SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


(Mark One)

 (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 EXCHANGE ACT

      For the transition period from __________ to __________

                         Commission file number 1-13478


                    GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
        (Exact name of small business issuer as specified in its charter)

           Delaware                                        13-3698386
  (State or other jurisdiction of             (IRS Employer Identification No.)
   incorporation or organization)


            5697 Rising Sun Avenue, Philadelphia, Pennsylvania 19120
                    (Address of principal executive offices)

                                 (215) 342-7700
                           (Issuer's telephone number)

         (Former name, former address and former fiscal year, if changed
                               since last report)

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

         State the number of shares  outstanding of each of the issuer's classes
of common  equity,  as of the latest  practicable  date:  As of August 13, 1997,
there were 5,072,538 shares of common stock outstanding.

                               Page 1 of 17 Pages

                            Exhibit Index -- Page 16


                                        1

<PAGE>



            GLOBAL TELECOMMUNICATION SOLUTIONS, INC. AND SUBSIDIARIES


<TABLE>
<CAPTION>

                                                                                                      Page
<S>                                                                                                   <C>  
Part I.  Financial Information

         Item 1.  Consolidated Financial Statements

         Consolidated Balance Sheets - June 30,1997 (unaudited) and December 31, 1996...................3

         Consolidated Statements of Operations - Six and three months ended June 30,
         1997 and 1996 (unaudited)......................................................................4

         Consolidated Statements of Cash Flows - Six months ended June 30, 1997 and
         1996 (unaudited)...............................................................................5

         Notes to Consolidated Financial Statements.....................................................6

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

Part II. Other Information

         Item 2.  Changes in Securities................................................................14

         Item 6.  Exhibits and Reports on Form 8-K.....................................................14

         Signatures....................................................................................15

</TABLE>


                                        2

<PAGE>



                    GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
                                AND SUBSIDIARIES

                           Consolidated Balance Sheets
<TABLE>
<CAPTION>



                                   Assets                                                June 30,           December 31,
                                                                                           1997                 1996
                                                                                           ----                 ----
                                                                                        (Unaudited)
<S>                                                                                          <C>                <C>   
Current assets:
    Cash                                                                              $   927,069         $  1,352,322
    Accounts receivable, less allowance for doubtful accounts                           2,703,547            2,450,119
      of $452,134 and $399,000 in 1997 and 1996, respectively
    Inventory                                                                             376,456              202,129
    Deferred costs                                                                        957,053            1,127,887
    Prepaid royalties and patent license fees                                              39,695               95,396
    Prepaid expenses and other current assets                                             102,107              164,876
                                                                                       ----------           ----------          
            Total current assets                                                        5,105,927            5,392,729
                                                                                      -----------           ----------          
Goodwill, net                                                                          17,376,694           18,008,599
Fixed assets, net                                                                       2,230,195            1,948,917
Deferred financing fees, net                                                              260,184              270,219
Other assets                                                                              903,862              198,901
                                                                                        ---------           ----------          
            Total assets                                                               25,876,862          $25,819,365
                                                                                       ==========          ===========           
         Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                                                                    4,245,428            3,238,666
    Accrued liabilities                                                                 1,451,433              542,965
    Deferred revenues                                                                   3,430,801            4,431,309
    Estimated sales and excise tax liability                                            2,082,169            1,684,478
    Amounts payable to affiliate                                                          954,628            1,073,921
    Capital lease obligation, current                                                      56,528               51,775
                                                                                     ------------           ----------          
            Total current liabilities                                                  12,220,987           11,023,114
                                                                                      -----------           ----------          
Capital lease obligation, long-term                                                        12,498               42,002
Convertible notes payable                                                               2,624,750            2,800,000
Notes payable, net of unearned discount of $1,098,529 and $1,484,040                    1,951,471            1,565,960
                                                                                      -----------           ----------          
            Total liabilities                                                          16,809,706           15,431,076
                                                                                     ------------           ----------          
Stockholders' equity:
    Preferred stock, $.01 par value, authorized 1,000,000 shares;                              --                   --
      none issued
    Common stock, $.01 par value, authorized 35,000,000 shares;                            21,975               18,376
      issued and outstanding 2,197,538 and 1,837,601 shares, respectively
    Additional paid-in capital                                                         25,865,214           22,990,766
    Deferred compensation                                                               (150,399)            (102,498)
    Accumulated deficit                                                              (16,553,320)         (12,406,504)
    Cumulative foreign currency translation adjustment                                   (16,314)             (11,851)
    Common stock note receivable                                                        (100,000)            (100,000)
                                                                                     ------------          -----------           
            Total stockholders' equity                                                  9,067,156           10,388,289
                                                                                     ------------          -----------           
            Total liabilities and stockholders' equity                                $25,876,862          $25,819,365
                                                                                      ===========          ===========           
</TABLE>

