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

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB


(Mark One)
/x/   QUARTERLY REPORT UNDER SECTION 13 OR 14(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934.

                  For the Quarterly period ended July 31, 1997

                                       OR


/ /   TRANSITION REPORT UNDER SECTION 13 OR 15(b) OF THE SECURITIES EXCHANGE ACT
      OF 1934.

             For the transition period from __________ to __________


                         Commission file number 0-21913

                            GROUP LONG DISTANCE, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)


            Florida                                        65-0213198
-------------------------------                        -------------------
(State or Other Jurisdiction of                        (I.R.S. Employer
 Incorporation or Organization)                        Identification No.)


                       1451 West Cypress Road, Suite 200,
                            Fort Lauderdale, FL 33309
                    ----------------------------------------
                    (Address of Principal Executive Offices)


                                 (954) 771-9696
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


      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 past 90 days.  Yes /x/  No / /

The number of shares of Common Stock, no par value, outstanding as of September
12, 1997 was 3,467,118.

The number of Redeemable Warrants outstanding as of September 12, 1997 was
1,437,500.

Transitional Small Business Disclosure Format (check one):  Yes / /   No /x/

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


<PAGE>


                   GROUP LONG DISTANCE, INC. AND SUBSIDIARIES

                                      INDEX
                                                                     Page Number
                                                                     -----------

PART 1.   FINANCIAL INFORMATION

    Item 1. Financial Statements
            Consolidated Balance Sheets as of July 31, 1997
            (unaudited) and April 30, 1997.................................2

            Unaudited Consolidated Statements of Operations
            for the three Months Ended July 31, 1997 and 1996..............3

            Unaudited Consolidated Statements of Cash Flows
            for the Three Months Ended July 31, 1997 and 1996..............4

            Notes to Consolidated Financial Statements.....................5

    Item 2. Management's Discussion and Analysis or Plan of Operation......8

PART II.  OTHER INFORMATION:

    Item 1. Legal Proceedings..............................................14

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

SIGNATURES.................................................................15

                                       1
<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                   Group Long Distance, Inc. and Subsidiaries
                           CONSOLIDATED BALANCE SHEETS
                  July 31, 1997 (Unaudited) and April 30, 1997

<TABLE>
<CAPTION>
ASSETS
                                                                                  July 31,1997        April 30, 1997
                                                                                  ------------        --------------
                                                                                  (Unaudited)
<S>                                                                                <C>                   <C>       
Current assets
    Cash                                                                           $   751,829           $1,977,546
    Accounts receivable less allowance for doubtful accounts                         7,380,947            3,493,154
       of $634,000 and $620,000 at July 31,1997 and April 30,1997,
       respectively
    Note receivable - related party                                                     26,608               32,261
    Deferred tax assets                                                                233,300              233,300
    Prepaid expenses and other current assets                                        7,309,948              642,333
                                                                                     ---------              -------
                                                                                    15,702,632            6,378,594
                                                                                    ----------            ---------

Prepaid Expenses, net of current portion                                             5,070,000                    -
Property and equipment, net                                                            322,120              347,615
Customer acquisition costs, net                                                      1,710,935            2,291,221
Deferred tax assets                                                                    513,384              416,600
Other assets                                                                            33,543               37,236
                                                                                        ------               ------
          Total assets                                                             $23,352,614           $9,471,266
                                                                                   ===========           ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Accounts payable                                                               $19,668,593            4,272,880
    Accrued expenses and other liabilities                                             533,197              790,739
    Current portion of long-term debt                                                1,881,373            1,698,966
                                                                                     ---------            ---------
                                                                                    22,083,163            6,762,585
Long-term debt, net of current portion                                               1,074,330            1,072,307
                                                                                     ---------            ---------
          Total liabilities                                                         23,157,493            7,834,892
                                                                                    ----------            ---------
Stockholders' equity                                                                         -                    -
Preferred stock, no par value, 2,000,000 shares authorized; no
   shares issued and outstanding
Common stock, no par value, 12,000,000 shares authorized;                                    -                    -
   3,467,118 and 3,462,354 shares issued and outstanding as of
   July 31, 1997 and April 30, 1997, respectively
Additional paid-in capital                                                           5,751,319            5,848,819
Accumulated deficit                                                                 (5,556,198)          (4,212,445)
                                                                                   -----------          -----------
          Total stockholders' equity                                                   195,121            1,636,374
                                                                                       -------            ---------
          Total liabilities and stockholders' equity                               $23,352,614           $9,471,266
                                                                                   ===========           ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       2
<PAGE>


                   Group Long Distance, Inc. and Subsidiaries
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                For the Three Months Ended July 31, 1997 and 1996

