================================================================================



                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                                 ---------------

                                    FORM 10-Q
(Mark One)

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

         For the quarterly period ended September 30, 1996

                                  OR

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

         For the transition period from ___________ to ___________

                           TRESCOM INTERNATIONAL, INC.
             (Exact Name of Registrant as Specified in its Charter)

                        COMMISSION FILE NUMBER : 0-27594

             FLORIDA                                             
(State  or Other  Jurisdiction  of                    65-0454571
  Incorporation or Organization)         (I.R.S. Employer Identification No.)


             200 EAST BROWARD BOULEVARD
              FORT LAUDERDALE, FLORIDA                  33301
      (Address of Principal Executive Offices)        (Zip Code)

                                 (954) 763-4000
              (Registrant's Telephone Number, Including Area Code)

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

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

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of Common Stock, as of the latest practicable date.

               CLASS                                      OUTSTANDING
               -----                                      -----------

     Common Stock, par value $0.0419                 11,632,145 shares
     per share.                                      as of November 11, 1996

================================================================================



<PAGE>



                           TRESCOM INTERNATIONAL, INC.

                                      INDEX
                                      -----

PART I.  FINANCIAL INFORMATION                                       PAGE NO.
------------------------------

ITEM 1.  Financial Statements

         Consolidated  Balance  Sheets as of September 30,
         1996  (Unaudited) and December 31, 1995 ................        2

         Consolidated  Statements  of  Operations  for the
         Three  Months Ended September 30, 1996 (Unaudited),
         the Three Months Ended September 30, 1995
         (Unaudited),   the  Nine  Months  Ended   September
         30,  1996 (Unaudited), and the Nine Months Ended
         September 30, 1995......................................        4

         Consolidated Statements of Shareholder's Equity
         at September 30, 1996 (Unaudited) ......................        5

         Consolidated Statements of Cash Flows for the 
         Nine Months Ended September 30, 1996 (Unaudited)
         and the Nine Months Ended September 30, 1995 ...........        6

         Notes to Consolidated Financial Statements
         (Unaudited) ............................................        7

ITEM 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.....................       17


PART II. OTHER INFORMATION
--------------------------

ITEM 1.  Legal Proceedings.......................................       21

ITEM 2.  Changes in Securities...................................       21

ITEM 3.  Default Upon Senior Securities..........................       21

ITEM 4.  Submission of Matters to a Vote of Security-Holders.....       21

ITEM 5.  Other Information.......................................       21

ITEM 6.  Exhibits and Reports on Form 8-K........................       21

SIGNATURES


<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>

                                            TRESCOM INTERNATIONAL, INC.
                                            CONSOLIDATED BALANCE SHEETS

                                                      ASSETS


<CAPTION>
                                                                                                 SEPTEMBER 30,     DECEMBER 31,
                                                                                                     1996             1995
                                                                                                 -------------     -----------
                                                                                                          (UNAUDITED)
                                                                                              (IN THOUSANDS, EXCEPT SHARE DATA)

CURRENT ASSETS:
<S>                                                                                                  <C>           <C>     
Cash and cash equivalents ..............................................................             $  6,069      $  2,052
Short term investments .................................................................                1,007          --
Accounts receivable, net of allowance for doubtful accounts
  of $5,748 and  $4,140, respectively ..................................................               28,056        17,054
Other current assets ...................................................................                2,499         1,302
                                                                                                     --------      --------
   Total current assets ................................................................               37,631        20,408
Property and equipment, at cost:
   Transmission and communications equipment ...........................................               20,706        14,001
   Furniture, fixtures and other .......................................................                5,655         3,494
                                                                                                     --------      --------
                                                                                                       26,361        17,495
Less accumulated depreciation and amortization .........................................               (4,633)       (2,716)
                                                                                                     --------      --------
                                                                                                       21,728        14,779
OTHER ASSETS:
Customer bases, net of accumulated amortization of $1,174
   and $6,612, respectively ............................................................                2,679         3,092
Excess of cost over net assets of business acquired, net of
   accumulated amortization of $2,114 and $1,371,
   respectively ........................................................................               32,569        33,313
Other ..................................................................................                  647         1,038
                                                                                                     --------      --------
Total assets ...........................................................................              $95,254      $ 72,630
                                                                                                     ========      ========

</TABLE>











                See accompanying notes to consolidated financial statements.