           See accompanying notes to consolidated financial statements


                                        3

<PAGE>



                    GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                            Six months ended                        Three months ended
                                                                June 30,                                 June 30,
                                                   -----------------------------------       --------------------------------

                                                           1997              1996                  1997              1996
                                                           ----              ----                  ----              ----
<S>                                                        <C>               <C>                   <C>                <C>
Net sales                                              $ 8,604,812       $ 4,459,356            4,916,659        $ 3,131,646
Cost of sales                                            6,956,236         3,387,048            4,100,879          2,373,492
                                                       -----------       -----------           ----------        -----------
         Gross profit                                    1,648,576         1,072,308              815,780            758,154
                                                       -----------       -----------           ----------        -----------
Selling and marketing expenses                           1,367,629         1,292,376              588,966            777,094
General and administrative expenses                      2,947,346         2,299,364            1,361,202          1,450,384
Depreciation and amortization                              863,688           563,671              435,436            422,253
                                                      ------------        ----------           ----------        -----------
         Operating expenses                              5,178,663         4,155,411            2,385,604          2,649,731
                                                      ------------        ----------          -----------        -----------
         Operating loss                                (3,530,087)       (3,083,103)          (1,569,824)        (1,891,577)
Investment income                                           14,519            41,154               10,618             21,573
Interest expense                                         (662,495)          (87,508)            (339,742)           (70,282)
Other                                                       31,247             5,600               27,047              4,200
                                                      ------------       -----------          -----------         ----------
         Loss before income taxes                      (4,146,816)       (3,123,857)          (1,871,901)        (1,936,086)
Income tax expense                                             --                --                   --                 --
         Net loss                                     $(4,146,816)      $(3,123,857)     $    (1,871,901)     $  (1,936,086)
                                                       ===========       ===========          ===========         ==========
Net loss per share                                    $     (2.10)      $     (2.08)     $          (.90)     $       (1.11)
                                                     =============     =============        =============      =============
Weighted average shares of common
  stock and common stock  equivalents                    1,974,053         1,500,222            2,090,036          1,747,124
                                                       ===========         =========           ==========       ============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                        4

<PAGE>



            GLOBAL TELECOMMUNICATION SOLUTIONS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                            Six months ended
                                                                                                June 30,
                                                                                   -----------------------------------

                                                                                         1997               1996
                                                                                         ----               ----
<S>                                                                                      <C>                 <C>  
Cash flows from operating activities:
  Net loss                                                                           $(4,146,816)        $(3,123,857)
  Adjustments to reconcile net loss to net cash provided by or used in
    operating activities:
    Depreciation and amortization                                                         863,688             556,876
    Deferred compensation                                                                 103,747             230,667
    Amortization of deferred financing fees                                                47,311               6,795
    Amortization of unearned discount                                                     385,511                  --
    Issuance of common stock in connection with a severance agreement                      50,000                  --
    Loss on disposal of fixed assets                                                       19,912                  --
  Changes in operating assets and liabilities, net of effects of acquisition:
    (Increase) decrease in accounts receivable                                          (253,428)           1,296,015
    (Increase) decrease in inventory                                                    (174,327)             134,769
    Decrease in deferred costs                                                            170,834              46,574
    Decrease in prepaid royalties and patent license fees                                  55,701              14,432
    Decrease in prepaid expenses and other current assets                                  62,769              64,757
    (Increase) in other assets                                                          (704,961)            (18,183)
    Increase (decrease) in accounts payable                                             1,006,762           (715,393)
    Increase (decrease) in accrued liabilities                                            908,469            (14,192)
    Increase in sales and excise taxes payable                                            397,691             363,427
    (Decrease) increase in deferred revenue                                           (1,000,508)              66,193
                                                                                     ------------       -------------
         Net cash used in operating activities                                        (2,207,645)         (1,091,120)
                                                                                    -------------       -------------
Cash flows from investing activities:
  Purchases of fixed assets                                                             (532,974)           (222,214)
  Cash acquired in excess of cash payment for acquisition                                   --                 54,190
                                                                                   --------------       -------------
         Net cash used in investing activities                                          (532,974)           (168,024)
                                                                                    -------------       -------------
Cash flows from financing activities:
  Net proceeds from issuance of common stock and warrants                                      --           2,656,358
  Payment of notes payable to affiliate                                                 (119,293)           (550,000)
  Increase in notes receivable from Global Link prior to merger                                --           (250,655)
  Proceeds from the exercise of options                                                     4,374                  --
  Payments on capital lease obligation                                                   (24,751)            (32,404)
  Proceeds from exercise of warrants                                                    2,500,000                  --
  Increase in deferred financing fees                                                    (40,501)                  --
                                                                                   --------------      --------------
         Net cash provided by financing activities                                     2,319,829            1,823,299
                                                                                    -------------      --------------
Effects of exchange rate changes on cash                                                  (4,463)             (8,616)
                                                                                   --------------      --------------
         Net increase (decrease) in cash                                                (425,253)             555,539
Cash and cash equivalents at beginning of period                                        1,352,322             928,516
                                                                                     ------------      --------------
Cash and cash equivalents at end of period                                           $    927,069       $   1,484,055
                                                                                     ============        ============
Supplemental disclosures:
         Interest paid during the period                                            $      99,931      $           --
                                                                                     ============       =============
Income taxes paid during the period                                                 $        --        $           --
                                                                                     ============       =============
Non-cash investing and financing activities:
  Issuance of common stock in connection with acquisition                           $        --          $ 11,039,488
                                                                                     ============         ===========
  Deferred compensation arising from grant of options and warrants                   $    151,648       $     400,000
                                                                                      ===========        ============
  Conversion of convertible notes payable into common stock                          $    175,250       $     148,850
                                                                                      ===========        ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                        5