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                      ------------------
                                                                            July 31
                                                                            -------
                                                                   1997               1996
                                                                   ----               ----
<S>                                                           <C>                <C>        
Sales                                                         $  9,064,998       $ 5,712,188
Cost of sales                                                    6,961,188         4,033,142
                                                                 ---------         ---------
            Gross profit                                         2,103,810         1,679,046
Selling, general and administrative expenses                     1,188,567         1,094,972
Marketing Expenses                                               1,690,000                 -
Depreciation and amortization                                      633,284           375,290
                                                                   -------           -------
            Earnings (loss) from operations                     (1,408,041)          208,784
Interest expense, net                                               32,496            43,630
                                                                    ------            ------
            Earnings (loss) before income taxes                 (1,440,537)          165,154
Income tax expense (benefit)                                       (96,784)           80,264
                                                                  --------            ------
            Net earnings (loss)                               $ (1,343,753)      $    84,890
                                                              ============       ===========
Earnings (loss) per common and common equivalent
  share                                                       $      (0.39)      $       .04
                                                              ============       ===========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       3
<PAGE>


                   Group Long Distance, Inc. and Subsidiaries
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Three Months Ended July 31, 1997 and 1996

<TABLE>
<CAPTION>
                                                                                           Three Months Ended
                                                                                           ------------------
                                                                                                 July 31
                                                                                                 -------
                                                              
                                                                                      1997                   1996
                                                                                      ----                   ----
<S>                                                                                <C>                   <C>
Cash flows from operating activities
          Net (loss) earnings                                                      $(1,343,753)             $84,890
Adjustments to reconcile net (loss) earnings to net cash provided by
operating activities
          Depreciation and amortization                                                633,284              378,561
          Provision for bad debts                                                      434,449              184,930
          Changes in assets and liabilities
          (Increase) in accounts receivable                                         (4,322,242)          (2,643,622)
          Decrease  in notes receivable                                                  5,653                6,780
          (Increase) in deferred tax asset                                             (96,784)             (36,995)
          (Increase) in prepaid expenses and other current assets                   (6,695,115)            (354,327)
          (Increase) in prepaid expenses, net of current portion                    (5,070,000)                   -
          Increase in accounts payable                                              15,395,713              206,865
          Increase in Notes Payable                                                          -            1,033,346
          (Decrease) Increase in accrued expenses and other liabilities               (239,269)             211,589
                                                                                     ---------              -------
          Net cash used in operating activities                                     (1,298,064)            (927,983)
                                                                                   -----------            ---------

Cash flows from investing activities
          Acquisitions of property and equipment                                             -             (291,769)
          Acquisitions of customer bases                                                     -           (5,387,930)
          Decrease in other assets                                                       3,693                    -
                                                                                         -----          -----------
                   Net cash (used in) provided by investing activities                  3,693           (5,679,699)
                                                                                         -----          -----------

Cash flows from financing activities
          Net (payments) borrowings under line of credit agreement                      (8,333)              50,000
          Proceeds from loan originations                                              184,430            6,671,230
          Principal repayments of long-term debt                                             -              (90,444)
          Proceeds from the sale of common stock and warrants                            2,500                    -
          Principal repayments of capital lease obligations                             (9,943)              (2,975)
          Repurchase of Tel-Save Warrants                                             (100,000)
          Offering costs incurred                                                            -              (63,092)
                                                                                     ---------             --------
          Net cash provided by financing activities                                    68,654            6,564,719
                                                                                        ------            ---------

Net (decrease) in cash                                                              (1,225,717)             (42,963)
Cash at beginning of year                                                            1,977,546               78,767
                                                                                     ---------              -------
Cash at end of year                                                                   $751,829              $35,804
                                                                                      ========             ========

Noncash investing and financing activity:
          The Company acquired a customer base partially with common stock
          with a value of $1,085,000.
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       4
<PAGE>

                   Group Long Distance, Inc. and Subsidiaries

              UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in
accordance with the generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all 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 fair presentation have been included. Operating results
for the three months ended July 31, 1997 are not necessarily indicative of the
results that may be expected for the year ending April 30, 1998.

The balance sheet at April 30, 1997 has been derived from the audited financial
statements at that date, but does not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements. For further information, refer to the audited financial statements
and footnotes thereto included in the Form 10-KSB filed by the Company for the
year ended April 30, 1997.


NOTE B - FORMATION AND OPERATIONS OF THE COMPANY

In November 1995, Group Long Distance, Inc. (the "Company") (which was
originally incorporated in July 1990) merged into Second ITC Corporation, the
surviving corporation, whose name was changed to Group Long Distance, Inc. The
existing stockholders of Group Long Distance, Inc. retained 94% of the issued
and outstanding stock of the merged company. For accounting purposes, the
acquisition has been treated as a recapitalization of Group Long Distance, Inc.
with Group Long Distance, Inc. as the acquired company (reverse acquisition),
and the financial statements of Group Long Distance, Inc. are considered to be
the financial statements of the Company. Historical stockholders' equity of
Group Long Distance, Inc. prior to the merger has been retroactively restated.