<PAGE>

<TABLE>

                           TRESCOM INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDERS' EQUITY

<CAPTION>

                                                                                              SEPTEMBER 30,          DECEMBER 31,
                                                                                                 1996                   1995
                                                                                             ---------------       ---------------
                                                                                              (UNAUDITED)
                                                                                               (IN THOUSANDS, EXCEPT SHARE DATA)

CURRENT LIABILITIES:
<S>                                                                                         <C>                    <C>      
   Accounts payable ..................................................................      $   1,709              $   1,613
   Accrued network costs .............................................................         18,042                 11,585
   Other accrued expenses ............................................................          3,817                  3,459
   Long-term obligations due within one year .........................................            719                 25,290
   Notes payable to shareholder ......................................................           --                    8,179
     Other current liabilities .......................................................            182                    294
                                                                                            ---------              ---------
       Total current liabilities .....................................................         24,469                 50,420
Long term obligations (Notes 3 and 4) ................................................          3,671                    702

Shareholders' equity
   Redeemable preferred stock, $.01 par value, 1,000,000
     shares authorized including accrued undeclared
       dividends (Notes 5 and 9 )
         Series A, no shares authorized, issued and
           outstanding; 180,617 shares authorized,
           issued and outstanding ....................................................          --                   21,807
         Series B, no shares authorized, issued and
           outstanding; 200,000 shares authorized,
           104,444 shares issued and outstanding .....................................          --                   11,620
         Series C, no shares authorized, issued and
           outstanding; 151,421 shares authorized,
           issued and outstanding ....................................................          --                   16,750
   Common stock, $.0419 par value; 50,000,000 shares
     authorized, 11,632,145 shares issued and outstanding;
     2,386,663 shares issued and outstanding .........................................           487                    100
   Deferred compensation .............................................................          (927)                  (657)
   Additional paid-in capital ........................................................       104,610                  4,124
   Accumulated deficit ...............................................................       (37,056)               (32,236)
                                                                                           ---------              ---------
Total shareholders' equity ...........................................................        67,114                 21,508
                                                                                           ---------              ---------
Total liabilities and shareholders' equity ...........................................     $  95,254              $  72,630
                                                                                           =========              =========

</TABLE>



          See accompanying notes to consolidated financial statements.

<TABLE>

                                            TRESCOM INTERNATIONAL, INC.
                                       CONSOLIDATED STATEMENTS OF OPERATIONS


<CAPTION>

                                                                        THREE MONTHS ENDED          NINE MONTHS ENDED
                                                                          SEPTEMBER 30,               SEPTEMBER 30,
                                                                         1996         1995          1996         1995
                                                                       ------------------------------------------------
                                                                            (UNAUDITED)                (UNAUDITED)
                                                                           (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                                    <C>          <C>          <C>           <C>     
Revenues..........................................................     $ 36,007     $ 28,168     $ 101,859     $ 75,046
Cost of services                                                         27,188       20,192        77,446       54,864
                                                                       --------     --------      --------     --------
Gross profit......................................................        8,819        7,976        24,413       20,182
Selling, general and administrative                                       7,975        6,733        22,289       19,699
Depreciation and amortization.....................................        1,236        1,041         3,493        2,741
Expenses related to Hurricane Marilyn.............................         -           2,500          -           2,500
Settlement with a major customer..................................         -            -             -           4,069
                                                                       --------     --------      --------     --------
Operating loss....................................................         (392)      (2,298)       (1,369)      (8,827)
Interest (income) expense, net....................................         (103)         635           808        1,782
                                                                       --------     --------      --------     --------
Net loss before extraordinary  items..............................         (289)      (2,933)       (2,177)     (10,609)
Extraordinary items...............................................         -            -            1,956         -
                                                                       --------     --------      --------     --------    
Net loss..........................................................     $   (289)    $ (2,933)     $ (4,133)    $(10,609)
                                                                       ========     ========      ========     ========

Per Share Data:
Loss per share of common stock and
  common stock equivalents before
  extraordinary items.............................................     $  (0.02)    $ (0.39)      $  (0.19)    $  (1.42)
Extraordinary items per share.....................................          -           -         $  (0.17)          -
                                                                       --------     -------       --------     --------   
Loss per share of common stock and
  common stock equivalents after
  extraordinary items.............................................     $  (0.02)    $ (0.39)      $  (0.36)    $  (1.42)
                                                                       =========    =======       ========     ========
                                                         
Weighted average number of common
  stock and common stock
  equivalents outstanding.........................................       12,200       7,489        11,533         7,489
                                                                       =========    =======       =======       ======= 
</TABLE>






                See accompanying notes to consolidated financial statements.