<PAGE>



            GLOBAL TELECOMMUNICATION SOLUTIONS, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                  June 30, 1997

(1)      Business and Basis of Presentation

         Business

         Global   Telecommunication   Solutions,   Inc.  (the   "Company")   was
         incorporated  on December 23, 1992 and is engaged in the  marketing and
         distribution of prepaid phone cards.  The Company's phone cards provide
         consumers  access  to  long  distance  service  through  its  switching
         facilities and long distance network arrangements.

         Basis of Presentation

         The accompanying  unaudited consolidated financial statements have been
         prepared in accordance with generally  accepted  accounting  principles
         for interim  financial  information  and with the  instructions to Form
         10-QSB and Item  310(b) of  Regulation  S-B.  Accordingly,  they do not
         include all of the  information  and  footnotes  required by  generally
         accepted accounting  principles for complete financial  statements.  In
         the  opinion  of  management,  all  adjustments  (consisting  of normal
         recurring accruals)  considered  necessary for a fair presentation have
         been included. Operating results for the six months ended June 30, 1997
         are not necessarily  indicative of the results that may be expected for
         the year ending December 31, 1997.

(2)      Loss Per Share

         Weighted  average  shares of common stock for the six months ended June
         30, 1997 and 1996 does not include  common stock  equivalents  as their
         effect would be anti-dilutive.

(3)      Reclassifications

          Certain  reclassifications  have  been  made to the 1996  consolidated
          financial      statements      to      conform     to     the     1997
          presentation.ReclassificationsCertain reclassifications have been made
          to the 1996 consolidated  financial  statements to conform to the 1997
          presentation.

(4)      Acquisition

         On February 29, 1996, pursuant to an Agreement and Plan of Merger dated
         January 18,  1996,  the  Company,  through a  wholly-owned  subsidiary,
         acquired  all the issued and  outstanding  common  stock of Global Link
         Teleco  Corporation  ("Global Link"). The acquisition was accounted for
         as a purchase.  Accordingly,  the acquired assets and liabilities  were
         recorded at their  estimated fair values at the date of acquisition and
         the operating  results of Global Link were included in the accompanying
         consolidated statement of operations from the acquisition date.

         In connection  with the merger,  the Company  issued  572,773 shares of
         common stock in exchange for all of the issued and  outstanding  common
         stock of Global Link. In addition,  the Company issued 17,602 shares of
         common stock to Peoples Telephone Company, Inc. ("Peoples"), a creditor
         of Global Link and a principal  stockholder  of the Company.  The total
         cost of the acquisition was approximately  $11,400,000 including direct
         transaction costs of approximately $344,000.


                                        6

<PAGE>



         The acquisition resulted in goodwill of $19,069,000,  based on
         an allocation of purchase price, calculated as follows:

         Fair market value of common stock issued                $11,040,000
         Fair value of liabilities assumed                        10,811,000
         Fair value of assets acquired                            (3,126,000)
         Acquisition related costs                                   344,000
                                                                  -----------
                           Goodwill                              $19,069,000

         The following  unaudited  combined pro forma  information  reflects the
         results of operations  assuming the acquisition of Global Link had been
         made on January 1, 1996.


                                                           Six Months Ended
                                                             June 30, 1996
                                                          -------------------
                 Net sales                                    $5,959,000
                 Net loss                                     (3,806,000)
                 Net loss per share                            $ (2.25)


         Pro  forma  adjustments  include  recording   amortization  expense  of
         goodwill and the elimination of interest expense on debt of Global Link
         repaid in connection with the acquisition.

         The pro forma results of operations are not  necessarily  indicative of
         the actual  results of  operations  that  would have  occurred  had the
         purchase been made at the  beginning of the  respective  period,  or of
         results which may occur in the future.

