<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 June 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:

                             August 28, 1997

                                9,222,981
                                ---------



                      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.

<PAGE>
<TABLE>

                       NET TELECOMMUNICATIONS, INC.
                              Balance Sheets
                                (Unaudited)
<CAPTION>

                                  ASSETS
                                                June 30,       December 31,
                                                1997              1996         
<S>                                            <C>              <C>       
CURRENT ASSETS                                  (Unaudited)

  Cash in bank                                  $ 23,322        $ 15,742 
  Prepaid expenses                                13,743          17,485 

     Total Current Assets                         37,065          33,227 

PROPERTY AND EQUIPMENT

  Leasehold improvements                          16,503             -     
  Office equipment                                17,363          17,363 
  Furniture                                        5,925           5,925
  Less - accumulated depreciation                (11,782)         (5,196)

     Property and Equipment - net                 28,009          18,092 

OTHER ASSETS                                     186,505          25,476

     TOTAL ASSETS                               $251,579        $ 76,795 

              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

  Accounts payable                              $111,190        $ 40,846 
  Accrued expenses                                 6,862           4,384 
  Note payable - current portion                  -               19,312 

     Total Current Liabilities                   118,052          64,542 

LONG-TERM DEBT                                   612,000          65,688

     Total Liabilities                           730,052         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                                       (977,714)       (552,676)

     Total Stockholders' Equity (Deficit)       (478,473)        (53,435)

     TOTAL LIABILITIES AND STOCKHOLDERS' 
             EQUITY (DEFICIT)                   $251,579      $   76,795     
</TABLE>
<TABLE>
                          NET TELECOMMUNICATIONS, INC.
                        (A Development Stage Company)
                     Consolidated Statements of Operations
                                  (Unaudited)
<CAPTION>
                                                                    From      
                                                                 Inception on
                                                                  October 24, 
                        For the Six Months  For the Three Months 1994 Through
                          Ended June 30,        Ended June 30,     June 30,    
                        1996         1997    1996       1997       1997      
<S>                  <C>        <C>       <C>        <C>          <C>
NET SALES            $  16,802  $ 17,104  $   7,038  $  7,068     $ 57,422

EXPENSES

  Depreciation and 
     amortization        1,619     6,586        810     5,793       11,782
  General and 
    administrative      65,404   435,556     38,972   276,527      787,113

     Total Expenses     67,023   442,142     39,782   282,320      798,895

LOSS FROM OPERATIONS   (50,221) (425,038)   (32,744) (275,252)    (741,473)

OTHER EXPENSE

  Interest expense         -         -          -         -         13,869

     Total Other Expense   -         -          -         -         13,869

LOSS BEFORE DISCONTINUED
 OPERATIONS            (50,221) (425,038)   (32,744) (275,252)    (755,342)

DISCONTINUED OPERATIONS    -         -          -         -       (222,372)

NET LOSS             $ (50,221)$(425,038)  $(32,744)$(275,252) $  (977,714)

LOSS PER SHARE       $   (0.00)$   (0.05)  $  (0.00)$   (0.03)

WEIGHTED AVERAGE
 SHARES OUTSTANDING  8,318,892  8,318,892  8,318,892 8,318,892 
</TABLE>
<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, 1995    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 six 
 months ended
 June 30, 1997 (Unaudited)       -       -             -         (425,038)

Balance, June 30, 1997 
  (Unaudited)              8,318,892  $8,319      $849,920     $ (977,714)
</TABLE>
<TABLE>
                          NET TELECOMMUNICATIONS, INC.
                        (A Development Stage Company)
                     Consolidated Statements of Cash Flows
                                  (Unaudited)
<CAPTION>
                                                                  From     
                                                               Inception on
                                                                October 28, 
                     For the Six Months  For the Three Months  1994 Through
                        Ended June 30,       Ended June 30,       June 30,  
                       1996         1997    1996          1997         1997    
<S>                  <C>       <C>         <C>       <C>        <C>
CASH FLOWS FROM 
 OPERATING ACTIVITIES

Net Income (loss)    $ (50,221) $(425,038) $(32,744) $(275,252) $(977,714)
Adjustments to 
 reconcile net 
 income (loss) to 
 net cash  provided 
 (used) by operating
 activities:
  Depreciation and 
    amortization         1,619      6,586       810      5,793     11,782
  Loss on rescinded 
    acquisition           (750)       -         -          -      222,372
                     
  Issuance of stock 
   options                 -          -         -          -       13,869
                     
Change in assets and liabilities:
  (Increase) decrease in
   accounts receivable (11,422)       -      (7,300)       -          -     
  (Increase) decrease in
    receivable-related 
    parties             (7,461)       -      (7,461)       -          -     
  (Increase) decrease in 
    prepaid expenses       -       19,993       -       14,246      2,508
  (Increase) decrease in
    other assets        (4,200)  (177,280)      -     (161,029)  (202,756)
  Increase (decrease) in 
    accounts payable     1,245     70,344    (8,267)    57,007    113,844
  Increase (decrease) in
    accrued expenses      (339)     2,478      (452)     1,362      6,862
  Increase (decrease) in
    payable to officer  (2,960)       -      (1,988)       -       (2,654)