<PAGE>

<TABLE>


                                                                               TRESCOM INTERNATIONAL, INC.
                                                                     CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                                                                       (UNAUDITED)
                                                                     (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

                                                       Redeemable Preferred Stock                
                                              -------------------------------------------------  
                                                                        Accrued                  
                                                                       Undeclared      Stock     
                                                Shares       Amount    Dividends    Subscriptions
                                              -------------------------------------------------  

<S>                                             <C>         <C>          <C>           <C>
Balance at December 31, 1995 ................   436,482     $ 43,648     $6,529        $--
                                              ================================================
Conversion of Redeemable Preferred Stock to
   Common Stock .............................  (436,482)    (43,648)         --         --   
Accrued dividends on Redeemable Preferred
   Stock ....................................      --           --          687         --   
Conversion of accrued dividends on Redeemable
   Preferred Stock to Common Stock ..........      --           --       (7,216)        --   
Initial public offering of Common Stock .....      --           --           --         --   
Costs associated with initial public
   offering of Common Stock .................      --           --           --         --   
Grant of stock options ......................      --           --           --         --   
Exercise of stock options ...................      --           --           --         --   
Net loss ....................................      --           --           --         --   
                                              ------------------------------------------------
Balance at March 31, 1996 ...................      --         $ --         $ --        $--
Exercise of stock options ...................      --           --           --         --   
Forfeiture of stock options .................      --           --           --         --   
Costs associated with initial public
   offering of Common Stock .................      --           --           --         --   
Net loss ....................................      --           --           --         --   
                                              ------------------------------------------------
Balance at June 30, 1996 ....................      --         $ --         $ --        $--
Exercise of stock options ...................      --           --           --         --   
Costs associated with initial public
   offering of Common Stock .................      --           --           --         --   
Net loss ....................................      --           --           --         --   
                                              -----------------------------------------------
Balance at September 30, 1996 ...............      --         $---         $---        $--
                                              ===============================================


                                                        Common Stock
                                              ----------------------------------
                                                                      Additional
                                                                        Paid-in 
                                                Shares       Amount     Capital
                                              ----------------------------------

Balance at December 31, 1995 ................  2,386,663      $100      $  4,124
                                              ===================================
Conversion of Redeemable Preferred Stock to
   Common Stock .............................  3,911,129       164        43,484
Accrued dividends on Redeemable Preferred
   Stock ....................................      --           --           --   
Conversion of accrued dividends on Redeemable
   Preferred Stock to Common Stock ..........    646,482        27         7,189
Initial public offering of Common Stock .....  4,545,455       190        50,537
Costs associated with initial public
   offering of Common Stock .................      --           --        (1,739)
Grant of stock options ......................      --           --         1,701
Exercise of stock options ...................     39,458         2            13
Net loss ....................................      --           --           --   
                                              -----------------------------------
Balance at March 31, 1996 ...................  11,529,187     $483      $105,309
Exercise of stock options ...................      21,461        1             8
Forfeiture of stock options .................      --           --          (236)
Costs associated with initial public
   offering of Common Stock .................      --           --          (286)
Net loss ....................................      --           --           --   
                                              -----------------------------------
Balance at June 30, 1996 ....................  11,550,648     $484      $104,795
Exercise of stock options ...................      81,497        3            32
Costs associated with initial public
   offering of Common Stock .................      --           --          (217)
Net loss ....................................      --           --           --   
                                              -----------------------------------
Balance at September 30, 1996 ...............  11,632,145     $487      $104,610
                                              ===================================


                                                                             Total
                                                 Deferred    Accumulated  Stockholders'
                                               Compensation    Deficit       Equity
                                              ------------------------------------------
                                            
Balance at December 31, 1995 ................   $  (657)      $(32,236)     $21,508
                                              ========================================