(5)      Reverse Stock Split

         In February  1997,  the Board of Directors  of the Company  approved an
         amendment to its Amended and Restated  Certificate of  Incorporation to
         effect a one-for-three reverse stock split, which was effected on March
         24, 1997.  All per share data and  references  to number of shares have
         been  retroactively  restated  in these  financial  statements  to give
         effect to the reverse stock split.

(6)      Deferred Compensation

         In January 1997, the Company  extended its consulting  agreements  with
         two of the Company's  stockholders,  pursuant to which the stockholders
         will provide  consulting  services to the Company for a two-year period
         ending February 1999. As consideration for these services,  the Company
         issued  options to purchase  25,000 shares of Common Stock at $9.00 per
         share to each stockholder. These options became exercisable in February
         1997 and remain  exercisable  until  February  2002. The estimated fair
         market  value of these  options of  $151,648  was  recorded as deferred
         compensation  and the  Company  has  recorded  compensation  expense of
         $37,912 to date.

(7)      Amounts Payable to Principal Stockholder

         In March 1997,  the Company  entered  into an  agreement  with  Peoples
         whereby  Peoples agreed not to sell or otherwise  dispose of its shares
         of the  Company's  Common  Stock  until June 30,  1997 and the  Company
         agreed that it would pay Peoples the balance of approximately  $954,000
         in trade payables ("Trade Payables") from the proceeds of the Company's
         proposed  secondary  offering  (see note 12)  within two days after the
         consummation  of such  offering.  The offering was  consummated in July
         1997 with the Trade Payables  being repaid within the  stipulated  time
         period.


                                        7

<PAGE>



(8)      Tax Obligations and Compliance

         At June  30,  1997,  the  Company  has  not  remitted  certain  amounts
         previously  collected for sales, use and excise taxes to various taxing
         jurisdictions.  Further,  the Company has not filed  certain  sales and
         use, excise,  income or franchise tax returns in certain  jurisdictions
         in which it does  business.  Management  is in the process of reviewing
         the Company's tax  collection,  remittance and compliance  policies and
         procedures and has recorded a reserve for estimated tax obligations and
         related  compliance  issues.  Depending on the ultimate  resolution  of
         these  matters,  it is  reasonably  possible  that the  amount  of this
         reserve  could  require  adjustment  in the near term and the amount of
         such adjustment could be material.

(9)      Liquidity

         The Company has  substantial  capital  requirements  resulting from the
         funding of losses  from  operations  and the need to finance  continued
         growth.  The Company  believes that its cash  balances,  along with the
         proceeds of $2,500,000 from the exercise of warrants in April 1997, and
         the net proceeds of $13,468,863  from the Company's  public offering in
         July 1997 (see note 12), will satisfy the Company's  cash  requirements
         until the end of 1998;  however,  there can be no  assurance  that this
         will be the case. In the event that the  Company's  plans change or its
         assumptions  change  or prove to be  inaccurate  (due to  unanticipated
         expenses, delays, difficulties or otherwise), or if cash flow proves to
         be insufficient to fund the Company's  operations  after such period of
         time,  the Company will be required to seek  additional  financing  and
         curtail  its  expansion  activities.  The  Company  does  not  have any
         arrangements with respect to, or sources of,  additional  financing and
         there can be no assurance that  additional  financing will be available
         to the Company on commercially reasonable terms, or at all. The failure
         to obtain such  financing  could have a material  adverse effect on the
         Company.

(10)     Warrants

         Pursuant to an agreement with Wheatley Partners,  L.P.  ("Wheatley") in
         April  1997,  the  Company  received  $2,500,000  upon the  exercise of
         warrants to purchase  333,334 shares of Common Stock issued to Wheatley
         in a private placement  consummated by the Company in December 1996. In
         consideration  for  exercising  such  warrants,  the Company  issued to
         Wheatley  warrants to purchase an aggregate of 250,000 shares of Common
         Stock.

(11)     Dial Around Compensation

         In June 1997,  the Company and three  other  parties  filed a complaint
         with  the FCC  against  Sprint,  challenging  Sprint's  application  of
         per-call  surcharges  for  toll-free  services   originating  from  pay
         telephones that  purportedly  compensate pay telephone  providers.  The
         Company  and  the  other  complainants  claim  that  Sprint's  tariffed
         per-call  surcharges are inconsistent  with the  Communications  Act of
         1934  ("Communications  Act") and the FCC's pay telephone  compensation
         order  and  are  unlawful  under  long  standing  FCC  precedent.   The
         complainants  requested  that the FCC (i)  find  that  Sprint  violated
         Section  201(b)  of the  Communications  Act  by  charging  unjust  and
         unreasonable  pay  telephone  surcharges,   (ii)  find  the  surcharges
         contained in Sprint's  tariffs unlawful and,  therefore,  unenforceable
         and (iii) require Sprint to refund, with interest,  any and all amounts
         collected from phone card providers as a result of Sprint's  imposition
         of the telephone surcharges.