Group Long Distance, Inc is a long distance telecommunications provider. The
Company utilizes special network service contracts through major national long
distance telecommunications carriers to provide its customers with products and
services which include basic "1 plus" and "800" long distance services, as well
as local, Internet, e-mail and data services and prepaid calling cards. As a
nonfacilities based reseller of long distance telecommunication services, the
Company utilizes service contracts to provide its customers with switched,
dedicated and private line services to various long distance telecommunications
networks such as Tel-Save, Inc. ("Tel-Save") and WorldCom/LDDS Inc. The Company
is dependent on a limited number of long distance carriers and numerous regional
and local telephone companies to provide its services and products. The majority
of the Company's revenues are derived from calls routed through Tel-Save. Such
revenues represented 90% and 71% of total revenues for the three months ended
July 31, 1997 and 1996 , respectively.

                                       5
<PAGE>

NOTE C - WARRANT REPURCHASE

In connection with the financing of the acquisition of Adventures-in-Telecom,
Inc. ("AIT") in July 1996, the Company issued warrants to Tel-Save to purchase
300,000 shares of common stock of the Company at $5.75 per share and 50,000
shares at $5.00 per share. In June 1997, these warrants were purchased by the
Company from Tel-Save for $100,000.


NOTE D - INCREASE IN PREPAID EXPENSES AND ACCOUNTS PAYABLE

For the three months ended July 31, 1997, the Company incurred $13,520,000 in
marketing expenses which has resulted in approximately 200,000 new orders. The
Company is provisioning (activating new customers) on the Tel-Save
One-Better-Net ("OBN"). During the three months ended July 31, 1997, 74,000 of
these new customers were provisioned on the OBN and accounted for approximately
$4.1 million of revenues for the quarter. The balance of these customers are to
be provisioned during the three months ending October 31, 1997. These expenses
are being expensed 50% in the current fiscal year and 50% in the subsequent
year. This allocation approximates the Company's estimate of the time in which
such telemarketing expenses should correspond with the anticipated revenues from
such marketing efforts. $1,690,000 of such telemarketing expenses were allocated
for the three months ended July 31, 1997. The Company anticipates continuing its
telemarketing campaign through the second quarter of fiscal 1998 and anticipates
incurring similar marketing expenses.


NOTE E - PROCEEDS FROM PUBLIC OFFERING

On March 24, 1997, the Company commenced an underwritten public offering (the
"Offering") whereby 1,250,000 shares of its Common Stock, no par value (the
"Common Stock"), and warrants to purchase 1,437,500 shares of Common Stock (the
"Redeemable Warrants") were sold. Of the Redeemable Warrants sold, warrants to
purchase 187,500 shares of Common Stock were sold pursuant to the underwriters'
over-allotment option. Of the approximately $3.9 million of net proceeds,
approximately $1.4 million of the proceeds remained available to the Company at
April 30, 1997. During the three months ended July 31, 1997, the Company used
the $1.4 million balance of proceeds for working capital and general business
purposes, including marketing and sales expenses.


NOTE  F -  COMMITMENTS AND CONTINGENCIES

Reference is made to Note I - Commitments and Contingencies to the Company's
Financial Statements for the year ended April 30, 1997, which is incorporated
herein in its entirety except to the litigation discussed below, which is
restated in its entirety except as amended to reflect recent developments.

The Company owes AT&T $547,500 under a previously executed settlement agreement
relating to certain billing disputes. The Company is a defendant in a civil
action styled AT&T Corp. v. Group Long Distance, Inc., Civil Action No. 97-2226
(NAP), pending in the United States District Court for the District of New
Jersey. In this action brought in April 1997, AT&T seeks $612,324 and attorneys'
fees as damages for breach of a settlement agreement entered into between AT&T
and the Company in 1993. AT&T also seeks to recover this $612,324 under a
separate claim for unpaid tariff charges. The Company has answered the complaint
and asserted certain counterclaims. These counterclaims include claims for

                                       6
<PAGE>

rescission of the settlement agreement as well as for damages in contract, in
tort and pursuant to the Federal Communications Act. The Company vigorously
plans to litigate this matter. A scheduling conference for the matter has been
set for October 6, 1997. While the Company cannot predict with certainty the
outcome of this litigation, the Company's results of operation or cash flow in a
particular quarterly or annual period could be materially affected by protracted
litigation or an unfavorable decision.

The Company is from time to time the subject of complaints or litigation in the
ordinary course of its business. Except as disclosed, the Company believes that
such lawsuits, claims and other legal matters to which it has become subject are
not material to the Company's financial condition or results of operations, but
an existing or future lawsuit or claim resulting in an unfavorable outcome to
the Company could have a material adverse effect on the Company's financial
condition and results of operations.