Conversion of Redeemable Preferred Stock to
   Common Stock .............................        --            --           --
Accrued dividends on Redeemable Preferred
   Stock ....................................        --           (687)         --
Conversion of accrued dividends on Redeemable
   Preferred Stock to Common Stock ..........        --            --           --
Initial public offering of Common Stock .....        --            --        50,727
Costs associated with initial public
   offering of Common Stock .................        --            --        (1,739)
Grant of stock options ......................    (1,029)           --           672
Exercise of stock options ...................        --            --            15
Net loss ....................................        --         (3,407)      (3,407)
                                               ---------------------------------------
Balance at March 31, 1996 ...................   $(1,686)      $(36,330)     $67,776
Exercise of stock options ...................        65            --            74
Forfeiture of stock options .................       236            --           --
Costs associated with initial public
   offering of Common Stock .................        --            --          (286)
Net loss ....................................        --           (437)        (437)
                                              ----------------------------------------
Balance at June 30, 1996 ....................   $(1,385)      $(36,767)     $67,127
Exercise of stock options ...................       458            --           493
Costs associated with initial public
   offering of Common Stock .................        --            --          (217)
Net loss ....................................        --           (289)        (289)
                                              ----------------------------------------
Balance at September 30, 1996 ...............   $  (927)      $(37,056)     $67,114
                                              ========================================

</TABLE>

 
            See accompanying notes to consolidated financial statements

<PAGE>


<TABLE>


                           TRESCOM INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS



                                                                             NINE MONTHS ENDED SEPTEMBER 30,
                                                                              1996                    1995
                                                                           ---------               ----------
                                                                           (UNAUDITED)
                                                                                      (IN THOUSANDS)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                    <C>                          <C>      
Net loss                                                               $     (4,133)                $(10,609)
Adjustments to reconcile net loss to net cash used in
      operating activities:
   Depreciation and amortization                                              3,493                    2,741
   Non-cash interest on derivative instruments                                  302                      -
   Non-cash interest on note to shareholder                                     297                      -
   Non-cash compensation                                                      1,195                      125
   Extraordinary item: early retirement of revolving credit facility            431                      -
   Extraordinary item: early retirement of note to shareholder                1,524                      -
Changes in operating assets and liabilities, net:
       Accounts and note receivable                                         (11,002)                  (6,628)
       Other current assets                                                  (2,608)                    (861)
       Accounts payable                                                          96                   (1,103)
       Accrued network costs                                                  6,457                    7,961
       Other accrued expenses                                                    63                     (286)
       Other current liabilities                                               (112)                     -
                                                                            --------                 --------
Net cash used in operating activities                                        (3,997)                  (8,930)
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property, plant and equipment                                 (8,866)                  (4,777)
   Expenditures for line installations                                          (60)                    (353)
                                                                            --------                 --------
Net Cash used in investing activities                                        (8,926)                  (5,130)
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from the issuance of common stock                            50,727                      915
   Net proceeds from the issuance of preferred stock                            -                     14,778
   Costs relating to initial public offering                                 (1,954)                     -
   Repayment of revolving credit facility                                   (24,173)                     -
   Repayment of seller's note                                                (1,000)                     -
   Repayment of notes payable to shareholder                                (10,000)                     -
   Repayment of  derivative instruments                                        (302)                     -
   Proceeds from exercise of stock options                                       59                      -
   Repayment of cash overdraft                                                  -                       (382)
   Repayment of debt                                                            -                        (23)
   Proceeds from capital lease                                                3,701                      -
   Principal payments on capital lease obligations                             (118)                    (128)
                                                                            --------                 --------
Net cash provided by financing activities                                    16,940                   15,160
                                                                            --------                 --------
Net change in cash                                                            4,017                    1,100
Cash and cash equivalents at beginning of period                              2,052                      -
                                                                            --------                 --------
Cash and cash equivalents at end of period                                  $ 6,069                  $ 1,100
                                                                            ========                 ========
                                                                       
Interest paid                                                               $   424                    2,066
                                                                            ========                 ========

</TABLE>

                See accompanying notes to financial statements.

<PAGE>


                          TRESCOM INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. BUSINESS

   ORGANIZATION AND BASIS OF PRESENTATION

   TresCom  International,  Inc. (the "Company") was  incorporated in Florida on
December 8, 1993 as TeraCom  Communications,  Inc.  Effective June 30, 1994, the
Company  changed  its  name to  TresCom  International,  Inc.  The  Company  was
considered a development  stage enterprise from its inception until February 22,
1994, the date revenues were first generated.  During the development stage, the
Company incurred a net loss of $319.