         Commencing in February 1997,  Sprint has charged the Company a total of
         $441,363 in connection with the pay telephone  surcharges.  The Company
         has provided  Sprint with formal written notice  indicating its dispute
         with the calculation  and  application of the pay telephone  surcharge.
         The Company has not paid any of the disputed  charges to Sprint and has
         only accrued for a small portion  thereof.  In the event the Company is
         unsuccessful in its dispute of Sprint's  calculation and application of
         the pay  telephone  surcharge,  the  application  of that pay telephone
         surcharge could have a material adverse effect on the Company.

                                        8

<PAGE>



(12)     Subsequent Events

         The Company's Certificate of Incorporation authorizes 35,000,000 shares
         of  common  stock,  of  which  2,197,538  and  1,837,601   shares  were
         outstanding  at June 30, 1997 and December 31, 1996,  respectively.  In
         July 1997, the Company sold in a public  offering  2,875,000  shares of
         its common stock which  generated net proceeds of  approximately  $13.5
         million.  The proceeds are to be used (i) to expand sales and marketing
         activities,   (ii)  to  expand  the  Company's   network  of  switching
         platforms,  (iii) to repay  debt owed to Peoples  and (iv) for  working
         capital and general corporate purposes.




                                        9

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

                  When used in this Form 10-QSB and in future  filings by Global
Telecommunication  Solutions,  Inc. ("Company") with the Securities and Exchange
Commission  ("SEC"), in the Company's press releases and in oral statements made
with the approval of an authorized  executive officer of the Company,  the words
or phrases "will likely result,"  "management expects" or "the Company expects,"
"will continue," "is anticipated," "estimated" or similar expressions (including
confirmations  by an  authorized  executive  officer of the  Company of any such
expressions  made by a third party with  respect to the Company) are intended to
identify  "forward-  looking  statements"  within  the  meaning  of the  Private
Securities  Litigation  Reform Act of 1995.  Readers are  cautioned not to place
undue reliance on any such forward-looking  statements, each of which speak only
as of  the  date  made.  Such  statements  are  subject  to  certain  risks  and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
historical  earnings and those presently  anticipated or projected.  The Company
has no obligation to publicly  release the result of any revisions  which may be
made to any  forward-looking  statements to reflect anticipated or unanticipated
events or circumstances occurring after the date of such statements.

Company Overview

                  On February 29, 1996, the Company  acquired,  through a merger
("Global  Link  Merger"),  all of the  outstanding  capital stock of Global Link
Teleco  Corporation  ("Global  Link")  for a  purchase  price  of  approximately
$11,400,000, and the assumption of liabilities. Prior to the Global Link Merger,
the  Company  focused  on  marketing  custom-designed  prepaid  phone  cards for
business  promotional use and other retail products utilizing prepaid phone card
technology.  Global Link  marketed  primarily  traditional  prepaid  phone cards
through various retailers and distributors, including supermarkets,  convenience
stores,  travel  agencies and tour  wholesalers and  Company-owned  and operated
retail phone centers.  Capitalizing on the strengths of their prior  businesses,
the Company and Global Link have  integrated  their  operations to create a more
diversified  prepaid phone card company.  Global Link's  operating  results were
consolidated with the Company's commencing on March 1, 1996.

                  The Company records  deferred revenue at the time it sells its
prepaid phone cards. The Company recognizes revenue (i) at the time the consumer
accesses long distance services utilizing the Company's phone cards or (ii) when
the phone card expires  (generally  12 to 18 months after  issuance or six to 12
months after last use).  At the time revenue is  recognized,  the costs to which
that  revenue  specifically  relates  also  are  recognized.  When  the  Company
recognizes  revenue due to the  expiration of a prepaid phone card,  the Company
does not incur any long distance costs associated with that revenue.  As of June
30, 1997, the Company's deferred revenue was $3,430,801.

                  The Company's primary cost of sales are the costs of providing
the long  distance  service and the design and  production  of its prepaid phone
cards.  The cost of providing long distance  service  represents  obligations to
carriers that provide  minutes of long distance over their networks and services
associated with the Company's phone cards.

                  The Company's selling and marketing expenses consist primarily
of salary and related  employment  expenses  for the  Company's  in-house  sales
force,  advertising and promotional  expenses,  and commissions payable to third
party  distributors,  sales  agents  and  brokers.  The  Company's  general  and
administrative expenses consist primarily of salaries and occupancy costs.