NOTE G - SUBSEQUENT EVENTS

On August 11, 1997, the Company acquired all the issued and outstanding stock of
Eastern Telecommunications Incorporated ("ETI"), a New York-based long-distance
reseller. The purchase price aggregated $8.313 million and consisted of two $3.5
million notes (the "ETI Notes") and the assumption of $1.2 million of certain of
ETI's liabilities and the payment of closing costs in the amount of $113,000.
ETI's assets consist of two warrants to purchase 1,347,000 shares of the common
stock of Tel-Save (the "ETI Tel-Save Warrants"), a customer base of 7,000 and
receivables. A substantial portion of ETI's revenues are derived through
Tel-Save. On August 11, 1997 the Company exercised one of the ETI Tel-Save
Warrants to purchase 600,000 common stock shares of Tel-Save for an aggregate
exercise price of $2,450,000. The Company is currently treating this amount as
an account payable to Tel-Save.

The ETI Notes bear interest at 10% per annum payable monthly and are due on
August 11, 1998, although the net proceeds from the sale of the securities
underlying the ETI Tel-Save Warrants shall be used to prepay the principal of
the ETI Notes. Upon the event of default, interest under the ETI Notes increases
to 21% per annum until the default is cured. The ETI Notes also provide penalty
payment of $500,000 for failure to make timely payments of principal and
interest when due after giving effect to certain grace periods should such
uncured default occur prior to August 11, 1998 and $1,000,000 should such
uncured default occur on or after August 8, 1998. Events of default under the
ETI Notes include failure to make payments when due, modification or disposition
of assets pledged as collateral (described below), bankruptcy and material
misrepresentation in the ETI Notes or any related security agreement.

Under the terms of the ETI stock purchase agreement (the "ETI Agreement"), the
ETI Tel-Save Warrants have been pledged to guarantee the Company's obligations
under the ETI Notes. In addition, all other assets of ETI have been pledged as
collateral and the Company has pledged a subordinated interest in all its assets
as collateral.

The ETI Agreement also provides that the Company will indemnify the selling
shareholders for a period of five years from the date of sale from and against
any and all losses arising from the transaction and releases the selling
shareholders from certain liabilities to ETI. The indemnification excludes any
tax liability the selling shareholders may incur in connection with the
transaction.

Of the $8.313 million acquisition cost of ETI, $7.713 million has been allocated
to the ETI Tel-Save Warrants and the balance of $600,000 has been allocated to
the customer base. No value was assigned to the receivables purchased due to the
uncertainty surrounding their collectibility.

                                       7
<PAGE>


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

The following discussion and analysis of significant factors affecting the
Company's operating results and liquidity and capital resources should be read
in conjunction with the accompanying financial statements and related notes.

This Report on Form 10-QSB contains forward-looking statements. Additional
written and oral forward-looking statements may be made by the Company from time
to time in Securities and Exchange Commission ("SEC") filings and otherwise. The
Company cautions readers that results predicted by forward-looking statements,
including, without limitation, those relating to the Company's future business
prospects, revenues, working capital, liquidity, capital needs, interest costs,
and income are subject to certain risks and uncertainties that could cause
actual results to differ materially from those indicated in the forward-looking
statements, due to the following factors, among other risks and factors
identified herein and from time to time in the Company's filings with the SEC.


Overview

        Group Long Distance, Inc. (the "Company") is a long distance
telecommunications provider. The Company utilizes special network service
contracts through major national long distance telecommunications carriers to
provide its customers with products and services which include basic "1 plus"
and "800" long distance services, as well as local, Internet, e-mail and data
services and prepaid calling cards. As a nonfacilities based reseller of long
distance telecommunication services, the Company utilizes service contracts to
provide its customers with switched, dedicated and private line services to
various long distance telecommunications networks such as Tel-Save, Inc.
("Tel-Save") and WorldCom/LDDS Inc ("WorldCom"). The Company is dependent on a
limited number of long distance carriers and numerous regional and local
telephone companies to provide its services and products. The majority of the
Company's revenues are derived from calls routed through Tel-Save. Such revenues
represented 90% and 71% of total revenues for the three months ended July 31,
1997 and 1996, respectively.

        To obtain favorable rates from its carriers, the Company has committed
to purchase certain minimum volumes of long distance services during stated
periods, whether or not such volumes are used. Certain of the Company's network
service agreements contain provisions for guaranteed monthly volume and network
usage which is the basis for determining volume discounts and other special
billing features. If the Company is unable to achieve the guaranteed monthly
volume, the agreements provide for various surcharges. Failure to satisfy volume
purchase commitments or price increases by carriers could materially adversely
affect the Company's future operating results. The Company periodically
renegotiates its volume commitments with its carriers.

        The Company relies on the marketing of its services, which is currently
performed by independent telemarketers and direct sales personnel, to generate a
significant portion of its revenues. The Company has significantly increased its
use of telemarketers, and anticipates that it will become increasingly dependent
upon these independent telemarketers to market its services.