   The Company is a facilities  based long distance  telecommunications  carrier
focused on international long distance traffic originating in the United States.
The Company offers telecommunications services, including long distance, calling
cards,  prepaid  debit  cards,  international  toll-free  calling and  bilingual
operator services.

   The Company has a limited  operating  history  and has  sustained  net losses
since its inception.  In addition,  the Company had a working capital deficiency
of  approximately  $33,012  at  December  31,  1995 but had  working  capital of
approximately $13,162 at September 30, 1996. The Company generated negative cash
flows from  operations of $8,930 during the nine months ended September 30, 1995
and $3,997 for the nine months  ended  September  30,  1996.  Further, since its
formation,  the Company has experienced  growth and its operations have required
substantial  additional  capital.  The  Company's  growth has  placed,  and will
continue to place,  significant  demands on the  Company's  financial  and other
resources.  In connection with these demands, the Company successfully completed
an initial public offering of its Common Stock,  par value $.0419 per share (the
"Common  Stock")  in  February  1996 (the  "Initial  Public  Offering")  for net
proceeds of approximately $48,600 as described in Note 9.

   The 1995 Annual Report on Form 10-K for the Company and subsidiaries includes
a summary of significant  accounting  policies and should be read in conjunction
with this Quarterly Report on Form 10-Q. The consolidated  financial  statements
at September  30, 1996 and the quarter then ended are  unaudited and the balance
sheet at December 31, 1995 is derived from audited financial  statements.  These
financial  statements  do not include  all  disclosures  required  by  generally
accepted  accounting  principles.  In the opinion of  management,  all  material
adjustments  necessary  to present  fairly the  results of  operations  for such
periods  have been  included.  All such  adjustments  are of a normal  recurring
nature.  Results  of  operations  for any  interim  period  are not  necessarily
indicative of the results of operations for the entire fiscal year.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   PRINCIPLES OF CONSOLIDATION

   The accompanying  consolidated  financial  statements include the accounts of
the Company and its  wholly-owned  subsidiaries.  All  significant  intercompany
transactions and balances have been eliminated in consolidation.


<PAGE>



                           TRESCOM INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

   CASH AND CASH EQUIVALENTS

   The Company considers all highly liquid investments with original  maturities
of three months or less to be cash equivalents. Cash equivalents are recorded at
cost, which approximates fair value.

   PROPERTY AND EQUIPMENT

   Property and equipment is recorded at cost.  Depreciation and amortization is
provided for financial  reporting  purposes using the straight-line  method over
the following estimated useful lives:

       Transmission and communications equipment       3 to 10 years
       Furniture, fixtures and other                   3 to 7 years

       The costs of software and software  upgrades  purchased  for internal use
are capitalized.

   ADVERTISING

     The  Company   expenses   advertising   costs  as   incurred,   except  for
direct-response  advertising,  which  is  capitalized  and  amortized  over  its
expected period of future benefit.  Direct-response advertising consists of fees
paid to various  telemarketing  entities and agents.  The capitalized  costs are
amortized over a nine month period  beginning in the month  revenues  associated
with those costs are first generated.

   At September  30, 1996,  advertising  costs  totaling  $976 were  recorded as
assets.  Advertising  expense for the year ended December 31, 1995 and the three
and nine  months  ended  September  30,  1996  were  $1,431,  $742  and  $1,881,
respectively.

   OTHER ASSETS

   The excess of costs over net assets of  businesses  acquired  represents  the
excess of the  consideration  paid over the fair  value of the net assets and is
amortized on a straight-line basis over 35 years. Customer bases are recorded at
the  estimated  value of the  customer  bases  acquired  in the  acquisition  of
businesses  and  are  amortized  on a  straight-line  basis  over  7  years.  In
accordance with Company policy,  intangible  assets that are fully amortized are
netted against the asset.

     Legal expenses and other direct costs incurred in connection with obtaining
financial  agreements  are deferred and amortized over the life of the financial
agreements. Such costs amounted to $533 during the year ended December 31, 1995.
Subsequent to the Initial Public  Offering,  all existing  financial  agreements
were paid off in their entirety.  Accordingly, any remaining unamortized portion
of the costs were expensed in the first quarter of 1996. Of the expense incurred
relating to these costs, $148 was ordinary and $431 was extraordinary.