                                       10

<PAGE>




Results of Operations

                  The  following  table sets forth,  for the periods  indicated,
items from the Company's  Consolidated  Statements of Operations  expressed as a
percentage of sales:

<TABLE>
<CAPTION>

                                                                                            Percentage of Sales
                                                                  ----------------------------------------------------------------
                                                                             Six Months Ended              Three Months Ended
                                                                                 June 30,                        June 30,
                                                                  ----------------------------------------------------------------
                                                                            1997            1996            1997           1996
                                                                            ----            ----            ----           ----
<S>                                                                          <C>             <C>            <C>            <C>  
Traditional card sales..........................................            81.3            89.6            81.4           95.2
Promotional card and other retail product
   and service sales............................................            18.7            10.4            18.6            4.8
                                                                           -----           -----            ----           ----
         Net sales..............................................           100.0           100.0           100.0          100.0
Cost of sales...................................................            80.8            75.9            83.4           75.8
                                                                           -----           -----            ----           ----
         Gross profit...........................................            19.2            24.1            16.6           24.2
                                                                           -----           -----            ----           ----
Selling and marketing expenses..................................            15.9            29.0            12.0           24.8
General and administrative expenses.............................            34.3            51.6            27.7           46.3
Depreciation and amortization...................................            10.0            12.6             8.8           13.5
                                                                           -----           -----            ----           ----
         Operating expenses.....................................            60.2            93.2            48.5           84.6
                                                                           -----           -----            ----           ----
         Operating loss.........................................          (41.0)          (69.1)          (31.9)         (60.4)
                                                                          ------          ------          ------         ------
Interest income.................................................             0.2             0.9             0.2            0.7
Interest expense................................................           (7.7)           (2.0)           (6.9)          (2.2)
Other...........................................................             0.4            0.1              0.6            0.1
                                                                           -----          ------            ----           ----
         Loss before income taxes...............................          (48.1)          (70.1)          (38.1)         (61.8)
Income tax expense..............................................              --              --              --             --
                                                                            ----            ----            ----           ----
        Net loss................................................         (48.1%)         (70.1%)         (38.1%)        (61.8%)
                                                                         =======         =======         =======        =======
</TABLE>


                  Substantially   all  of  the   increases   in  revenues   from
traditional  cards and  operating  expenses were  attributable  to the Company's
acquisition  on February  29, 1996 of all of the  outstanding  capital  stock of
Global  Link.  Global  Link's  operating  results  were  consolidated  with  the
Company's  commencing  on  March  1,  1996.  Accordingly,  while  Global  Link's
operating  results were included for all six months of the period ended June 30,
1997,  Global Link's operating results only were included for four months of the
period ended June 30, 1996.

Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

                  Net  sales  for  the six  months  ended  June  30,  1997  were
$8,604,812  compared to  $4,459,356  for the six months ended June 30, 1996,  an
increase of  $4,145,456,  or 93.0%.  Net sales of  traditional  phone cards were
approximately  $6,885,000  for the six months ended June 30,  1997,  compared to
approximately  $3,995,000 for the six months ended June 30, 1996, an increase of
approximately  $2,890,000.  Net  sales  generated  from the sale of  promotional
cards,  other retail products  utilizing prepaid phone card technology and other
services for the six months ended June 30, 1997 were  approximately  $1,606,000,
compared to approximately  $464,000 for the comparable period in the prior year,
an increase of approximately  $1,142,000.  The Company's gross margins decreased
to 19.2% of net sales for the six months ended June 30, 1997,  compared to 24.0%
of net sales for the  comparable  period in the prior year.  The decrease in the
gross  margin was  primarily  a result of an  increase in the sale of cards with
reduced  per-minute rates to consumers and an increase in patent license fees as
a result of an increase in revenues  subject to such fees,  offset by a decrease
in production and switch administration costs as a percentage of sales.

                                       11

<PAGE>



                  Selling and marketing  expenses were $1,367,629  (15.9% of net
sales) for the six months ended June 30, 1997,  compared to $1,292,376 (29.0% of
net sales) for the six months ended June 30,  1996.  The increase was the result
of changes  occurring  mainly  within the  following  areas:  The  provision for
doubtful  accounts  increased by approximately  $122,500;  advertising  expenses
increased by approximately  $20,000;  and expenses for sales personnel increased
by approximately $28,000.  Promotional items decreased by approximately $33,900.
Salary expenses decreased by approximately $39,800 as a result of the closing of
several of the Company's retail phone centers in the New York area.

                  General and administrative  expenses were $2,947,346 (34.3% of
net sales) for the six months ended June 30, 1997, compared to $2,299,364 (51.6%
of net sales) for the six months ended June 30, 1996.  The increase  consists of
approximately  $312,000 in salaries  and  related  benefits of other  additional
personnel  which make up the  Company's  infrastructure,  including  accounting,
legal, customer service,  customer support and information technology personnel;
approximately $164,400 in rent costs;  approximately $71,100 in telephone costs;
approximately  $63,400 in computer costs and approximately $50,000 expensed as a
result of the issuance of stock to a former employee.

                  Depreciation  and amortization  expense  increased to $863,688
for the six months  ended June 30, 1997 from  $563,671  for the six months ended
June 30, 1996,  primarily due to the amortization of goodwill resulting from the
Global Link Merger and the acquisition of additional switching equipment.