        The Company's ability to continue and to expand its operations is
dependent upon the Company's ability to maintain satisfactory relationships with
existing carriers and independent telemarketers and establish relationships with
additional carriers and independent telemarketers.

                                       8
<PAGE>


        For the three months ended July 31, 1997, the Company incurred
$13,520,000 in marketing expenses which has resulted in approximately 200,000
new orders. The Company is provisioning (activating new customers) on the
Tel-Save One-Better-Net ("OBN"). During the three months ended July 31, 1997,
74,000 of these new customers were provisioned on the OBN and accounted for
approximately $4.1 million of revenues for the quarter. The balance of these
customers are to be provisioned during the three months ending October 31, 1997.
These expenses are being expensed 50% in the current fiscal year and 50% in the
subsequent year. This allocation approximates the Company's estimate of the time
in which such telemarketing expenses should correspond with the anticipated
revenues from such marketing efforts. $1,690,000 of such telemarketing expenses
were allocated for the three months ended July 31, 1997. The Company anticipates
continuing its telemarketing campaign through the second quarter of fiscal 1998
and anticipates incurring similar marketing expenses.

        The Company has historically experienced delays in provisioning by its
carriers. In an effort to improve provisioning efficiencies, the Company is
currently entering into negotiations to begin "LEC billing" arrangements with
the Regional Bell Operating Companies and local exchange carriers. This is
expected to reduce billing inefficiencies and increase collections and improve
customer retention. The Company anticipates implementing this change in the
third quarter of fiscal year 1998.

        The Company's operating results are significantly affected by customer
attrition rates. The Company believes that a high level of customer attrition in
the industry is primarily a result of national advertising campaigns,
telemarketing programs and customer incentives provided by major competitors, as
well as the termination of service for non-payment.

        There can be no assurance that assumed attrition rates underlying the
Company's amortization schedule will prove to be accurate or that customer
attrition rates will not increase in the future. Any significant increase in
customer attrition rates resulting in increased amortization expense will
continue to have a material adverse effect on the Company's operating results.
In the event that attrition rates increase as a result of increased competition,
the purchase of poorly performing customer bases or the inability to manage the
existing customer base, the Company may continue to incur charges that result in
losses.

        The Company operates in a highly fragmented segment of the
telecommunications industry and has historically expanded its operations through
the acquisition of customer bases. The Company regularly evaluates possible
acquisition opportunities and may seek to acquire smaller resellers and customer
bases in order to expand the distribution of its services and products and its
geographic markets. On August 11, 1997, the Company acquired all the issued and
outstanding capital stock of Eastern Telecommunications Incorporated, a New
York-based reseller of long-distance services. Except as otherwise disclosed
herein, the Company has no plans, agreements, commitments, understandings or
arrangements with respect to any acquisition. There can be no assurance that the
Company will ultimately effect any acquisition, that the Company will not
experience increased customer attrition as a result of any acquisition, that the
Company be able to successfully integrate into its operations any business or
customer base which it may acquire, or that the Company will be able to service
any debt or other obligations incurred in connection with such acquisition.

        The Company intends to actively pursue a strategy of continued growth
and will seek to expand the distribution of its services and products and
maximize penetration of new and existing geographic markets. The Company intends
to expand its marketing activities by increasing the use of independent
telemarketers. The Company will also continue to (i) develop strategic marketing
relationships, (ii) regularly evaluate possible acquisition opportunities, and
(iii) improve operating and network efficiencies. The Company's ability to
 
                                      9
<PAGE>

achieve these objectives will be affected by, and to a certain extent dependent
on, many factors that are beyond the control of the Company. Thus, no assurance
can be given that such objectives can be or will be achieved.


Results of Operations

        The following table sets forth for the periods indicated the percentages
of total sales represented by certain items reflected in the Company's
consolidated statements of operations:


<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                    July 31,
                                                         -----------------------------
                                                              1997             1996
                                                         -------------     ------------
<S>                                                         <C>              <C>
 Sales                                                      100%             100%
 Cost of Sales                                               77               71
 Gross profit                                                23               29
 Selling, general and administrative expense                 13               19
 Marketing Expenses                                          19
 Depreciation and amortization expense                        7                7
 Interest expense, net                                        *                *
 Earnings (losses) before income taxes                       16                3
 Income taxes                                                 1                1
 Net income (loss)                                           15                2
</TABLE>
----------
 * Less than 1 percent


        Comparison of Three months ended July 31, 1997 to Three months ended
July 31, 1996.