<PAGE>


                          TRESCOM INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

   USE OF ESTIMATES

   The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.

   REVENUES

   Revenues from long distance  telecommunications  services are recognized when
the services are provided.

   COST OF SERVICES

   Cost of services  includes  payments  to local  exchange  carriers  ("LECs"),
interexchange carriers and post, telegraph and telephone organizations primarily
for access and transport charges.

   CONCENTRATIONS OF CREDIT RISK

   The Company  derives a majority of its  operating  revenues  from  commercial
customers  in  Florida,   New  York,  St.  Thomas  and  Puerto  Rico.  Financial
instruments  which  potentially  subject the Company to concentrations of credit
risk consist  principally of accounts  receivable.  The Company's  allowance for
doubtful   accounts  is  based  upon   management's   estimates  and  historical
experience. In situations where the Company deems appropriate, prepayment and/or
cash deposits are required for the provision of services.

   INCOME TAXES

   The Company accounts for income taxes under the liability  method.  Under the
liability  method,  deferred  income  taxes are  recorded to reflect the net tax
effects of the temporary  differences between the carrying amounts of assets and
liabilities  for  financial  reporting  and the  amounts  used  for  income  tax
purposes.

   PER SHARE DATA

   The computation of fully diluted pro forma net loss per share of Common Stock
was antidilutive;  therefore, the amounts reported for primary and fully diluted
are the same.

   Pro  forma  net loss per  share  was  computed  by  dividing  net loss by the
weighted  average  number of shares of Common  Stock  outstanding  after  giving
retroactive  effect to the  conversion,  in February  1996, of all the Company's
Series A  Preferred  Stock,  $.01 par value per share (the  "Series A  Preferred
Stock"),  Series B  Preferred  Stock,  $.01 par value per share  (the  "Series B
Preferred  Stock") and Series C Preferred  Stock,  $.01 par value per share (the
"Series C Preferred  Stock"),  and related accrued and unpaid dividends thereon,
into Common Stock in connection with the  consummation of the Initial
Public Offering,  plus cheap stock as defined below.  Pursuant to Securities and



<PAGE>



                           TRESCOM INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Exchange Commission Staff Accounting Bulletin No. 83, common stock, common stock
equivalents  and other  potentially  dilutive  securities  (including  preferred
stock)  issued at prices below the assumed  initial  public  offering  price per
share ("cheap stock") during the twelve month period  immediately  preceding the
initial  filing date of the  Company's  Registration  Statement  for the Initial
Public  Offering have been  included as  outstanding  for all periods  presented
(using the treasury stock method at the assumed  Initial Public  Offering Price)
even though the effect is to reduce loss per share. Pro forma net loss per share
was $(0.02) and $(0.36) for the three and nine months ended  September 30, 1996,
respectively.  Historical  losses per share have not been presented because such
amounts are not deemed meaningful due to the significant change in the Company's
capital structure which occurred in connection with the Initial Public Offering.

   NEW ACCOUNTING PRONOUNCEMENTS

   In 1996, the Company adopted SFAS No. 121,  "Accounting for the Impairment of
Long-Lived  Assets and for Long-Lived  Assets to be Disposed Of." The Company is
now  evaluating the carrying  value of its  long-lived  assets and  identifiable
intangibles,  including  goodwill,  in accordance  with SFAS No. 121 in light of
events or changes in circumstances which might indicate that the carrying amount
of such assets may not be  recoverable.  In 1996,  the Company  also adopted the
provisions  of SFAS No. 123,  "Accounting  for  Stock-Based  Compensation."  The
Company does not expect the effect of adopting these statements to be material.

