<PAGE>
                 U. S. Securities and Exchange Commission
                         Washington, D. C.  20549


                                FORM 10-QSB


[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the quarterly period ended September 30, 1997

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 

     For the transition period from                to 
                                    --------------    ---------------

                                     
                       Commission File No. 33-2279-D


                    NET TELECOMMUNICATIONS, INCORPORATED
                    ------------------------------------    
              (Name of Small Business Issuer in its Charter)


           NEVADA                                        87-0297202 
           ------                                        ----------    
   (State or Other Jurisdiction of                 (I.R.S. Employer I.D. No.)
    incorporation or organization)

                     101 Convention Center Drive, Suite P125
                            Las Vegas, Nevada  89109    
                            ------------------------
                      (Address of Principal Executive Offices)

                    Issuer's Telephone Number:  (702) 734-1160


Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 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.

(1)  Yes  X    No                  (2)  Yes  X    No  
         ---     ---                        ---      ---

<PAGE>
             APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                PROCEEDINGS DURING THE PRECEDING FIVE YEARS

                              Not applicable.


                   APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:

                             January 22, 1998

                                9,703,006
                                ---------



                      PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements.

          The Financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management, and commence on the
following page, together with Related Notes.  In the opinion of management,
the Financial Statements fairly present the financial condition of the
Registrant.

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                       NET TELECOMMUNICATIONS, INC.
                              Balance Sheets
                                     
<CAPTION>
                                  ASSETS

                                      September 30,        December 31, 
                                         1997                 1996         
                                      (Unaudited)      
<S>                                   <C>                  <C>
  Cash in bank                        $   23,308           $   15,742
  Accounts receivable - net of 
   allowance for uncollectible
   accounts of $4,380 and $0, 
   respectively                           24,030                  -     
  Prepaid expenses                         7,996               17,485       

     Total Current Assets                 55,334               33,227       

PROPERTY AND EQUIPMENT

  Leasehold improvements                  31,613                  -     
  Office equipment                        18,122               17,363       
  Furniture                                5,925                5,925
  Less - accumulated depreciation        (12,575)              (5,196)

     Property and Equipment - net         43,085               18,092       

OTHER ASSETS                             422,414               25,476

     TOTAL ASSETS                     $  520,833           $   76,795       

              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

  Accounts payable                    $   99,028           $   40,846       
  Accrued expenses                         5,903                4,384        
  Note payable - current portion             -                 19,312       

     Total Current Liabilities           104,931               64,542       

LONG-TERM DEBT                         1,174,406               65,688

     Total Liabilities                 1,279,337              130,230

STOCKHOLDERS' EQUITY (DEFICIT) 

  Common stock; par value $0.001; 
   50,000,000 authorized,
   8,318,892 issued and outstanding        8,319                8,319
  Additional paid-in capital             849,920              849,920
  Subscriptions receivable              (358,998)            (358,998)
  Deficit accumulated during the 
   development stage                  (1,257,745)            (552,676)

     Total Stockholders' Equity 
      (Deficit)                         (758,504)             (53,435)

     TOTAL LIABILITIES AND STOCKHOLDERS' 
      EQUITY (DEFICIT)                $  520,833         $     76,795

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                          NET TELECOMMUNICATIONS, INC.
                        (A Development Stage Company)
                     Consolidated Statements of Operations
                                 (Unaudited)
                                                   
<CAPTION>
                                                                From        
                                                                Inception on  
                                                                October 24,  
                      For the Three Months  For the Nine Months 1994 Through 
                       Ended September 30,  Ended September 30, September 30,
                       1997          1996    1997        1996       1997       
<S>                    <C>       <C>        <C>      <C>       <C>
NET SALES              $ 39,578  $  4,535   $56,682  $ 20,390  $   97,000

EXPENSES                 

  Depreciation and 
    amortization            793     1,122     7,379     2,741      12,575
  General and 
    administrative      318,816    44,743   754,372   109,199   1,105,929

     Total Expenses     319,609    45,865   761,751   111,940   1,118,504

LOSS FROM OPERATIONS   (280,031)  (41,330) (705,069)  (91,550) (1,021,504)

OTHER EXPENSE

  Interest expense          -         -         -         -        13,869

     Total Other Expense    -         -         -         -        13,869

LOSS BEFORE DISCONTINUED
 OPERATIONS            (280,031)  (41,330) (705,069)  (91,550) (1,035,373)

DISCONTINUED OPERATIONS     -         -         -         -      (222,372)

NET LOSS             $ (280,031) $(41,330) $705,069) $(91,550)$(1,257,745)

LOSS PER SHARE       $    (0.03) $  (0.01) $  (0.08) $  (0.01) 

