "Convertible Note") and the Convertible Note was subsequently converted
         into a $3,200,000 principal amount subordinated loan facility
         ("Conversion Loan") on substantially the same terms and conditions as
         the Subordinated Loan. The lender has not advanced any amount to the
         Company in excess of the original principal amount of the Bridge Loan
         and the unfunded amount of the Conversion Loan is evidenced by a
         promissory note from the lender to the Company. It is anticipated that
         the Conversion Loan will be repaid (and the promissory note evidencing
         the unfunded portion thereof will be satisfied) by conversion into the
         Subordinated Loan. In connection with the Bridge Loan, the Company
         delivered to the lender a five-year warrant to purchase 200,000
         shares of its common stock, exercisable at $2.25 per share.


                                       12
<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      March 31, 2000 and December 31, 1999

NOTE 2 - MATERIAL EVENTS (Continued)

         UNSECURED PROMISSORY NOTE (Continued)

         The Debenture will be convertible into shares of common stock of the
         Company (a minimum of 880,000 shares under the Conversion Loan and a
         maximum of 2,500,000 shares under the Subordinated Loan) and will be
         due a maximum of 30 months after the date of issuance. The holder may
         convert up to a specified face amount of the Debenture upon issuance (a
         minimum of $122,223 under the Conversion Loan and a maximum of $555,556
         under the Subordinated Loan) on each monthly anniversary date
         thereafter (each, a "Due Date"). Any amount not converted accumulates
         and may be converted thereafter. However, the holder is prohibited from
         converting any amount of the Debenture that would cause the holder's
         total ownership of common stock to equal five percent or more of the
         total shares outstanding. Under the Conversion Loan, the per share
         conversion price will be equal to the lesser of (a) $2.50 and (b) the
         lowest daily trading price of the common stock (as reported by
         Bloomberg) of the twenty (20) consecutive trading days immediately
         preceding submission of a notice to convert by the holder. Under the
         Subordinated Loan, the per share conversion price will be equal to the
         lesser of (a) $4.00 and (b) the average of the three lowest daily
         trading prices of the common stock (as reported by Bloomberg) of the
         twenty (20) consecutive trading days immediately preceding submission
         of a notice to convert by the holder. In the event the closing bid
         price of the Company's common stock is less than a specified amount per
         share at any time during the five trading days preceding a Due Date,
         the Company will have the right to redeem for cash the monthly
         conversion amount of the Debenture (in lieu of allowing the holder to
         convert such amount) at premiums ranging from 105% to 108%. The
         Debenture will be secured by a letter of credit in an initial principal
         amount equal to 75% of the principal amount of the Debenture. The
         required amount of the letter of credit will decrease by a specified
         amount for every $1.00 of principal reduction of the Debenture, whether
         the reduction occurs by conversion or redemption.

         The Warrant will be exercisable for the purchase of 40,000 shares of
         common stock per $100,000 in principal amount of the Debenture, one
         third of which will be exercisable at $2.25 per share, one third of
         which will be exercisable at $3.75. The Warrant will be exercisable at
         any time prior to the expiration of five years from the date of
         issuance.

         The Company will be required to register for resale all shares of
         common stock issuable upon conversion of the Debenture and exercise of
         the Warrant. Certain penalty provisions apply if a registration
         statement covering the shares is not filed with 150 days or is not
         declared effective within 180 days of the date of issuance.

                                       13
<PAGE>


              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      March 31, 2000 and December 31, 1999


NOTE 2 - MATERIAL EVENTS (Continued)

         ADDITIONAL ICE FINANCING

         The Company has loaned approximately $200,000 to ICE pursuant to an
         unsecured promissory note payable on July 4, 2000 bearing interest at
         an annual rate of 10% to commence on July 1, 2000.

         The Company has paid approximately $48,400 for the right of first
         refusal on any and all phone cards that the ICE may choose to market.

         The Company expects to invest approximately $121,000 per card for
         design, artwork, impression, printing, testing and delivery of
         satisfactory network delivery and support capabilities. In exchange,
         the Company is to receive 50% of ICE's gross revenue monthly until it
         has received twice its original investment, and subsequently, 25% of
         gross monthly revenues for as long as the contract is in force,
         including renewals.