        Net Loss. The Company incurred a net loss of $1,343,753, or $0.39 per
share, for the three months ended July 31, 1997, as compared to net earnings of
$84,890 for the three months ended July 31, 1996, or $.04 per share, primarily
as a result of the increase in marketing expenses incurred as a result of
aggressive telemarketing efforts to attract new customers. Of the total of
$13,520,000 marketing expenses incurred during the three months ending July 31,
1997, $1,690,000 were expensed for that period.

        Sales. The Company's sales were $9,064,998 for the three months ended
July 31, 1997 compared to $5,712,188 for the three months ended July 31, 1996,
an increase of $3,352,810 or 59%. The increased sales were primarily the result
of the Company's telemarketing efforts which added approximately $4.1 million of
additional sales in the three months ended July 31, 1997.

        Cost of Sales. Cost of sales was $6,961,188 for the three months ended
July 31, 1997 compared to $4,033,142 for the three months ended July 31, 1996,
an increase of $2,928,046 or 73%. As a percentage of sales, cost of sales was
77% for the three months ended July 31, 1997 compared to 71% for the three
months ended July 31, 1996. The increase in cost of sales was a result of
additional start up costs incurred in provisioning new orders onto OBN. Gross
margin was $2,103,810 for the three months ended July 31, 1997 compared to
$1,679,046 for the three months ended July 31, 1996, an increase of $424,764 or
25%. As a percentage of sales, gross margin was 23% for the three months ended
July 31, 1997 compared to 29% for the three months ended July 31, 1996. Higher
gross margin in the prior period was due to the AIT acquisition.

        Selling, General and Administrative Expense. Selling, general and
administrative expenses ("SG&A") were $1,188,567 for the three months ended July
31, 1997 compared to $1,094,972 for the three months ended July 31, 1996, an
increase of $93,595 or 8%. This increase in SG&A was due to increased sales,
which was offset by improved operating efficiencies and a reduction in staff as
compared to the three months ended July 31, 1996. As a percentage of sales, SG&A
for the fiscal years ended April 30, 1997 and 1996 was approximately 13% and
19%, respectively. This decrease was due to the increase in sales without a
significant change in expenditure.

        Marketing Expenses. Marketing expenses were $1,690,000 for the three
months ended July 31, 1997. These expenses were incurred as a result of
increased telemarketing efforts in the three months ended July 31, 1997 and
which resulted in increased sales of $4.1 million for the corresponding period.

                                       10
<PAGE>

        Depreciation and Amortization Expense. Depreciation and amortization
expense was $633,284 for the three months ended July 31, 1997 compared to
$375,290 for the three months ended July 31, 1996, an increase of $257,994. The
increase in depreciation and amortization was attributable to the Company's
change in the estimated rate of amortization of the AIT customer base due to
significant customer attrition. As a percentage of sales, depreciation and
amortization expense was constant at approximately 7% for the three months ended
July 31, 1997 and 1996.

        Interest Expense Net. Interest expense (net) for the three months ended
July 31, 1997 was $32,496 compared to $43,630 for the three months ended July
31, 1996, a decrease of $11,134. This interest expense was primarily due to the
$5,521,230 loan from Tel-Save in July 1996 which was primarily used to complete
the AIT acquisition (the "AIT Loan"). The outstanding loan balance at July 31,
1997 was approximately $2,283,000.

        Income Taxes. Income tax benefit for the three months ended July 31,
1997 was $96,784 compared to a provision for income taxes of $80,264 for the
three months ended July 31, 1996. The tax benefit was a result of the Company's
loss for income tax purposes and as a result of certain amortization expenses
being not currently deductible.


Liquidity and Capital Resources

        The Company's primary cash requirements have been to fund the
acquisition of customer bases and increased levels of accounts receivable which
have required substantial working capital. The Company has historically
satisfied its working capital requirements principally through cash flow from
operations and borrowings.

        At July 31, 1997, the Company had a working capital deficit of
$6,380,531, as compared to working capital deficit of $383,991 at April 30,
1997. The increase in the working capital deficit was primarily attributable to
an increase in accounts payable due to marketing expenses incurred as a result
of the telemarketing efforts in the first quarter of fiscal year 1998.

        Net cash used in operating activities was $1,298,064 for the three
months ended July 31, 1997 as compared to cash used in operating activities of
$927,983 for the three months ended July 31, 1996. The increase in cash used in
operating activities is primarily attributable to an increase in accounts

                                       11
<PAGE>

receivable, an increase in prepaid expenses as a result of marketing expenses
incurred through telemarketing efforts and an increase in accounts payable. Net
cash provided from investing activities was $3,693 for the three months ended
July 31, 1997, as compared to cash used in operating activities of $5,679,699
for the three months ended July 31, 1996. The increase in cash used in investing
activities for the three months ended July 31, 1996 was attributable primarily
to the AIT acquisition. Net cash provided by financing activities was $68,654
for the three months ended July 31, 1997 as compared to net cash provided by
financing activities for the three months ended July 31, 1996 of $6,564,719. The
increase in cash provided by financing activities is primarily attributable to
the proceeds of the AIT Loan for the three months ended July 31, 1996. At July
31, 1997, the Company had cash of $751,829.