                  Investment and interest  income was $14,519 for the six months
ended June 30, 1997, compared to $41,154 for the six months ended June 30, 1996.
The  decrease  of  $26,635  was a  result  of  lower  balances  of cash and cash
equivalents on hand.

                  Interest  expense  for the six  months  ended  June  30,  1997
increased  to  $662,495  from  $87,508 for the six months  ended June 30,  1996,
primarily  as a result  of  interest  on the  principal  amount  of  convertible
debentures,  amounts due to Peoples Telephone Company, Inc. ("Peoples"), and the
amortization of the unearned  discount and deferred  financing costs relating to
the issuance of notes payable pursuant to the private  placement  consummated by
the Company in December 1996.

                  For the foregoing reasons,  the Company incurred a net loss of
$4,146,816  for the six months  ended June 30,  1997,  compared to a net loss of
$3,123,857 for the six months ended June 30, 1996.

Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996

                  Net  sales  for the  three  months  ended  June 30,  1997 were
$4,916,659  compared to $3,131,646  for the three months ended June 30, 1996, an
increase of  $1,785,103,  or 57.0%.  Net sales of  traditional  phone cards were
approximately  $3,890,000 for the three months ended June 30, 1997,  compared to
approximately  $2,983,000  for the three months ended June 30, 1996, an increase
of  approximately  $907,000.  Net sales  generated  from the sale of promotional
cards,  other retail products  utilizing prepaid phone card technology and other
services for the three months ended June 30, 1997 were  approximately  $913,000,
compared to approximately  $149,000 for the comparable period in the prior year,
an increase of approximately  $764,000. The Company's gross margins decreased to
16.6% of net sales for the three months  ended June 30, 1997,  compared to 24.2%
of net sales for the  comparable  period in the prior year.  The decrease in the
gross  margin was  primarily  a result of an  increase in the sale of cards with
reduced  per-minute rates to consumers and an increase in patent license fees as
a result of an increase in revenues  subject to such fees,  offset by a decrease
in production and switch administration costs as a percentage of sales.

                  Selling and marketing  expenses  were  $588,966  (12.0% of net
sales) for the three months ended June 30, 1997,  compared to $777,094 (24.8% of
net sales) for the three months ended June 30, 1996. The increase was the result
of changes  occurring  mainly  within the  following  areas:  The  provision for
doubtful  accounts  increased  by $61,419;  advertising  expenses  increased  by
approximately   $21,700;   and  expenses  for  sales   personnel   increased  by
approximately  $8,200.  Promotional  items decreased by  approximately  $17,000.
Salary

                                       12

<PAGE>



expenses  decreased  by  approximately  $201,100  as a result of the  closing of
several of the Company's  retail phone centers in the New York area as well as a
restructuring within the Company's sales team.

                  General and administrative  expenses were $1,361,202 (27.7% of
net sales) for the three  months  ended June 30,  1997,  compared to  $1,450,384
(46.3% of net sales) for the three months ended June 30, 1996.  The decrease was
a result of a reduction in expenditures  for professional and consulting fees of
approximately $116,600.

                  Depreciation  and amortization  expense  increased to $435,436
for the three  months  ended June 30, 1997 from  $422,253  for the three  months
ended June 30, 1996, primarily due to the acquisition of additional equipment.

                  Investment  and  interest  income  was  $10,618  for the three
months ended June 30, 1997,  compared to $21,573 for the three months ended June
30,  1996.  The  decrease of $10,955 was a result of lower  balances of cash and
cash equivalents on hand.

                  Interest  expense  for the three  months  ended June 30,  1997
increased  to $339,742  from  $70,282 for the three  months ended June 30, 1996,
primarily as a result of the amortization of the unearned  discount and deferred
financing  costs  relating  to the  issuance  of notes  payable  pursuant to the
private placement consummated by the Company in December 1996.

                  For the foregoing reasons,  the Company incurred a net loss of
$1,871,901  for the three months ended June 30, 1997,  compared to a net loss of
$1,936,086 for the three months ended June 30, 1996.

Liquidity and Capital Resources

                  At June 30, 1997 the Company had cash and cash  equivalents of
$927,069 and a working capital deficit of $7,115,060, compared to $1,352,322 and
$5,630,385, respectively, at December 31, 1996.