                                       14
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

FORWARD-LOOKING STATEMENTS-CAUTIONARY STATEMENTS

        THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS CERTAIN "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED (THE "EXCHANGE ACT"). SPECIFICALLY, ALL STATEMENTS OTHER
THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS REPORT, REGARDING THE
COMPANY'S FINANCIAL POSITION, BUSINESS STRATEGY AND PLANS AND OBJECTIVES OF
MANAGEMENT OF THE COMPANY FOR FUTURE OPERATIONS ARE FORWARD-LOOKING STATEMENTS.
THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF THE COMPANY'S
MANAGEMENT, AS WELL AS ASSUMPTIONS MADE BY AND INFORMATION CURRENTLY AVAILABLE
TO THE COMPANY'S MANAGEMENT. WHEN USED IN THIS REPORT, THE WORDS "ANTICIPATE,"
"BELIEVE," "COULD," "ESTIMATE," "EXPECT" AND "INTEND" AND WORDS OR PHRASES OF
SIMILAR IMPORT, AS THEY RELATE TO THE COMPANY OR THE COMPANY'S MANAGEMENT, ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS REFLECT THE
CURRENT VIEW OF THE COMPANY WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO
CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS AND RELATED FACTORS INCLUDING,
WITHOUT LIMITATIONS, COMPETITIVE FACTORS, GENERAL ECONOMIC CONDITIONS, CUSTOMER
RELATIONS, RELATIONSHIPS WITH VENDORS, INTEREST RATES, CURRENCY FLUCTUATIONS,
GOVERNMENT REGULATION AND SUPERVISION, POLITICAL EVENTS, THE OPERATION OF THE
COMPANY'S NETWORKS, TRANSMISSION COSTS, PRODUCT INTRODUCTIONS AND ACCEPTANCE,
TECHNOLOGICAL CHANGE, CHANGES IN INDUSTRY PRACTICES, ONE-TIME EVENTS AND OTHER
FACTORS DESCRIBED HEREIN ("CAUTIONARY STATEMENTS"). ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT
SUCH EXPECTATIONS WILL PROVE TO BE CORRECT. BASED UPON CHANGING CONDITIONS,
SHOULD ANY ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD
ANY UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY
FROM THOSE DESCRIBED HEREIN AS ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED OR
INTENDED. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTED
TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR
ENTIRETY BY THE APPLICABLE CAUTIONARY STATEMENTS.

RESULTS OF OPERATIONS

         In the later part of 1999, the Registrant retained new senior
management and determined to focus on developing and pursuing its
telecommunications opportunities in China and Europe. As a result, among other
things, the Registrant rescinded, as of October 1, 1999, the practice of its two
Canadian multimedia subsidiaries, Planet City Graphics Corp. and Webworks
Multimedia Corporation, which were originally acquired in related transactions
on February 9, 1998.

Furthermore, on March 9, 1999, the Registrant entered into a Share Exchange
Agreement providing for the acquisition of 51% of the issued and outstanding
shares of Pacific Asset International Ltd. (Pacific Asset), a Hong Kong
corporation, in exchange for 600,000 shares of the Registrant's common stock
representing approximately 4% of the Registrant's then issued common stock.
Pacific Asset was expected to provide the Registrant access to institutional and
banking e-commerce business in Asia and the Registrant planned to assist Pacific
Asset in the development of its business in the telecommunications and
information technology sector. The Registrant subsequently determined the
Registrant would not be able to provide such assistance and that it would not be
in the best interest of the Registrant to continue its relationship with Pacific
Asset. In addition, the shareholders of Pacific Asset


                                       15
<PAGE>


failed to deliver their shares to the Registrant in accordance with the terms of
the Share Exchange Agreement. For the foregoing reasons, the exchange
transaction was rescinded pursuant to a Mutual Rescission Agreement dated as of
January 13, 2000 between the Registrant and the shareholders of Pacific Asset.

         As part of the Registrant's focus on developing its business in China,
on September 15, 1999, the Registrant entered into an agreement with
International Communications Enterprises Ltd. (ICE) to provide funding for a
joint venture between ICE and First Telecom of Hong Kong (FT). The primary
purpose of the joint venture will be to originate and terminate telephone
traffic in China. The Registrant made an investment of approximately $243,500 to
acquire 25% of the gross revenue due to ICE from all activities generated by the
ICE/FT venture. On October 21, 1999, the Registrant entered into a second joint
venture with ICE as a financial partner to assist it in the development and
distribution of promotional commemorative prepaid calling cards relating to
sports figures.

         As of December 31, 1999, the Registrant fulfilled its obligation to
provide $1,300,000 in development funds to its Hong Kong based subsidiary,
Regent Luck Holdings Ltd. (Regent). These funds were provided as paid in capital
for Regent's 90% interest in Shenzhen Global Net Computer Information Co. Ltd.,
which has an Exclusive Agency Agreement with Shenzhen Newsnet Co. Ltd., a
wholly-owned subsidiary of China Telecom.