     Net Cash Used in
       Operating 
       Activities      (74,489)  (502,917)  (57,402)  (357,873)  (811,887)

CASH FLOWS FROM
 INVESTING ACTIVITIES

  Purchase of property
   and equipment           -      (16,503)      -      (11,503)   (39,791)

     Net Cash Used in
      Investing 
      Activities       $   -    $ (16,503) $    -    $ (11,503)  $(39,791)

CASH FLOWS FROM 
 FINANCING ACTIVITIES
  Proceeds from loans  $   -    $ 527,000  $    -    $ 384,000   $612,000
  Sale of common stock  78,699        -      29,368        -      263,000      
        
     Net Cash Flows from
      Financing 
      Activities        78,699    527,000    29,368    384,000    875,000
                     
NET INCREASE (DECREASE)
 IN CASH                 4,210      7,580   (28,034)    14,624     23,322 

CASH BEGINNING OF 
  PERIOD                22,380     15,742    54,624      8,698        -        

CASH END OF PERIOD   $  26,590   $ 23,322  $ 26,590   $ 23,322   $ 23,322 


SUPPLEMENTAL DISCLOSURES
 OF CASH FLOW
 INFORMATION

  Interest           $  -        $ -       $  -       $ -        $ -     
  Income taxes       $  -        $ -       $  -       $ -        $ -     

NON CASH FINANCING

  Issuance of stock 
   options           $  -        $ -       $  -       $ -        $372,867
</TABLE>
                       NET TELECOMMUNICATIONS, INC.
                     Noes to the Financial Statements
                    June 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 June 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.
------------------

       As of April 15, 1997, the Company's Siemens switch is fully operational
and customers are being fully serviced.  Additional customers will be
solicited on an ongoing basis.  The Company began receiving revenues from
these customers in July, 1997.
   
          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 June 30, 1997, and June 30,
1996, were $7,068 and $7,038, respectively.  Total expenses during these
periods were $282,320 and $39,782, resulting in losses from operations of
$275,252 and $32,744, respectively. Loss per share in the quarterly period
ended June 30, 1997, was $0.03, as compared to a net loss per share of $0.00
in the quarterly period ended June 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.
----------------------------

          Pursuant to a Stock Purchase Agreement dated April 1, 1997, and an
Addendum to Stock Purchase Agreement dated April 25, 1997, (i) the merger of
Sierra-Net, Inc., a Nevada corporation ("Sierra") into First Net
Telecommunications Subsidiary, Incorporated, a Nevada corporation (the "Net
Tel Subsidiary") was deemed to have been rescinded by the purchase of all of
the outstanding shares of Sierra and the subsequent cancellation of 393,757
shares of the 600,000 shares issued pursuant to the Agreement and Plan of
Merger effecting such merger (the "Sierra Plan") (126,243 shares were to
remain outstanding of those purchased pursuant to the Sierra Plan); and (ii)
the merger of Sierra Internet, Inc., a Nevada corporation dba Tahoe On-Line
("Tahoe On-Line") into Sierra (the "Tahoe On-Line Plan") was deemed to have
been rescinded by the cancellation of all 130,000 shares issued under the
Tahoe on-Line Plan.  These rescissions were fully disclosed in the Company's
Current Reports on Form 8-K-A1, which were dated August 1, 1996, and August
24, 1996, respectively, and which were filed with the Securities and Exchange
Commission on or about May 15, 1997.  See the Exhibit Index, Item 6 of this
Report.

          On June 2, 1997, the Board of Directors of the Company adopted a
cafeteria plan within the context of Section 125 of the Internal Revenue Code
and group medical insurance.  Under the cafeteria plan, the Company pays 75%
of the medical plan costs and 50% of the vision and dental plan for all
employees that have enrolled in the plans.  The Company also offers a
disability plan and cancer coverage at employee expense.  Group insurance
coverage began in July, 1997, which is subsequent to the period covered by
this Report, and all employees and certain consultants are eligible, provided
that employees must remain employed for 90 days after initial enrollment. 

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

          (a)  Exhibits.

               Financial Data Schedule.

          (b)  Reports on Form 8-K.

               Current Report on Form 8-K-A1, dated August 1, 1996, and filed
               with the Securities and Exchange Commission on May 15, 1997.

               Current Report on Form 8-K-A1, dated August 24, 1996, and filed
               with the Securities and Exchange Commission on May 15, 1997.

<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: 10-7-97                         By /s/ Michael W. Gorts
     --------------                     -------------------------------------
                                        Michael W. Gorts   
                                        Director and President


Date: 10/7/97                         By /s/ Tony Tegano   
     --------------                     -------------------------------------
                                        Tony Tegano                      
                                        Chairman of the Board


Date: 10/6/97                         By /s/ Lonnie Ellis  
     --------------                     -------------------------------------
                                  Lonnie Ellis
                                  Director


Date: 10/6/97                         By /s/ Annette Moreno  
     --------------                     -------------------------------------
                                  Annette Moreno
                                  Secretary/Treasurer