WEIGHTED AVERAGE 
 SHARES OUTSTANDING   8,318,892  7,893,531 8,318,892  6,402,876                
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<TABLE>
                           NET TELECOMMUNICATIONS, INC.
                         (A Development Stage Company)
            Consolidated Statements of Stockholders' Equity (Deficit)
<CAPTION>
                                                               Deficit   
                                                               Accumulated
                                                  Additional    During the 
                              Common Stock         Paid-in     Development
                            Shares     Amount      Capital        Stage   
<S>                        <C>        <C>         <C>          <C>
Balance, December 31, 1995 5,434,158  $5,435      $126,866     $ (100,438)

Issuance of common stock 
 for cash at various dates 
 at approximately $0.14 per
 share                       565,362     565        78,134            -      

Common stock issued in 
 recapitalization          2,000,000   2,000        (2,000)           -     
                                
Issuance of common stock 
 at various dates at $1.00 
 per share                    47,000      47        46,953            -     

Issuance of common stock 
 for cash at $0.10 per 
 share on July 3, 1996        50,000      50         4,950            -     

Issuance of common stock 
 in failed acquisitions      222,372     222       222,150            -      

Options granted at $0.06
 per share                       -       -         372,867            -     

Net loss for the year ended
 December 31, 1996               -       -             -         (452,238)

Balance, December 31, 1996 8,318,892   8,319       849,920       (552,676)

Net loss for the nine 
 months ended September 
 30, 1997 (Unaudited)            -       -             -         (705,069)

Balance, September 30, 1997 
 (Unaudited)               8,318,892  $8,319     $ 849,920    $(1,257,745)
</TABLE>
<TABLE>
                           NET TELECOMMUNICATIONS, INC.
                         (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                                  (Unaudited)
<CAPTION>                                         

                                                                From        
                                                                Inception on  
                                                                October 24,  
                      For the Three Months For the Nine Months  1994 Through 
                       Ended September 30, Ended September 30,  September 30,
                       1997          1996    1997       1996        1997       
<S>                    <C>          <C>      <C>        <C>       <C>
CASH FLOWS FROM 
 OPERATING ACTIVITIES

Net Income (loss)      $(280,031) $ (41,330) $(705,069) $ (91,550)$(1,257,745)
Adjustments to 
 reconcile net 
 income (loss) to net 
 cash provided (used) 
 by operating
 activities:
  Depreciation and 
   amortization              793      1,122      7,379      2,741      12,575
  Bad debt expense         4,380        -        4,380        -         4,380
  Loss on rescinded 
   acquisition               -          -          -         (750)    222,372
  Issuance of stock options  -          -          -          -        13,869  
  
Change in assets and liabilities:
  (Increase) decrease in
    accounts receivable  (28,410)    13,407    (28,410)     1,985     (28,410)
  (Increase) decrease in
    receivable-related 
    parties                  -         (713)       -       (8,174)        -    
  (Increase) decrease in 
    prepaid expenses       5,747         74      9,489         74      (7,996)
  (Increase) decrease in
    other assets        (235,909)     1,254   (396,938)    (2,946)   (422,414)
  Increase (decrease) in 
    accounts payable     (12,162)    (3,180)    58,182     (1,935)     99,028
  Increase (decrease) in
    accrued expenses        (959)     1,355      1,519      1,015       5,903
  Increase (decrease) in
    payable to officer       -        4,000        -        1,040         -    
 
Net Cash Used in
   Operating Activities (546,551)   (24,011)(1,049,468)   (98,500) (1,358,438)

CASH FLOWS FROM
 INVESTING ACTIVITIES

  Purchase of property
   and equipment         (15,869)   (35,047)   (32,372)   (35,047)    (55,660)

Net Cash Used in
  Investing Activities  $(15,869) $ (35,047)  $(32,372)  $(35,047)  $ (55,660)

CASH FLOWS FROM 
 FINANCING ACTIVITIES
  Proceeds from loans   $562,406  $     -   $1,089,406   $    -    $1,174,406
  Sale of common stock       -       44,000        -      122,699     263,000 

 Net Cash Flows from
    Financing Activities 562,406     44,000  1,089,406    122,699   1,437,406  
  
NET INCREASE (DECREASE)
 IN CASH                     (14)   (15,058)     7,566    (10,848)     23,308  
  
CASH BEGINNING OF PERIOD   23,322    26,590     15,742     22,380         -    
 
CASH END OF PERIOD       $ 23,308  $ 11,532   $ 23,308   $ 11,532    $ 23,308 

SUPPLEMENTAL DISCLOSURES
 OF CASH FLOW
 INFORMATION

  Interest               $    -    $    -     $    -     $  -       $  13,869
  Income taxes           $    -    $    -     $    -     $  -       $ -     

NON CASH FINANCING

  Issuance of stock 
  options                $    -    $    -     $    -     $  -       $  372,867
<PAGE>
                       NET TELECOMMUNICATIONS, INC.
                     Notes to the Financial Statements
                 September 30, 1997 and December 31, 1996


NOTE 1 -        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Certain information and footnote disclosures normally included in the
   financial statements prepared in accordance with generally accepted
   accounting principles have been condensed or omitted.  It is suggested
   that these financial statements be read in conjunction with the
   Registrant s December 31, 1996 Annual Report on Form 10-KSB.  The
   results of operations for the periods ended September 30, 1997 and
   1996 are not necessarily indicative of operating results for the full
   years.