3. LONG-TERM OBLIGATIONS

   A summary of long-term obligations is as follows:

<TABLE>

                                                                      SEPTEMBER 30,     DECEMBER 31,
                                                                           1996             1995
                                                                    -----------------   ------------

<S>                                                                       <C>            <C>      
Credit facility .............................................             $  ---         $  24,173
Note payable to former shareholder of business acquired,
   bearing 5% simple interest, due February 1996 ............                ---             1,000
Loans payable to the Small Business Administration,  bearing 
   interest at 4%, due in monthly  principal  and  interest  
   payments of $3 through  February  2015, collateralized 
   by a security agreement covering certain assets ..........                422               432
Capital leases bearing interest at rates ranging from 9% to
   11% and payable in monthly installments totaling $91 .....              3,966               383
Other........................................................                  2                 4
                                                                     -----------------------------------
                                                                           4,390            25,992
                                                                     -----------------------------------
Less amounts due within one year ............................                719            25,290
                                                                     -----------------------------------
                                                                          $3,671         $     702
                                                                     ===================================
</TABLE>

<PAGE>



                           TRESCOM INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


   In November  1994, a wholly-owned  subsidiary of the Company  obtained from a
bank a revolving  credit  facility  (the  "Credit  Facility")  with an aggregate
commitment  of $27,000,  which  expired on June 30, 1996.  Outstanding  advances
under the Credit Facility  accrued interest at the Eurodollar Rate (as defined),
plus certain specified  percentages,  depending on the Company's leverage ratio.
At December  31, 1995,  the rate was 10.375%.  The Company was required to pay a
quarterly  commitment fee of 0.5% of the annualized  average daily unused amount
of the credit line.

   On February 16, 1996, the Company  repaid all  outstanding  amounts  borrowed
under the  Credit  Facility.  During  the first  quarter  of 1996,  the  Company
recorded a charge to  interest  expense in the amount of $479 to  reflect,  as a
liability,  the current net settlement  value of the Instruments (as hereinafter
defined).

     Under the  terms of the  Credit  Facility,  the  Company  was  required  to
maintain  at least  50% of its debt on a fixed  rate  basis  and,  as a  result,
entered into an interest rate swap  agreement and an interest rate cap agreement
(the  "Instruments")  with the lending bank to convert  variable  interest  rate
payments to fixed  payments.  The  estimated  fair value (i.e.,  the net present
value of the amount the Company was  required  to pay the  counterpart  over the
remaining  term of the  agreement)  of the  Instruments,  based  upon the quoted
market price  provided by the bank,  which was a party to the  Instruments,  was
$562 at December 31, 1995. On September 18, 1996, when the net settlement  value
was $302, the Instruments were paid off in full.

       In October and November  1995,  the Company  borrowed  $7,000 and $3,000,
respectively,  under one-year notes bearing interest at 12% compounded quarterly
from a major  shareholder of the Company.  In connection  with these notes,  the
Company  issued a warrant to purchase  358,034  shares of the  Company's  Common
Stock at an  exercise  price of $.42 per share.  The  warrants  are  exercisable
immediately  and  expire on  October 2,  2007.  Of the  $10,000  in  borrowings,
approximately  $2,400  has  been  allocated  to the  value of the  warrants.  On
February 14, 1996, the Company  repaid the entire balance  relating to the notes
and the  warrants.  Extraordinary  interest  expense in the amount of $1,524 was
recognized in the first quarter of 1996.

Principal payments on all long term obligations are:

       For the three months ended December 31, 1996................$     173
       1997 .......................................................      738
       1998 .......................................................      820
       1999 .......................................................      827
       2000 .......................................................      863
       2001 .......................................................      634
       Thereafter .................................................      335
                                                                    ----------
                                                                    $   4,390
                                                                    ==========



<PAGE>



                           TRESCOM INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


4.   LEASE OBLIGATIONS

   The Company  occupies  office  facilities  and leases  certain  equipment and
software under noncancelable operating leases. Rental expense for the year ended
December 31, 1995 and for the three and nine months ended September 30, 1996 was
$1,341, $423 and $1,261, respectively.

   The Company did not  acquire  communication  equipment  under  capital  lease
obligations  during the year ended  December 31, 1995.  During the quarter ended
September   30,  1996,   the  Company   acquired   communication   equipment  of
approximately  $3,701  under  capital  lease  obligations.  Asset  balances  for
property acquired under capital leases consists of:

                                                 SEPTEMBER 30,   DECEMBER 31,
                                                      1996           1995
                                                 -------------   ------------

Transmission and communication equipment........    $ 4,106           405
Furniture, fixtures and other...................        270           270
                                                 -------------   ------------
                                                      4,376           675
Accumulated amortization........................       (215)         (141)
                                                 -------------   ------------
                                                    $ 4,161           534
                                                 =============   ============