         On January 28, 2000, the Registrant acquired 70% of the issued and
outstanding shares of capital stock of Nano Technology Limited (Nano), a British
Virgin Islands company. Nano owns 100% of the issued and outstanding capital
stock of Cyber 2000 Ltd. (Cyber 2000), a Hong Kong company. Nano's only activity
is to hold the Registrant's ownership interest of Cyber 2000. Cyber 2000 is
engaged in the business of developing Voice over Internet Protocol (VoIP) and is
expected to become a provider of VoIP re-sale services with major international
telephony carriers. AT&T is expected to provide a number of professional and
management services to implement Cyber 2000's VoIP Program in China and the US.
Cyber 2000 has also established a cooperation arrangement with Teleinfo (a
wholly owned subsidiary of China Telecom (HK) Ltd.) pursuant to which Teleinfo
will work with Cyber 2000 as part of this project to provide various supports in
marketing and technical programs. The Registrant acquired its interest in NANO
for an aggregate purchase price of $2,600,000, of which $1,350,000 was payable
in cash and the balance was payable by delivery of 500,000 restricted shares of
the Registrant's common stock valued at $2.50 per share. As of the date hereof,
a portion of the purchase price in the amount of $850,000 has been paid in cash
and 500,000 restricted shares of the Registrant's common stock, representing
2.9% of the Registrant's then issued and outstanding common stock, have been
issued.

         In the first quarter of 2000, the general and administrative costs
increased to $1,232,159, representing an increase of 531%. Legal and accounting
costs totaled approximately $185,000, consultant's costs totaled approximately
$170,000, travel and entertainment costs totaled approximately $208,000 and a
total of approximately $195,000 was spent for wages for employees. Office and
rent totaled approximately $63,000, investor relations approximately $14,000, an
allowance for doubtful accounts receivable


                                       16
<PAGE>


approximately $342,000 and finance and bank charges approximately $10,000. In
addition $45,000 was expensed pursuant to a revenue participation agreement
with International Communications Enterprises Ltd. (ICE). During this period,
the Registrant's number of employees increased from 14 to a total of 18. Such
amounts have been expensed due to the Company's growing concern whether ICE
can successfully sell the proposed products.

LIQUIDITY AND CAPITAL RESOURCES

During the first quarter of 2000, the Registrant raised $1,300,000 through the
sale of common stock as compared to the first quarter of 1999, during which the
Registrant raised approximately $940,000 through the sale of common stock. In
the year ended December 31, 1999, the Registrant raised $4,152,753 from the sale
of equity securities and $544,921 from notes payable to fund current operations.
The proceeds of such financing transactions were used for working capital needs.
The Registrant's current ratio at March 31, 2000 was 3.17 compared to 2.80 at
December 31, 1999.

The Registrant's operating activities used cash of approximately $1,334,968 for
the three months ended March 31, 2000. During this period, the Registrant had an
operating loss before depreciation and amortization of approximately $1,232,159
as compared to the first quarter of 1999, during which the Registrant had an
operating loss before depreciation and amortization of approximately $231,781.
During the year ended December 31, 1999, the Registrant had operating expenses
of $6,018,194, resulting in a net loss of $5,719,946.

In January 2000, the Registrant paid $350,000 in cash towards the acquisition of
Cyber 2000. As a result of the above activities and the Registrant's increased
operating costs, the Registrant experienced a decrease in cash of $568,393 for
the first three months of 2000.

BUSINESS RISK

Because of management's broad discretion with respect to the acquisition of
assets, properties or businesses, the Registrant may be deemed to be a growth
oriented company. Although management intends to apply substantially all of the
proceeds that it may receive through the issuance of stock or debt to suitable
acquisitions and development of acquired companies, such proceeds will not
otherwise be designated for any more specific purpose. The Registrant can
provide no assurance that any allocation of such proceeds will allow it to
achieve its business objectives.

As discussed previously, the Registrant's continuation of business is dependent
upon socio-political factors such as China's entry into the World Trade
Organization and the liberalization of foreign investment in China's Internet
sector. There are inherent risks involved in operating in China, a region where
the rules and regulations are still uncertain. The potential opening of the
information technology/Internet sector to foreign participation will also mean
an increase in competition from multinational telecommunications companies in
China. The degree to which these factors may affect the Registrant's future
operations and financial results is uncertain and will depend on the success of
the management team in executing its business plan and carrying out an effective
implementation of the core operations of the Registrant's joint ventures.


                                       17
<PAGE>


                                     PART II
                                OTHER INFORMATION


ITEM 1.      LEGAL PROCEEDINGS.

         There have been no changes since the Registrant's last report in Item
3, Legal Proceedings of Form 10-KSB for the fiscal year ended December 31, 1999.

ITEM 2.      CHANGES IN SECURITIES.

Not applicable.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

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

None

ITEM 5.      OTHER INFORMATION

None

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits - None
         Form 8-K - None

(b)      Reports on Form 8(K)
        -Form 8-K dated February 14, 2000 reporting the acquistion of Nano
         Technology Limited
        -Financial statements of Nano Technology Limited

                                       18
<PAGE>


                                   SIGNATURES


             In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



                                          GLOBAL TELEPHONE
                                          COMMUNICATION, INC.



DATE:                   , 2000            BY:
     ------------------                      -----------------------------------
                                             Robert J. Andresen
                                             President & Chief Operating Officer


                                       19