        On March 24, 1997, the Company commenced an underwritten public offering
(the "Offering") whereby 1,250,000 shares of its Common Stock, no par value (the
"Common Stock"), and warrants to purchase 1,437,500 shares of Common Stock (the
"Redeemable Warrants") were sold. Of the Redeemable Warrants sold, warrants to
purchase 187,500 shares of Common Stock were sold pursuant to the underwriters'
over-allotment option. Of the approximately $3.9 million of net proceeds,
approximately $1.4 million of the proceeds remained available to the Company at
April 30, 1997. During the three months ended July 31, 1997, the Company used
the $1.4 million balance of proceeds for working capital and general business
purposes, including marketing and sales expenses.

        Proceeds from loans totaled $184,430 during the three months ended July
31, 1997 and $6,671,230 during the same period in 1996. No repayment of loans
were made during the three months ended July 31, 1997.

        In May 1996, the Company entered into an agreement with Gateway American
Bank of Florida ("Gateway") pursuant to which it borrowed $50,000 of which
$18,750 was outstanding at July 31, 1997, compared to $27,083 at April 30, 1997.
The loan bears interest at the prime rate plus 2% and matures on May 2, 1998. In
August 1996, the Company entered into an agreement with Gateway which, as
amended as of February 1997, provides for a line of credit of up to $150,000,
bearing interest at the prime rate plus 1% and which terminates on September 5,
1997. Repayment of the loan and the line of credit is secured by all of the
Company's equipment, machinery, furniture and general intangibles and is
personally guaranteed by Gerald M. Dunne, Jr., President and Chief Executive
Officer of the Company. As of July 31, 1997, no amount was outstanding under
this line of credit.

        In September 1995, the Company issued a promissory note to John L.
Tomlinson, a director of the Company, and Philip C. Cezeaux, an unaffiliated
third party in the aggregate principal amount of $100,000. The interest rate on
the promissory note adjusts semi-annually based on the prime rate plus 2% and
principal and interest are payable in equal monthly installments of $2,600 until
September 1999. At July 31, 1997, $58,895 was outstanding under such note,
compared to $66,968 at April 30, 1997. As an inducement for the loan, the
Company issued options to Messrs. Tomlinson and Cezeaux to purchase 47,635 of
Common Stock at a price of $3.15 per share. These options expire on September
30, 1997.

        In July 1996, Global Telecom Network, Inc., a company controlled by
Gerald M. Dunne, Sr., the father of Gerald M. Dunne, Jr. President and Chief
Executive Officer of the Company, converted accounts payable to the Company into
a promissory note in the principal amount of $182,050 bearing interest at a rate
of 15% per annum. The outstanding principal amount and accrued interest on the
note is payable monthly and matures on November 15, 1997. Gerald M. Dunne, Sr.
has pledged 50,000 shares of the Company's Common Stock owned by him to secure
repayment of such promissory note. As of July 31, 1997, the balance outstanding
on the note was $26,608, compared to $32,261 at April 30, 1997.

                                       12

<PAGE>

        At July 31, 1997, the Company's allowance for doubtful accounts was
approximately $634,000 after certain write-offs during the quarter as compared
to approximately $620,000 at April 30, 1997, which the Company believes is
currently adequate for the size and nature of its receivables. Nevertheless,
delays in collection or uncollectibility of accounts receivable could continue
to have a material adverse effect on the Company's liquidity and working capital
position and could require the Company to continually increase its allowance for
doubtful accounts. Bad debt expense accounted for 5% of the Company's revenues
for the three months ended July 31, 1997 and 3% for the three months ended July
31, 1996.

        The Company's capital requirements have been and will continue to be
significant. Historically, the Company has been dependent on financing to fund
its cash requirements. Based on the Company's currently proposed plans and
assumptions relating to its operations, the Company believes its available cash,
which includes proceeds from its initial public offering, together with
projected cash flow from operations, will be sufficient to satisfy its
contemplated cash requirements for the fiscal year ending April 30, 1998. The
Company may seek, however, additional debt or equity financing to fund its
continuing expansion through acquisitions. In the event that the Company's plans
change, its assumptions change or prove to be inaccurate or if the proceeds of
the offering or project cash flow prove to be insufficient to fund operations
(due to unanticipated expenses, operating difficulties or otherwise), the
Company would be required to seek additional financing earlier than anticipated
or curtail its operations.

Effects of Inflation

        The Company does not believe that inflation has had a significant impact
on its operations for the three months ended July 31, 1997 and the three months
ended July 31, 1996.