   The consolidated financial statements and other information furnished
   herein reflect all adjustments which are, in the opinion of management
   of the Registrant, necessary for a fair presentation of the results
   of the interim periods covered by this report.
      

Item 2.   Management's Discussion and Analysis or Plan of Operation.
--------------------------------------------------------------------

Plan of Operation.
------------------

          The Company's objective is to reach a volume of revenues that would
enable it to be classified as a second-level long distance company with annual
revenues in excess of $100 million. In order to reach this level, the Company
will continue to increase revenue, improve cash flows and increase earnings by
implementing the following business strategies. 

Nationwide Origination 
----------------------

        The Company provides nationwide origination and termination of long
distance services. This enables retail, agent and wholesale reseller customers
to be added in any of the 50 United States, thereby enabling expansion to
occur on a national, rather than regional, basis.
 
Build Call Volume 
-----------------

        In order to reach certain economics of scale, the Company will
continue to focus on building minutes of long distance traffic by region, to
defined levels, prior to establishing an independent switching system for that
region. This strategy allows the Company to build call volumes within
geographic areas without incurring large capital expenditures for switching
equipment until the call volumes meet an acceptable predefined level. Once the
Company has established the call volumes to an acceptable level, the Company
can reduce its cost of transmission by establishing a switching system. 

        The management of the Company is experienced at traffic engineering,
utilized to evaluate the optimum network configuration which will reduce the
Company's costs. Retail, agent and wholesale customers will receive the
benefits of a network configuration that provides for lower cost transmission
in markets where call volume is high and supported by the Company's switching
systems. In addition, due to the Company's large volume of traffic, the
Company has negotiated long distance facility arrangements that allow it to
provide a low cost per minute in the other areas in which it operates. 

Consolidation to Support Marketing 
----------------------------------

        The Company has a strategic plan for acquiring small and medium-size
long distance telephone companies as a method of achieving controlled growth.
The size of the acquisition targets is a key concept in the Company's
acquisition strategy. Combining smaller and medium-size long distance
companies creates large gains in market share and immediate operating
improvements through economies of scale. The Company's plan is to use the
consolidation of other long distance companies operating throughout the United
States into a platform to serve the sales made by retail, agent and wholesale
resellers. 

        The Company has and will seek additional affiliations with existing
marketers of long distance telephone services, agents and wholesale resellers,
which sell to their end users' long distance telecommunications services that
utilize the Company's existing relationships and facilities. These marketing
companies supplement the Company's direct sales staff and act as the Company's
nationwide distribution channel.
 
Results of Operations.
----------------------

        Net sales for the quarterly periods ended September 30, 1997, and
September 30, 1996, were $39,578 and $4,535, respectively.  Total expenses
during these periods were $319,609 and $45,865, resulting in losses from
operations of $280,031 and $41,330, respectively. Loss per share in the
quarterly period ended September 30, 1997, was $0.03, as compared to a net
loss per share of $0.01 in the quarterly period ended September 30, 1996.

Liquidity.
----------

        The Company has been able to meet all of its cash needs up to the time
that revenue from the sale of its services began to be received.  As of the
date of this Report, management expects that the Company will be able to meet
its liquidity requirements through such revenues.  It is not anticipated that
the Company will be required to raise additional capital through borrowing or
by selling additional securities during the next 12 months, although there can
be no guarantee that such activities will not become necessary in the future.

        It is not anticipated that the Company will be required to purchase
any plant or significant equipment in the next 12 months.

                        PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.
----------------------------

          None; not applicable.

Item 2.   Changes in Securities.
--------------------------------

          None; not applicable.
 
Item 3.   Defaults Upon Senior Securities.
------------------------------------------

          None; not applicable.

Item 4.   Submission of Matters to a Vote of Security Holders.
--------------------------------------------------------------

          None; not applicable.
          
Item 5.   Other Information.
----------------------------

         None; not applicable.

Item 6.   Exhibits and Reports on Form 8-K.
-------------------------------------------

          (a)  Exhibits.

               Financial Data Schedule.

          (b)  Reports on Form 8-K.

               None; not applicable.

<PAGE>
 
                               SIGNATURES

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

                                      NET TELECOMMUNICATIONS, INCORPORATED



Date: 1/22/98                         By /s/ Michael W. Gorts
     --------------                     -------------------------------------
                                        Michael W. Gorts   
                                        Director and President


Date: 1/22/98                         By /s/ Tony Tegano    
     --------------                     -------------------------------------
                                        Tony Tegano                      
                                        Chairman of the Board


Date: 1-22-98                         By /s/ Lonnie Ellis   
     --------------                     -------------------------------------
                                        Lonnie Ellis
                                        Director


Date: 1/22/98                         By /s/ Annette Moreno  
     --------------                     -------------------------------------
                                        Annette Moreno
                                        Secretary/Treasurer

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