                  Net cash used in operating activities for the six months ended
June 30, 1997 of  $2,207,645  was  primarily due to the Company's net loss and a
decrease in deferred revenue,  offset by non-cash items such as depreciation and
amortization,  increased accounts payable, accrued expenses and sales and excise
taxes payable and a decrease in accounts  receivable.  Accounts  receivable  are
generated pursuant to sales of prepaid phone cards primarily to distributors and
retail establishments. Typically, the Company provides 30-day terms (or less) to
reputable  retail  establishments  that sell its phone cards.  Deferred  revenue
represents  sales of  prepaid  phone  cards for which  revenue  has not yet been
recognized,  but typically  will be  recognized  in future  periods as customers
access long distance services, at the expiration dates of the phone cards or, in
the case of promotional  phone card  programs,  during the period the program is
executed.  Net cash used in investing  activities  for the six months ended June
30, 1997  consisted of $532,973 of capital  expenditures.  Net cash  provided by
financing  activities  for the six  months  ended  June 30,  1997  consisted  of
payments  to Peoples of  $119,293,  payments  on capital  lease  obligations  of
$24,751,  an increase in deferred  financing fees of $40,501 in connection  with
the  issuance of notes  payable in December  1996,  offset by $4,374 of proceeds
from the exercise of employee  stock options and $2,500,000 of proceeds from the
exercise of warrants.  Under its carrier agreement with Sprint, the Company must
fulfill a $200,000 per month usage commitment.

                  In April 1997, the Company filed a  registration  statement on
Form SB-2 with the SEC for a secondary  offering  of  securities.  The  offering
("Public Offering") was consummated in July 1997 and yielded approximately $13.5
million of net proceeds to the Company.

                  As indicated in the  accompanying  financial  statements,  the
Company incurred a net loss of $4,146,816 for the six months ended June 30, 1997
and is in a negative  working  capital  position of $7,115,060 at June 30, 1997.
Management's  projections  indicate  that the Company  anticipates  that it will
continue to generate  operating  losses and negative  cash flow at least through
1997. Further, the Company is delinquent on

                                       13

<PAGE>



certain vendor  obligations as of June 30, 1997 and the Company has not remitted
certain amounts previously  collected for sales, use and excise taxes to various
taxing jurisdictions. The Company has substantial capital requirements resulting
from the funding of losses  from  operations  and the need to finance  continued
growth. The Company believes that its cash balances,  along with the proceeds of
$2,500,000  from the exercise of warrants in April 1997, and the net proceeds of
approximately $13.5 million from its Public Offering, will satisfy the Company's
cash requirements until the end of 1998; however, there can be no assurance that
this  will be the case.  In the event  that the  Company's  plans  change or its
assumptions  change or prove to be inaccurate  (due to  unanticipated  expenses,
delays, difficulties or otherwise), or if cash flow proves to be insufficient to
fund the  Company's  operations  after such period of time,  the Company will be
required to seek additional financing or curtail its expansion  activities.  The
Company  does not  have  any  arrangements  with  respect  to,  or  sources  of,
additional  financing and there can be no assurance  that  additional  financing
will be available to the Company on  commercially  reasonable  terms, or at all.
The failure to obtain such financing could have a material adverse effect on the
Company.


PART II. OTHER INFORMATION

Item 2.  Changes in Securities

(c)      Recent Sales of Unregistered Securities

                  During the six months  ended June 30,  1997,  the Company made
the following sales of unregistered securities:

<TABLE>
<CAPTION>

                                                            Consideration Received
                                                              and Description of                          If Option, Warrant
                                                            Underwriting or Other                           or Convertible
                                                             Discounts to Market       Exemption from     Security, Terms of
                                                              Price Afforded to         Registration         Exercise or
Date of Sale            Title of Security    Number Sold          Purchasers              Claimed             Conversion
------------            -----------------    ------------   ------------------------   --------------    ---------------------
<S>                            <C>               <C>                 <C>                    <C>                  <C> 
4/1/97                  Common Stock          333,334       Exercise of warrants            4(2)                 N/A
------------------------------------------------------------------------------------------------------------------------------
                                                            Warrants issued in                            Exercisable through
4/28/97                 Warrants              250,000       consideration for the           4(2)          December 14, 1999
                                                            exercise of $2.5 million                      at an exercise price
                                                            of warrants                                   of $12.00 per share
------------------------------------------------------------------------------------------------------------------------------
                                                            Conversion of 6%
5/30/97 and  6/2/97     Common Stock           7,422        Senior Secured                  4(2)                 N/A
                                                            Convertible Promissory
                                                            Notes
------------------------------------------------------------------------------------------------------------------------------
</TABLE>


Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         27       Financial Data Schedule (6/30/97)

(b)      Current Reports on Form 8-K

         None


                                       14

<PAGE>



                                   SIGNATURES


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


Dated:   August 14, 1997

                                  GLOBAL TELECOMMUNICATION SOLUTIONS, INC.



                                   By:         /s/ Michael Kresky
                                      -----------------------------------------
                                       Michael Kresky, Vice President - Finance
                                           and principal accounting officer



                                       15

<PAGE>

EXHIBIT INDEX


Exhibit Number               Description                             Page

27                           Financial Data Schedule                  17




                                       16

<PAGE>