   The present value of minimum lease payments are included in the balance sheet
as a part of  long-term  obligations.  Future  minimum  lease  payments  for all
noncancelable leases at September 30, 1996 are:


                                              CAPITAL   OPERATING
                                              LEASES      LEASES      TOTAL
                                             ---------  ---------  ------------

Three months ended December 31, 1996....       $   273   $  344      $   617
1997....................................         1,094    1,276        2,370
1998....................................         1,094    1,242        2,336
1999....................................         1,013      966        1,979
2000....................................           961      737        1,698
2001....................................           643      566        1,209
Thereafter..............................           ---      608          608
                                             --------------------------------
Total future minimum lease payments.....         5,078   $5,739      $10,817
                                                         ====================
Less amounts representing interest......        (1,112)
                                             ----------
Present value of net minimum lease payments.   $ 3,966
                                             ==========




                           TRESCOM INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

5.     CAPITALIZATION

   PREFERRED STOCK

   The Board of Directors of the Company is  authorized to issue up to 1,000,000
shares of Preferred  Stock,  $.01 par value per share, in one or more series and
to fix the powers,  voting rights,  designations and preferences of each series.
During 1994, the Board of Directors  authorized  two series of Preferred  Stock:
179,420  shares  of Series A  Preferred  Stock  and  200,000  shares of Series B
Preferred  Stock.  Both  provided  for  10%  cumulative   dividends  per  annum,
compounded semi-annually.

   On August 9, 1995, the Board of Directors authorized 151,421 shares of Series
C Preferred Stock. In addition,  the Board of Directors authorized an additional
1,197  shares  of  Series A  Preferred  Stock.  The  dividend  rate on  Series A
Preferred  Stock was  increased to 12% beginning  August 1, 1995,  with dividend
accruals  compounded  quarterly beginning October 15, 1995. The dividend rate on
the Series C Preferred  Stock provided for 12%  cumulative  dividends per annum,
compounded quarterly, computed retroactively from February 23, 1995.

   The Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock required mandatory  redemption of preference value plus dividends upon the
earlier of the closing of an  underwritten  public  offering of shares of Common
Stock or in three equal annual  installments  beginning February 1, 2002, in the
case of Series A Preferred  Stock and Series C Preferred  Stock,  or February 1,
2003,  in the case of Series B  Preferred  Stock.  Under  certain  circumstances
outside the control of the Company, upon the effective date of an initial public
offering,  the holders of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred  Stock were  required to exchange  their shares for shares of
Common Stock;  the number of shares of Common Stock was calculated  based on the
redemption  value of the Preferred Stock dividend by the Initial Public Offering
price less underwriting  discounts and commissions.  The Company was entitled to
redeem, at its option,  Series A Preferred Stock and Series C Preferred Stock in
whole or Series B Preferred  Stock in whole or in part at the redemption  price.
The  Preferred  Stock had a  preference  value of $100 per share for purposes of
calculating dividends and redemption value.

   On  February  5,  1996,  the  terms of  Series A  Preferred  Stock,  Series B
Preferred  Stock and Series C Preferred  Stock were amended such that  mandatory
redemption was not required.  In connection with the Initial Public Offering, on
February 7, 1996,  the Series A Preferred  Stock,  Series B Preferred  Stock and
Series C Preferred Stock were converted into 4,557,895 shares of Common Stock.

   On February 13, 1996,  the Company  effected a reverse  stock split of Common
Stock at a ratio of approximately  4.19-to-1. The share and per share amounts in
the financial statements have been adjusted for the reverse stock split.

   STOCK OPTION PLAN

     The Company has a stock option plan under which a total of 936,432  options
to purchase  shares of Common Stock may be granted to officers,  key  employees,
consultants and directors. The Stock Option Plan

<PAGE>


                           TRESCOM INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

allows the granting of incentive  stock options,  which may not have an exercise
price below the  greater of par value or the market  value on the date of grant,
and non-qualified stock options, which have no restrictions as to exercise price
other than the  exercise  price  cannot be below par value.  All options must be
exercised  no later  than 10 years  from the date of  grant.  No  option  may be
granted under the plan after February 22, 2004.

   The  following  table  summarizes  all  option  activity  for the year  ended
December 31, 1995 and the nine months ended September 30, 1996.

                                                    Number of options
                                                        Issued
                                                        ------