Subsequent Events

        On August 11, 1997, the Company acquired all the issued and outstanding
stock of Eastern Telecommunications Incorporated ("ETI"), a New York-based
long-distance reseller. The purchase price aggregated $8.313 million and
consisted of two $3.5 million notes (the "ETI Notes") and the assumption of $1.2
million of certain of ETI's liabilities and the payment of closing costs in the
amount of $113,000. ETI's assets consist of two warrants to purchase 1,347,000
shares of the common stock of Tel-Save (the "ETI Tel-Save Warrants"), a customer
base of 7,000 and receivables. A substantial portion of ETI's revenues are
derived through Tel-Save. On August 11, 1997 the Company exercised one of the
ETI Tel-Save Warrants to purchase 600,000 common stock shares of Tel-Save for an
aggregate exercise price of $2,450,000. The Company is currently treating this
amount as an account payable to Tel-Save.

        The ETI Notes bear interest at 10% per annum payable monthly and are due
on August 11, 1998, although the net proceeds from the sale of the securities
underlying the ETI Tel-Save Warrants shall be used to prepay the principal of
the ETI Notes. Upon the event of default, interest under the ETI Notes increases
to 21% per annum until the default is cured. The ETI Notes also provide penalty
payment of $500,000 for failure to make timely payments of principal and
interest when due after giving effect to certain grace periods should such
uncured default occur prior to August 11, 1998 and $1,000,000 should such
uncured default occur on or after August 8, 1998. Events of default under the
ETI Notes include failure to make payments when due, modification or disposition
of assets pledged as collateral (described below), bankruptcy and material
misrepresentation in the ETI Notes or any related security agreement.

                                       13
<PAGE>

        Under the terms of the ETI stock purchase agreement (the "ETI
Agreement"), the ETI Tel-Save Warrants have been pledged to guarantee the
Company's obligations under the ETI Notes. In addition, all other assets of ETI
have been pledged as collateral and the Company has pledged a subordinated
interest in all its assets as collateral.

        The ETI Agreement also provides that the Company will indemnify the
selling shareholders for a period of five years from the date of sale from and
against any and all losses arising from the transaction and releases the selling
shareholders from certain liabilities to ETI. The indemnification excludes any
tax liability the selling shareholders may incur in connection with the
transaction.

        Of the $8.313 million acquisition cost of ETI, $7.713 million has been
allocated to the ETI Tel-Save Warrants and the balance of $600,000 has been
allocated to the customer base. No value was assigned to the receivables
purchased due to the uncertainty surrounding their collectibility.


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

Reference is made to Part 1, Item 3. Legal Proceedings, of the Company's Annual
Report on Form 10-KSB for the year ended April 30, 1997 which is incorporated
herein in its entirety except to the litigation discussed below, which is
restated in its entirety except as amended to reflect recent developments.

        The Company is a defendant in a civil action styled AT&T Corp. v. Group
Long Distance, Inc., Civil Action No. 97-2226 (NAP), pending in the United
States District Court for the District of New Jersey. In this action brought in
April 1997, AT&T seeks $612,324 and attorneys' fees as damages for breach of a
settlement agreement entered into between AT&T and the Company in 1993. AT&T
also seeks to recover this $612,324 under a separate claim for unpaid tariff
charges. The Company has answered the complaint and asserted certain
counterclaims. These counterclaims include claims for rescission of the
settlement agreement as well as for damages in contract, in tort and pursuant to
the Federal Communications Act. The Company vigorously plans to litigate this
matter. A scheduling conference regarding the matter has been set for October 6,
1997. While the Company cannot predict with certainty the outcome of this
litigation, the Company's results of operation or cash flow in a particular
quarterly or annual period could be materially affected by protracted litigation
or an unfavorable decision.

        The Company is from time to time the subject of complaints or litigation
in the ordinary course of its business. Except as disclosed, the Company
believes that such lawsuits, claims and other legal matters to which it has
become subject are not material to the Company's financial condition or results
of operations, but an existing or future lawsuit or claim resulting in an
unfavorable outcome to the Company could have a material adverse effect on the
Company's financial condition and results of operations.

Item 6.  Exhibits and Reports on Form 8-K
        (a)  Exhibit 27 - Financial Data Schedule

        (b)  Reports on Form 8-K

              No reports on Form 8-K were filed for the quarter ended July 31,
1997.

                                       14
<PAGE>


                                   SIGNATURES

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

                                  GROUP LONG DISTANCE, INC.


Date  September 22, 1997          By:  /s/ Gerald M. Dunne, Jr.
                                       -------------------------
                                       Chairman, Chief Executive 
                                       Officer and President.
                                       (Principal Executive Officer)

Date  September 22, 1997          By:  /s/ Peter J. Russo.
                                       --------------------
                                       Chief Financial Officer
                                       (Principal Financial Officer)

Date  September 22, 1997          By:  /s/ Sam D. Hitner.
                                       -------------------
                                       Controller
                                       (Principal Accounting Officer).

                                       15